In this lesson, we will talk about operations involving services, but before we can talk about operations let's talk about what we mean by services. So, Philip Kottler defines services as, "Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything." So, the key operative words here are intangible and no transfer of ownership. This makes services very different than the production or manufacturing of goods and so it's important to understand what services are and what makes them so different before we start thinking about how we deliver services and how we go about making sure that the customer has a great service experience. So, if you think of the first part of Kottler's definition, "Services are intangible." So, what might that mean? If you start thinking about what such services might be, we can categorize them according to one of several things that they provide and possibly maybe a combination of things that are provided. For example, services require the provision of attention from the provider to the customer. This might be someone providing babysitting services or geriatric care services. This might be a teacher paying attention to a student. This might be a financial adviser paying attention to the needs of their client or a lawyer paying attention to the needs of a defendant. So the provision of attention is intangible; there's nothing that's being exchanged here that has any physical form, shape or substance. There might be advice that is being given, consultants provide advice, lawyers provide advice, and so as a service the provision of advice might be categorized as the service experience. Services might be in the form of providing access, providing access to people with power is what political lobbyists do in places like Washington D.C. It might be about providing an experience. For example, when one goes to a Disney property, Disney provides us an experience. When we go to a restaurant, we have a dining experience. It might be having a discussion, which is what maybe a consultant may do and it might be the provision of information. So for example, Google is in the business of providing information that it has collected across the web and through other sources and is now providing it to people. So the service that Google provides is information. Now, this whole area of services sort of comes out of this notion of what is called affective Labor. Now the term affective labor actually originated from feminist literature where people were concerned about the fact that economics was more concerned about factory labor, or the labor involved in production of goods, and domestic labor, which is what a lot of women used to do, was sort of not given enough attention. So, this whole notion of affective labor became sort of a surrogate for the services that when provided, that were not tangible services. So affective labor is typically used to talk about labor which either produces or modifies an emotional experience. If you think of the things that we've looked at so far in terms of the kinds of service features that we have discussed, affective labor is basically a provision of some emotion, either an experience, either attention, advise, discussion, or some way will change or modify the counter parties emotional state. So, if those are the kinds of things that services involve, we can think in terms of service offerings which might be what are the types of services, for example, that one can get. Now, there's a categorization of services into what are called Search, Experience, and Credence and the same categorization can also be used for products, but it makes a lot of sense in terms of services. So, for example, we can think in terms of service offerings that are search type service offerings in which one can actually evaluate the product or offering before we purchase it. For example, if I call a barber shop and say I need to be a walk in and come in and get my haircut, the barbershop might say, "Well, you can come in, but it's going to be a 40 minute wait." Now, I know I'm going to have to wait 40 minutes so I know that in this particular experience, it's going to be 40 minutes plus the time for a haircut, let say 15 minutes, so it's going to be 55 minutes total time that I have to wait to get the service and I can evaluate this and decide whether I want to go in or not. The same thing happens at restaurants when you walk in and you ask how much is the wait to be seated at a table, and then based on that you can decide whether you want to go through with the experience or not. So, it's possible to look at certain things like certain kinds of services beforehand and decide whether we want to purchase those services. The second kind of service offerings that we can think of are what we'll call Experience Service Offerings. This cannot be judged prior to purchase in that you have to go through the experience to be able to evaluate the particular experience. For example, if I offer to sing to you and I tell you I'm a great singer and I’ve offered to sing to you for a certain exchange of money. Now, you don't know what kind of experience you're going to get and so you would have to hesitate before actually purchasing this from me because I could be a terrible singer or I could turn out to be this hidden gem of a singer and you get a great experience out of it. But not only that, even if you knew I was a great singer, on a particular day you will not know if I'm going to be singing well or whether I'm going to be singing well when I sing just for you. So, unless you go through the experience of listening to me sing you wouldn't know whether the service that I've offered had any value to you or not. So, there are the products where one has to go through the actual experience. The last kind of service offerings we can think of are what are called Credence, which are service offerings that are difficult to evaluate. For example if you get legal advice from a lawyer, it's difficult for you as a lay person to evaluate the quality of advice that you got. Even after you experience the advice, you do not know whether that advice was good advice or not. So, there are services now where even after experiencing, not only could you not do it prior to purchase, but even after experiencing, you don't know if this was good or not. For example, if you're a first-time drinker of beer and you've heard beer taste wonderful and then you actually drink the beer and at the end of it you might find the taste either pleasant or unpleasant and so you might be able to say I've been able to experience it, but if I asked you, was that a good beer? You would not know. Maybe you just don't like beer at all or you like beer, but you really have no way of knowing whether this particular beer was actually good or not. So, in this kind of cases, you have to either develop some expertise in that, or rely on somebody else's expertise, or rely on the reputation of the service provider to be able to say that the service offered was actually valuable to you. So as you can see, this is making things a little complicated because we no longer are able to even judge the offering that we are purchasing when we talk in terms of service offerings. Now, where might some of this services be provided? Well, here's a long list of service industries and by no means is this a comprehensive list. So we've mentioned, for example, Disney, so we can think in terms of hospitality and tourism as an industry where services are provided. We've talked about restaurants and food, another place where a service experience can be had. We can go to a movie, so the whole entertainment industry is another service industry. Healthcare, vital to our well-being, that's a service industry. Information technology, financial services, transportation and distribution, the physical movement of goods even though we're moving something that's physical, the actual offering is the transportation of those and so the transportation itself is an intangible service offering. We can think of telecommunications, we can think of marketing, we can think of government. So the services that government offers, for example, are intangible; vital to our well-being, but intangible. Administration of businesses, administration of offices, administration of public agencies, consulting services, education, what I do is I provide a service and that service that I provide is education. Legal services, insurance. Many, many such services are offered and they are fairly large industries involved in the provision of these services.
