CMU Summer Academy
Embodied Futures and Service
Design
June 23-25
lpatric@fe.up.pt
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Relative importance of services in
the world economy
Employment GDP
I II III I II III
Portugal 12,8% 24,8% 54,2% 2000 3,9% 24,8% 71,3% 2004
EU 25 4,4% 27,2% 67,2% 2005 2,2% 27,3% 70,5% 2004 (est)
USA 0,7% 22,9% 76,4%
0 7% 22 9% 76 4% 2005 1,0% 20,4% 78,7%
1 0% 20 4% 78 7% 2005 ( t)
(est)
Japan 4,6% 27,8% 67,7% 2004 1,7% 25,8% 72,5% 2005 (est)
I – A i lt
Agriculture
II - Manufacturing
III - Services
Source: CIA world Fact book
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Service
• A service is an action, a performance, and
effort (Rathmell 1966).
( )
– Services are processes
– “A service can not be dropped on your foot
A foot,
stored in a box, or lost in a drawer.”
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Categories of services
• P
Pure t
tangible product
ibl d t
– salt, detergent, rice.
• T
Tangible product with supplementary services
ibl d t ith l t i
– car, computer
• H b id product
Hybrid d t
– Restaurants
• S i with a product component
Service ith d t t
– Air transportation
• Pure service
– Health club, medical advice
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Distinctive characteristics of
services
• Intangibility
• Simultaneity
• Heterogeneity
• Perishability
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Intangibility
• A service cannot be touched or put on a shelf,
because they have no physical existence.
• This intangibility raises challenges for
consumers in evaluating the service before
g
consumption.
• The design of the physical evidence is crucial for
a good service experience.
– The look of a bank branch, display of degrees and
certifications of medical doctors or lawyers,
cleanliness of a restaurant.
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Simultaneity between production
and consumption
• S i
Services are consumed as th are
d they
produced (theater, class…)
• Frequently, the customer actively
p
participates in the p
p process, being na
, g
important concreator of the service(ex:
educat o )
education).
• Service provision requires a high degree
of interaction between the customer and
the provider
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Heterogeneity
• Services result from the interaction
beween people and other p p , or
p p people,
people and the service environment.
• This interactive nature of service
experience makes it more difficult to
standardize services.
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Perishability
• S i
Services cannot be stored f future
t b t d for f t
consumption. (ex: seat in a plane or hotel
rooms)
• Perishability raises importante challenges
y p g
for service management, requiring a
st o g demand a age e t effort.
strong de a d management e o t
• Some demand management strategies:
– Differentiated prices, reservations
prices
– Part-time workers,
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Distictive challenges posed to
Service design
• Services cannot be stored for future
consumption
• The intangible elements frequently represent the
g q y p
largest share in value co-creation
• Services are difficult to visualize and understand
• Customers play a crucial role in value co-
creation
• Service inputs and outputs tend to vary more
• Time assumes is crucial for service
management
• Service can be provided through virtual delivery
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The 7 P’s of Services Marketing
Ps
(Bitner e Booms 1981)
• Product
• Price
• Promotion
• Place
Pl
• Participants
– Service workers and customers who co create the
co-create
service.
• Physical evidence
y
– Service tangible aspects that facilitate communication
and provision.
• Process of service delivery
– Procedures and activity flows that contribute to the
service provision.
p
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The importance of interaction
design in service design
• Service experiences
– The service experience results from all the moments
of contact (service encounters) between the customer
and the firm.
• V l i use
Value in
– Value is no longer embbeded in physical offerings,
but is
b t i co-created th
t d through customer i t
h t interactions.
ti
• Implications for service design
– Firms no longer design pre-determined services, but
they offer value propositions, which customer turn into
value th
l through usage.
h
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Service Systems
• Services are delivered by systems of
p p , processes and p y
people, p physical evidence.
• All system components should b
t t h ld be
integrated to enhace the service
experience and value co-creation by the
customer.
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Co-
Co-creation of value
• New service centered paradigm (Vargo and Lusch 2004)
– Value is no longer embedded in tangible products, but is co-
created by customers through interaction and usage.
– Customers are always co creators of value and firms can only
co-creators value,
offer value propositions.
• Service Systems (ifm and IBM 2008).
– complex service systems involve multi-channel configurations of
people and t h l
l d technology th t enable customers t co-create value.
that bl t to t l
What are the implications of value co-
co
creation for service system design?
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Service delivery systems
• “Co-creating configuration of resources,
such as people, technology and
p p , gy
organizations, all connected internally and
externally through value propositions” (ifm &
propositions
IBM 2008)
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Se uc o ( g
Servuction (Langeard,, Bateson,, Lovelock and
Eiglier 1981)
Backstage Frontstage
Customer
Physical A Customer
environment
B
System’s invisible
component
Customer
Service C
representatives
Service value for
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Service Delivery System (Lovelock)
Service Delievery System
y y Other touch points
Operations
Other Adverstisements
customers Call center
E-mail
Physical Surveys
environment Web site
Word-of-mouth
Technical Customer
core Equipment
Service
S i
representatives
Other
customers
Backstage Frontstage
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The Service Theater Metaphor (Fisk,,
e Se ce ea e e ap o (
Grove and John)
Performance
Environment
Actors Audience
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