C L A S S I F I C A T I O N O F S E R V I C E S

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C L A S S I F I C A T I O N O F S E R V I C E S

  1. 1. CLASSIFICATION OF SERVICES K V PRABHAKAR
  2. 2. CLASSIFICATION OF SERVICES <ul><li>THE TRADITIONAL METHOD OF CLASSIFICATION OF SERVICES: </li></ul><ul><li>THE FOLLOWING CHART DEPICTS THE TRADITIONAL METHOD: </li></ul>
  3. 4. CONTD., <ul><li>MODERN METHODS OF CLASSIFYING SERVICES </li></ul><ul><li>SOME PROMINENT WAYS OF CLASSIFYING SERVICES INCLUDE: </li></ul>
  4. 5. CONTD., <ul><li>1. UNDERSTANDING THE NATURE OF SERVICE: </li></ul><ul><li>Two parameters are used in this classification (a) Who or what is the direct recipient of the services? </li></ul><ul><li>(b) What is the nature service act? </li></ul><ul><li>The following chart shows this classification: </li></ul>
  5. 7. CONTD., <ul><li>2. THE DEGREE OF TANGIBILITY OF SERVICE : </li></ul><ul><li>Some services are more tangible than others </li></ul><ul><li>For example food in a restaurant is a tangible thing, though the service part may not be </li></ul><ul><li>The effect of a restaurant visit may be linked with the tangible items and the satisfied derived from them. But in a consultant’s job, a lot of things remain intangible even after the consultancy is over </li></ul><ul><li>Thus different services could be classified on their extent or degree of tangibility. </li></ul>
  6. 10. CONTD., <ul><li>3.WHETHER THE SERVICE IS DIRECTED AT THE CUSTOMER OR HIS/HER POSSESSIONS: </li></ul><ul><li>Some services are performed on the customer or with his/her participation as a part of the service delivery, as in the case of haircut, hotel check-in etc., </li></ul><ul><li>On the other hand, some are provided to his/her possessions such as car, camera or TV repairs. </li></ul>
  7. 11. Strategic Service Classification (Nature of the Service Act) <ul><li>Direct Recipient of the Service </li></ul><ul><li>Nature of </li></ul><ul><li>the Service Act People Things </li></ul><ul><li>People’s bodies: Physical possessions: </li></ul><ul><li>Health care Freight transportation </li></ul><ul><li>Passenger transportation Equipment repair and maintenance </li></ul><ul><li>Tangible actions Beauty salons Veterinary care </li></ul><ul><li>Exercise clinics Janitorial services </li></ul><ul><li>Restaurants Laundry and dry cleaning </li></ul><ul><li>People’s minds: Intangible assets: </li></ul><ul><li>Education Banking </li></ul><ul><li>Intangible actions Broadcasting Legal services </li></ul><ul><li>Information services Accounting </li></ul><ul><li>Theaters Securities </li></ul><ul><li>Museums Insurance </li></ul>
  8. 12. CONTD., <ul><li>This classification helps us to clarify whether : </li></ul><ul><li>1.Physical or mental presence is necessary for the service </li></ul><ul><li>2. If necessary, should it be at the beginning or throughout or at the end </li></ul><ul><li>Accordingly, the location and schedule of the service can be determined </li></ul><ul><li>In low contact services where the presence is not necessary, the locations can be far away </li></ul><ul><li>Mail-orders and home deliveries are possible </li></ul>
  9. 13. CONTD., <ul><li>If presence is necessary, high contact becomes important </li></ul><ul><li>Then physical facilities and processes also become more significant </li></ul><ul><li>Presence provides opportunities for heightened levels of satisfaction, consequent loyalty and world of mouth publicity </li></ul>
  10. 14. CONTD., <ul><li>4.THE TIME AND PLACE OF SERVICE DELIVERY: </li></ul><ul><li>The location can be either the service provider’s location or the customer’s home or office </li></ul><ul><li>For example, the pest control has to be on the site but software services can be provided via internet from any location </li></ul><ul><li>Similarly, medical operations have to performed at specific sites recommended by the doctor. </li></ul>
  11. 16. CONTD., <ul><li>5.LEVEL OF CUSTOMIZATION VERSUS STANDARDIZED : </li></ul><ul><li>Services can be customized like a theme birthday party at a hotel or restaurant, or standardized like a standard meal at a south Indian restaurant </li></ul><ul><li>Some services tend to be more customized like lawyer’s or doctor’s consultation, whereas there are a few standardized services like some of NIIT computer courses or a McDonald’s menu, ambience and service pattern. </li></ul>
  12. 17. Strategic Service Classification (Customization and Judgment) <ul><li>Extent to Which Service Characteristics Are Customized </li></ul><ul><li>Extent to Which Personnel </li></ul><ul><li>Exercise Judgment in Meeting </li></ul><ul><li>Customer Needs High Low </li></ul><ul><li>Professional services Education (large classes) </li></ul><ul><li>Surgery Preventive health programs </li></ul><ul><li>Taxi services Family restaurant </li></ul><ul><li>High Gourmet restaurant </li></ul><ul><li>Telephone service Public transportation </li></ul><ul><li>Hotel services Spectator sport </li></ul><ul><li>Low Retail banking (excl. major loans) Movie theater </li></ul><ul><li>Cafeteria Institutional food service </li></ul>
  13. 18. CONTD., <ul><li>Customization is thus another method of classifying services based on two dimensions: </li></ul><ul><li>Extent of customization </li></ul><ul><li>Extent of judgment/discretion used during service delivery </li></ul><ul><li>Low customization is when the service remains unchanged whoever the customer may be TV, Radios, movies, car servicing etc., belong to this category </li></ul><ul><li>Very high customization is when the service is practically tailored to the requirements of the customer, as in the case of legal advice or hospital treatment </li></ul>
  14. 19. CONTD., <ul><li>Where discretion is high, training of staff and control of process are important </li></ul><ul><li>Where both customization and discretion are low, standardized procedures and systems may be appropriate </li></ul><ul><li>Consistency of delivery, standardization and use of equipment can be attempted if the service moves to the bottom right quadrant </li></ul><ul><li>If a service can be moved to the left top quadrant, here is enhancement in value A WOW experience is possible </li></ul>
  15. 20. CONTD., <ul><li>With high levels of computerization and “fuzzy logic”, high levels of customization has become a norm </li></ul><ul><li>“ A market segment of one” captures this trend </li></ul><ul><li>Students are offered a “cafeteria” of subjects from which they may choose specified number to complete a course </li></ul><ul><li>Mikissimes Design system called the “eye tailor” in USA takes a digital picture of the customer’s face and then adjusts size, shape and color of lens, and offers options for nose-bridge, hinges and arms of the frame designs </li></ul><ul><li>Electronic kiosks enable customers to design labels and greeting cards on the spot, composing their own messages </li></ul>
  16. 21. CONTD., <ul><li>6. FORMAL OR INFORMAL RELATIONSHIP WITH CUSTOMERS : </li></ul><ul><li>Generally, entry to clubs require formal membership </li></ul><ul><li>The Disney world or a move theatre only requires people to buy a tick for entry, with no record of the name of the customer or any particulars </li></ul><ul><li>The telephone and electricity supplying companies require the name,address and other particulars of customers </li></ul><ul><li>CRM is very significant in service companies. </li></ul>
  17. 22. CONTD., <ul><li>Services like libraries, insurance, banking are available to those formally approved for the service by a specific service producer, while radio and TV programs may be received by any person without the knowledge of the service producer </li></ul><ul><li>Encrypted TV called “pay channels” need membership </li></ul><ul><li>Airlines try to increase membership through frequent flyer program </li></ul><ul><li>Members of hospital get periodical free check ups, bulletins on health care or fitness facilities </li></ul><ul><li>The following chart indicates this classification: </li></ul>
  18. 23. Strategic Service Classification (Relationship with Customers) <ul><li>Type of Relationship between Service Organization and Its Customers </li></ul><ul><li>Nature of </li></ul><ul><li>Service Delivery “Membership” relationship No formal relationship </li></ul><ul><li>Insurance Radio station </li></ul><ul><li>Telephone subscription Police protection </li></ul><ul><li>Continuous delivery Electric Utility Lighthouse </li></ul><ul><li>of service Banking Public Highway </li></ul><ul><li>Long-distance phone calls Restaurant </li></ul><ul><li>Theater series subscription Pay phone </li></ul><ul><li>Discrete transactions Transit pass Toll highway </li></ul><ul><li>Sam’s Wholesale Club Movie theater </li></ul><ul><li>Airline frequent flyer Public transportation </li></ul>
  19. 24. CONTD., <ul><li>7.THE EXTENT TO WHICH DEMAND AND SUPPLY FLUCTUATE : </li></ul><ul><li>Some services have steady demand like a downtown restaurant </li></ul><ul><li>Some others have highly fluctuating demand based on the time of the day or season like electric power, the demand for which increases or decreases with the weather. </li></ul><ul><li>In North Indian plains, coolers and air conditioners are of great demand in the hot months,d and room heaters in the winter months </li></ul><ul><li>In the South generally, the weather is more reasonable, except for a couple of months. The power demand fluctuates accordingly. </li></ul>
  20. 25. CONTD., <ul><li>Demand and supply factors are important in service business because of the characteristic of perishability </li></ul><ul><li>The chart below indicates this: </li></ul>
  21. 26. Strategic Service Classification (Nature of Demand and Supply) <ul><li>Extent of Demand Fluctuation over Time </li></ul><ul><li>Extent to which Supply </li></ul><ul><li>Is Constrained Wide Narrow </li></ul><ul><li>Electricity Insurance </li></ul><ul><li>Peak demand can Telephone Legal services </li></ul><ul><li>usually be met Police emergency Banking </li></ul><ul><li>without a major delay Hospital maternity unit Laundry and dry cleaning </li></ul><ul><li> </li></ul><ul><li>Tax preparation Fast food restaurant </li></ul><ul><li>Peak demand regularly Passenger transportation Movie theater </li></ul><ul><li>exceeds capacity Hotels and motels Gas station </li></ul>
  22. 27. CONTD., <ul><li>8.INTERACTION WITH PEOPLE OR INANIMATE OBJECTS/ENVIRONMENT : </li></ul><ul><li>Some transactions could be done on the phone, like ordering a new cheque book from a bank </li></ul><ul><li>Others need the presence of the customer on site, like taking a flight or eating out </li></ul><ul><li>Depending on the level and frequency of the customer contact required, one can classify services into different categories </li></ul><ul><li>There may be mixed models, where some contact is needed, but after the customer is on his/her own, like a fast food self-service model. </li></ul>
  23. 28. CONTD., <ul><li>9. LABOR INTENSITY : </li></ul><ul><li>Yet another classification is based on the amount of labor intensity in service delivery and the extent of interaction with the customer : </li></ul>
  24. 29. CONTD <ul><li>If interaction is low, standard operating procedures can be evolved </li></ul><ul><li>If interaction is high, the quality of the response to customer intervention is important </li></ul><ul><li>If the labor intensity is high, hiring and training methods as well as scheduling become important </li></ul>
  25. 30. CONTD., <ul><li>10. PROXIMITY : Some services require the physical proximity of the customer and the service provider. Some do not require this. </li></ul><ul><li>Physical proximity may be made possible by either the user or the provider or both </li></ul>
  26. 31. CONTD., <ul><li>Some services like couriers, consultancy and car repairs could be in more than one quadrant. The service provider can be mobile or immobile </li></ul><ul><li>Advancements electronics technology is making long-distance provision of services (bottom right quadrant) possible </li></ul><ul><li>The internet will bring many services into the bottom right quadrant </li></ul><ul><li>Education, consultations, shopping, library references requiring physical and mental presence become possible through the Internet, with both the service provider and the customer being immobile </li></ul>
  27. 32. CONTD., <ul><li>Services can cross international boundaries easily </li></ul><ul><li>Multiple outlets or franchises improve the mobility of the provider </li></ul><ul><li>Mobility of the service provider improves ease of access but with the Internet, there is effective mobility, despite real immobility </li></ul>
  28. 33. CONTD., <ul><li>11. COMPLEXITY : A simple classification is concerning the dimensions of the complexity of services and divergence </li></ul><ul><li>Complexity refers to the number of steps and sequences in process </li></ul><ul><li>divergence refers to the extent of freedom available in taking a step </li></ul>
  29. 34. SUMMING UP <ul><li>The usefulness of these classifications or typologies of services depends on how we use them. </li></ul><ul><li>If used strategically, for example in making choices which service markets to enter, they may point out if the new area is a ‘core competence's area for the company or not. </li></ul>
  30. 35. Village Volvo’s Service Classification <ul><li>Nature of the service act </li></ul><ul><li>Relationship with customers </li></ul><ul><li>Customization and judgement </li></ul><ul><li>Nature of demand and supply </li></ul><ul><li>Method of service delivery </li></ul>
  31. 36. Xpresso Lube’s Service Classifiction <ul><li>Nature of the service act </li></ul><ul><li>Relationship with customers </li></ul><ul><li>Customization and judgement </li></ul><ul><li>Nature of demand and supply </li></ul><ul><li>Method of service delivery </li></ul>
  32. 37. Figure 13: Major Categories of Services Source: R. Johnson, 1999
  33. 38. Figure 13, continued : Major Categories of Services Source: R. Johnson, 1999
  34. 40. DO YOU HAVE ANY LEGITIMATE AND REASONABLE QUESTIONS FOR ME?

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