Managing Services

13-1
Service

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.

13-2
Service Sectors
 Government
 Private, nonprofit
 Business
 Manufacturing
 Retail

13-3
Service Component in The
Offerings
 Pure tangible good
 Good with accompanying service
 Hybrid
 Service with accompanying goods
 Pure service

13-4
Service Distinctions
 Equipment-based or people-based
 Service processes
 Client’s presence required or not
 Personal needs or business needs
 Objectives and ownership

13-5
Distinctive Characteristics of Services
 Intangibility
 Inseparability
 Variability
 Perishability

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Distinctive Characteristics of Services
 Intangibility – Unlike physical products, services cannot
be seen, tasted, felt, heard, or smelt before they are bought.
To reduce uncertainty, buyers will look for evidence of
quality by drawing inferences from the following
- Place
- People
- Equipment
- Communication Material
- Symbols
- Price
The service providers task is to manage the physical
evidence in order to tangibilize the intangibles. And
thereby transforming intangible services into concrete
benefits and a well-defined experience.
 Inseparability
Whereas physical goods are manufactured, put
into inventory, distributed through multiple
resellers, and consumed later, services are typically
produced and consumed simultaneously.
 Variability – The quality of services depends on who
provides them, when and where, and to whom. Services are
highly variable. Methods of reducing variability are: -
- Investing in good hiring and training procedures in
order to attain the following characteristics of the service
personnel:-
1) Competence, 2) Courtesy, 3) Credibility, 4) Reliability 5)
Responsiveness, and 6) Communication

- Standardizing the service-performance process

throughout the organization

- Monitoring customer satisfaction

13-9
 Perishability
Services cannot be stored, so their perishability
can be a problem when demand fluctuates.

 Demand management is critical – the right

services must be available to the right customers at
the right places at the right time and at right prices
to maximize profitability.
Perishability …..contd
 Several strategies can produce a better match
between demand and supply in a service business.
On the demand side:
- Differential Pricing for shifting demand from peak to off peak
periods
- Cultivating non peak demand
- Complementary Services
- Reservation Systems
On the supply side
- Part time employees for peak demand periods
- Increased consumer participation

13-11