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Service Industry I
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A full summary of the Service Industry I trainings and lectures.
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Service industryIntroducti on to the service industry
Book -> service management, an integrated approach
Growing importance of the service industry
The service sector has been growing at an annul rate of 8% in recent years. The service sector
dominates with the best jobs. Driving forces:
- Increasing consumer income and sociological & demographic changes led to increase in
demand for service
- Increasing professionalism in companies and technological developments
Industry division in sectors
Primary sector: farming, forestry and fishing
Secondary: industrial such like gas, mining, manufacturing, water and construction
Tertiary: service sector
Categories of services
Distributive: transportation, communication and trade
Producer: investment banking, insurance engineering, accounting, bookkeeping and legal services
Social: health care, education, non-profit organizations and government agencies
Personal services: tourism recreational, domestic services.
There are different kinds of definitions for a service, there is not just one:
- Definition of Kepler; a service is an activity, benefit or satisfaction offered for sale that is
essentially intangible and does not result in the ownership of anything.
- Definition of the book; services are economic activities performed by one party to another.
Often time-based, these performances bring about desired results to recipients, objects or
other assets. In exchange for money, time and effort, service customers expect value from
access to labour, skills, expertise, goods, facilities, networks and systems.
- Services: all those economic activities that are intangible or tangible and imply an interaction
to be realised between service provider and consumer.
Characteristics of services
1. Intangibility
A service may or may not be attached with a psychical product
2. Heterogeneity
Or variability, related to the potential of variability in the performance of services. Possible
sources of variability; 1. Service provider 2. The customer 3. The surroundings
3. Simultaneity
The provider and consumer are there at the same time that the service is provided.
4. Perishability
It cannot be stored for later sale or use
Difference product versus service
Consuming a physical product means making use of the product itself. Consuming a service means
undergoing the process and the final result. That’s the inseparability factor. A service can be added
to a psychical product (= augmented)
, So what is a service?
A service is an intangible product offered by organizations in order to serve needs or to satisfy
wants, characterized by simultaneous production and consumption. Resulting in
- Simultaneity (demand and supply must meet)
- Heterogeneity (quality performance not constant)
- Perishability (stocking is impossible)
- Also in non-ownership
Training 2
In order to deliver a service (cost effective), service firms need to manage their processes.
The marketing mix has three additional P’s:
1. Process
2. Physical evidence
3. People
Process = element of the service marketing mix looks at the systems used to deliver the service.
Variability in the process
Remember training week 1; possible sources of variability (heterogeneity)
1. Service provider
2. The customer
3. The surroundings
Challenge in designing services: potential heterogeneity (variability) in the process.
Customer variability in the process
Customer introduce variability in the process:
1. Arrival variability (can the arrival be different)
2. Request variability (can the customer’s request different things)
3. Capability variability (is there a difference between custom tevredenheid)
4. Effort variability (can the effort be different)
5. Subjective preference variability
Physical evidence (environment): services cape
Services are intangible. So customers often use the tangible cues to guide their evaluation.
People
Services are inseparable (simultaneity)
Services are typically delivered by people, standardization is limited. The selection, training and
motivation of those employees are important. Services are undergone by people, so they influence
outcome as well.
Training 3
P of products ; service design
Value = the ‘customer eye of view’ of the benefits and costs related to the exchange of goods and
services. So value needs to meet customer’s expectations. So value needs to meet customer’s
expectations.
Value in services is mostly subjective -> perceived value is more important than what can be
measured objectively.
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