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Part One THE NATURE OF SERVICES1

1 The nature of services&Steven Desmet,Bart Van Looy,Roland Van Dierdonck3

Introduction3

Objectives4

The growing importance of services4

Services:what makes them special?10

A closer look at services12

The role of service classifications17

Conclusion23

Review and discussion questions24

Notes and references24

Suggested further reading26

2 Defining the service concept&Paul Gemmel,Bart Van Looy,Gino Van Ossel27

Introduction27

Objectives28

Why do we need a service concept?28

How to define the service concept29

Implementing the service concept31

The service concept as a guiding framework:an overview of its main ingredients35

Why not all service concepts are alike37

Conclusion38

Review and discussion questions38

Notes and references39

Suggested further reading39

3 Servitization:or why services management is relevant for manufacturing environments&Steven Desmet,Roland Van Dierdonck,Bart Van Looy40

Introduction40

Objectives41

From goods to services41

Why servitization?42

Making the transition44

Conclusion49

Review and discussion questions50

Notes and references50

Suggested further reading51

Part Two CUSTOMER LOGIC53

4 Relationship marketing&Kristof De Wulf55

Introduction55

Objectives55

Relationship marketing:new words to an old tune?56

Linking customer satisfaction,customer loyalty and profitability58

Lifetime value:the link with profitability62

How to increase customer satisfaction and customer loyalty65

Setting objectives in service marketing68

Conclusion71

Review and discussion questions72

Notes and references72

Suggested further reading73

5 Promoting services&Patrick De Pelsmacker,Joeri Van Den Bergh74

Introduction74

Objectives74

What is so different about promoting services?74

The basic building blocks of promotion76

Designing a marketing communications strategy for services83

Drawing up a promotion plan92

Conclusion94

Review and discussion questions95

Notes and references95

Suggested further reading96

6 Pricing services&Marion Debruyne,Stefan Stremersch98

Introduction98

Objectives98

Developing a framework for pricing decisions99

Pricing objectives101

Pricing strategies102

Pricing structure115

Pricing levels and tactics118

Conclusion120

Review and discussion questions121

Notes and references121

Suggested further reading122

7 Customer satisfaction and complaint management&Gino Van Ossel,Stefan Stremersch,Parul Gemmel123

Introduction123

Objectives123

Service quality and customer satisfaction124

A service satisfaction framework125

Measuring customer satisfaction126

Complaint management138

Conclusion152

Review and discussion questions152

Notes and references153

Suggested further reading154

8 Service guarantees and service-level agreements&Gino Van Ossel,Paul Gemmel155

Introduction155

Objectives156

Service guarantees156

Service-level agreements168

Internal service guarantees and service-level agreements172

Conclusion177

Review and discussion questions177

Notes and references177

Suggested further reading178

Part Three HUMAN RESOURCES IN SERVICE ORGANIZATIONS179

9 The role of human resource practices in service organizations&Bart Van Looy,Koen Dewettinck,Dirk Buyens,Tine Vandenbossche181

Introduction181

Objectives182

The nature of services182

Human resource management for services187

Conclusion192

Review and discussion questions192

Notes and references192

Suggested further reading193

10 Competencies and service organizations&Walter Stevens,Dries Faems,Bart Van Looy,Tine Vandenbossche,Dirk Buyens194

Introduction194

Objectives194

Designing competency-based HR practices195

Competencies for service organizations204

Conclusion212

Review and discussion questions212

Notes and references213

Suggested further reading213

11 Collaboration:integrating work and learning&Bart Van Looy214

Introduction214

Objectives 21S215

The benefits of collaboration in the workplace215

The broader relevance of collaboration to services218

The role of collaboration in learning219

Collaboration as the central theme222

Establishing collaborative relationships223

Conclusion227

Review and discussion questions227

Notes and references227

Suggested further reading228

12 The role of empowerment in service organizations&Bart Van Looy,Krist'l Krols,Dirk Buyens,Tine Vandenbossche229

Introduction229

Objectives230

The relevance of empowerment for service environments231

Empowerment:the employee and the supervisor232

Empowerment:the organization237

Conclusion240

Review and discussion questions241

Notes and references241

Suggested further reading242

13 Role stress among front-line employees&Koen Dewettinck,Dirk Buyens243

Introduction243

Objectives244

Relevance of role stress for the service encounter244

Role stress defined245

Handling role stress for front-line employees247

Conclusion252

Review and discussion questions252

Notes and references253

Suggested further reading254

Part Four OPERATIONS MANAGEMENT IN SERVICE ORGANIZATIONS255

14 Service process design and management&Paul Gemmel259

Introduction259

Objectives260

Process choice261

Process design263

Process monitoring267

Process evaluation268

Process re-engineering271

Conclusion274

Review and discussion questions274

Notes and references274

Suggested further reading276

15 Capacity management&Roland Van Dierdonck277

Introduction277

Objectives279

Capacity and capacity management279

Capacity planning285

Scheduling capacity291

Managing the demand side300

The psychology and managerial consequences of waiting307

Conclusion314

Review and discussion questions314

Technical note315

Notes and references315

Suggested further reading316

16 Facilities management&Roland Van Dierdonck,Paul Gemmel,Steven Desmet317

Introduction317

Objectives318

The nature of facilities management in services319

Back office versus front office320

Location322

Designing the servicescape332

Conclusion337

Review and discussion questions338

Notes and references338

Suggested further reading339

17 IT developments and their impact on services&Tim Duhamel,Bart Van Looy,Wilfried Grommen,Wim Grielens,Niels Schillewaert,Pedro Matth？nssens340

Introduction340

Objectives341

The network era-Where do we stand?341

The impact of IT developments on service encounters345

Action strategies for the new media360

Conclusion366

Review and discussion questions366

Notes and references366

Suggested further reading369

Part Five AN INTEGRATED APPROACH371

18 Performance measurement systems in service firms&Paul Gemmel,Kurt Verweire,Gino Van Ossel,Werner Bruggeman,Roland Van Dierdonck,Bart Van Looy373

Introduction373

Objectives374

Designing performance measurement systems for services374

Implementing an integrated performance measurement system388

Conclusion401

Review and discussion questions401

Technical note401

Notes and references401

Suggested further reading403

19 Managing innovation in a service environment&Koenraad Debackere,Bart Van Looy404

Introduction404

Objectives405

Innovations as spiral processes:the value-constellation approach406

Innovation portfolio management409

Organizing the innovation portfolio:the make-or-buy decision414

The operational management of innovation416

Conclusion423

Review and discussion questions424

Notes and references424

Suggested further reading426

20 Managing services across national boundaries&Roland Van Dierdonck427

Introduction427

Objectives431

Why internationalize?431

Drivers towards internationalization432

Culture and cultural differences436

Internationalization strategies444

Conclusion450

Review and discussion questions451

Notes and references451

Suggested further reading452

21 Defining a service strategy&Aimé Heene,Bart Van Looy,Roland Van Dierdonck453

Introduction453

Objectives453

The nature of strategic management453

The challenges of strategic management for services461

Conclusion472

Review and discussion questions473

Notes and references473

Suggested further reading474

TECHNICAL NOTES477

1 How to collect customer satisfaction data&Gino Van Ossel477

2 Analysing queuing systems in service environments&Paul Gemmel491

3 Simulation as a tool in designing services&Paul Gemmel498

4 Data envelopment analysis&Paul Gemmel510

5 Insights stemming from emerging resource and competence-based strategic management theories&Aimé Heene513

APPENDICES516

1 Importance of informational elements in ads-comparing goods and services516

2 The state probability(P(n))517

Index519

1.1 Contribution of service sector to employment,1999(%)7

1.2 Maslow's pyramid of needs and its relationship to disposable income9

1.3 The different kinds of qualities and their importance for tangible and intangible products13

1.4 Service classifications based on intangibility and simultaneity19

1.5 Maister's framework of service classification20

2.1 Service concept as guiding framework35

2.2 The service concept:main ingredients36

3.1 Goods and services:three stages of transition42

3.2 The ABB pyramid47

3.3 New view of customer service49

3.4 ABB Service redefined49

4.1 The service profit chain58

4.2 The dimensions of customer loyalty59

4.3 The relationship between customer satisfaction and customer loyalty61

4.4 Sources of profitability in relation to customer retention62

4.5 Percentage increase in customer value(profitability)as a result of a 5 per cent decrease in customer defection64

4.6 Customer loyalty ladder65

4.7 Distribution of marketing costs over customer segments69

4.8 Setting marketing objectives one customer at a time70

4.9 The value-spectrum model71

5.1 A two-step flow communications model76

5.2 The Lavidge and Steiner model of the customer adoption process77

5.3 Advertisement for a Swiss bank in which the customers' needs for individual service are addressed79

5.4 Advertisement with transformational needs as basis of message81

5.5 The service delivery process and the relevance of promotional channels83

5.6 Advertisement in which a strong image takes the place of long explanations87

5.7 The relative importance of the individual elements of the communications mix(a)for goods and(b)for services91

5.8 The stages in drawing up a communication plan92

6.1 A price structure99

6.2 The pricing process100

6.3 The model of'perceived value'105

6.4 Chart showing relarive positions of companies in a competitive market110

6.5 Matrix representing criteria for implementation of discount pricing119

7.1 A service satisfaction framework126

7.2 Percentage of brand-loyal customers in various sectors139

7.3 Repeated purchases for dissatisfied customers140

7.4 Percentage of service organizations using different techniques to lower the threshold to complain141

7.5 Time taken for companies to react to complaint144

7.6 Types of compensation used by service organizations146

7.7 Centralized and decentralized handling and receiving of complaints149

8.1 The effect of the introduction of a service guarantee at PTT Telecom161

9.1 The cycle of failure185

9.2 The cycle of success186

10.1 Quintessence Performance and Competency Management Model195

10.2 Most important competencies for front-office personnel in a distribution company200

10.3 The three layers of competencies205

10.4 The relative importance of the three types of competencies in different types of services206

10.5 Kolb's learning cycle207

11.1 The stages of trust development224

11.2 Phases in group development226

12.1 Empowerment as a pyramid234

12.2 A general model of leadership235

12.3 An integrated framework of leadership and empowerment236

13.1 Ambiguities faced by front-line employees246

13.2 Minimizing service employees' role stress through formalization or empowerment,by degree ot service interactivity251

14.1 The relationship between process type and transaction volume261

14.2 Relationship between process type and transaction volume,according to Silvestro et al262

14.3 The service encounter:a blueprint for discount brokerage264

14.4 Partial QFD for an auto-service firm266

14.5 SPC used to monitor the overall course evaluation over time269

14.6 Service Transaction Analysis of the'Indiana Jones and the Temple of Peril Backwards'attraction in Disneyland Paris270

14.7 Time-drivers in the CT-scanning process272

15.1 The value of EuroDisney stock,Nov 1989 to Jan 1997278

15.2 Flowchart showing the inspection processes at Belmont280

15.3 The nature of capacity management283

15.4 Capacity utilization and waiting time286

15.5 Capacity utilization and waiting times in a bank287

15.6 Determining the capacity level288

15.7 Optimal waiting time in a fast-food restaurant289

15.8 Hospital resource planning system294

15.9 The resources planning procedure295

15.10 A product structure tree for Veal Picante296

15.11 An integrated framework for manpower planning,staffing and scheduling297

15.12 A demand curve302

15.13 An integrated view of managing the perception of waiting times312

16.1(a) Population density of Europe,1995323

16.1(b) Average temperature in selected European countries,1996323

16.2 Determining the optimal number of service facilities327

16.3 Location model according to Huff332

16.4 A framework for understanding environment-user relationships in service organizations334

17.1 Network computing342

17.2 Relationship between nature of service and relevance of the market space352

17.3 Degree of richness of task-interactive services354

17.4 The relationship between the nature of a service,information richness demands and the relevance of the market space354

17.5 The commodity magnet and how to handle it364

18.1 The balanced scorecard as developed by Henry Ford Health System376

18.2 The EFQM Excellence Model377

18.3 Service concept as a guiding framework380

18.4 The implementation process of a performance measurement system390

18.5 The balanced scorecard at Rank Xerox395

19.1 The innovation portfolio410

19.2 Performance determinants of innovation projects417

19.3 Project performance in the innovation matrix420

20.1 Ratio of exports in commercial services to merchandise trade,1985-94($million)429

20.2 The same hand movement interpreted differently in three different countries438

20.3 The structure of culture439

20.4 International views of the past,present and future441

20.5 The relationship between cultural characteristics and stereotypes442

20.6 A general framework of internationalization strategies444

21.1 The field of strategy making454

21.2 Product companies and service companies moving towards each other462

TN2.1 The relationship between method of payment and payment time in a supermarket493

TN2.2 An example of the negative exponential distribution495

TN3.1 Animation of the supermarket502

TN3.2 The fitting of a gamma distribution to the variable purchasing time(without a packer)505

TN3.3 The fitting of a log-normal distribution to the variable purchasing time(with a packer)506

TN5.1 The firm modelled as an open system513

1.1 Contribution of service sector to GDP in some developed countries,1970-99(%)6

1.2 Contribution of service sector to GDP in some Eastern European countries,1980-99(%)6

1.3 Contribution of service sector to GDP in some developing countries,1970-99(%)7

1.4 Differences between services and goods11

2.1 Buyer expectations of various do-it-yourself stores according to the buying situation32

4.1 Calculation example of lifetime value63

4.2 Reasons for breaking a relationship with a supplier66

5.1 Addressing needs:making a distinction between negatively and positively oriented buying motives80

5.2 Research results showing how often certain items of information appeared in newspaper advertisements86

7.1 The results of a Servqual perception measurement in a Nuclear medicine clinic135

8.1 The main differences between service guarantees and service-level agreements169

9.1 Sources of employee satisfaction191

10.1 Characteristics of Competence Management deployment processes198

10.2 Customer orientation as a competency199

10.3 Definitions of three competencies for'salespeople'201

10.4 Detailed definitions of three competencies for'salespeople'201

10.5 Different training approaches and their relevance for developing different types of competencies211

12.1 Contingencies of empowerment232

12.2 The five dimensions of empowerment as a driving force behind individual work motivation233

12.3 Comparison of employees with high and low levels of empowerment234

14.1 A comparison of operational performance measures between two hospitals272

15.1 Various categories of waiting situations:frequencies and average waiting times285

15.2 Mean satisfaction rating by length of time on hold286

15.3 Distribution of sales throughout the week at a typical branch of McDonald's291

15.4 Distribution of sales throughout the day at a typical branch of McDonald's292

15.5 Staffing at McDonald's292

15.6 The Gates Hotel no-show experience306

16.1 Summary of results by type of music318

16.2 Major design considerations for back office and front office321

16.3 Factors influencing the location decision325

16.4 Choosing a restaurant site329

16.5 Probabilities330

16.6 The current trading areas of the seven branches330

18.1 Input of the 24 branches for the DEA analysis384

18.2 Data Envelopment Analysis for 24 bank branches385

18.3 An integrated set of performance measures and their operationalization for a bank387

19.1 The make-or-buy decision spectrum415

19.2 Portfolio management and the make-and-buy decision416

20.1 Dimensions to characterize underlying assumptions440

20.2 Organizational models446

20.3 Elements of internationalization strategies449

21.1 Distinctive characteristics of tangibles and intangibles465

TN2.1 Arrival time,interarrival time and service time of 12 shoppers492

TN2.2 Different elements of a queuing system494

TN3.1 Interarnval distribution500

TN3.2 Service-time distribution500

TN3.3 A two-digit random number table501

TN3.4 Monte Carlo simulation of the bank-teller problem501

TN3.5 Summary statistics for different variables(in seconds) in the situation with and without packers504

TN3.6 Comparison of the frequency distribution of the variable purchasing time respectively in the situation with packer and without packer504

TN3.7 Results in terms of numbers of customers served by the clerk in an eight-hour day507

1.1 Methods of classifying services17

2.1 SMART:addressing parking needs30

3.1 Colora:selling solutions43

3.2 The development of ABB Services47

5.1 Somer errors in communication82

6.1 Pricing service innovations throughout the life cycle108

7.1 Ten components of service quality133

7.2 Measuring service quality at an outpatient nuclear medicine clinic135

7.3 Involving the entire company151

8.1 Service-level agreements at Securis171

8.2 Filling vacancies173

9.1 Rising sales at Au Bon Pain187

11.1 Failing apprentices in the butcher trade221

12.1 Empowerment at Taco Bell236

15.1 The Belmont case279

15.2 Capacity scheduling at McDonald's291

15.3 MRP in a New Orleans restaurant295

15.4 Staffing and scheduling nurses in an acute care hospital299

15.5 Yield management in Transpacific Airlines304

15.6 The Gates Hotel,San Francisco306

16.1 Determining the site of EuroDisney322

16.2 Terminal decline337

17.1 IT and the stockbroking industry345

17.2 The development of the bicycle:a socio-technological tale358

18.1 Benchmarking employee performance in aban kusing DEA383

18.2 Performance measurement at G-Mart388

18.3 Internationalization at Vlerick390

19.1 Dream ticket for truck transport407

20.1 Wal-Mart comes shopping in Europe427

20.2 Overseas expansion is a graveyard428