The service offering

Figure 5 Levels of operation, Sipilä (1995)

One of the main issues for companies is to decide and define the strategy and the means to implement that strategy concerning the other operations involved with customer than production of goods. As stated earlier, there are various reasons and drivers why manu-facturing firms have entered the service area as well. According to Sipilä, there are at least four levels on which the company can operate as seen on figure 5. Sipilä states that each company must review its strategy and potential on each area. The review should spring from the idea, that what the company is providing must be beneficial to customer on each level. Should there be elements that are not functioning as optimal, the whole offering will be hindered. Sipilä is suggesting that in most of the cases a company must build the system gradually in order to have optimum outcome or have a significant re-sources to perform well on each area. However, Sipilä emphasises that keeping the company as parts or product supplier can be as successful as widening the operations to cover the whole service aspect. The focus and aim are then different and strategy must be organized accordingly.

(Sipilä 1995)

It has been noticed that the service organizations have often difficulties to describe their service product and define and adjust the strategy accordingly. One of the challenges is the intangible nature of service, but also the customer involvement on the service proc-ess. Fitzsimmons et al. has defined a five-sided service package, where the package is bundle of goods and services with certain information provided in particular environ-ment. The five areas of the package are:

1. Support facility. The physical resources from where the services are offered. This can vary from hospital or barber shop (the place where service is occurring) to buss depot or warehouse (from where the service is provided from). The criteria of support facilities include location, supporting equipment, facility layout and also interior decoration or architectural appropriateness. Naturally the importance of these criteria varies signifi-cantly in different business. E.g. providing professional services for pulp mill, there’s little or non-existent relevance to the architectural issues from where the service is pro-vided from whereas beauty salon services cannot be propro-vided from oily, damp and dark warehouse premises.

2. Facilitating goods. This area consists of the items consumed by the customer and/or provided by the service provider. In professional services, the goods can bear a great significance e.g. leasing the vehicle or providing all spare parts to the equipment in question. Criteria consist of consistency, quantity and selection. The service mix be-tween the criteria is often dependant on other criteria as well. E.g. the quantity and se-lection level can vary greatly according to what has been agreed on other areas of the package.

3. Information. The information flow between parties. One other hand the information given to the customer during and after service actions but also the prior information provided by customer to enable efficient and customized service. The criteria are accu-racy, time-relativeness and usefulness. The usefulness and accuracy are easy to per-ceive, but can be sometimes quite hard to deliver. The time-relativeness is linked to the service type and encounter type. In face-to-face interaction e.g. asking instructions how

to operate new television set, the time gap must be as minimal as possible whereas when asking legal advice the acceptable time span can be weeks or even months.

4. Explicit services. The explicit service covers all benefits of the service that are ob-servable by senses or measurements. These are also the essential part of the service fea-tures offered and of which the customer is willing to pay directly. The example could be the smooth operation with 10% less downtime of equipment that has been maintained or response time in case of emergency. The criteria are e.g. training and competence of service personnel, comprehensiveness, consistency, agility, reliability and availability of the service.

5. Implicit services. This area covers the psychological benefits that the customer may sense only vaguely. Examples can be the sense of luxurious status of high level hair-dresser or easiness of business making and informality with certain service provider..

The most common and often the criteria to be adjusted are service personnel attitude towards service, atmosphere, status, sense of well-being, privacy, security and conven-ience. The challenge in implicit services is also that they may vary heavily depending on service provider’s personal interaction with customer. They are very hard to measure or grade and the service provider obtains only weak signals of the success. For example the atmosphere of the service consists of numerous sub-levels and it is virtually impos-sible to direct them all. On service encounter, one customer may enjoy informality with greasy jokes while other may place value by proceeding strictly to business issues with no deviation. When changing cultural area, the gap on implicit issues will expand and it will be even harder to obtain the weak signals from the encounter or they cab be even misinterpreted.

One must bear in mind that even though the explicit services are the most “visible” part of the service and the customer and often also the service provider focus heavily on these criteria, the service package should be viewed from each areas. Otherwise there is a danger that the adjustments are only made in explicit area, which can lead to partial optimization.

(Fitzsimmons et al. 2008)