Services are acts that are intangible and do not result in ownership. They can be a minor or major part of an offering combined with goods. Services are categorized based on whether equipment or people are used to deliver them, if the client must be present, and if they meet personal or business needs. Key characteristics of services include intangibility, inseparability of production and consumption, variability in quality, and perishability if not used. Managing demand and supply helps address the perishability challenge.

1. Designing and Managing
Services
How do we define and classify
Services, and how do they differ
from goods?

2. Define and Classify Services?
A service is any act of performance that one party can
offer another that is essentially intangible and does
not result in the ownership of anything; its production
may or may not be tied to a physical product. Some
service sectors are government, business, retail,
manufacturing and private non-profit.

3. Categories of Service Mix
• The service component can be a minor or a major
part of the total offering.
• Pure tangible good
• Tangible good with accompanying services
• Hybrid: Offering consists of equal parts goods and
services. Eg: Restaurant
• Major service with accompanying minor goods and
services: Eg: Airline
• Pure service

4. Service Distinctions
• Equipment-based or people-based
• Service processes: Companies can choose among
different processes to deliver their service. Eg:
Restaurant may opt for cafeteria style, fast food,
buffet or candlelight.
• Client’s presence required or not
• Personal needs or business needs
• Objectives and ownership: Objective - profit or not
for profit, ownership - private or public

5. Service Characteristics
• Intangibility:
Tangibilize the service through good exterior and
interior (place, few waiting lines), good
personnel(people), good equipment, communication
material, meaningful symbols and use of price
(eg: dominoes - free if delivered later than 30min)

6. Service Charecteristics
• Inseparability:
Services are produced and consumed simultaneously.
Provider-Client interaction eg: barber and client.

7. Service Characteristics
• Variability:
Some doctors have an excellent bedside manner,
others are pathetic. Service guarantees reduce
perceived risks due to variability. To increase quality
control, invest in good hiring and training
procedures, standardize the service-performance
process throughout the organization and monitor
customer satisfaction.

8. Service Characteristics
• Perishability:
This can be a problem when demand fluctuates.
Demand or yield management is critical. On the
demand side: Have differential pricing, cultivate non
peak demand, complementary services to waiting
customers and reservation systems. On the supply
side, part-time employees can serve peak demand,
peak time efficiency routines can allow employees to
perform only essential tasks, increased customer
participation can be encouraged, shared services can
improve offerings and facilities for future expansion
can be a good investment.