Transcript Role of Services in an Economy

Role of Services in an Economy
What is a service?
An idea?
 A circumstance?
 A convenience?
 A physical thing?

Goods vs. Services
Good: tangible physical object; created and
transfered; existence over time
 Service: intangible and perishable; created
and used simultaneously; only the effect has
an existence over time

» Book, restaurant, TV
Challenge to managers
Identify appropriate techniques developed
in manufacturing that are applicable to
service operations
 Initiate the innovative use of information
systems
 Recognise the consumer as a productive
resource
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Service Definition
A Service is a Time-perishable, Intangible
Experience Performed for a Customer
Acting in the Role of a Coproducer.
James Fitzsimmons
Definition of Service Firms
Service Enterprises are Organizations that
Facilitate the Production and Distribution of
Goods, Support Other Firms in Meeting
Their Goals, and Add Value to Our Personal
Lives.
James Fitzsimmons
Taxonomy of services
Domestic services
 Trade and Commerce
 Services that refine and extend human
capacities

Role of Services in an Economy
FINANCIAL SERVICES
· Financing
· Leasing
· Insurance
MANUFACTURING
Services inside company:
· Finance
· Accounting
· Legal
· R&D and design
BUSINESS SERVICES
· Consulting
· Auditing
· Advertising
· Waste disposal
INFRASTRUCTURE SERVICE
· Communications
· Transportation
· Utilities
· Banking
DISTRIBUTION
SERVICES
· Wholesaling
· Retailing
· Repairing
PERSONAL SERVICES
· Healthcare
· Restaurants
· Hotels
CONSUMER
(Self-service)
GOVERNMENT SERVICES
· Military
· Education
· Judicial
· Police and fire protection
1-8
Stages of Economic
Development
Features
Society Game
PreAgainst
Industrial Nature
PreUse of
dominant
human Unit of
activity
labor
social life
Agriculture Raw
Extended
Mining
muscle household
power
Standard
of living
measure
Subsistence
Industrial Against Goods
fabricated production
nature
Machine Individual
tending
PostAmong
industrial Persons
Artistic Community Quality of InterInformation
Creative
life in terms dependent
Intellectual
of health, Global
education,
recreation
Services
Quantity
of goods
Structure
Technology
Routine
Simple hand
Traditional tools
Authoritative
Bureaucratic Machines
Hierarchical
The New Experience Economy
Economy
Agrarian
Industrial
Service
Experience
Function
Extract
Make
Deliver
Stage
Nature
Fungible
Tangible
Intangible
Memorable
Attribute
Natural
Standardized Customized Personal
Method of
supply
Stored in
bulk
Inventoried
Seller
Trader
Manufacturer Provider
Stager
Buyer
Market
User
Guest
Delivered
on demand
Client
Revealed
over time
The Four Realms of an Experience
Customer Participation
Passive
Active
Absorption Entertainment Education
Environmental
(Movie)
(Language)
Relationship
Immersion Esthetic
(Tourist)
Escapist
(Skydiving)
Experience Design Principles
Theme the Experience (Big Chefs)
 Harmonize Impressions with Positive Cues
 Eliminate Negative Cues
(Cinemark talking trash containers)
 Mix in Memorabilia (Hard Rock T-shirts)
 Engage all Five Senses (Mist in Rainforest)

1-12
Source of Service Sector Growth
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Information Technology (e.g. Internet)
Innovation
Push theory (e.g. Post-it)
Pull theory
Services derived from products
Exploiting information (e.g. Auto part sales)
Difficulty of testing service prototypes
Changing Demographics
Aging of the population
Two-income families
Urbanisation
1-13
Role of the Service Manager
Entrepreneurial Innovation
 Capitalizing on Social Trends
 Management Challenges
Economies of Scale (MRI scanner)
Economies of Scope(Convenience store)
Complexity (Yield Management)
Boundary Crossing (Bank vs Brokerage)
International Competitiveness( Cultural
Diversity)
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Discussion Topics
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Illustrate how the type of work he or she does
influences a person’s lifestyle.
Is it possible for an economy to be based entirely
on services?
Speculate on the effect that the Internet will have
on the delivery of services.
What is the value of self-service in an economy?
Comment on the role that marketing plays in the
service innovation process.