CLASSIFICATION OF SERVICES

CLASSIFICATION OF SERVICES
Classification of services enables a better understanding of the particular service under consideration. It highlights the similarities and differences between the service being classified and other services It can assist in the development of marketing strategies and tactics as services in the same category will face some similar challenges

Selected Ways of Classifying Services

Degree of tangibility/intangibility of service processes Who or what is direct recipient of service process customers possessions belonging to customers Place and time of service delivery Customization vs. standardization

Nature of relationship with customers

Extent to which demand and supply are in balance Facilities, equipment, people as part of the service

Classification on the basis of the Nature of the Service Activity Based on differences in nature of service act (tangible/intangible) and who or what is direct recipient of service (people/possessions), there are four categories of services:
People processing Possession processing Mental stimulus processing Information processing

Four Categories Of Services

Who or What Is the Direct Recipient of the Service? Nature of the Service Act Tangible Actions (services directed at peoples bodies): People People processing Possessions
Possession processing (services directed at physical possessions):

Intangible Actions

Barbers Health care

Refueling

Disposal/recycling

Mental stimulus processing (services directed at peoples minds):

Information processing (services directed at intangible assets):

Education

Advertising/PR

Accounting Banking

Four Categories Of Services

People Processing Customers must:
Physically enter the service factory Co-operate actively with the service operation

Managers should think about process and output from customers perspective
To identify benefits created and non-financial costs:
Time, mental, physical effort

Possession Processing
Possession Processing Customers are less physically involved compared to people processing services Involvement is limited Production and consumption are separable

Mental Stimulus Processing

Mental Stimulus Processing Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers Physical presence of recipients not required Core content of services is information-based
Can be inventoried

Information Processing
Information Processing Information is the most intangible form of service output But may be transformed into enduring forms of service output Line between information processing and mental stimulus processing may be blurred.

Classification of services: By nature of service

People Things

Service directed at peoples bodies: Healthcare Passenger transportation Beauty saloons Exercise clinics Restaurants Hairdressers

Tangible actions

Service directed at goods:

Freight transportantion Industrial equipment repair Laundry and dry cleaning Lawn care Veterinary care

Classification of services: By nature of service

People Intangible actions
Service directed at peoples minds: Education Broadcasting Information services Theaters Museums

Things
Service directed at intangible assets: Banking Legal services Accounting Securities Insurance

By C. Lovelock

Implications of Different Service Processes: Design of the Service Factory

People-processing services require customers to visit the service factory, so: think of facility as a stage for service performance

design process around customer

choose convenient location create pleasing appearance, avoid unwanted noises, smells consider customer needs--info, parking, food, toilets, etc.

For possession-processing, mental-stimulus processing, or information processing services, alternatives include: 1. Customers come to the service factory 2. Customers come to a retail office 3. Service employees visit customers home or workplace

Implications of Different Service Processes:Alternative Channels for Service Delivery

4. Business is conducted at arms length through - physical channels (e.g., mail, courier service) - electronic channels (e.g., phone, fax, email, Web site)

Implications of Different Service Processes: Applying Technology to Service Processes

All services can benefit from IT, but mental-stimulus processing and information-processing services have the most to gain: Remote delivery of informationbased services anywhere, anytime New service features through Web sites, email, and internet (e.g., information, reservations) More opportunities for selfservice New services can be offered

Strategic Service Classification (Relationship with Customers/ Nature of Service Delivery)

Type of Relationship between Service Organization & Customers Nature of Service Delivery Membership relationship Insurance Telephone subscription Electric Utility Banking No formal relationship Radio station Police protection Public Highway

Continuous delivery of service

Long-distance phone calls Restaurant Theater series tickets Pay phone Discrete transactions Transit pass Toll highway Sams Wholesale Club Movie theater Airline frequent flyer Public transportation

Strategic Service Classification (Customization and Judgment)

Extent to Which Service Characteristics Are Customized Extent to Which High Low Personnel High Surgery Education Exercise Judgment Taxi services (in large classes) in Meeting Customer Gourmet restaurant Family restaurant Needs

Low

Telephone service Hotel services Retail banking Cafeteria

Public transportation Spectator sports Movie theater Institutional food service

Classification of services: By method of service delivery

Type of Interaction between Customer and Service Organization

Availability of Service Outlets Single Site Drama Theater Barbershop Lawn Care
Multiple Sites
Bus service Fast-food chain

Customer goes to service organization

Service organization comes to customer

Customer and service organization transact remotely (mail or electronic communications)

Mail delivery

Mobile car wash

Credit card company Local TV station Broadcast network Telephone company