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What are services?
The document explores the definitions and characteristics of services, emphasizing their intangible nature and categorization based on various attributes and marketing elements. It highlights the product-service continuum and differences between product-dominant and service-dominant logic, showcasing how services interact with customers and address their needs. Furthermore, it discusses the role of services in the sharing economy, categorizing different forms of non-ownership that fuel service provision.
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What are services?
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- 2. SolvInnov.com Product or Service? atangible object that is manufactured, stored, transported and transacted between buyer and seller a transaction between service provider and an end customer that offers something beyond a tangible object. Product Service
- 3. SolvInnov.com Evolution of thedefinitions of service(s) “The production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange satisfies an identified need” “Results generated by activities at the interface between the supplier and the customer and by supplier internal activities to meet customer needs” “A service is a process consisting of a series of more or less intangible activities that normally, but not necessarily always, take place in interactions between the customer and service employee and/or physical resources or goods and / or systems of the service provider, which are provided as solutions to customer problems.” Palmer & Cole (1995) Zeithmal & Bitner (1996) Grönroos (2000) Hollins & Hollins (1999) “Services are deeds, processes, and performances” ”Any activity or benefit that one party can give to the 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” Kotler (1996)
- 4. SolvInnov.com Grönroos’ (and mypreferred) definition of services Services are provided as solutions to customer problems They are processes, made up of a series of activities activities normally take place – but don’t have to – in interactions between the customer and some combination of service provider elements are more or less intangible serviceprovider elements The customer may interact with: systems of the service provider physical resources or goods of the service provider employees of the service provider employees
- 5. SolvInnov.com We can defineservices by categorises them...
- 6. SolvInnov.com Services Categories (Eueconomic activities) Agriculture Forestry & Fishing Mining & Quarrying Manufacturing Construction Electricity, Gas, Steam, and Air Conditioning Supply Water Supply; Sewerage, Waste Management and Remediation Activities Wholesale & Retail Trade; Repair Motor Vehicles & Motorcycles Transportation & Storage Accommodation & Food Service Activities Information & Communication Financial & Insurance Activities Real Estate Activities Professional, Scientific & Technical Activities Administrative & Support Service Activities Public Administration & Defence; Compulsory Social Security Education Human Health & Social Work Activities Arts, Entertainment and Recreation Other Service Activities Activities of Householders as Employers Activities of Extraterritorial Organisations & Bodies (source: EuroStat – Reference and Management of Nomenclature; NACE Rev 2, 2008
- 7. SolvInnov.com Services Categories (functionalcategories) Tangible Actions Intangible Actions People Possessions 1. People Processing Services directed at people’s bodies 2. Possession Processing 3. Mental-Stimulus Processing 4. Information Processing Services directed at physical possessions Services directed at people’s minds Services directed at intangible assets For example: • Healthcare • Beauty • Personal Trainer For example: • Banking • Software as a Service / Cloud • Knowledge Intensive Business Services For example: • Education • Theatre • Advertising For example: • Recycling • Water Supply • Retail Natureoftheact Who or What is the direct recipient of the act (source: Wirtz, J. & Lovelock, C. (2016)
- 8. SolvInnov.com We can defineservices by their attributes...
- 9. SolvInnov.com Intangible Inconsistent Involvement Inseparable Inventory Services have 5I’s... They are Delivery and Consumption are Cannot create an Are Require end customer
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- 11. SolvInnov.com Services have afew P’s in the Marketing Mix Marketing Mix Product Price Promotion Place People Physical Evidence Process Performance Product Marketing Mix (4 P’s) Service Marketing Mix (7 P’s) Alternative Service Marketing Mix (8 P’s)
- 12. SolvInnov.com But, we haveto know there is a continuum between products and services...
- 13. SolvInnov.com Product-Service Continuum Tangible Dominant Intabgible Dominant Complete tangible products Pure services Tangible products with supportingservices Hybrid Offers Major service with supporting products
- 14. SolvInnov.com Examples sitting onthe Product-Service Continuum Tangible Dominant Intabgible Dominant Buy food at Supermarket & cook at home Not yet Invented (thankfully!) All you can eat Buffet Coffee Shop with a selection of beans and brewing Methods; and a knowledgeable barista 5 Star Gourmet Restaurant Complete tangible products Pure services Tangible products with supporting services Hybrid Offers Major service with supporting products
- 15. SolvInnov.com They need theirown logic – we have to think differently from products
- 16. SolvInnov.com Service vs Productdominant logic The manufacturing process creates value and bakes it into the product Product and embedded value presented to customer Customer buys the product (value-in-exchange) Customer uses-up / destroys embedded value through use of the product design of a new service manufacturing process no value itself value and bakes it into the product Offering presented to customer Product and embedded value presented to customer uses buys value-in-exchange value-in-use(sometimes) (value-in-context) and Supplier co-generate value (or generate co-value) through use uses-up / destroys embedded value through use of the product • Product Dominant Logic • Service Dominant Logic
- 17. SolvInnov.com Services have fuelledthe sharing economy – if we look at them as non-ownership
- 18. SolvInnov.com 5 Categories ofnon-ownership that are fuelling services • Rented goods services • Place and Space rental • Labour and Expertise rental • Physical facility and usage rental • Network access and usage (source: Lovelock, C., Gummesson, E. (2004))
- 19. SolvInnov.com We can definethem through their characteristics
- 20. SolvInnov.com Vectors of servicecharacteristics acting in a Service Source: Gallouj & Weinstein (1997) Innovation in Services 𝐶′1 𝐶′2 … 𝐶′ 𝑘 … 𝐶′ 𝑞 𝐶1 𝐶2 . 𝐶 𝑘 . . 𝐶 𝑝 𝑋1 𝑋2 . 𝑋𝑗 . . 𝑋 𝑛 𝑌1 𝑌2 . 𝑌𝑖 . . 𝑌 𝑚 Customer Provider Technical External Competences Characteristics
- 21. SolvInnov.com In the end,they are as Grönroos says....
- 22. SolvInnov.com Grönroos’ (and mypreferred) definition of services Services are provided as solutions to customer problems They are processes, made up of a series of activities activities normally take place – but don’t have to – in interactions between the customer and some combination of service provider elements are more or less intangible serviceprovider elements The customer may interact with: systems of the service provider physical resources or goods of the service provider employees of the service provider employees