Designing and Managing Services

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What is a Service?
A service is any act of performance that one party can offer another that is essentially intangible and does not result in the ownership of anything; its production may or may not be tied to a physical product.

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Service Sectors
Government Private nonprofit Business Manufacturing Retail

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Categories of Service Mix

Pure tangible good Good with accompanying services Hybrid Service with accompany goods Pure service

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Service Distinctions
Equipment-based or people-based Service processes Clients presence required or not Personal needs or business needs Objectives and ownership

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Distinctive Characteristics of Services

Intangibility Inseparability Variability Perishability

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Physical Evidence and Presentation

Place People Equipment Communication material Symbols Price

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How to Increase Quality Control

Invest in good hiring and training procedures Standardize the service-performance process Monitor customer satisfaction

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Matching Demand and Supply

Demand side Differential pricing Nonpeak demand Complementary services Reservation systems Supply side Part-time employees Peak-time efficiency Increased consumer participation Shared services Facilities for future expansion
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Improving Service Quality

Listening Reliability Basic service Service design Recovery Surprising customers Fair play Teamwork Employee research Servant leadership

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Solutions to Customer Failures

Redesign processes and redefine customer roles to simplify service encounters Incorporate the right technology to aid employees and customers Create high-performance customers by enhancing their role clarity, motivation, and ability Encourage customer citizenship where customers help customers
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Table 13.1 Factors Leading to Customer Switching Behavior

Pricing Inconvenience Core Service Failure Service Encounter Failures Response to Service Failure Competition Ethical Problems Involuntary Switching
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Gaps that Cause Unsuccessful Service Delivery

Gap between consumer expectation and management perception Gap between management perception and service-quality specifications Gap between service-quality specifications and service delivery Gap between service delivery and external communications Gap between perceived service and expected service
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Determinants of Service Quality

Reliability Responsiveness Assurance Empathy Tangibles

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Best Practices
Strategic Concept Top-Management Commitment High Standards Self-Service Technologies Monitoring Systems Satisfying Customer Complaints Satisfying Employees
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Developing Brand Strategies for Services

Choosing brand elements Establishing image dimensions Devising branding strategy

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Customer Worries
Failure frequency Downtime Out-of-pocket costs

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Table 13.4 Top Customer Service Providers

USAA Four Seasons Hotels Cadillac Nordstrom Wegman Food Markets Edward Jones Lexus UPS Enterprise Rent-aCar Starbucks Ritz-Carlton Amica Insurance Southwest Airlines

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