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
1 3
2 4
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