Unit-2

OPERATIONS CONCEPT

Difference Between Product And Service

Basis Product Service

Tangibility Physical, Intangible, non-

tangible items. physical
activities.

Nature Can be seen, Experienced,

touched, and consumed, or
possessed. utilized.

Production Manufactured Generated or

or produced. delivered
through
actions.

Ownership Can be owned, Cannot be

purchased, and owned but can
possessed. be availed.

Evaluation Quality Quality

assessed assessed
based on based on
attributes. experience.

Customization Can be Can be highly

customized to personalized or
some extent. tailored.

Perishability Can be stored Generally

without perishable,
deterioration. consumed
promptly.

Return Can be Generally no

returned or return, service
exchanged. completion.

Inventory Can be stocked Not stocked,

and managed. produced on
demand.

Transferability Transferable Non-

ownership transferable,
through sale. consumed by
recipient.
Characteristics of Services
The key characteristics of services are as follows:
1. Intangibility: Services are intangible in nature as they cannot be seen, touched, or physically
possessed like products. They are experiential in nature, involving interactions, performances, or
activities.
2. Inseparability: Services are typically produced and consumed simultaneously. The production
and delivery ofa service occur in real-time, often involving direct interaction between the service
provider and thecustomer. This characteristic makes it challenging toseparate the service from the provider.
3. Variability: Services are highly variable in qualityand consistency due to the involvement of
human interactions . Factors like individual skills, attitudes, and customer expectations can result in
variations in servicedelivery.

4. Perishability: Services are perishable in the sense that they cannot be stored or inventoried like
physical products.
5. Heterogeneity: Services are heterogeneous as they are unique and tailored to individual
customer needs and preferences.
6. Customer Participation: Customers may need to actively engage, provide information, or
collaborate with service providers to achieve the desired outcome.
7. Time-based: Services are time-sensitive, as they areprovided and consumed within a specific
timeframe.
8. Perceived Quality: The quality of services is subjective and based on customer perceptions. The
customer satisfaction is influenced by factors such as responsiveness, empathy, reliability, and the
overall experience.
9. Relationship-driven: Services often involve building and maintaining relationships between
service providers and customers. Establishing trust, understanding customer preferences, and
delivering personalized experiences are crucial in service-orientedbusinesses.
10. Customer Influence: Customers play a significant role in the service delivery process, and their
expectations, feedback, and preferences can shape the quality and direction of services.
Factors Affecting Service Design

The factors that can impact service design:

1. Customer Needs and Expectations: Conducting customer research and gathering feedback helps
in identifying what customers value and expect from a service.
2. Market Trends and Competition: It helps identify emerging opportunities, potential gaps in the
market, and enables differentiation from competitors.
3. Internal Capabilities and Resources: Factors such as the expertise of the workforce,
infrastructure, and financial resources influence the design choices and the ability to deliver the desired
service.
4. Legal Requirements: Compliance with legal requirements is essential in industries such as
finance, healthcare, and telecommunications as it decreasws the risk.
5. Service Quality and Performance: Designing services that meet or exceed customer expectations,
provide consistent performance, and deliver value helpsbuild customer loyalty and satisfaction.
6. Cultural and Social Considerations: Designing services that are sensitive to cultural norms,
customs, and social values ensures the acceptance among the target audience.

Service Designing Process

The general framework for service design is as follows:

1. ResearchandAnalysis:
• Identify customer needs and expectations through market research, customer surveys, and
interviews.
• Analyze the competitive landscape, market trends, and industry best practices.
• Gather insights into customer pain points, preferences, and behaviors.
2. Define the Service Objectives:
• Identify the target audience and understand their characteristics, demographics, and
behaviors.
3. Ideation and Concept Development:
• Encourage brain storming sessions, workshops, and cross-functional collaboration to initiate
creativity.

• Develop service concepts that address customer need and to align it with the brand.
4. Service Blueprinting:
• Create a service blueprint that illustrates the end-to-end customer journey and the underlying
processes and touchpoints.
5. Prototyping and Testing:
• Conduct usability testing and gather feedback from target customers.
• Iterate on the service design based on user feedback, making necessary adjustments and
improvements.
6. Service Design Implementation:
• Develop a detailed plan for implementing the service design, including timelines, resources,
and responsibilities.

7. Evaluation:
• Continuously monitor and evaluate the service performance against defined objectives and
customer

Service Blueprinting
Service blueprinting is a visual tool used to map out and analyze the customer journey and service
delivery processes. It provides a detailed representation of the interactions, touch points, and actions
that occur between customers and service providers.
Advantages of Service Blueprinting:
1. Comprehensive Understanding: Service blueprinting provides a holistic view of the service
experience, helping to understand the end-to-end customer journey and the underlying processes involved.
2. Identifying Pain Points: This enables organizations to identify areas for improvement and enhance
the customer experience.
3. Enhancing Service Design: Service design helps in refining service processes & making them
more customer-centric and efficient.

4. Innovation and Differentiation: By analyzing the organization we can identify opportunities for
innovation and differentiate their services from
competitors.
5. Training : Training helps employees to ensure their roles andresponsibilities in delivering the service.
Dimensions of Quality In Services

The dimensions of quality in services, often referred to asthe RATER model, were developed by
researchers Zeithaml, Parasuraman, and Berry. They identified five key dimensions of service quality:
1. Reliability: The ability to consistently deliver the promised service accurately, dependably, and
without disruptions or errors.
2. Assurance: The knowledge, competence, and credibility of service providers, instilling trust and
confidence in customers that their needs will be met.
3. Tangibles: The physical and visible aspects of theservice environment, including facilities,
equipment,
appearance, cleanliness, and other tangible cues that contribute to the perception of quality.

4. Empathy: The level of understanding, care, and personalized attention shown by service providers
towards customers, acknowledging their individual
circumstances and tailoring services accordingly.
5. Responsiveness: The willingness and promptness ofservice providers to assist customers, address
their needs, and provide timely and efficient service.

Understanding Service Quality Gap

The service quality gap, also known as the "gap model," refers to the disparity between customer expectations
of service and their perceptions of the actual service delivered.
The several gaps are as under:
1. Gap1:The Knowledge Gap This gap represents the difference between customer expectations
and
management's understanding of those expectations. It occurs when organizations fail to accurately
determine
customer needs and preferences, often due to inadequate market research or a lack of customer
feedback mechanisms.
2. Gap 2: The Design and Standards Gap This gap occurs when management fails to set
appropriate service design and quality standards to meet customer expectations
3. Gap3:TheDeliveryGap It refers to the
Difference between service design and service delivery.
Factors contributing to this gap include variations in employee performance, ineffective service
processes,

Inadequate training, and lack of empowerment for employees to address customer needs.
4. Gap 4: The Communication Gap The communication gap occurs when organizations fail to
accurately convey the promised service quality through marketingandcommunications.
5. Gap 5:The Perception GapThe perception gap is the discrepancy between the customer's
perception of the service received and their initial expectations.

Measuring Service Quality Using SERVQUAL Model

The SERVQUAL model is a widely recognized frame work for measuring and assessing service quality.
It was developed by researchers Zeithaml, Parasuraman, and Berry and focuses on five key service
quality:
1. Understanding the Dimensions: The SERVQUAL model identifies five dimensions of service
quality that customers use to evaluate their service experiences. These dimensions are:
a) Tangibles
b) Reliability
c) Responsiveness
d) Assurance
e) Empathy

2. Developing a Questionnaire: The questionnaire includes statements related to each of the five
dimensions of service quality. Customers are asked to rate their expectations and perceptions of the
service.

3. Calculating Gap Scores: Gap scores are calculated by subtracting the perception score from the
expectation score for each dimension.

4. Analyzing the Gaps:The gaps between customer expectations and perceptions are analyzed to
identify
areas of improvement. Positive gap scores indicate that
expectations exceed perceptions.

5. Prioritizing Improvement Efforts: Based on the gap analysis, organizations can prioritize their
improvement efforts. Dimensions with the largest positive gaps are given priority, as they indicate
significant
Discrepancies between customer expectations and perceptions.