MM2

CHAPTER 09
DESIGNING AND
MANAGING SERVICES
PRANAY SINDHU
IMTH 2024-26
WHAT IS A SERVICE?

“An ACT that one entity PERFORMS for another that is essentially
INTANGIBLE and does not result in the OWNERSHIP of anything.”
 CATEGORY LEVEL OF SERVICE
The Service INVOLVED
Aspect of an PURE TANGIBLE
GOOD
NO accompanying service

Offering TANGIBLE GOODS Car with specialized service

with contract, Laptops/Phones
• Based on the ACCOMPANYING with warranties
DEGREE to which a SERVICES
SERVICE is HYBRID OFFERING Restaurant meal (equal
INVOLVED in an parts goods and service)
OFFERING, there MAJOR SERVICE Air travel (snacks, drinks)
with accompanying
could be 5 minor goods and
CATEGORIES of services
OFFERINGS: PURE SERVICE Consulting, baby sitting,
dog walking, therapy,
massage 3
 • Based on the DIFFICULTY OF EVALUATION,
service benefits can be classified as:
• SEARCH BENEFITS (Pre-purchase
evaluations): Benefits that buyer can
evaluate before purchase
• EXPERIENCE BENEFITS (Post-purchase
evaluation): Benefits that buyer can
evaluate relatively easily after the
Criteria to
purchase
evaluate
• CREDENCE BENEFITS: Characteristics the
SERVICE
buyer finds hard to evaluate after
BENEFITS consumption
4
 • “Inability to be seen, tasted, felt,
heard, or smelled before they are
bought.”
• To reduce uncertainty, buyers look for
EVIDENCE of QUALITY by drawing
INFERENCES from PLACE, PEOPLE,
EQUIPMENT, COMMUNICATION, PRICE
• The service provider’s task –
DISTINCTIVE “TANGIBILIZE THE INTANGIBLE”
CHARACTERISTICS • All aspects of service delivery can be
OF SERVICES used to demonstrate service quality –
signages, environmental design,
#1: INTANGIBILITY employee apparel etc.
5
 • “Services are produced and
consumed simultaneously”
• Example: Haircut – cannot be
stored – cannot be produced
without the barber.
• When providers have STRONG
provider preferences – Providers
can RAISE prices
DISTINCTIVE • This could cause overcrowding –
CHARACTERISTICS insufficient service delivery
OF SERVICES

#2:
INSEPARABILITY
6
 • “Quality of service depends on WHO
provides them – as well as on WHEN,
WHERE, and to WHOM; thus, services
are highly VARIABLE.”
• 3 steps to increase service quality
control:
• Invest in good hiring and training
procedures
DISTINCTIVE • STANDARDIZE the service-
CHARACTERISTICS performance process throughout the
OF SERVICES organization
• Monitor customer satisfaction
#3: VARIABILITY
7
 STRATEGIES FOR THE STRATEGIES FOR THE
DISTINCTIVE CUSTOMER SIDE SUPPLY SIDE
CHARACTERISTICS OF DIFFERENTIAL PRICING PART-TIME EMPLOYEES
SERVICES – Shifts demand from – serve during peak
peak to off-peak demand.
#4: PERISHABILITY NON-PEAK DEMAND PEAK-TIME EFFICIENCY
can be cultivated. ROUTINES – Drills
• “Services cannot be stored or COMPLIMENTARY DECREASED EMPLOYEE
SERVICES can provide PARTICIPATION – buffet,
inventoried for future use.
alternatives for waiting self-service, bag your
Service capacity that goes customers (Keeps them own grocery
unused in one time-period busy)
cannot be carried over to the
next.” RESERVATION SYSTEMS SHARED SERVICES –
– manage demand well. Different schools under
• Demand or YEILD a same university
MANAGEMENT is critical.

8
 • Accelerated DIGITAL TRANSFORMATION
of service delivery.
• TELEMEDICINE: enabling remote patient
The new consultations and the delivery of
healthcare services
service
• FINTECH: convenient online and mobile
realities – banking services – secure digital
INCREASING transactions
ROLE OF • TRANSPORTATION AND LOGISTICS: Ride-
TECHNOLOGY sharing and delivery services powered
by mobile applications have optimized
transportation and logistics operations
• EDUCATION: E-learning platforms and
virtual classrooms

9
 • Customers are inclined towards
buying “UNBUNDLED SERVICES”
The new – choosing the elements they
service wish to pay for – AIRLINES
realities – • Customers dislike having to
CUSTOMER DEAL with a MULTITUDE OF
EMPOWERMEN SERVICE PROVIDERS handing
T different type of products or
equipment – ONE-STOP
SOLUTIONS
• Empowerment through SOCIAL
MEDIA – Two- way
communication with sellers
10/18/2024 Sample Footer Text 10
 • Customers often believe that they derive more
value, and feel a stronger connection to the
service provided, if they are actively engaged
in the service process. – GURUDWARA LANGAR
The new • Self-checkout at Retail (AZORTE) – Customized
service food orders (SUBWAY) – Online customization of
realities – products – Travel planning websites – self-service
car washes
CUSTOMER • But as much as the customers want to be
CO- actively part of the delivery – they are most
PRODUCTION often the first ones to shift the blame on the
company when the service failure is caused
because of them.
• Encourage “customer citizenship” – limit the
“customer’s role” – CAVEAT EMPTOR

11
 The new • Instilling strong customer
orientation in employees
service
realities – • EMPATHY

SATISFYING
EMPLOYEES
AS WELL

10/18/2024 Sample Footer Text 12

DIFFERENTIATING SERVICES

EASE OF ORDERING SPEED AND TIME OF DELIVERY

• Making interaction frictionless. • SPEED + ACCURACY + CARE

• Example: AMAZON ALEXA RE-BUY • AMAZON, Myntra
• QR Code ordering at restaurants
• BB AT IMTH
• Clutter free UNLIKE FK – Adding address
• Sending money by adding payee
• OTPs over Whatsapp than text
• IKEA – order on APP – pick up at store
• But what’s with their first floor – second
floor concept?
DIFFERENTIATING SERVICES

INSTALLATION, TRAINING AND

CONSULTING MAINTENANCE AND REPAIR

• Installation – Furlenco, Pepperfry • Toyota

• Training – Employee training • Apple
programs to handle customers • Boeing
better – ICICI Bank, Hospitality (ITC),
Baristas at Starbucks. • Caterpillar

• Consulting – Legal services with

consulting, Healthcare services with
consulting, Education with
consulting
DIFFERENTIATING SERVICES

RETURNS

• Return policy of new upcoming

startups:
• Discounted stuff will not be
refunded/returned –
• only exchanged –
• and you must ship it to us –
 • The service quality of a firm is tested at
each service encounter.
• If employees are bored, cannot answer
simple questions, or are visiting with each
other while customers are waiting,
customers will think twice about doing
business there again.
• Two important activities are:
• Managing customer expectations
• Incorporating self-service technologies
MANAGING
SERVICE
QUALITY
10/18/2024 Sample Footer Text 16
 • Customers form expectations from many sources –
past experiences, WOM, ads
• In general, PERCEIVED SERVICE >/=/< EXPECTED
SERVICE.
• Perceived service -> customer’s subjective
evaluation of the experienced service.
MANAGING • If the perceived service < expected service 
SERVICE Disappointment

QUALITY – • THE SERVICE QUALITY MODEL

Managing
customer
expectations
10/18/2024 Sample Footer Text 17
 •SERVICE-QUALITY MODEL
•BY Parasuraman, Zeithaml
and Berry (1985)
•PAGE 211

10/18/2024 Sample Footer Text 18

GAP 1: Gap between consumer
expectation and management perception
—Management does not always
correctly perceive what customers want.

MBA EDUCATION
Consumer expectation: Students
expect up-to-date and practical
business knowledge, BUT
Mgmt’s perception of expected
service: Lectures with theory and
few examples are sufficient for
learning (Humein bhi toh yahi mila
tha – toh inhe bhi yahi chahiye)
---GAP---
GAP 2: Gap between management
perception and service-quality
specification—Management correctly
perceive customers’ wants but not set a
performance standard.

MBA EDUCATION
Mgmt Perception of Expected
Service: Faculty realizes the need of
students, BUT
Service-quality specification:
Curriculum emphasizes traditional
lectures over practical training
OR faculty feedback of 5/10 is also great
---GAP---
GAP 3: Gap between service-quality
specifications and service delivery—
Employees might be poorly trained or
incapable of or unwilling to meet the
standard

MBA EDUCATION
Service-quality specification:
Curriculum empowers and
encourages faculty to match industry
standards, BUT
Service delivery: Faculties find
themselves unable to deliver due to
poor training, poor motivation etc.
---GAP---
GAP 4: Gap between service
delivery and external
communications—Consumer
expectations are affected by
statements made by company
representatives and ads.

MBA EDUCATION
External communication to the
consumer: Anurag Kashyap,
Christopher Nolan, BUT
Service delivery: Farhad Samji,
Adipurush, KRK
---GAP---
GAP 5: Gap between perceived and
expected service—The consumer
may misperceive the service quality.

MBA EDUCATION
Expected service: Industry aligned
and comprehensive educational
experience, BUT
Perceived service: Students feeling
dissatisfied or unprepared for the
practical challenges of the business
world
---GAP---
 • Based on the service-quality model – 5 CRITERIA of
service quality have been identified: (RATER
model)
MANAGING
SERVICE • RELIABILITY – Ability to perform the promised
QUALITY - service dependable and accurately
key factors • RESPONSIVENESS – The willingness to help
that help customers and provide prompt service.
measure and • ASSURANCE – The knowledge and courtesy of
evaluate the employees and their ability to convey trust and
quality of confidence.
services • EMPATHY – The provision of caring, individualized
provided by attention to customers.
firms.
• TANGIBLES – The appearance of physical facilities,
equipment, staff and communication materials.
24
 MANAGING PRODUCT-SERVICE
MANAGING SELF-SERVICE BUNDLES

• The more customers are allowed Products can be augmented with

to work, the lesser they would be key service differentiators in areas
such as ordering, delivery,
disappointed of us. installation, customer training,
• ATMs, vending machines, buffet, customer consulting, maintenance,
self-checkout, ticket purchasing and repair.
online, investment trading
Some equipment companies, such
as Caterpillar and Deere, make a
significant percentage of their
profits from these services.
 ----END OF CHAPTER
09----

10/18/2024 Sample Footer Text 26