CLASSIFICATION OF SERVICES. (FRAMWORKS FOR ANALYSIS OF SERVICES).

Problem: narrow exposure of managers to the variety of service industries; managers perceive their service as unique; management personnel is usually inbred; as a result, marketing thought in the field of services is underdeveloped. E.g., hoteliers often spend their whole life in the industry or even one company, most airline managers have grown up in the commercial aviation industry, bankers and hospital administrators usually work within the confines of banking and health care, respectively. anagers from manufacturing sector find themselves unprepared to deal with servicing problems. !ervices are neither a homogeneous group, nor different in"between according to industry classification. !ervices can be segmented into clusters that share certain marketing"relevant characteristics. Classifications. #mport from tangible products domain: - $opeland%s convenience, shopping, specialty goods. &'etail service institutions can also use this approach; e.g., from financial services providers to restaurants(. - )urability. &*or services: durability of benefits is relevant to repurchase frequency(. - $onsumer+industrial. &)ifferent evaluation of competing alternatives, purchasing procedures and usage behavior is also transferable to services(. ,perations approach to classification: every service is different &insisting that airlines% marketing has nothing to do with banks, insurance, motels, etc.(. -owever, marketing views demonstrate a lot of similarities in sharply different services; valid classification highlights implications for managers . concepts and strategies can be shared between industries. $lassification will have managerial value if it offers strategic insight . i.e. implications for managers. /his includes both the core and supplementary services. $0/E1,'#2#31 !E'4#$E P',$E!!: 5-0/ #! /-E 30/6'E ,* /-E !E'4#$E 0$/#4#/78 )ifferent types of processes result in different levels of customer involvement. #f services are 9deeds, acts, or performances:, two questions arise: - at whom &or what( is the activity directed; - is the activity tangible or intangible.
5hat is the nature of the service act8 /angible actions 5ho or what is the direct recipient of the service8 People Possessions #. !ervice directed at people%s bodies: ##. !ervices directed at physical possessions: - passenger transportation; - freight transportation; - health care; - repair and maintenance; - lodging; - warehousing+storage; - beauty saloons; - ;anitorial services; - physical therapy; - retail distribution; - fitness centers; - laundry and dry cleaning; - restaurants; - refueling; - haircutting; - landscaping+lawncare; <=< !ervices analysis frameworks

#ntangible actions

- funeral services ###. !ervices directed and people%s minds: - adverti>ing+P'; - arts and entertainment; - broadcasting+cable; - management consulting; - education; - information services; - concerts; - psychotherapy; - religion; - voice telephone.

- disposal+recycling. #4. !ervices directed at intangible assets: - accounting; - banking; - data processing; - data transmission; - insurance; - legal services; - programming; - research; - securities investment; - software consulting.

#. People processing. anagers should think about the process and output in terms of what happens to the customer &or other ob;ect process( to identify what benefits are being created. 'eflecting on the service process itself helps to identify some of the non"financial costs . time, mental and physical effort, and even fear and pain . that customers incur in obtaining the services. $ritical factors: - moving to the 9service: factory &or service people going to clients(; - getting into contact and cooperation; ##. Possession processing. *requently . quasi"manufacturing operations. /he services are the entire chain of activities that may take place during the lifetime of the ob;ect in question. 'eceivers are not necessary to be present. ###. ental stimulus processing. !trong ethical standards and careful oversight may be required. 'eceivers% physical presence is not necessary, but communication+participation is required. #4. #nformation processing. $ustomer involvement is determined by traditions and personal desire; operationally it is not required. #nsights and implications. /he model helps answering a question 9what business are we in8: and formulating the benefits provided by services to the users. $ustomer satisfaction is influenced by: - encounters with service personnel; - appearance and features of service facilities . both exterior and interior; - interactions with self"service equipment; - characteristics and behavior of other customers. 0dvancement of telecommunication forms a uniform channel for informational"type services delivery " internet. /rend is the move from 9high"contact: service into a 9low"contact: with offering customers greater convenience. -,5 #! /-E !E'4#$E )E?#4E'E)8 #ssues: - the current method of delivery and
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- the number of distribution sites. Aey question: does the firm currently require customers to be in direct physical contact with personnel, equipment, and facilities8 #f the firm does require direct physical contact, do customers have to visit the facilities of the service organi>ation or will the latter send personnel and equipment to customer%s own sites8 0lternatively, can transactions between provider and customer be completed at arm%s length8 0nother issue: distribution . does the company require one or multiple distribution sites8
3ature of interaction b+w customer and service organi>ation $ustomer goes to service organi>ation !ervice organi>ation comes to customer $ustomer and service organi>ation transact at arm%s length &mail or through #nternet( 0vailability of service outlets !ingle site /heater; Barbershop. ?awncare service; Pest control service; /axi $redit card company; ?ocal /4 station. ultiple sites Bus service; *ast"food chain. ail delivery; 0uto club road service. Broadcast network; /elephone company.

#nsights and implications. -ow and where service is delivered forms the basis of distribution strategy. #t also affects the nature of customers% service experiences . including the encounters they have with specific service personnel . and impacts the cost they incur in obtaining service. $ombination of facilities, equipment and personnel generate value and costs. Aey issues: convenience; costs involved in travel; appeal of the retail facilities relative to competing alternatives. ostly, companies require customers to visit the 9factory:. -owever, niches of premium customers should be considered, who agree to pay for the servicemen visit. 5-0/ #! /-E 30/6'E ,* )E 03) *,' /-E !E'4#$E8 Empty seats in an airplane or rooms in a hotel are lost forever if unoccupied. Productive capacity of an auto repair shop is wasted if no one brings a car. $onversely, when demand for service exceeds supply, the excess business may be lost. -owever, demand and supply imbalances are not found in all service situations.
Extent to which supply is constrained Peak demand can usually be met w+o a ma;or delay Extent of demand fluctuations over time 5ide Electricity; 3atural gas; /elephone; -ospital maternity unit; Police and fire emergencies 0ccounting and tax preparation; Passenger transportation; -otels+motels; 'estaurants; /heaters. 3arrow #nsurance; ?egal services; Banking; ?aundry and dry cleaning.

Peak demand regularly exceeds capacity

&!ervices, similar to those in cell above, but which have insufficient capacity for their base level of business(.

#nsights and implications.

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anaging demand is the ma;or challenge for many service marketers, especially in people" processing and possession"processing services when opportunities to manage the level of physical capacity &facilities or personnel( are tightly constrained. Duestions, managers should answer: 0re demand fluctuations cyclical, what is the cycle period8 5hat are the underlying causes of fluctuations8 )o fluctuations reflect customer habits that can be changed by marketing8 ,r are they formed by Cd parties &working or classroom hours(8 ,r random events8 !moothing demand is done through marketing strategies that affect customer behavior or queuing system &which inventories demand rather than supply(. 'eservation system can also be implemented. &5hat other implementations are possible to smooth demand8(. 5-0/ 0'E /-E 0//'#B6/E! ,* /-E !E'4#$E EEPE'#E3$E8 Equipment" or people"based, or both. /he parameters are rather continuous. #nsights and implications. /he greater the degree of physical involvement by the customer in the service process, the more likely service personnel, equipment, and facilities are to form an important part of the service experience. $ustomers may choose suppliers by the appraisal of these elements and evaluation of the output. anagers may get insights from other service businesses with similar facilities+people emphasis. &E.g. hospitals may import from hotels, public accounting firm . management consulting company(. -owever, marketing strategies used by one type of service in an industry may not be generali>able to other services offered by that same industry &e.g. conventional and electronic banking, hotels and motels(. People based services are harder to manage than equipment"based &in general(. 1eneral trend . switch to self"service &in what industries8(.

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!ervices analysis frameworks

5-0/ /7PE ,* 'E?0/#,3!-#P! ),E! /-E !E'4#$E ,'103#20/#,3 -04E 5#/#/! $6!/, E'!8 $ontinuous relationship or discreet transaction8
3ature of service delivery $ontinuous delivery of service /ype of relationship between the service organi>ation and its customers embership relationship 3o formal relationship - #nsurance; - 'adio station; - $able /4 subscription; - Police protection; - $ollege enrollment; - ?ighthouse; - Banking - Public highway. - ?ong"distance calls; - $ar rental; - /heater series subscription; ail service; - /ravel on commuter ticket; - /oll highway; - 'epair under warranty; - Pay phone; - -ealth treatment for - , member. ovie theater; - Public transportation; - 'estaurant.

)iscrete transactions

#nsights and implications. 0dvantage of membership relationships is that it knows who its current customers are and, usually, what use they make of the services offered. Pricing also is 9easier: with membership relationship through periodic &monthly( fees. -owever, multiple transaction payments may seem more fair. $ontinuous delivery is typical only for 9public goods:. )iscrete transactions make customers 9anonymous: what makes marketing harder, since suppliers are less informed about who their customers are and what use each customer makes of the service. #n general, businesses tend to create formal on"going relationships with customers. &5hy8 Examples8( -,5 6$- ',, #! /-E'E *,' $6!/, #20/#,3 03) G6)1 E3/8 #n contrast to 9tangible world:, services are frequently custom made. $ustomi>ation can proceed at least at two dimensions: - how much the characteristics of the service and its delivery system lend themselves to customi>ation and - how much ;udgment customer"contact personnel are able to exercise in defining the nature of the service received by individual customers.
Extent to which customer" contact personnel exercise ;udgment in meeting individual customer needs -igh Extent to which service characteristics are customi>ed -igh ?ow

?ow

?egal services; -ealth care+surgery; 0rchitectural design; 'eal estate agency; /axi service; Beautician; Plumber; Education &tutorials(. /elephone service; -otel services; 'etail banking &excluding ma;or <H<

Education &large classes(; Preventive health programs.

Public transportation; 'outine appliance repair; *ast"food restaurant; !ervices analysis frameworks

loans(; 1ood restaurant.

ovie theater; !pectator sports.

#nsights and implications. $ustomi>ation has its costs. $onstant struggle b+w marketing &add value( and operations &reduce costs through standardi>ation(. $ustomi>ation is not necessarily important to success. !tandardi>ed services tend to imitate customi>ation &naming clients in hotels, morning calls, etc(. #n general, customers like to get expected results. #n first quadrant, providers% role is first diagnosing the nature of the situation and then designing a solution. #n this case neither provider nor receiver have clear vision what the result will be. )ividing the service in to diagnosis and implementation can be the options. /rial encounters can also remedy the uncertainty to some degree. ,/-E' 0PP',0$-E! /, $?0!!#*#$0/,3 )uration of benefits. #mplications . relationships with clients &random vs. long"lasting ties(. )uration of service delivery. &/elephone call vs. college(. ?onger services make more likely longer relationships with supplementary services. &7our service classification ideas8(

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!ervices analysis frameworks