Understanding Professional Services

Professional Services  Professional services firms (e.g., law, consulting, accounting firms, advertising agencies) deliver products that are almost entirely dependent upon the quality of the employees. Unlike travel, communications, and other services, the quality of the product delivered is a combination of a number of factors-not only the people involved but the underlying technology (quality of the digital cellular connection), equipment (aircraft used), and so on. While barriers to entry are high, intangibility of the product is still a problem as is the inseparability of production and consumption, to some extent, as clients have to partici­pate in the creation of tax returns, consulting reports, and other products of professional service firms. A high overall level of technical...

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Service Design

Service Design  Because services are intangible, they are difficult to describe and, therefore, to design and redesign if a new service is desired. Perhaps the best way to understand this is to think of the design of a manufactured item. Physical goods can be blueprinted; that is, either on paper or using computer software, the physical nature of the product (width, length, circuitry design, etc.) can be described. As a result, physical product attributes can be shown, communicated, and understood easily. Service blueprinting involves creating a flowchart that describes the flow of activity from the time the customer first contacts the service provider to the time the customer receives the service. An example of a service blueprint is a blueprint for a mail delivery service. The process...

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Singapore Airlines

Singapore Airlines  The Singapore is only 25 percent of the size of the state of Rhode Island, Singapore Airlines is one of the world's ten biggest airlines, as measured in international tons-kilometers of load carried. The airline became successful by concentrating on marketing. The goal of the airline's management was to create an international airline with a distinctly Asian personality. At the top of the priority list was an emphasis on customer service. The company used the island's main natural resource-the natural hospitality of its people-as a competitive advantage. Through comfortable seating, free drinks and movie headsets, and the hospitality of its flight attendants, Singapore Airlines has set the world standard for international air travel quality. In 1991, the airline...

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Channels of Distribution

Channels of Distribution  Because services are intangible, the notion of physical distribution channels does not apply. However, the general principle of channels offering customers access to the product does. Because services are characterized by the inseparability of production and consumption, service organizations must be physically present when the service is delivered or engage others to be present.Any time the product leaves the producing company's hands and is put under the control of others, there is the potential for the independent channel member to do a less effective job of marketing the product than the producer would. This is an even greater problem with services because they are often delivered by people. Nonstandardization of services increases when the service is being...

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Franchising and Services

Franchising  Franchising is an extremely popular form of retail service distribution covering a wide variety of consumer and business-to-business services. A franchise is a contractual agree­ment between the originator of the service concept (the franchiser) and an individual or organization that provides retail distribution for the service (the franchisee). It works particularly well when the service can be standardized across disparate geographic locations. Elements of a typical franchise agreement are: the nature of the service to be supplied by the franchiser the geographic territory within which the franchisee can market the service the percentage of the revenue generated by the franchisee that must be paid to the franchiser the length of the agreement the up-front fee paid by...

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Agents and Brokers for Servies

Agents and Brokers  Many service companies use independent agents or brokers to sell their services. Well­known examples are the insurance and travel industries. There are trade-offs with using these methods for distributing any kind of product. Major advantages include a wider distribution and the fact that agents and brokers know their local markets well. Disadvantages include the loss of control, as it is very difficult to deteTj:nine what agents and brokers are doing and what they are saying about your product....

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Electronic Channels of Services

Electronic Channels  The growth of the Internet has spawned many opportunities for distributing services. Travel services (Expedia, Travelocity, Orbitz, for example) is the largest segment of the e-commerce industry with nearly $70 billion worth of services sold in 2005. The finan­cial services industry has also taken advantage of electronic channels through services such as home banking and stock brokerage. The advantage of electronic channels is their low cost and the ease of access (for those with Internet connections). For example, rather than using a large number of branch banks or automatic teller machines ("bricks and mortar"), customers of most major banks can now check their balances, move money between accounts, and pay bills using the banks' web sites. Entertainment companies,...

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