Service Classification

Scheme
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Why classify services?

Classification schemes are used to organize items into different
classes or groups for systematic investigation and theory
development.
managers from various fields perceive their service as unique
(when it is not)
Better understanding of needs and behavior of customers by
classifying goods in relevant categories.
Some service industries have similar challenges Most of the
services share relevant marketing characteristics eg :
Relationship between customers and service provider
Patterns of demand
Supply constraints

Examples: Similar behavior of different

service industries
Telecom industry and call center
Similar demand patterns
Doctors, consultants and lawyers
Frequent meetings with more personalization
Airlines and Hotels
High infrastructure costs
Haircutting, boutique and spa
More personalized services

Classification of service
degree of tangibility or intangibility of
service processes
direct recipient of the service process
place and time of service delivery
customisation 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

Classification of service
(cont)

Dimension / Strategy
to Classify Service
(Nature of Service
Act and Recipient of
Service)

Classification in these slide

series
Dimension / Strategy to Classify Service
(Nature of Service Act and Recipient of Service)
Dimension / Strategy to Classify Service
(Relationship with customers)
Dimension / Strategy to Classify Service
(Customization and Judgment)
Dimension / Strategy to Classify Service
(Method of Service Delivery)
Dimension / Strategy to Classify Service
(Nature of Demand & Supply)
Service as process

Dimension / Strategy to Classify Service

(Nature of Service Act and Recipient of
Service)
UNDERSTANDING THE NATURE OF SERVICE:

Two parameters are used in this classification :

(a) Who or what is the direct recipient of the services?
Directly on people bodies or mind ?
directed at goods and other physical possessions or
intangible assets ?
(b) What is the nature service act?
Service performance may result in tangible action
Service performance may result in intangible action

Dimension / Strategy to Classify Service

(Nature of Service Act & Recipient of
service)

Dimension / Strategy to Classify Service

(Nature of Service Act & Recipient of service)
People processing involves tangible actions to people's bodies.
Example : passenger transportation, haircutting, etc. Customers need to be
physically present throughout service delivery to receive its desired benefits.
Possession processing includes tangible actions to goods and other
physical
possessions belonging to the customer.
Examples of possession processing include car repair,cleaning services. The
object requiring processing must be present, but the customer need not be.
Mental stimulus processing refers to intangible actions directed at
people's minds.
Examples : entertainment, theatre performances. customers must be present
mentally but can be located elsewhere but connected by telecommunication
linkages.
Information processing describes intangible actions directed at
customers assets. Examples insurance, banking,and consulting .Only little
direct involvement with the customer maybe needed once the request for
service has been initiated.

Implication of classification based on nature

of service act (Nature of Service Act and
Recipient of Service)
Physical presence of customers involves:
Interaction with service personnel
Attention given to nature of service facilities
( a.k.a service factory i.e Facility location and
facility design
Characteristics of other customers using the
same service

No physical presence of customer

Customer does not meet service provider face-toface
Focus on facilities may not be that important but
effectiveness of service needs great attention

Dimension / Strategy to
Classify Service
(Relationship with
customers)

Dimension / Strategy to Classify Service

(Relationship with customers)
Membership Relationship
Some services involve a formal relationship, where customer
are known to the organization and all transactions are
individually (like a visit to the doctor).
Some services lend themselves naturally to a membership
relationship, in which customers must apply to join the club and
their subsequent performance is monitored over time (as in
insurance or college enrolment)
Sometimes companies create special club memberships or
frequent user programs to reward loyal customers. For instance,
a carwash offers a fidelity card allowing a free wash after ten
visits.

Dimension / Strategy to Classify Service

(Relationship with customers)
Non Formal Relationship
But in other services, unidentified
customers can come and consume and then
disappear from the organization's sight (for
instance, the meal in a McDonalds).
Other services, like buses, hair salons, dry
cleaners, and airlines, need to undertake
proactive efforts to create an ongoing
relationship with their customers.

Dimension / Strategy to Classify Service

(Relationship with customers)

Continuous delivery is typical only

for public goods.
Discrete transactions make
customers anonymous what makes
marketing harder, since suppliers are
less informed about who their
customers are and how they use the
service.

Dimension / Strategy to Classify Service

(Relationship with customers)

16

 Dimension / Strategy to
Classify Service
(Customization and
Judgment)

Dimension / Strategy to Classify

Service
(Customization and Judgment)
Customization is thus another method of
classifying services based on two dimensions:
Extent of customization
Extent of judgment/discretion used during
service delivery
Low customization is when the service
remains unchanged whoever the customer may
be TV, Radios, movies, car servicing etc.
Very high customization is when the service
is practically tailored to the requirements of the
customer, as in the case of legal advice or
hospital treatment

Dimension / Strategy to Classify Service

(Customization and Judgment)

19

Dimension / Strategy to Classify

Service
(Customization and Judgment)
Where discretion is high, training of staff and control
of process are important.
Where both customization and discretion are low,
standardized procedures and systems may be
appropriate.
Consistency of delivery, standardization and use of
equipment can be attempted if the service moves to
the bottom right quadrant
If a service can be moved to the left top quadrant,
here is enhancement in value a WOW experience is
possible

Dimension / Strategy to Classify

Service
(Customization and Judgment)
With high levels of computerization, high
levels of customization has become a norm.
Examples : Students are offered a
cafeteria of subjects from which they may
choose specified number to complete a
course
Electronic kiosks enable customers to
design labels and greeting cards on the
spot, composing their own messages

Dimension /
Strategy to Classify
Service
(Method of Service
Delivery)

Dimension / Strategy to Classify

Service
(Method of Service Delivery)
Key questions: does the firm currently require
customers to be in direct physical contact with
personnel, equipment, and facilities?
if yes, do customers have to visit the facilities of
the service organization or the service provider
go to customers own sites?
Alternatively, can transactions between provider
and customer be completed at arms length? E.g
through mail or electronic channels?
Another issue: distribution does the company
require one or multiple distribution sites?

Dimension / Strategy to Classify Service

(Method of Service Delivery)

24

Dimension / Strategy
to Classify Service
(Nature of Demand &
Supply)

Dimension / Strategy to Classify Service

(Nature of Demand & Supply)

Demand and supply factors are

important in service business because
of the characteristic of perishability.
Some services have steady demand like
a popular restaurant.
Some others have highly fluctuating
demand based on the time of the day or
season (for example the demand for
electricity increases or decreases
according to weather)

Dimension / Strategy to Classify Service

(Nature of Demand & Supply)

27

Dimension / Strategy to Classify

Service
(Nature of Demand & Supply)
When the demand for service fluctuates
widely over time, capacity must be adjusted
to accommodate the level of demand e.g
hiring part time employees or renting extra
facilities to manage excess demand.
Marketing strategies must be implemented
to
predict, manage, and smooth demand
levels to bring them into balance with
capacity.

Service as Process

Service as Process
Marketers need to understand the nature of the
processes through which services are created
and delivered because their customers are often
involved in service production and have
preferences for certain methods of service
delivery
A process is a particular method of operation or
a series of actions, typically involving sequential
steps. (range from simple procedures involving
only a few steps e.g filling a car's tank with fuelto complex activities like transporting
passengers on an international flight.

Service as Process (cont)

Marketers need to understand:
(1) whether the service is directed at
customers themselves or at their
possessions
(2) whether service entails delivery of
tangible or intangible actions,
(3) the sequence in which different elements
of servicedelivery need to be organized
(4) the role played by information.

Service as Process (cont)

Pls refer to the Dimension / Strategy
to Classify Service (Nature of Service
Act & Recipient of Service) for the
explanation of SERVICE AS A
PROCESS

33

THANK
YOU

 References :
Fundamentals in Service Marketing
(n.d.).
Prabhakar, K. (n.d.). Classification of
Services.