Complex services

Due to their characteristics, some services are especially difficult to comprehend for customers. These kinds of services are normally reflected by, for instance, high levels of intangibility, heterogeneity, and infrequency of use (Johnson, Nader, and Fornell 1996, 165–166). In addition, these types of services have been argued difficult to evaluate by customers due to their abstract and complex nature (Hoffman, Howe, and Hardigree 1991; Andreassen and Lindestad 1998). These kinds of services are referred to as complex services in the literature (see e.g. Hoffman et al. 1991; Johnson et al. 1996; Andreassen and Lindestad 1998). Although complex services are mentioned in the literature a specific definition for the concept was somewhat difficult to find. None of the above mentioned researchers has concretely defined complex service as a construct.

However, in their study on complex services in the Internet surroundings, Vroomen, Donkers, Verhoef, and Franses (2005, 38) have defined complex services as “services that consist of many attribute values per attribute, which are often tailor-made, infrequently pur-chased, more difficult to comprehend, and require in general assistance during the decision-making process”. In my opinion, this definition well encapsulates also the insights of other researchers by addressing the established characteristics of complex services. Therefore, a similar logic is followed also in this study while discussing the essential nature of insur-ance service throughout the report.

In order to take more detailed view on the above presented definition of complex ser-vices, I shall interpret its content piece-by-piece in the following. First of all, “many attri-bute values”, for instance, refers to the complex and possibly abstract nature of a service.

“Tailor-made” refers to heterogeneity of service, in other words, a service performance may, and most likely will, vary for different customers. “Infrequently purchased” refers to the fact that complex services are usually purchased and consumed only occasionally.

This might also be one reason for customers’ difficulties to evaluate the content of the service and/or service performance. “More difficult to comprehend” refers to the complex and abstract nature, but also to the intangible nature of the service. As Bateson (1979) has suggested, intangibility can be considered at least from two different perspectives: physi-cal and mental intangibility. These two dimensions of intangibility are also supported by other researchers (e.g. Lovelock and Gummesson 2004).

In case of complex services as well as electronic services (elaborated in chapter 4.1) both perspectives are actually particularly relevant and useful. Physical intangibility means that services cannot be physically touched, smelled, seen, felt, or tasted by a customer. If service is mentally intangible then customer cannot comprehend it even cognitively (Bateson 1979, 138–139). In comparison, services that are not considered as complex services, such as mail order, usually only indicate physical intangibility (Johnson et al. 1996, 166).

Concerning the different fields of business, earlier research has suggested that certain branches can be perceived as dealing with complex services. For example, financial services, especially insurance (Hoffman et al. 1991) and banking to some extent (e.g. Johnson et al. 1996; Vroomen et al. 2005), are considered as complex services due to their service characteristics, such as, complexity, abstract nature (i.e. high level of physical and mental intangibility), heterogeneity, and infrequency of use. Further, Andreassen and Lindestad (1998, 15) define package tour industry as complex service due to its high monetary cost, infrequent consumption, and the service quality attributes that are difficult for customers to evaluate. As can be perceived, branches that are considered complex services are deter-mined particularly by similar characteristics.

Although “complex services” as a construct is used in the service literature as one way to classify services, a direct counterpoint to the concept is difficult to find. As far as I am

concerned, the extant service literature generally has not been discussing, for instance, the term “simple services” which can be considered a direct counterpoint to the term “complex services”.

However, for the sake of clarity it is essential to make a distinction between complex services and services that can be considered as simple services in the context of this study.

Although I have not found a definition of simple services these types of services can be characterized and identified by considering service characteristics similarly as other re-searchers have characterized complex services. In this regard, the definition of Vroomen et al. (2005) is followed.

First of all, simple services are intangible but not in an equal sense to complex services.

However, the intangibility is more physical than mental, and thereby, the nature of service is not as complex and abstract as it is in case of complex services. Second, simple services are usually more homogenous. Third, simple services are more frequently purchased than complex services. Along with the higher purchasing frequency the use of service becomes more like routine, and thereby, customers do not necessarily experience the service so complex and abstract.

Good example about “simple services” is visiting a hamburger restaurant (e.g. McDon-alds). There the content or the service (ordering and receiving the selected hamburger meal) is easy for the customer to grasp. In addition, the service is also more homogenous than in case of complex service since the staff is behaving according to the instructed pat-terns to serve customers. Hence, different customers are treated in a similar, more or less homogenous, way. Further, some banking services can also be defined as “simple services”.

For instance, simply performing a cash withdrawal or paying bills easily becomes routine-task for customers because the frequency of use is normally high. In addition, it is easy for the customer to comprehend the essential content of the service since the core function is transferring money from one party to another, nothing more.

In order to make a distinction between complex and simple services the latter con-struct can be defined by following the definition of Vroomen et al. (2005), and on the other hand, on the basis of characterizations presented above. Thus, I suggest that “simple services”can be defined as services that are more or less homogenous, frequently used, and easy to comprehend. However, “simple services” are not examined in this study but the main focus is on investigating services characterized as “complex services”, especially in the context of (non-life) insurance services. The “simple services” are only defined in order to clearly emphasize the focus of the research, and establish how they are distinguished from complex services. Continuing the discussion on complex services, I shall take a closer look at the nature of insurance (as a service) as an example of complex services in the next sub-chapter.