Service Sector: Characteristics, Nature, and Strategic Operations
Conceptual Approach
Among the many changes implemented throughout the history of societies, one stands out: the economy. We are especially impressed by how people’s lifestyles change, creating new needs and, therefore, new forms of markets that meet the demands coming from these evolutionary changes.
The growth of the service sector is most evident in finance, insurance, real estate, miscellaneous services, and retail trade. This sector is especially important to the economy due to its natural resistance to setbacks. These identify it as a fundamental need of everyday life in modern societies, so that the economic sector in many countries is predicated on the basis of this context (Fitzsimons & Fitzsimons, 2003).
This event is supported by Bateson & Hoffman (2003) and by Gianesi & Corrêa (1994, p.17), who ensure that the breadth of the service sector is driven by the economic growth and prosperity of organizations. These organizations direct their efforts to those aspects of services, first as a form of competitive advantage for their operations and others, as sources of additional revenue in their business.
Corroborating these features, Kotler (1998, p. 412) proposes a specific way that the service can be understood: as any act or performance that one party can offer the other and that is essentially intangible and does not result in ownership of anything. Its production may or may not be linked to a physical product.
On the topic, Fitzsimons & Fitzsimons (2003) warn that the differences between manufacturing and services cannot be ignored since the service environment consists of peculiarities that require a high burden of creating capacity to manage in practice.
For Chase (2001), service management must be seen in three broad organizational contexts:
- Organizations that have services as a mission;
- Services for customer support, supporting customers who have purchased products or services of the organization;
- Internal services needed to support the internal activities of the organization as a whole.
Lovelock & Wright (2001, p. 5) cover these aspects, explaining that services can be seen as an act or performance that creates benefits for customers through a desired change in the name of the recipient of the service. Or, considering the viewpoint of the economic context, services are an economic activity that creates value and provides benefit or gain, an advantage that customers get from the performance of a service or use of a physical asset.
Bateson & Hoffman (2003, p. 3) state that the imperative to complement the service reflects the view that the intangible aspects of products are becoming the fundamental characteristics that differentiate the market.
Actually, the service configuration features a magnitude that comprises a continuum (see pg. 14) between the distinct profiles of attendance in movie rental stores, restaurants, and hotels, through services such as differential attached to products to organizations of consulting, outsourcing, information technology, or research.
Gummesson (1998) concludes that the future paradigm of manufacturing organizations will be their way of interaction as a service provider to the customer. This view shows the importance of adopting the service as a platform for the recovery of manufacturing at all stages of its formation, especially in what is directly in contact with the end customer, i.e., the point of sales.
Given its economic importance, the approaches presented clearly demonstrate, each in its way, the importance of service organizations or those who use the services as support to manufacturing, are in constant update of what is essential to keep their prized relationship with the market.
Characteristics, Nature, and Classification of Services
According to Kotler (1998), Bateson & Hoffman (2003), and Gianesi & Correa (1994), most of these differences are mainly attributed to four unique characteristics: intangibility, inseparability, heterogeneity, and perishability.
Fitzsimons & Fitzsimons (2003, p.43) agree, as in figure 2.2, that distinguishing between a product and service is difficult. They explain that the episode of purchasing a product is frequently accompanied by a service, and despite this, the purchase of a service also includes the ownership of physical assets.
Even in agreement regarding the scale of tangibility of Shostack (1977) about the difficulty of identifying service or product, the variant of this range represents a breakthrough. It demonstrates that the nature of the services may vary on a continuum (see pages 13 and 14) that extends from transactions in which the client performs the self-service operations to the execution part of others for it to be fully met. This feature is pointed to by Grönroos (2003) and Gianesi & Correa (1994) as concurrency and consists of customer participation in the implementation and use of the service.
This conception is ratified by Kotler (1998) to define the proposal for a company to market depends on the service component may or may not be part of this offer. The author has identified five distinct categories of offerings which exemplify his thinking, namely, tangible good or not accompanied by a service, and hybrid product with some part of service, service with good service and clean. It’s a way to demonstrate the degree of integration of tangible and abstract customer valued and represented in a product or service.
Four categories of services can be identified based on their nature and to whom they are intended, whether to persons or property.
Conceptual Approach
- Organizations that have services as a mission;
- Services for customer support, supporting customers who have purchased products or services of the organization;
- Internal services needed to support the internal activities of the organization as a whole.
Characteristics, Nature, and Classification of Services
- High-touch service and high/tech;
- Services provided on a continuous or occasional transaction basis;
- The author argues that high-touch services to people mainly depend on its composition. However, the inclusion of physical and technological resources to support the processes of customer-oriented services is also planned. Nevertheless, the high/tech service is characterized by the predominance in the use of different technologies for its composition, such as automated systems, management systems in decision-making, and other physical resources.
Service System as a Strategic Operation
- In the first stage, the company is available to the service, and like any other, it only has a reactive role to the demand, regardless of its performance;
- In stage II, through the qualifications of its employees, the company has reliable operations but is not noted for lack of a distinction in the market;
- In stage III, according to continuously improving operations, driven by customer focus, the company achieved a distinctive position in the market. Because of this, it begins to be sought for its expertise and reputation in meeting the needs of customers;
- In stage IV, as a result of the previous stage, the company becomes a reference and an example to be followed. The production function for services manages all stages of their processes and can now be called World Class.
Package of Services
- Central office or principal;
- Services (of goods) facilitators;
- Services (and assets) support.
The 7 Steps of Project Management
- Select and adopt a methodology
- Communicate: it’s not just the fish that dies by the mouth!
- Define project scope and detail the activities
- Meet the people involved and build your team
- Develop the timeline along with those who put their hands dirty
- Monitor the risks and be proactive
- Formalize the beginning and end of the project