Operations in service industry 3

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Introductory Issues in Service Operations Management.

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Operations in service industry 3

  1. 1. ByDr. Swatantra Kumar Dr. Swatantra Kumar, SSVGI, Bareilly
  2. 2.  Supporting Facility: The physical resources that must be in place before a service can be sold. Examples are golf course, ski lift, hospital, airplane. Facilitating Goods: The material consumed by the buyer or items provided by the consumer. Examples are food items, legal documents, golf clubs, medical history. Information: Operations data or information that is provided by the customer to enable efficient and customized service. Examples are patient medical records, seats available on a flight, customer preferences, location of customer to dispatch a taxi. Dr. Swatantra Kumar, SSVGI, Bareilly
  3. 3.  Explicit Services: Benefits readily observable by the senses. The essential or intrinsic features. Examples are quality of meal, attitude of the waiter, on-time departure. Implicit Services: Psychological benefits or extrinsic features which the consumer may sense only vaguely. Examples are privacy of loan office, security of a well lighted parking lot. Dr. Swatantra Kumar, SSVGI, Bareilly
  4. 4. Degree Degree of Interaction and Customizationof labor Intensity Low High Service Factory Service Shop * Airlines * Hospitals Low * Trucking * Auto repair * Hotels * Other repair services * Resorts and recreation Mass Service Professional Service * Retailing * Doctors High * Wholesaling * Lawyers * Schools * Accountants * Retail banking * Architects Dr. Swatantra Kumar, SSVGI, Bareilly
  5. 5. Dr. Swatantra Kumar, SSVGI, Bareilly
  6. 6. Dr. Swatantra Kumar, SSVGI, Bareilly
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  8. 8. Dr. Swatantra Kumar, SSVGI, Bareilly
  9. 9.  What are the characteristics of services that will be most appropriate for Internet delivery? When does collecting information through service membership become an invasion of privacy? What are some management problems associated with allowing service employees to exercise judgement in meeting customer needs? Illustrate the “distinctive characteristics of service operations” for a service with which you are familiar. What factors are important for a manager to consider when attempting to enhance a service firm’s image? Dr. Swatantra Kumar, SSVGI, Bareilly
  10. 10.  On the basis of end user On the basis of degree of tangibility Degree of customer contact Degree of expertise Profit orientation Dr. Swatantra Kumar, SSVGI, Bareilly
  11. 11.  Business services Consumer services Govt. Dr. Swatantra Kumar, SSVGI, Bareilly
  12. 12.  Purely intangible Services with tangible inputs Products with service inputs Dr. Swatantra Kumar, SSVGI, Bareilly
  13. 13.  Low customer contact High Customer contact Dr. Swatantra Kumar, SSVGI, Bareilly
  14. 14.  High Moderate Low Dr. Swatantra Kumar, SSVGI, Bareilly
  15. 15.  For profit Not for profit Dr. Swatantra Kumar, SSVGI, Bareilly
  16. 16.  Goods are tangible whereas services are intangible Customers participate in many service processes, activities and transactions The demand for services is more difficult to predict than the demand for goods Services can not be stored as physical inventory Service management skills are paramount to a successful service encounter Dr. Swatantra Kumar, SSVGI, Bareilly
  17. 17.  Service facilities typically need to be in close proximity to the customer Patents do not protect services Dr. Swatantra Kumar, SSVGI, Bareilly
  18. 18. Salt  Soft Drinks  Detergents  Automobiles  CosmeticsFast-food  Outlets  Intangible DominantTangible Dominant Fast-food Outlets  Advertising Agencies  Airlines  Investment Management  Consulting  Teaching Dr. Swatantra Kumar, SSVGI, Bareilly
  19. 19. Dr. Swatantra Kumar, SSVGI, Bareilly
  20. 20.  “you’ll never have product or price advantage again. They can be easily duplicated, but a strong customer service culture can’t be copied” – Jerry Fritz, Director of Management Institute University of Wisconsin, Madison, WI Dr. Swatantra Kumar, SSVGI, Bareilly
  21. 21.  Intangibility Perishability Heterogeneity/ non-standardization/ variability inseparability Dr. Swatantra Kumar, SSVGI, Bareilly
  22. 22.  No possibility of the customer to see, touch or feel the service proposition before or during its purchase. No impulse purchase Very difficult to evaluate or measure quality in service The customer cannot stake any claim of ownership or possession of the service proposition: he can only experience the offer Dr. Swatantra Kumar, SSVGI, Bareilly
  23. 23.  Services cannot be inventoried Services cannot be easily patented Services cannot be readily displayed or communicated Pricing is difficult Dr. Swatantra Kumar, SSVGI, Bareilly
  24. 24.  Simultaneous production and consumption They can’t be stored and reproduced Example: Business school enrolments; cinema show; rail/air travel reservation, they all expire with time Time is irrecoverable and so as service Dr. Swatantra Kumar, SSVGI, Bareilly
  25. 25.  It is difficult to synchronize supply and demand with services Services cannot be returned or resold Dr. Swatantra Kumar, SSVGI, Bareilly
  26. 26.  Inconsistent quality and delivery (due to human element) Dr. Swatantra Kumar, SSVGI, Bareilly
  27. 27.  Service delivery and customer satisfaction depend on employee and customer actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted Dr. Swatantra Kumar, SSVGI, Bareilly
  28. 28.  We can’t have any new Gazals from Legendary Jagjit Singh (of course the old ones are preserved and can be reproduced) People is service (both provider and recipient are important) For heart surgery you need the doctor and the patient. Dr. Swatantra Kumar, SSVGI, Bareilly
  29. 29.  Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Mass production is difficult Dr. Swatantra Kumar, SSVGI, Bareilly
  30. 30. How to address the uniquecharacteristics of the service industry Dr. Swatantra Kumar, SSVGI, Bareilly
  31. 31.  These are the ways in which intangibility can be overcome Visualization Association Physical Representation Documentation Facts and figures Dr. Swatantra Kumar, SSVGI, Bareilly
  32. 32.  Beautiful looking internet sites Beautiful building and landscapes at institutions Well dressed staff at Hotels/hospitals Big offices of real estate brokers Dr. Swatantra Kumar, SSVGI, Bareilly
  33. 33.  Over marketing Managing Demand ( demand states) Managing Supply (goods, systems and processes, people) Dr. Swatantra Kumar, SSVGI, Bareilly
  34. 34.  Differential pricing at Cinema theaters Peak & off peak offers at Holiday resorts Happy hours at restaurant Dr. Swatantra Kumar, SSVGI, Bareilly
  35. 35.  Training of internal customers Recruitment and selection of internal customers Training of external customers automation Dr. Swatantra Kumar, SSVGI, Bareilly
  36. 36.  Automation (ATMs for banking services) Training is critical (as most service businesses are people intensive) Dr. Swatantra Kumar, SSVGI, Bareilly
  37. 37.  Training of internal customers Video conferencing Robotics Dr. Swatantra Kumar, SSVGI, Bareilly
  38. 38.  All business organizations are functionally integrated. Hence functions overlap and interact Service operations and service marketing are intensely affected by each other as the production and consumption of services is simultaneous Dr. Swatantra Kumar, SSVGI, Bareilly
  39. 39.  All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:  Product  Price  Place  Promotion Dr. Swatantra Kumar, SSVGI, Bareilly
  40. 40.  Product Price Place Promotion People  All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment. Physical Evidence  The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service. Process  The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems. Dr. Swatantra Kumar, SSVGI, Bareilly
  41. 41. Dr. Swatantra Kumar, SSVGI, Bareilly
  42. 42.  Service Culture The Critical Importance of Service Employees Boundary-Spanning Roles Strategies for Delivering Service Quality Through People Customer-Oriented Service Delivery Dr. Swatantra Kumar, SSVGI, Bareilly
  43. 43. “A culture where an appreciation for good service exists, and where giving good service to internal as well as ultimate, external customers, is considered a natural way of life and one of the most important norms by everyone in the organization.” - Christian Gronroos (1990) Dr. Swatantra Kumar, SSVGI, Bareilly
  44. 44.  They are the service. They are the organization in the customer’s eyes. They are the brand. They are marketers. Their importance is evident in:  the services marketing mix (people)  the service-profit chain  the services triangle Dr. Swatantra Kumar, SSVGI, Bareilly
  45. 45. Company (Management) Internal Marketing External Marketing “Enabling the promise” “Making the promise”Employees Customers Interactive Marketing “Delivering the promise” Dr. Swatantra Kumar, SSVGI, Bareilly
  46. 46.  Who are they?  “boundary spanners” What are these jobs like?  emotional labor  many sources of potential conflict ▪ person/role ▪ organization/client  quality/productivity tradeoffs Dr. Swatantra Kumar, SSVGI, Bareilly
  47. 47. External Environment Internal EnvironmentDr. Swatantra Kumar, SSVGI, Bareilly
  48. 48.  Person versus role Organization versus client Client versus client Dr. Swatantra Kumar, SSVGI, Bareilly
  49. 49. Hire for service competencies and service Compete for inclination Be the the best preferred people employer Measure and Train for reward strong technical and Hire the service interactive performers right people skills Customer- Develop Treat Retain the people toemployees as Oriented Empower best deliver customers Service service employees people Delivery quality Include Provide employees in needed support Promote the company’s systems teamwork vision Develop Measure service-oriented internal service Provide internal quality supportive processes technology and equipment Dr. Swatantra Kumar, SSVGI, Bareilly
  50. 50. Servicescape Other tangiblesFacility exterior Business cards Exterior design Stationery Signage Billing statements Parking Reports Landscape Employee dress Surrounding environment Uniforms BrochuresFacility interior Web pages Interior design Virtual servicescape Equipment Signage Layout Air quality/temperature
  51. 51.  Is a clearly defined set of tangible (goods content) and intangible (Service-content) features that the customer recognizes, pays for, uses, or experiences CBP consists of a primary good or services coupled with peripheral goods and/or services, and sometimes a variant A primary good or service is the core offering that attracts customers and responds to their primary wants and needs. Dr. Swatantra Kumar, SSVGI, Bareilly
  52. 52.  Peripheral goods or services are those that are not essential to the primary good or service, but enhance it. A variant is a CBP attribute that departs from the standard CBP and is normally location or firm specific. Dr. Swatantra Kumar, SSVGI, Bareilly
  53. 53. Peripheral goods Variant Free Kids wash play Anytime area High Primary Good speed Free internet Coffee Vehicle & tea Replacement Purchasing Peripheral parts and services leasing Dr. Swatantra Kumar, SSVGI, Bareilly
  54. 54.  Think of a service May be an existing or new idea Draft a plan for service creation and delivery. Create primary good/service, peripheral goods/services and variant. Dr. Swatantra Kumar, SSVGI, Bareilly
  55. 55. Dr. Swatantra Kumar, SSVGI, Bareilly

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