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Services Notes

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Services notes A History of research in service operations: What's the big idea? - Chase and Apte, 2006???Service sector is the fastest-growing segment of the economies of the US and other developed countries. In 2006, in the US services accounted for 83% of employment. Early 20th century - Gilbreth challenged the use of Taylorism in services and argued the perspectives and happiness of workers must be taken into account, principles of psychology should be applied to solve problems. Leffingwell 1917, who tried to apply scientific management to services, found it difficult because business practices had to adapt to vagaries of customers. Can't predict the number of customer orders or length/content of accompanying letters. The 'exceptional principle', process of separating difficult cases and sending them to an expert for processing. Challenges of measurement and quantification prevalent in service industries made it difficult for managers to monitor/control processes. Disney - as a harbinger of the emerging experience economy, Disneyland developed many principles of service operations such as managing the customer's total experience by offering carefully designed themed lands, providing rigorous training to employees through Disney University, casting employees to play specific parts and providing them with rigid scripts to follow in interacting with customers, and leveraging cartoon characters to wow customers. Application of scientific management is the key factor underlying McDonald's success. Main principles embodied in operation include standardizing and reducing the variety of products; simplification, standardization and automation of processes so that workers with limited skills and training can reliably produce quality products and deliver high quality service; monitoring and control of process performance. Hamburger University training responsible for much of the high productivity. Sasser 1976 - service industries are distinct from marketing due to their immediacy. Balancing S and D is hard - managers can either chase demand or level capacity. Chase - direct customer contact and efficiency are inversely related. Decoupling services into front office and back office operation has gained prominence in recent years, with the former responsible for high-contact elements of work and the latter for low-contact elements. Beneficial - back office work can be moved to less expensive locations.


Schmenner 1986 - use of a service matrix defined by the degree of customer interaction and customization on one axis and the degree of labour intensity on the other. Gives rise to 4 classes of services - service factory, service shop, mass service and professional service - matrix can be used to understand the managerial challenges faced in each class and design appropriate strategic operational changes. Heskett 1987 - 'strategic service vision' framework - identification of the target market segment, development of the service concept to meet the needs of the target segment, formulation of an operating strategy to support the service concept, design of a service delivery system to suooirt the operating strategy. Southwest Airlines. Service performances cannot be guaranteed since they are delivered by human beings who are less predictable than machines. Hart 1988 - does not mean that customer satisfaction cannot be guaranteed. Criteria for good service guarantee - the guarantee is unconditional, easy to understand and communicate, meaningful, easy to invoke, easy and quick to collect on. This is a powerful tool because it forces the entire company to focus on the customer's definition of a good service, sets clear performance standards for employees, generates reliable dates when performance is poor, forces the company to examine its entire service delivery system for possible failure points, and builds customer loyalty, sales, and market share. Maister 1985 - two laws of services. The first compares the customers' expectations with their perceptions of the delivered service to conjecture that if the perceived service is better than expectations they depart as happy customers. Second is that first impressions can influence all of the rest of the service experience. Heskett et al 1997 - the service profit chain links profitability and revenue growth of a service enterprise with the satisfaction and loyalty of its employees. Profitability/revenue growth influenced by customer loyalty, determined by perceived value of service. Generating service value dependent on satisfied, loyal and productive employees, so attention should be pad to HR issues like employee selection and training, providing suitable information, designing reward and recognition systems for employees. Mistakes are inevitable, but can be saved. Anticipate needs for recovery, act fast, train employees, empower front line employees, close the loop by keeping customers informed about improvements. The power of information technology - with the availability of networked computers and associated workflow software, managers in the service sector have available the power of computerized measurement, monitoring and control. The

extent of service rationalization is limited because of the variation inherent in the human interactions. Customer Experience Creation: Determinants, Dynamics and Management Strategies - Verhoef et al, 2008???Many firms incorporating customer experience into their mission statements. The customer experience originates from a set of interactions between a customer and a product, a company, or part of its organization, which provoke a reaction. This experience is strictly personal and implies the customer's involvement at different levels (rational, emotional, sensorial, physical and spiritual). Add that the customer experience construct is holistic in nature and involves the customer's cognitive, affective, emotional, social and physical responses to the retailer. Affected by elements that the retailer can control and those that they can't. encompasses the total experience, inc search, purchase, consumption and after-sales. Conceptual model: several determinants of customer experience. Social environment, service interface, retail atmosphere, assortment, price and promotions, and experiences in other channels (eg internet). Effect of determinants is moderated by consumers' goals for the shopping trip - task orientated customers may view assortment as more important than experientially orientated customers. Shaped by factors like personality, sociodemographics, location and situational circumstances. Also situational moderators - type of store, channel, location, culture, season, economic climate and competitive intensity. Social environment: who else is in the shop has an impact. If one customer is being demanding of attention from a sales person it can take away from the experience of another customer needing help, people might shop with friends or family. McGrath and Otnes - typology of roles that strangers can play in a retail environment, eg helpseeker, helper, competitor, complainer. Fostering some exchanges between customers can be rewarding for the company, eg having knowledgeable customers that can assist other customers. Customers may howevs also destroy the experience of others to try and sabotage the company, abusive and dysfunctional behaviour - jaycustomer behaviour (Lovelock 1994). Eg on a plane, a customer treating the seat pocket as a bin may ruin the experience of others and lead to lower satisfaction and loyalty. Possible domino effects? Harris and Reynolds 2003 - customers may imitate abusive behaviour towards employees/physical objects. Importance of customer compatibility and need to manage customer conduct to

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