Classification of Services Free Essay Example from StudyTiger

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.Managers from manufacturing sector find themselves unprepared to deal with servicing problems. Services are neither a homogeneous group, nor different in-between according to industry classification. Services can be segmented into clusters that share certain marketing-relevant characteristics.

Classifications. Import from tangible products domain: - Copeland’s convenience, shopping, specialty goods. (Retail service institutions can also use this approach; e. g. , from financial services providers to restaurants). - Durability.

For services: durability of benefits is relevant to repurchase frequency). - Consumer/industrial. (Different evaluation of competing alternatives, purchasing procedures and usage behavior is also transferable to services). Operations approach to classification: every service is different (insisting that airlines’ marketing has nothing to do with banks, insurance, motels, etc.

). However, 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.Classification will have managerial value if it offers strategic insight – i. e.

implications for managers. This includes both the core and supplementary services. CATEGORIZING SERVICE PROCESS: WHAT IS THE NATURE OF THE SERVICE ACTIVITY? Different types of processes result in different levels of customer involvement. If services are “deeds, acts, or performances”, two questions arise: - at whom (or what) is the activity directed; - is the activity tangible or intangible. What is the nature of the service |Who or what is the direct recipient of the service? | |act? | | | |People |Possessions | |Tangible actions |I. Service directed at people’s bodies: |II.

| I. People processing. Managers should think about the process and output in terms of what happens to the customer (or other object process) to identify what benefits are being created.Reflecting 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. Critical factors: - moving to the “service” factory (or service people going to clients); - getting into contact and cooperation; II. Possession processing.

Frequently – quasi-manufacturing operations. The services are the entire chain of activities that may take place during the lifetime of the object in question. Receivers are not necessary to be present. III.

Mental stimulus processing. Strong ethical standards and careful oversight may be required.Receivers’ physical presence is not necessary, but communication/participation is required. IV.

Information processing. Customer involvement is determined by traditions and personal desire; operationally it is not required. Insights and implications. The model helps answering a question “what business are we in? ” and formulating the benefits provided by services to the users.

Customer 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. Advancement of telecommunication forms a uniform channel for informational-type services delivery - internet.Trend is the move from “high-contact” service into a “low-contact” with offering customers greater convenience. HOW IS THE SERVICE DELIVERED? Issues: - the current method of delivery and - the number of distribution sites.

How and where service is delivered forms the basis of distribution strategy. It 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.Combination of facilities, equipment and personnel generate value and costs. Key issues: convenience; costs involved in travel; appeal of the retail facilities relative to competing alternatives. Mostly, companies require customers to visit the “factory”. However, niches of premium customers should be considered, who agree to pay for the servicemen visit.

WHAT IS THE NATURE OF DEMAND FOR THE SERVICE? 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. Conversely, when demand for service exceeds supply, the excess business may be lost. However, demand and supply imbalances are not found in all service situations.

Questions, managers should answer: Are demand fluctuations cyclical, what is the cycle period? What are the underlying causes of fluctuations? Do fluctuations reflect customer habits that can be changed by marketing? Or are they formed by 3d parties (working or classroom hours)? Or random events?Smoothing demand is done through marketing strategies that affect customer behavior or queuing system (which inventories demand rather than supply). Reservation system can also be implemented. (What other implementations are possible to smooth demand? ). WHAT ARE THE ATTRIBUTES OF THE SERVICE EXPERIENCE? Equipment- or people-based, or both. The parameters are rather continuous. Insights and implications.

The 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. Customers may choose suppliers by the appraisal of these elements and evaluation of the output.Managers 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). However, marketing strategies used by one type of service in an industry may not be generalizable 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).

Advantage 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 “easier” with membership relationship through periodic (monthly) fees. However, multiple transaction payments may seem more fair. Continuous delivery is typical only for “public goods”.Discrete transactions make customers “anonymous” what makes marketing harder, since suppliers are less informed about who their customers are and what use each customer makes of the service.

|Movie theater; | | | |Spectator sports. | Insights and implications. Customization has its costs. Constant struggle b/w marketing (add value) and operations (reduce costs through standardization).

Customization is not necessarily important to success. Standardized services tend to imitate customization (naming clients in hotels, morning calls, etc). In general, customers like to get expected results.In first quadrant, providers’ role is first diagnosing the nature of the situation and then designing a solution.

In this case neither provider nor receiver have clear vision what the result will be. Dividing the service in to diagnosis and implementation can be the options. Trial encounters can also remedy the uncertainty to some degree. OTHER APPROACHES TO CLASSIFICATON Duration of benefits. Implications – relationships with clients (random vs. long-lasting ties).

Duration of service delivery. (Telephone call vs. college). Longer services make more likely longer relationships with supplementary services.

(Your service classification ideas? )

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