The document discusses key concepts in services marketing and design. It summarizes that services have intangible and simultaneous production and consumption characteristics that pose distinctive challenges for design. It outlines the 7 Ps of services marketing and emphasizes the importance of interaction design. It also discusses concepts like value co-creation, service systems, servuction models, and the service theater metaphor.

1. CMU Summer Academy
Embodied Futures and Service
Design
June 23-25
lpatric@fe.up.pt
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2. 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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3. 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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4. 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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5. Distinctive characteristics of
services
• Intangibility
• Simultaneity
• Heterogeneity
• Perishability
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6. 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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7. 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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8. 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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9. 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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10. 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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11. 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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12. 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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13. 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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14. 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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15. 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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16. 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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17. 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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18. The Service Theater Metaphor (Fisk,,
e Se ce ea e e ap o (
Grove and John)
Performance
Environment
Actors Audience
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