Components of a Service Production System (Survuction System)

Service Operation System

The technical core where inputs are processed and service elements are created. The technical core is typically in the back-stage and invisible to customer. The proportion of the overall service operation that is visible to the customers depends on the level of contact.

High contact services involve physical person of the customer. Therefore the visible component of the service operation element tends to be more substantial. Low-contact services usually have most of the service operation backstage and this could be remotely located.

Service Delivery System

Where the final assembly of service elements takes place and service is delivered to customers and this includes the visible part of the service operation system - building, equipment and personnel - possibly other customers.

Other Contact Points

This consist of all points of contact with customer. (e.g. advertising communications, sales calls, billing, market research surveys, etc.)

Why is service encounter a "moment of truth" ?

Service encounter is a "moment of truth". Because the perceived quality is realized at the moment of truth, where the service provider and the service customer confront one another in the area. At the moment they are very much on their own. It is the skill, the motivation, and the tools employed by the firm's representative and the expectations and behaviour of the client which together will create the service delivery process.

Components that Contribute to Customer Expectations

- Desired Service Level: "Wished for" level of service quality that customer believes can and should be delivered.

- Adequate Service Level: Minimum acceptable level of service without dissatisfied.

- Predicted Service Level: Service level that customer believes firm will actually deliver.

- Zone of Tolerance: Range within which customers are willing to accept variations in service delivery.

What a Company can Do to Lower the Perceived Risks Faced by Its Customers

- Free trial (for service with high experience attributes)
- Advertise (helps to visualize)
- Display credentials
- Use evidence management (e.g. furnishing, equipment)
- Offer guarantees
- Encourage visit to service facilities
- Give customers online access to information about order status

What can a company do to "delight" a customer?

1) unexpected high levels of performance
2) arousal (e.g. surprise, excitement)
3) positive affect ( e.g. pleasure, joy, or happiness)

What Customers Normally Do to Reduce the Perceived Risks

- Seeking information from respected personal sources such as family, friends or peers
- Using the internet to compare service offerings and search for independent reviews and ratings
- Relying on a firm that has a good reputation
- Looking for guarantees and warranties
- visiting service facilities or trying aspects of service before purchasing
- Asking knowledgeable employees about competing services

Explain why services tend to be harder to evaluate than goods.

Services are high in Experience Attributes that cannot be evaluated before purchase - must experience to know it. (e.g. vacations, sporting events, medical procedures)

How does a person serach for a solution to his aroused need?

Evoked set: set of possible services or brands that he may consider in the decision process. Evoked set can be derived from past experiences or external sources such as advertising, retail displays. When there is an evoked set, the different alternatives need to be evaluated before a final choice is made.

How does a person become aware of his or her need for something?

- Unconscious minds (e.g. personal identity and aspirations)
- Physical conditions (e.g. chronic back pain)
- External sources (e.g. marketing activities)

THREE-Stage Model of Service Consumption

1) Pre-purchase Stage
- Awareness of Need
- Information Search
- Evaluation of alternatives
- Purchase decision

2) Service Encounter Stage
- Service encounters range from high to low contact
- Understanding the Servuction System
- Theatre as metaphor for service delivery (Role & Script theories)

3) Post-purchase Stage
- Evaluation of service performance
- Future intentions

FOUR Service Focus Strategies

1) Fully Focused: provide a limited range of services to a narrow and specific market segment.

2) Market Focused: concentrates on a narrow market segment, but has a wide range of services.

3) Service Focused: concentrates narrow range of services to fairly broad market.

4) Unfocused: broad markets with wide range of services. Many service providers fall into this category.

Differents between an Important Attribute & a Determinant Attribute

An Important Attribute
- very important for manufacturers and service providers
- not always important for buyers to make final decision

A Determinant Attribute
- may or may not always be on the top of the list of service characteristics
- important for making buying decision

How does a company determine which market segment to target?

Among the market segments, the company selected one to target and defined it on the basis of several variables.

Some market segments provide better sales and profit opportunities than others. But the company must also look at whether they can match or exceed competing offerings directed at the same segment.

Market Segmentation

A market segment is composed as a group of buyers who share common
1) Characteristics
2) Needs
3) Purchasing Behaviour
4) Consumption Pattern

Buyers within the same segments should be as similar as possible.
But between the segments, they should be as dissimilar as possible.

SIX Questions that can Help a Company Refine Its Service Positioning

1) What does our firm currently stand for in the minds of current and potential customers?

2) What customers do we serve now, and which ones would we like to target in future?

3) What is value position for each of our current service products, and what market segment is each one targeted at?

4) How does each of our service products differ from competitors?

5) How will do customers in chosen target segments perceive our service products as meeting their needs?

6) What changes must we make to our offerings to strengthen our competitive position?

FOUR Principles of Effecitve Positioning

1) Company must establish position for firm or product in the minds of target customers

2) Position should provide one simple, consistent message

3) Position must set firm/product apart from competitors

4) Company cannot be all things to all people - must focus its efforts

FOUR Related Aspects of Service Concpet that must be Addressed

1) How the different service components are delivered to customers
2) The nature of the customer's role in those processes
3) How long delivery lasts
4) The recommended level and style of service to be offered

Why Services can be marketed as products?

Services can be marketed as products. A product is a defined and consistent "bundle of output". One bundle of output can be differentiated from another bundle of output. Service product consists of two components, the core product and supplementary service. The core product is based on the core set of benefits and solutions delivered to customers. Supplementary service is a variety of service related activities which surround the core product.

Differences between Goods & Services

Services involve a form of rental, offering benefits without transfer of ownership while goods offer benefits transferring ownership.

Goods are tangible.
Services have either tangible or intangible actions.

All the goods can be inventoried while most service products cannot be.

Goods are easy to visualize and understand while services are difficult to do.

Goods are distributed by physical channels, while services may take place through non-physical channels.

FIVE Broad Types of Service that Offer benefits without the Need for any Physical Ownership

1) Rented goods service
2) Defined space and place rentals
3) Labour and expertise rentals
4) Access to shared physical environment
5) Systems and networks: access and usage