The Service Package and Service Delivery System

1
The Service Package and Service Delivery System

• Service Content
• Service Levels

2
Goods-Services Spectrum

• Goods
• Retailing
• Processing
• Cooking
• Serving

3
Service Content

• Premanufacturing and Prepacking of services
• Cost reduction
• Centralised control
• Increasing the Service Content
• Competitive pressure, personalizing products
• Consumerization of production
• Transfer part of the service production to the
  customer

4
Impact of Service Content

• Staffing
• Marketing, advertising
• Training
• Inventory
• Process design and control
• Investment
• Understand position on spectrum and plan
  direction of movement

5
Service Levels

• Key concern, elusive concept (athmosphere,
  convenience, status, consistency in addition to
  service)
• Expected service levels are met by delivering the
  components that the customer percieves as
  important
• Percieved service level combined with
  pricepercieved value
• Service Level is a measure of the implicit and
  explicit benefits provided

6
Setting Service Levels

• Adequate service level?
• Level of performance that will satisfy customer
  expectations
• Challenge understand satisfaction and
  translate it to discernable service levels
• Areas that require service level decisions
  staffing, customer throughput, quality of
  facilitating good, length of queue

7
Setting Service Levels (cont)

• Initial service level must be set carefully
  dangerous to change later
• Match management and consumer perception of
  service level
• Undertand consumer expectations through feedback
  from customer
• Shape consumer expectations through advertising

8
Service Levels-Consumer Model

• Substantive service vs desired (peripheral)
  attributes (hotel, restaurant, Village Volvo)
• Understand consumer judgement
• May show conflict when translated into desired
  attributes
• Broad menu too much choice
• Exclusive small hotel location, reservation
  uncertainty

9
Consumer model

• Consumer needs
• Substantive need
• Control
• Trust
• Convenience
• Self-fulfillment
• Status

• Desired attributes
• Substantive service
• Security
• Consistency
• Attitude
• Completeness
• Condition
• Availability
• Timing

translated to
Mixture of attributes creates the service level
10
Consumer model (cont.)

• Security safety (lighted parking lot)
• Consistency standardisation, reliability (meat
  in restaurant)
• Attitude service worker, printed instructions,
  signs
• Completeness array of services (agent just
  ticket/transportation/lodging)
• Availability access time, location, opening
  hours, frequency of schedule
• Timing service time (quick vs right
  psychological moment)

11
Models of consumer judgement

• One overpowering attribute
• Single attribute with threshold minimum of other
  attributes
• Weighted average of attributes

12
Service level Price combination

• Rational consumer D
• (at a given price P1 maximise service level-D
  more attractive than A)
• Consumer chooses desired service level D
• (for service level SL minimise price-D better
  than F or E)
• Service firm F
• A to B nominal expense to firm
• Successful firm B to E at nominal expense

Unacceptable to customer
unprofitable
13
Service Level Challenge

• Difficult to measure and communicate service
  levels
• Initial service level must be set with care (no
  turning back)
• Service level must be designed into the service
  delivery system
• Cannot be introduced later with inspection or QC
  (Simultaneity)
• Hotel complaint light bulbs, towels. More
  inspection? Encouraging workers?
• Set routine for making up a room same sequence
  in all rooms.
• minimises effort for worker,
• ensures standards

14
Human input in service levels

• Labor intensive (difficult to control service
  level)
• substitute technology for people
• Missing elements
• Human presence (warmth)
• Human assurance (security, trust)
• Human response (infinite variations, tailored to
  need)
• Human dexterity
• Human reasoning

Important to identify functional tasks that are
provided by humans as the starting point for
controlling and measuring service levels
15
Servive level focus
Services
Few
Many
Few
Markets
Many

• Start in Cell 1
• Move to Cell 2 Charter airline expands to
  businessmen.
• Can the same service delivery system control
  service levels for both markets?
• Move to Cell 3 airline also offering
  accomodation, car rental (successful?)
• Can the same service delivery system control
  service levels for different types of services?
• Move to Cell 4 dangerous. UNFOCUSING (being all
  things to all people)

16
Integrating the service package,service delivery
system and service levels

• Service Package
• Supporting facility
• Facilitating good
• Explicit services
• Implicit services

• Service Delivery System
• Quality of facilitating good
• Athmosphere image of firm
• Attitude of employees

DICTATES AND IS DEFINED BY
IS DEFINED BY MANAGEMENT TO CREATE
OPERATES TO CREATE

• Service Levels
• defined in terms of performance levels of
• Goods
• Facilities
• Personnel

COMMUNICATED BY
ADVERTISING
PURCHASES
Consumer perceived service levels