1. PASIG CATHOLIC COLLEGE
MKTG 29 – : Service Marketing Management
Part 2 – Customer Involvement in Service
Processes
Professor: Mr. Abelito T. Quiwa. MBA
School Year 2012 – 2013

2. “ After-sales service is more important
than assistance before sales.
It is through such service that one gets
permanent customers.”
-Konosuke Matsushita,
founder , Matsushita Electric Industrial Company. Ltd.,Japan

3. We will explore the following
questions in this particular chapter
 In what managerially-relevant ways to serviced
differ from one another?
 How are services classified?
 What are the underlying processes by which
services are created and delivered?
 How does the nature of a customer’s contact with
a service vary according to the underlying
process?
 Why do different service processes require
different marketing approaches?

4. How does services differ from one
another?
 As noted by Shelby Hunt, a researcher in marketing, “ the
purpose of theory is to increase scientific understanding
through a systematized structure capable of both explaining
and predicting phenomena”. Classification schemes, he said
, “play fundamental roles in the development of a discipline,
since they are the primary means for organizational
phenomena into classes or groups that are amenable to
systematic investigation and theory development.”
 Marketing practitioners have long recognized the value of
developing distinctive strategies for different types of goods.
 Another major classification is that of the durable goods.
Durability is closely associated with frequency of purchase
which has important implications for the development of
distribution and communications strategies.

5. How does services differ from
one another?
 Yet, another classification is a consumer goods(
those purchased for personal or household use)
versus industrial goods (those purchased by
companies and other organizations).
 While these goods-based classification schemes
are helpful, they do not really address the key
strategies issues facing service managers.
Service need to be classified into marketing-
relevant groups, based on points of similarity
between different industries. Such classification
can help managers focus on marketing strategies
that are relevant to specific service situation.

6. How Might Services Be Classified
 The traditional way of grouping services is by industry.
This grouping help define the core products offered by
the firm and enable an understanding of both customer
needs and competition.
Question: On a traditional way what is a grouping
services by industry?
 Selected ways of classifying services:
 Extent to which service processes are tangible
 Who or what is the direct recipient of the service
process?
 The place and time of service delivery
 Customization versus standardization
 Nature of the relationship with customers
 Extent to which demand and supply are in balance
 Extent to which facilities, equipment and people are part
of the service experience

7. How Might Services Be Classified
 Selected ways of classifying services:
 The extent to which service processes are tangible.
 Does the service entail something physical and
tangible (like sleeping in a hotel bed or dry cleaning
your clothes), or are its processes more tangible (like
teaching)?
 Different services processes not only shape the
nature of the service delivery system but also affect
the role of employees and the experience of
customers.

8. How Might Services Be Classified
 Selected ways of classifying services:
 Who or what is the direct recipient of the service process?
 Some services, such as hair cutting or public transportation,
are directed at customers who are present in person.
 Service to the customer in person tend to be somewhat more
complex.
 The place and time of service delivery
 When designing delivery systems, service marketers must ask
themselves whether customers need to visit the service
organization at its own sites or whether the service goes to the
customer.
 Delivery channels could also be physical, like postal delivery(
as with applying for insurance and paying the periodic
premiums) or electronic ( as with Internet based services that
allow you to trans-act in cyberspace).

9. How Might Services Be Classified
 Selected ways of classifying services:
 Customization versus standardization
 Services can be classified according to the degree of
customization or standardization involved in service
delivery.
 An eye examination by an optometrist can proceed
as per standardized procedure but a customized
diagnosis is called for if a prescription for correction
lenses is needed.

10. How Might Services Be Classified
 Selected ways of classifying services:
 Nature of the relationship with customers
 Some services involve a formal relationships, in which
each customer is known to the organization ( or at least
to its computer) and all transaction are individually
recorded.
 Sometimes, companies create a special club
membership or route of a frequent user programs to
reward loyal users.
 For instance, both the hairdresser and the restaurant
could record customers’ names and addresses and
periodically make them special offers.

11. How Might Services Be Classified
 Selected ways of classifying services:
 Extent to which demand and supply are in balance.
 Some service industries face steady demand for
their services while others encounter significant
fluctuations.
 In such situations, either capacity must be adjusted
to accommodate the level of demand or marketing
strategies should be such that they can predict,
manage and smooth demand levels to bring them in
line with capacity.
 Question: What should be done if a service
industries encounter significant fluctuation of
demand for their services?

12. How Might Services Be Classified
 Selected ways of classifying services:
 Extent to which facilities, equipment and people are part of the service
experience.
 Customers’ service experiences are shaped, in the part, by the extent
to which they are exposed to tangible elements in the delivery system.
( Ex. Is hospital)
 By contrast, it is rare for a telephone customer to encounter physical
equipment, other than the telephone handset, or company personnel.
Implication of classification Schemes
 The service classification schemes that we have discussed can help
managers better answer the following questions:
 What does our service operational actually do?
 What sorts of processes are involved in creating the core product that
we offer to customers?
 Where do customers fit in our operation?

13. Howservice classification schemes that we have discussed can help
 The
Might Services Be Classified
managers better answer the following questions:
 What does our service operational actually do?
 What sorts of processes are involved in creating the core product
that we offer to customers?
 Where do customers fit in our operation?
 The answer will depend on the nature of the underlying service
process required to create and deliver a particular service.
 WE now turn to the most fundamental of the 8Ps of integrated
service management: the processes by which service products are
created and delivered.
 Our focus will be on the core service product, but it should be noted
that supplementary services also require delivery and the process
employed may differ from the used for the core product.

14. Service as Process
 Because customers are often involved in service
production, marketers do need to understand the
nature of the processes to which their customers
may be exposed.
 A process is a particular method of operation or a
series of actions, typically involving multiple steps
that often need to take place in a defined sequence.
 Service processes range from relatively simple
procedures involving only a few steps, such as filling
a car’s tank with fuel, to highly complex activities
such as transporting passengers on an international
flight.

15. Service as Process
 Categorizing Service Processes
 From a purely operational perspective, service can
be categorized into four broad groups.
1. People processing
2. Possession processing
3. Mental stimulus processing
4. Information processing

16. Service As a Process
 From a purely operational perspective, service
can be categorized into four broad groups.
1. People processing involves tangible actions to
people’s bodies (Ex. Transportation and
hairdressing).
2. Possession processing covers tangible actions
to the customer’s physical possessions. (Ex.
Air freight, car repair and cleaning services).
3. Mental stimulus processing refers to intangible
actions directed at people’s minds. (Ex.
Entertainment, sport events and education)

17. People Processing
 If the customers want the benefits that a people-
processing service has to offer, they must be prepared to
spend time operating actively with the service provider.
 The output from these services, whose period of delivery
can vary from minutes to months, is a customer who has
reached her destination, or satisfied his hunger, or is now
sporting clean and stylishly-cut hair, or has had a couple
of night’s sleep away from home, or is now in better
physical health.
 It is important for managers to think about process and
output in terms of what happens to the customer because
that helps them to identify what benefits are being
created.

18. Possession Processing
 Possession processing services include
transport and storage of goods, wholesale and
retail distribution, and installation, removal and
disposal of equipment;
 In short, the entire value-adding chain of
activities during the lifetime of the object in
question.
 Customers are less physically involved with this
type of service than with people-processing
services.

19. Mental Stimulus Processing
 Services that interact with people’s minds include
education, news and information, professional advice,
psychotherapy, entertainment and certain religious
practices.
 Service such as entertainment and education are often
created in one place and transmitted by television or
radio to individual customers in distant locations.
 Since the core content of all services in this category is
information-based (whether it is much, speech or visual
imagers), they can easily be converted into digital bits,
recorded for posterity and transformed into a
manufactured product, such as a compact disc,
videotape, or audio-cassette-much like any other physical
good-or delivered via the Internet.

20. Information Processing
 Information processing has been revolutionized by the use of
computers. However, not all information is processed by machines.
 Among the services that are highly dependent on effective collection
and processing of information are financial and professional services
such as accounting, law, market research, management consulting
and medical diagnosis.
 The extent of customer involvement in both information and mental
stimulus processing services is often determined more by tradition
and a desire to meet the supplier face-to-face, than by the needs of
the operational process.
 As technology improves and people continue to become more
comfortable with videophones or the Internet, we can expect to see a
continuing shift away from face-to-face transactions.

21. Service Process and Their
Management Challenges
 By representing processes visually, one can
clearly see the differences in customer
involvement with service organization for each of
the four processes in their purest forms.
1. Stay at a hotel (people processing )
2. Repair a VCR( possession processing )
3. Weather forecast (mental stimulus processing)
4. Debit card application ( information processing)

22. Identifying Service Benefits
 The key is to understand the specific benefits that
customers hope to obtain from the service
provider.
 Many firms bundle together different activities in
an effort to provide good, service, but innovation
in service delivery requires a constant focus on
the processes underlying delivery of the core
product.
 Operation managers need to work with marketing
personnel to improve their chances of designing
new processes that deliver the benefits desired
by customers in user-friendly ways.

23. Designing the Service Factory
 Customer involvement in the core activity of services may
vary sharply for each of the four categories of service
processes.
 When customer visit a service factory, their satisfaction will
be influenced by such factors as the following:
 Appearance and features of service facilities-both exterior
and interior
 Encounter with service personnel
 Interactions with self-service equipment
 Characteristics and behavior of other customers
 Marketers need to work with HR to ensure that those
employees who are in contact with customers present an
acceptable profile.

24. Using Alternative Channels for
Service Delivery
 Managers responsible for possession-processing,
mental stimulus-processing and information-
processing services need to possibly include:
1) Letting customers come to a user-friendly factory
2) Limiting contact to a small retail office that is
separate from the main factory(or” back office”)
3) Coming to the customer’s home or office;
4) Conducting business at arm’s length
 Rethinking service-delivery procedures for all but
people-processing services may allow a firm to get
customers out of the factory and transform a
“high-contact” service into a “low-contact” one.

25. Making the Most of Information
Technology
 Many examples of using technology to transform
the nature of the core product and its delivery
system are based on radio and television.
 Modern telecommunications and computer
technologies allow customers to connect their
own computers, or other input-output devices,
with the service provider’s system in another
location.

26. Balancing Supply and Demand
 In general, services that process people and
physical objects are more likely to face capacity
limitations than those that are information based.
 In recent years, information processing and
transmission capacity have been vastly increased
by greater computing power, digital switching and
the replacement of coaxial cables with fibre-optic
ones.
 The issue of demand and capacity management
is so central to the productive use of assets, and
thus profitability, that we will devote significant
space.

27. Taking into Account People as Part of
the Product
 In many people-processing services, customers
meet lots of employees ( the people element of
the 8 Ps) and often interact with them over a long
period of time.
 Service business of this type tend to be harder to
manage because of the human element.
 As manager, how would you get all customers to
clear their tables after eating at a quick service
restaurant?
 How would you ensure that passengers do not
disturb others on the flight?

28. Avoiding the Risk of Over-Generalization
 The ninth characteristics-the ability to use
electronic deliver channel-applies to the two
information-based categories-mental stimulus
processing and information processing.
 Historically, the first eight characteristics also
apply quite well to many services in the two
information-based categories, because the
traditional delivery model used to require
customers to visit a local service factory to obtain
the information.

29. Conclusion
 Although not all services are the same, many do
share important characteristics. Rather than focusing
on broad distinctions between goods and services, it
is more useful to identify different categories of
services and to study the marketing, operations and
human resource challenges within each of these
groups.
 The four-way classification scheme discussed in
depth in this chapter focuses on different types of
service processes. Some services require direct
physical contact with customers such as
hairdressing and passenger transport, while others
focus on contact with people’s minds such as
education and entertainment. Some involves
processing of physical objects such as cleaning and

30. Conclusion
 The processes that underline the creation and
delivery of any services have a major impact on
marketing and human resources. Process design,
or re-design, is not just a task for the operations
department. Both managers and employees must
understand underlying processes-particularly
those in which customers are actively involved-in
order to run a service business that is both
efficient and user-friendly.