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CHAPTER - 2CLASSIFICATION      OF   SERVICES                 1
KEY POINTS• Introduction• Definitions of Service Classification• Different Classification Schemes    Nature of Service Act...
Scope for customization andjudgment on the part of the serviceprovider Nature of Demand and Supply forthe serviceMethod of...
INTRODUCTION• A thorough understanding of the  competitive, dimensions and  limitations of the industry is necessary  for ...
DEFINITIONS OF SERVICE          CLASSIFICATIONS• Equipment/People focus     Equipment focused services are   those where t...
• Customer contact time per transaction     High distance contact is where the   customer spends hours, days or   weeks in...
• Degree of customization    A high-degree of customization is   where the service process can be   adapted to suit the ne...
• Degree of discretion     A high degree of discretion is where   front office personnel can exercise   judgment in alteri...
• Value added back-office/front-office     A back-office oriented service is   where the proportion of front office   (cus...
• Product/Process focus     A product oriented service is where    the emphasis is on what the    customer buys.     A pro...
The Nature of Service Act• The tangible nature & who/what is the  direct recipient of the service creates four  classifica...
Understanding the Nature of the Service Act                                              (FIG. 2.1)                       ...
Type of Relationship that the Service  Organization has with its Customers• This classification scheme describes  the adva...
Relationship with Customers               (FIG. 2.2)Nature of     Membership relationship       No formal relationshipServ...
Scope for Customization and Judgment            in Service Delivery• Services are created as they are consumed  so there i...
Customization and Judgement in Service Delivery                                 (FIG. 2.3)                   Extent to Whi...
Nature of Demand & Supply for the               Service• The perishabililty of service capacity  creates a challenge for s...
What is the Nature of Demand for the Service               Relative to Supply (FIG. 2.4)                        Extent of ...
Method of Service Delivery• MOD raises a number of interesting  and important issues for the service  provider. It can cut...
Method of Service Delivery (FIG. 2.5)Nature of interaction Availability of Service Outletsbet. Customer and           Sing...
Summary• Thus, We may infer that these  classification schemes gives deep  insight in the strategies that can be  implied ...
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Services Marketing

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In this presentation, we will discuss classification of Services. Definition of Service Classification, Classification Schemes and several other topics discussed here will give a detailed idea about how the process of catering services in the market affects a brand identity.
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Services Marketing

  1. 1. CHAPTER - 2CLASSIFICATION OF SERVICES 1
  2. 2. KEY POINTS• Introduction• Definitions of Service Classification• Different Classification Schemes Nature of Service Act Type of Relationship that the Service Organization has with its Customers 2
  3. 3. Scope for customization andjudgment on the part of the serviceprovider Nature of Demand and Supply forthe serviceMethod of Service Delivery 3
  4. 4. INTRODUCTION• A thorough understanding of the competitive, dimensions and limitations of the industry is necessary for a firm to formulate its service strategy. Establishing a classification system can help understand services more clearly & can provide insight into how marketing principles effectively applied. 4
  5. 5. DEFINITIONS OF SERVICE CLASSIFICATIONS• Equipment/People focus Equipment focused services are those where the provision of certain equipment is the core element in service delivery. People focused services are those where the provision of contact staff is the core element in service delivery. 5
  6. 6. • Customer contact time per transaction High distance contact is where the customer spends hours, days or weeks in the service system per transaction. Low customer contact is where the contact with the service system is for a few minutes. 6
  7. 7. • Degree of customization A high-degree of customization is where the service process can be adapted to suit the needs of individual customers. A low-degree of customization is where there is a non-varying standardized process; the customers may be offered several routes, but the availability of routes is predetermined 7
  8. 8. • Degree of discretion A high degree of discretion is where front office personnel can exercise judgment in altering the service package or process without referring to superiors. A low degree of discretion is where changes in service provision can be made only with authorization from superiors. 8
  9. 9. • Value added back-office/front-office A back-office oriented service is where the proportion of front office (customer contact) staff to total staff is small. A front-office oriented service is where the proportion of front office staff to total staff is large. 9
  10. 10. • Product/Process focus A product oriented service is where the emphasis is on what the customer buys. A process-oriented service is where the emphasis is on how the service is delivered to the customer. 10
  11. 11. The Nature of Service Act• The tangible nature & who/what is the direct recipient of the service creates four classification possibilities they are: Tangible actions directed to the - customer, customer’s possessions & Intangible actions -directed at the customer’s intellect, performed on customer’s assets. The nature of service may identify more convenient forms of service delivery or a product that can substitute for the service e.g. videotapes of lectures. 11
  12. 12. Understanding the Nature of the Service Act (FIG. 2.1) Direct Recipient of the service People ThingsNature of the Services directed at Services directed atService act people’s bodies goods and other Health care Physical possessions: Passenger transportation Freight transportationTangible Beauty saloons Laundry & dry cleaningactions Restaurants Landscaping / lawn care Services directed at Services directed at people’s mind intangible assets: Education Banking Broadcasting Legal ServicesIntangible Information services Accountingactions Theatres Securities Museums Insurance 12 (Christopher H Lovelock. “Classifying Services to Gain Strategic Marketing insights”)
  13. 13. Type of Relationship that the Service Organization has with its Customers• This classification scheme describes the advantages of formal relationship with customers. Having customers as ‘members’ brings this advantage of building customer loyalty, when in informal relationship there is nothing known about the customer. 13
  14. 14. Relationship with Customers (FIG. 2.2)Nature of Membership relationship No formal relationshipServiceDelivery Insurance Radio station Telephone Police protectionContinuous subscription Light housedelivery College enrollmentof service Public highway Banking Long distance calls Car rental, Pay phone Theatre series Mail service, Toll wayDiscretetransaction subscript Theatre,Restaurant Computer ticket – Public transportation pass 14
  15. 15. Scope for Customization and Judgment in Service Delivery• Services are created as they are consumed so there is far more scope for tailoring the service to meet the needs of individual customers. Some service concepts are quiet standardized while some offer a wide choice of options, and some gives the customer contact personal wide liberty in how they deliver the service. 15
  16. 16. Customization and Judgement in Service Delivery (FIG. 2.3) Extent to Which Service Characteristics areExtent to Customizedwhichcustomer High LowContact Professional Services Education (large classes)PersonnelExercises Surgery, Plumber Preventive health prog..Judgement High Beautician, Taxi services College food servicein Meeting Education (tutorials)IndividualCustomer Gourmet restaurantNeeds Telephone service Public transportation Hotel service Routine appliance repair Low Retail banking Movie theatre Family restaurant Spectator sports Fast-food restaurant 16
  17. 17. Nature of Demand & Supply for the Service• The perishabililty of service capacity creates a challenge for service managers because they lack the option available to manufacturers of producing and storing inventory for future sale. But the extent of demand and supply imbalances varies across service industries. 17
  18. 18. What is the Nature of Demand for the Service Relative to Supply (FIG. 2.4) Extent of Demand Fluctuation over timeExtent to which Wide Narrowsupply is constrained Electricity,Natural gas Insurance Telephone Legal services Peak demand can Hospital maternity unit Banking usually be met Fire emergency Laundry and dry clean without a major delay Accounting and tax preparation Service similar to those above Peak demand Passenger transport But with insufficient regularly exceeds Hotels and motels Capacity for their base capacity Restaurants & theatre level of business 18
  19. 19. Method of Service Delivery• MOD raises a number of interesting and important issues for the service provider. It can cut across service industry barriers, thus enabling comparisons to be made with and lessons to be learned from service companies in other business fields. 19
  20. 20. Method of Service Delivery (FIG. 2.5)Nature of interaction Availability of Service Outletsbet. Customer and Single Site Multiple SitesService Organization Theater, Bus service, Customer goes to service organization Barbershop Fast-food chain Lawn care Mail delivery, Service organization services, Emergency comes to customer Taxi repairs Customer &Service Credit card Broadcast organization transact company, network, at arm’s length (mail Local TV Telephone or electronic station company communication) 20
  21. 21. Summary• Thus, We may infer that these classification schemes gives deep insight in the strategies that can be implied in order to make business more appropriate which may provide the competitive edge. 21

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