The concept of services

Services / Servuction: Servuction, neologism developed by Eiglier and Langeard; is the expression equivalent to the production of goods applied to services:

Production of services:

  • Systematic and coherent organization of all the physical and human elements necessary for the provision of a service with commercial characteristics and predetermined quality.

Importance of the service sector

"With little fanfare, in recent decades the development and administration of services, service technology and the human intellect, have emerged as the primary determinants of the economic success of many organizations and nations ”

“In the most industrialized countries, the participation of the sector services it is approximately 75% of the gross national product and generates nine out of every ten jobs that the economy creates "

“In the United States, service industries comprise 77% of all employees and 75% of gross domestic product. Service activities contribute most of the value added of manufacturing industries and make up 65% to 75% of most of its costs"

Value measured from a customer's perspective

Value = [More] Quality * [Better] Service / [Lower] Cost * [Less time]

Quality

  • Meeting customer needs
  • Designed to be used
  • Process integrity, minimum variances
  • Disposal of waste
  • Continuous improvement

Service

  • Customer Support
  • Product service
  • Product support
  • Flexibility to meet customer needs
  • Flexibility to meet market changes

Cost

  • Design and engineering
  • Conversion
  • Quality assurance
  • Distribution
  • Administrator
  • Inventory
  • Materials

Time

  • Time marketing
  • Process cycle time (from request to delivery)

Myths and misunderstandings of services

  • The service economy produces services at the expense of other sectors
  • Service jobs are trivial and poorly paid
  • Service production is strong in labor intensive, but low in productivity
  • Government growth is the main reason for the dominance of the service sector
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Products and services

  • Both are satisfiers of human, individual and collective needs
  • Services are processes, achievements
  • The services are intangible: They cannot be touched, smelled, etc.
  • The services are heterogeneous: Each service is different
  • The services are expired: They cannot be stored, nor repeated
  • Inseparability of production and consumption: They are consumed while they are produced
  • The consumer perceives more risk in the service than in the product. What motivates different consumer behavior
  • El also information participates in the development of the service
  • The client does not distinguish well between product and service
  • There is no service life
  • Image and positioning are important in the service
  • The human factor is very important in the service
  • There are difficulties of normalization and standardization of services
  • The service is sold and produced within the company. Hence the importance of the tangible elements of the company
  • Services are provided on demand
  • In many companies, services are provided by low-wage employees
  • The quality of the service is mental
  • The quality of the services is qualitative and quantitative
  • The quality of service cannot be determined in advance
  • In service, design quality is not assured

Differences between manufacturing companies and service companies

Manufacturing company Service company
The product is concrete The service is immaterial
The property is transferred with the purchase · The service cannot be resold
It is possible to demonstrate the product before closing the purchase Usually it is not possible to effectively demonstrate the service (because it does not exist before purchase)
Sellers and buyers can store the product The service cannot be stored
Production precedes consumption Production and consumption generally coincide
Production, sale and consumption are locally differentiated Production, consumption and, frequently, also sale, are spatially linked
The product can be transported The service cannot be transported, although it is possible, many times, for producers to move
The manufacturer / seller is the only one that produces The customer / buyer participates directly in the production
Indirect contact between the client and the company is sufficient In most cases, direct contact is necessary
The product can be exported The service cannot be exported normally, although the system followed for its provision can
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 Unique characteristics of service companies

  • Face-to-face relationships between supplier and customer
  • Large number of people involved
  • Numerous transactions
  • Relatively small amount of money involved in transactions
  • Generation of large masses of paper (documents)
  • Failures in services can be made by men, machines or both
  • Numerous ways to make mistakes
  • There is no mechanical control
  • Large-scale operations can be involved
  • Computer systems require special controls

 Service industries

Banks

Business services: legal, engineering, accounting, data processing

Education

Entertainment, recreation

Financials

Government: local, state, federal

Health

insurance

Professional services

Public services: water, electricity, telephone, gas. etc.

Real estate

Restaurants and cafes

Transport

Sales

 Three important functions in service administration (Lovelock C)

  1. The marketing concept: Create relationships with a specific type of clients through the delivery of a carefully chosen package of services, of a constant quality that meets their needs and perceives the superior value of this package compared to those that the competition offers.
  2. The concept of human resources: Hire, train, motivate, and retain managers and other employees who can work as a team, through the offering of a realistic compensation package that balances client objectives and operational effectiveness.
  3. The concept of operations: Using specific operational strategies and techniques - executed by personnel with the necessary skills and the appropriate support of facilities, equipment and information technology - create and deliver the package of services to the target clients, maintaining the quality and productivity standards determined by the clients. and the company, respectively.

Six principles in service administration (Grönroos C.) 

  1. The logic of the business and the origin of the profits: The customer's perception of the quality of the service is the source of profit.
  2. Authority, problem solving and taking strategic: The taking of strategic it should be decentralized as close as possible to the organization-client-interface.
  3. The organizational structure: The organization must be structured and operate in such a way that its fundamental objective is to mobilize resources to support operations that are in direct contact with the client.
  4. Supervision and control: Administrators should focus their attention on advising, training and supporting employees.
  5. Rewards System: The production of quality services perceived by the client should be the focus of the reward systems.
  6. Monitoring and measures: Customer satisfaction with quality services should be the focus of the measures and the scope.
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