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FM : Anis Gunawan,MManisg@pmbs.ac.id

Welcome to Service Management

Role of Services in an Economy

James FitzsimmonsSeay Professor of Business Emeritus

University of Texas at Austin

Service Definitions

Services are deeds, processes, and performances.Valarie Zeithaml & Mary Jo Bitner

A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer.

James Fitzsimmons

Orlando

Definition of Service Firms

Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives.

James Fitzsimmons

SM

Service Can Mean all of These

1. Service as a product

2. Customer service

3. Services as value add for goods

4. Service embedded in a tangible product

Examples of Service Industries1. Health Care

1. hospital, medical practice, dentistry, eye care2. Professional Services

1. accounting, legal, architectural3. Financial Services

1. banking, investment advising, insurance4. Hospitality

1. restaurant, hotel/motel, bed & breakfast 2. ski resort, rafting

5. Travel1. airline, travel agency, theme park

6. Others1. hair styling, pest control, plumbing, lawn maintenance, counseling

services, health club, interior design

Airline

Challenges for Services1. Defining and improving quality2. Ensuring the delivery of consistent quality3. Designing and testing new services4. Communicating and maintaining a consistent image5. Accommodating fluctuating demand6. Motivating and sustaining employee commitment7. Coordinating marketing, operations, and human resource efforts8. Setting prices9. Finding a balance between standardization versus

customization

SQ

Why do firms focus on Services?

1. Services can provide higher profit margins and growth potential than products

2. Customer satisfaction and loyalty are driven by service excellence

3. Services can be used as a differentiation strategy in competitive markets

SQ

Implications of Intangibility

1. Services cannot be inventoried

2. Services cannot be easily patented

3. Services cannot be readily displayed or communicated

4. Pricing is difficult

Implications of Heterogeneity

1. Service delivery and customer satisfaction depend on employee and customer actions

2. Service quality depends on many uncontrollable factors

3. There is no sure knowledge that the service delivered matches what was planned and promoted

Implications of Simultaneous Production and Consumption Customers participate in and affect the

transaction

Customers affect each other

Employees affect the service outcome

Decentralization may be essential

Mass production is difficult

Implications of Perishability

It is difficult to synchronize supply and demand with services

Services cannot be returned or resold

Examples of Goods Companies that are Expanding into Services

Boeing Kodak

Role of Services in an Economy

INFRASTRUCTURE SERVICE1.· Communications2.· Transportation3.· Utilities4.· Banking

PERSONALSERVICE· Healthcare· Restaurants· Hotels

CONSUMER(Self-service)

GOVERNMENT SERVICES· Military· Education· Judicial· Police and fire protection

DISTRIBUTION SERVICES

· Wholesaling · Retailing · Repairing

FINANCIALSERVICES1. · Financing2. · Leasing3. · Insurance

MANUFACTURINGServices inside company:

· Finance· Accounting· Legal· R&D and design

BUSINESS SERVICES· Consulting· Auditing· Advertising· Waste disposal

BT

NY

Cons

Percent Employment in ServicesTop Ten Postindustrial Nations

Country 1965 1975 1985 1995 2005

United States 59.5 66.4 70.0 74.1 78.6

United Kingdom 51.3 58.3 64.1 71.4 77.0

The Netherlands 52.5 60.9 68.3 73.4 76.5

Sweden 46.5 57.7 66.1 71.5 76.3

Canada 57.8 65.8 70.6 74.8 76.0

Australia 54.6 61.5 68.4 73.1 75.8

France 43.9 51.9 61.4 70.0 74.8

Japan 44.8 52.0 57.0 61.4 68.6

Germany 41.8 n/a 51.6 60.8 68.5

Italy 36.5 44.0 55.3 62.2 65.5

Trends in U.S. Employment by Sector

0

10

20

30

40

50

60

70

80

9018

50

1860

1870

1880

1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

Year

Pro

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rtat

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of

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Service

Manufacturing

Agriculture

Distribution of GDP in the US Economy

Product Services

Physical

Information

6%

10%

31%

53%

37%

63%

84%16%

D

BA

C

IBM

Stages of Economic Development

Pre- Use of Standard dominant Human Unit of of Living Society Game Activity Labor Social Life Measure Structure

Technology

Pre- Against Agriculture Raw Extended Sub- Routine Simple hand Industrial Nature Mining muscle household sistence Traditional tools

power Authoritative

Industrial Against Goods Machine Individual Quantity Bureaucratic Machines fabricated production tending of goods Hierarchical nature Post- Among Services Artistic Community Quality of Inter- Information industrial Persons Creative life in terms dependent Intellectual health, education, recreation

Bethel

Economic EvolutionEconomy Agrarian Industrial Service Experience

EconomicOffering

Food Packagedgoods

Commodityservice

Consumer services

Businessservices

Function Extract Make Deliver Stage Co-create

Nature Fungible Tangible Intangible Memorable Effectual

Attribute Natural Standardized Customized Personal Growth

Method of Supply

Stored in bulk

Inventoried Delivered on demand

Revealed over time

Sustained over time

Seller Trader Producer Provider Stager Collaborator

Buyer Market Customer Client Guest Collaborator

Expectation Quantity Features Benefits Sensations Capability

The Four Realms of an Experience

Customer Participation

Passive Active

Environmental

Absorption Entertainment (Movie)

Education (Language)

Relationship Immersion Esthetic (Tourist)

Escapist (ScubaDiving)

Experience Design Principles

Theme the Experience (Forum shops) Harmonize Impressions with Positive Cues

(O’Hare airport parking garage) Eliminate Negative Cues

(Cinemark talking trash containers) Mix in Memorabilia (Hard Rock T-shirts) Engage all Five Senses (Mist in Rainforest)

Typology of Services in the 21st CenturyCore Experience Essential Feature Examples

Creative Present ideas Advertising, theater

Enabling Act as intermediary Transportation, communications

Experiential Presence of customer Massage, theme park

Extending Extend and maintain Warranty, health check

Entrusted Contractual agreement Service/repair, portfolio mgt.

Information Access to information Internet search engine

Innovation Facilitate new concepts R&D services, product testing

Problem solving Access to specialists Consultants, counseling

Quality of life Improve well-being Healthcare, recreation, tourism

Regulation Establish rules and regulations Environment, legal, patents

ORlando

Case study in Services Management

Case : Marriot Hilton.

When Tom and Ruth checked out of the Marriott Hilton Head Resort, they were each given a brief postage paid survey to complete and return through the mail. The survey asked 15 questions about their stay at the Marriott Resort. It covered such attributes as overall satisfaction, check-in speed/efficiency, cleanliness, decor and comfort of their room, friendliness and efficiency of the staff, quality of dining experience, quality of merchandise/gift shop, intention to return, and willingness to recommend to friends.

Question :1.What is the decision facing Marriot Hilton?2.What factors are important in understanding this decision situation?3.What are the alternatives?4. What decision(s) do you recommend?

Question no 1 :What is the decision facing Marriot Hilton?

What types of research have to Marriott conduct ?

Question no 2 :

What factors are important in understanding this decision situation?

Consumer behavior that covered such attributes as overall satisfaction, check-in speed/efficiency, cleanliness, decor and comfort of their room, friendliness and efficiency of the staff, quality of dining experience, quality of merchandise/gift shop, intention to return, and willingness to recommend

Question no 3 : What are the alternatives?

A) Complaint solicitation B) Critical incidents studies C) Relationship surveys D) Trailer calls E) Lost customer research

Question no 4. What decision(s) do you recommend?

D) Trailer calls