Classification of services

Services can be classified in the following way:

I. By the end user of the services.

i. Individual consumer as an end user.
E.g. Insurance, Banking, Personal finance, hairdressing.
ii. Business to Business end user.
E.g. When Tata Steel asked O&M, the advertising agency to design its advertising
campaign.
E.g. When ACC asked Thompson press to print its annual report.
E.g. When Infosys asked PWHC (Price, Water, House Cooper) to do its accounting and
certify its accounts.
iii. Industrial Endurers.
E.g. ONGC would require for its drilling rigs maintenance, repair, operation from Essar,
Gujarat.
E.g. Godrej Housing the real estate would require services from the best controlled
companies.
E.g. many industries would require assistance from BMC for hygiene and garbage clean-up
and maintenance.

Christopher Lovelock gives another classification of services based on the customer

involvement in the production process.

a) People Processing
 Tangible actions to people’s bodies, such as airline transportation, haircutting and
surgery.
 Customers need to be physically present throughout the service delivery in order to
receive the desired benefits of such services.
 It is important to figure the process and output to identify the benefits created.
Also, some non-financial costs are to be identified- such as time, mental and physical
effort and even tear and in- that consumers incur in obtaining these benefits.

b) Possession Processing
  Tangible actions to goods and other physical possessions, such as air freight, lawn
mowing janitorial services.
 In these instances, the object requiring processing must be present, but the customer need
not be.

c) Mental Stimulus Processing

 Intangible actions directed at people’s mind, e.g. broadcasting and education.
 Here, the customer must be present mentally. It can be located either in specific service
facility in a remote location connected by broadcast signals or telecommunication
linkages.
 Services that interact with people’s mind have the power to shape attitudes and influence
behavior.

I. By the degree of tangibility.

 Highly Tangible
E.g. Car rental, vending machines, telecommunications.
 Service linked to tangible goods
E.g. Domestic appliance repair, car service.
 Highly intangible
E.g. Psychotherapy, Consultancy, legal services.

II. Services can be broken down into LABOUR INTENSIVE (PEOPLE BASED)
and Equipment based services.
This also can be represented by DEGREE OF CONTRACT
 People based services: High Contact
E.g. Education. Dental care, restaurants and medical service.
 Equipment based: Low Contact
E.g. Automatic car wash, vending machine, cinema.

III. The expertise and skills of service provider

 Professional
E.g. Medical services, accountancy, tutoring.
 Non Professional
E.g. Baby sitting, care taking and casual labor.
IV. The overall business orientation ( Profit)
 Not for Profit
The Scouts Association, charities, and public sector leisure facilities.
 Commercial
Banks, Airlines, tour operators, hotels and catering services.

So, when the customer is in the position of dependency or there is a potential for
manipulation, strong ethical standards and careful oversight is required.

This type of service can be easily converted to digital bits or analog signals, recorded for
prosperity, and transformed into a manufactured product, such as a compact disc, videotape
or audio cassette, which may be then packaged and marketed like any other physical good.

V. Information Processing.
 Intangible actions directed at intangible assets
E.g. Insurance, Investment banking and consulting

Here, no direct involvement with the consumer may be needed, once the request for the
service is initiated.

Services highly dependant on effective collection and processing of information includes

financial services, accounting and law, marketing research, management consulting, medical
diagnosis, and a variety of other professional services.

Innovation in services

Services Innovation is mainly about creating newer experiences for the consumer using new
technology, changed processes and more importantly, improved human factors. It is the
design and delivery of new services, more efficiently in a fail-proof manner. Information and
Communication Technologies (ICT) have been great enablers of Service Innovation. “Self
Service”, one of the best service innovations has been made possible mainly because of
advances in ICT.
Services meant innovative use of the technology for automation, efficiency and productivity
improvement. Most ICT users are now trying to leverage technology for creating new and
unique experiences for their customers. So the expectation from technology is not only
efficiency and productivity but design and creation of innovative new services as well.
Professional services companies including IT services and solutions providers have a great
opportunity to spearhead these innovation services.

The growing global services economy offers several opportunities. For instance, by 2030 it is
estimated that the working population as a percentage of total population in most countries
will be on the decline. In India it will continue to go up. So, innovative Elderly Care will be a
much-needed service in many countries.

Design services will be another major opportunity, as an increasing need for customized
products and services will necessitate shorter product cycles and a need for flexibility.
Consumer goods such as cell phones, automobiles, and fashion accessories and tourism offer
ample exemplification of these opportunities.

Another example is that of design intensive manufacturing. The current often repeated model
is that of “manufacturing in China and services from India”. However there is now new
emerging thinking that talks of India becoming a hub of design intensive, low volume
manufacturing. Design will be a major service that will actually create new manufacturing
opportunities.

Other examples include services around intelligent buildings, energy efficient environments,
E-health networks, personalized food and intelligent transportation.

Indian organizations can innovate in services not only to exploit those innovations within the
country but to export those service innovations as well. Similar to India, the European Union
has diversity in language, culture, consumption habits, climate and geographical terrain. India
can be a good test bed for a variety of products and services that need heterogeneity. One
such example is the case for clinical trials. Pharmaceutical and Biotech companies in India
can leverage India’s vast genetic pool of patients and apply cutting edge information
technology for drug discovery and discovery of new chemical and biological entities. They
can also accelerate clinical trials in a far more cost effective manner. Services also offer
excellent opportunities for entrepreneurs. Unlike in new product ventures, service
organizations have low entry and exit barriers. Further, most product companies would need
some element of customization for the product to be adopted by the customer and this would
lead to a lot of opportunities for service organizations. Alternate delivery models such as
Software-as-a-Service and Software Assembly also offer myriad opportunities for small
service providers along the service delivery process.

The flower of services

To explain in brief the flower of services is simply put the core product surrounded by
clusters of supplementary services. Theses services are:-
All of these services are related and augment the core product and are extremely important.
Each edifies and grants more perceptual importance to the core product.

1. Information: this relates to information and knowledge that is mandatory for all those
involved in the core product and is also important in informing customers as to what
exactly the product is.

For example: How many of us would know how to use a recharge number for prepaid
connections without prior knowledge or being prompted by an automated voice
response on how to recharge one’s validity?

2. Consultation: in case of any doubts and queries the service provider should be
approachable through a viable and clear and simple channel. Most decent service
providers have a dedicated FAQ section on their internet sites or in the information
brochure to nullify and reduce the asking of inconsequential questions.

For example: When buying an apartment the potential customer will first work out all
the details with the seller and have a number of queries answered; like banking
services provided, or rates for customization of flooring, amenities, etc.

3. Order taking: obviously this means that a service provider must have a dedicated and
efficient system of handling and registering orders. If in the event a client places an
order with the service provider and the system does not log it in and the item, service
they ordered goes to another person or is not shown at all this reflects badly on the
service provider in general and may result in the termination of the clients association
with the service provider.

For example: bad service in restaurant is firstly seen in the mixing up of orders or
confusing one dish for another, this reflects very badly on the establishment in
general.

4. Hospitality: would you as a customer ever go to hotel where the staff are known to be
surly and indifferent, even though the hotel is essentially a good one? In this way a
hospitable atmosphere goes a long way in any service provider-client relationship.
 Hence, employees are meant to be trained to be courteous and kindly, but not too
friendly with the establishment’s clients.

5. Caretaking: This means that a service provider has to be willing to accommodate the
needs and requests of the customer. This usually means customizing the service/
tailoring the service to the consumers wants.

For example: If the customer for an apartment wants a different kind of laminate and
veneer finish and is willing to spend extra money for it, this has to be done by the
service provider.

6. Exceptions: this is the service provider keeping an eye on emergency/ special/

contingency situations where special/ delicate handling is required.

For example: the provision for handicapped people in train services to ease their
traveling experience aboard the train during the journey.

7. Billing: this refers to there being an efficient and effective billing system behind the
service, because all clients will ask ‘loaded’ questions as to the logic behind some
charges, being able to give effective reasoning and being clear of mind is only
possible with a laid down and effective system. Also being able to process the amount
of money to be paid quickly and without error is necessary in promoting an image of
professionalism to the client.

8. Payment: obviously being able to complete any transaction without a hitch is very
important to any service provider or for that matter the customer. Most companies that
have an electronic payment gateway solution need to have a set and easy to use
payment system.

For example: you go to a 7-star hotel for dinner and after your meal you attempt to
pay through either your credit card, ITZ card, Oxicash mobile wallet or an
aggregation of the same and find to your utter disbelief that the establishment does not
accept any of the said services as a payment method, what then is going to be your
impression of the quality of service if a 7-star hotel does not accept credit cards, etc.?
 These are the components/ petals that are a part of the flower of services.

External Marketing

The company does external marketing on the customer. It promise benefit, explains features
and assures satisfaction by way of advertisement, public relation exercises and other form of
corporate communication. It uses mass media to convey its promises. It makes promises to
the customers. 

Internal Marketing.

The company does internal marketing to its providers. The company has to provide working
space like offices, equipments, like computer, telephones to its provider. It also has to recruit,
select and train appropriate employees, channel partners, franchises. It enables the providers
to complete the service transaction. the company enables its promise. 

Interactive Marketing.

The providers do interactive marketing with the customer. The provider is the one who
interacts with the customer. The provider is the face of the company and represents the
company. Both the customer as well as provider gets instant feedback about each other
during service transaction reflects the perception of the quality of the service. The providers
keep the promises made by the company to the customer. The game of promise in service
transactions:

 The company makes promises to the customers.

 The company enables the providers to complete the service transaction.  The company
enables it promises.
 The provider keeps the promises made by the company to the    customers. 

MOMENTS OF TRUTH (MOT) -The service encounter

A service encounter means any episode in which the customer comes in contact with any
aspect with the organization and gets an impression of the quality of its service. The service
encounter is popularly now known as a Moment of Truth .The usage of the term in services
gives drama to the encounter by the customer with the service process, service providers and
the service firm.
Let’s take a few examples of service encounter to understand its all pervasiveness
1) Seeing an advertisement of the firm
2) Having a telephonic enquiry session with the service firm
3) Being greeted in the entrance
4) The impression while waiting in a queue
5) The quality of the interaction between the service provider

CIT (Critical incidents in service Encounters)

There are several attempts in evaluating the quality of services and the “service
encounters” .One of the evaluation methods is critical incident technique. This was applied in
diagnosing the favorable and unfavorable incidents through collection of 700 incidents from
customers of airlines , hotels and restaurants. Out of this analysis the authors have tried to
classify the result of this study which given in nutshell below

BITNER AND BOOMS technique is used for collecting and categorizing critical incidents in
service delivery that contribute to or detract from the customers service experience in a
significant way

1. Employee response to service delivery system failure

Unavailable service
Unreasonably slow service
Other core service failure

2. Employee response to customer needs and request

Customer with special needs
Expressed customer preference
3. Problematic customer Behavior
Drunkenness
Verbal abuse
Breaking co. policies
 Un co operative behavior

Customers involvement in services :

Another role customers can play in services delivery is that of contributor to their own
satisfaction and ultimate quality of the services they receive. Customers may care little that
they have increased the productivity of the organization through their participation but they
likely care a great deal about whether their needs are fulfilled. Effective customer
participation can increase the likelihood that needs are met and that the benefits the customer
seeks are actually attained .Think about services such as health care , education , personal
fitness and weight loss, where the service outcome is highly dependent on customer
participation . In these cases, unless the customer performs her role effectively , the desired
service outcomes is not possible.

Technical and functional skills of the customer is equally important . It refers to the technical
and functional skills people possess in order to get the best services from providers. Research
suggest that customers who believe they have done their part to be effective in service
interactions are more satisfied with the service . for eg Banking services Technical quality of
customer inputs could be
 You clearly explained what you wanted the bank employee to do
 You gave proper information to the bank
 You tried to co operate with the bank employee
 You understand the proper procedure associated with this service
Functional (skills ) inputs of customer:
 You are friendly to the bank employee
 You have a good relationship with the bank employee
 You are courteous to the bank employee