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Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
Note on Services and Service Quality
Heineke, Janelle
Functional Area(s):
   Operations Management
   For Profit
Difficulty Level: Beginner
Pages: 9
Teaching Note: Not Available. 
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First Page and the Assignment Questions:
    Services are an important segment of all economies and they become increasingly more a part of everyday life as economies develop. The purpose of this teaching note is to discuss the unique challenges associated with managing service operations and with delivering service quality and to introduce several models and tools for service operations managers.


    Services differ from goods in several important ways. First, services are intangible and therefore more difficult for both service providers and customers to measure and evaluate objectively. Second, services are perishable and therefore cannot be made in advance of demand and held in inventories, which makes matching capacity to customer demand a particular challenge for service delivery systems. Third, services are relatively easy to copy and nearly impossible to patent, which makes attaining and sustaining competitive advantage in services particularly difficult. Finally, services are often produced and consumed simultaneously, meaning that the customer is intimately involved in the process as the service is being produced and delivered. The involvement of customers in the service delivery process changes the nature of the process - and the decisions and actions required to manage the service effectively and efficiently.

The Service Package

    Because services are intangible, it is particularly important for managers to understand what actually composes the service product. When customers enter a restaurant their experience has multiple levels. First, they experience the physical facility within which the service is provided. The customers will also experience the goods that are at the core of the restaurant service, whether they are vintage wines and shrimp scampi or burgers and fries. At the same time the customers experience the explicit service itself: how and by whom they are served. If they are returning customers, they expect the service to be of a particular standard and consistently performed. Finally, customers experience implicit services: the friendliness and responsiveness of the waitstaff and the characteristics of the wait for service.

    These four elements - the supporting facility, facilitating goods, explicit services, and implicit services - have been called the "service package" (Fitzsimmons & Fitzsimmons, 1994). Managers of service organizations need to be very aware that each of these elements affects the impression customers have of the service - and their ultimate satisfaction with that service.

    When facilitating goods are of little or no importance to the service, the service has been called a pure service. For example, a taxi ride, though it involves a supporting facility (the taxi), the actual journey from one point to another (the explicit service), and the attitude of the taxi driver (the implicit service), involves no real supporting good (unless, perhaps, a receipt is requested). A taxi ride, therefore, can be considered a nearly pure service. Pure services are actually the exception in the service sector, however. Most of what we consider to be services do, in fact, include some facilitating goods.


    Several models have been proposed for classifying services. Because customers are often in contact with the service provider at the time the service is performed, one of the simplest ways to classify services is according to the relationship between the service employee and the customer.

The Customer Contact Model

    The fact that customers are involved in many service delivery systems led to the development of a framework for classifying services that is based on the degree and type of contact. The Customer Contact model defines both types of services and types of contact (Chase, 1981).