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Summary & point of view: Gronroos, chapters 7, 8 & 9 Summaries Chapter 7 Behind every service there is a complicated process of developing this service. The starting point is a basic service package consisting of 1) the core service, 2) enabling services (and goods) and 3) enhancing services (and goods). This package is being brought to customers through a service process full of interactions between customer and service organization. Key elements in this process are a) accessibility of the service, b) interaction with the service organization and c) customer participation.
All these features together build up towards an outcome of that process and form the augmented service offering model. Chapter 8 One might think that the economic laws of cost and production efficiency in a manufacturing environment also apply to the managing of service organizations. But then you come up empty because next to this internal efficiency there is something called external efficiency: the external effectiveness as perceived by customers.
As a matter of fact, the managerial wish for internal efficiency can be a killer for external efficiency and it might end up in a vicious circle called the strategic management trap which could eventually lead to the demise of an organization. The service-oriented strategy tries to cope with this problem and puts external efficiency at first rank. This doesn’t mean however that cost considerations and internal efficiency are written off. The shift of management focus is characterized by flexibility: services can’t be standardized completely because they deal with people and people have different interests, behaviour and demands.
Chapter 9 Elaborating on chapter 8, chapter 9 shows that traditional productivity measurement instruments can’t be used in services because they are developed for a closed system: consumption and production are separate processes and customers do not participate in the production process. The service production process on the other hand is mostly an open system: customers are co-producers; they influence the service process and outcomes. The crucial point is the relationship between internal efficiency and perceived service quality (external efficiency).
In a service organization, improved cost efficiency can have a negative effect on perceived service quality. Point of view -The first stage of the dynamic augmented service offering model is the analysis of customers’ activities and processes and an assessment of what target customers are looking for and would appreciate. However, there can be a ‘dark side’ to this analyzing and monitoring: annoyance of potential customers with surveys, callcenters or newsletters.
What interests me about this is how customers perceive the organizations’ surge for information of what customers want. So it would be interesting to find out which people are ‘attracted’ through different ways of customer approach. Maybe some people (lower social groups) are more sensitive to basic ways of customer binding (like call centers) while others expect a sort of higher level treatment. I sometimes question myself how delicate this relationship is, can a bank lose customers because of a certain type of customer approach? I have a feeling that it may be quite hard to let external efficiency and customer relationships guide the decisions to be made in a company. I think that the effect of actions to improve external efficiency also depends on whether a customer is actually capable of comparing services of one organization to another. Measures regarding internal efficiency on the other hand, seem to have a more calculable nature beforehand. It could be pretty hard to convince management to pursue external efficiency because it’s almost impossible to give an estimate of the future revenues.
On the other hand I can see that something like a good maintenance service pays off, and people will stick to it. It probably depends on the sort of service and whether it’s a long term relationship or just a ‘flash’. -The major point of criticism concerns the measuring of service productivity by dividing the revenues from a given service by the costs of producing this service. In service organizations, revenue isn’t just a financial term, but it also consists of the human perception or appreciation of a given service.
And I think it’s almost impossible to measure the latter. As we can read in an article in the Financial Times : “Figures do not capture the inconvenience of having to travel, or the externalities associated with long shopping expeditions: traffic accidents, pollution, road maintenance”. This little example shows that there is quite much to measuring service sector productivity and that it’s not comparable across borders. -Gronroos, C. (2007). Service Management and Marketing (3rd ed). West Sussex: John Wiley & Sons Ltd.