ST 303:

Managing A Service Enterprise

Entrepreneurship Instructor: Boyd Marc T. Aquino,MBA

i
 Hello! Welcome to Compostela Valley State College. The global pandemic
may hinder you from going back to your classrooms but it will not hinder you from
furthering your learning and education. Through the collaborative and dedicated
effort of its administrators, faculty, and staff, the Compostela Valley State College
offers its first blended learning modality through its Learning Management System
and faculty-made Course Packs so as to deliver quality education at the comfort of
your homes.

In lieu of the aforementioned, this course pack serves as the instructional

material for self-directed learning in the course ST 303 or Managing A Service
Enterprise as this course is offered through blended learning modality, there shall be
asynchronous1 and scheduled synchronous2 learning sessions. During asynchronous
sessions, you are expected to do independent learning using the course pack. You can
either access the weekly learning materials online through the CVSC Learning
Management System at https://lms.cvsc.edu.ph or download and print the entire
course pack all at once for offline learning. All references including supplemental
learning materials are specified in this course pack to aid you during asynchronous
sessions. On the other hand, synchronous sessions are conducted through video
conferencing. These sessions are specifically scheduled for consultations and output
presentations and evaluations. All course requirements are specified in this course
pack and in the LMS. You are encouraged to submit the requirements at the
scheduled week and on or before the specified deadline for immediate feedback and
guided learning. All course requirements must be submitted via the LMS.

We sincerely encourage you to accomplish this course pack, its tasks and
requirements, from which your progress will be evaluated, with fairness and honesty
through fair and honest means. Spend your time wisely and do not think that you are
alone in this learning process. You are encouraged to consult your instructor, form
study groups with your classmates, and browse the internet for additional resources,
tutorials, and practice tests. We are in this together. We will learn as one.

Have fun learning! 

—The Authors—
1
students learn the same material at different times and locations
2
learning event in which a group of students are engaging in learning at the same
time

ii
 Greetings!

This Course Pack was crafted for students enrolled in ST 303 or Managing A
Service Enterprise currently attending Compostela Valley State College (CVSC).
Hence, the information provided in this course pack is for instructional purposes
only. Furthermore, the course pack shall not be reproduced for commercial use
within or outside the institution.

All information found herein has been lifted from reliable online and written
sources to deliver appropriate and accurate learning materials to the students.
Sources for the information are included in the Reference section of the lessons.
 This course pack covers key concept of service enterprises. It will introduce the
characteristic and its classification among related business enterprises. Specifically,
this course will look at the role of service business in entrepreneurial ventures.
Services defined as “activities, benefits, or satisfactions which are offered for sale, or
provided in connection with the sale of goods.

Customer has a vital role to play in the production process as the services are
provided in response to the problems of customers as solution. The production of the
service may or may not be closely associated with a physical product.

In order for learners to gain competency in this course, this course pack has been
structured into three (3) modules as follows:

Module 1: Understanding the Service

Enterprise Module 2: Service Processes

Module 3: Role of Service Enterprise in the Economy

At the completion of this course pack, learners should be able to:

 Define and understand the concept of service enterprise;

 Differentiate service to manufacturing enterprise;
 Discuss the characteristics and classification of services; and
 Analyze the service processes and role of service enterprise in the economy.

Students in this course are encouraged to go through each lesson in every module
sequentially to maximize their learning. They should work on all exercise to build on
the concepts of each topic introduced in each lesson.
Hence, to make this learning experience rewarding for you, study this course pack
with your co-learners at your own pace. You can also ask the help and support of your
peers, tutor and friends.

Good luck and God bless!

Cover Page ………………………………………………………… i
Foreword ………………………………………………………… ii
Preface ………………………………………………………… iii
Course Overview ………………………………………………………… iv
Table of Contents ………………………………………………………… v

Module 1: Understanding the Service Enterprise

Module Overview ………………………………………………… 1
Lesson 1: Introduction to Service Enterprise ……………… 2
Lesson 2: Nature of Service Enterprise …….…..………. 5
Lesson 3: Characteristics of Service Enterprise ……………… 10
Module Summary ………………………………………………… 14
Module References ………………………………………………… 15
Module Assessment ………………………………………………… 16
Module 2: Service Processes
Module Overview ………………………………………………… 17
Lesson 1: Introduction to Service Processes …………………. 18
Lesson 2: Introduction to Service Processes ..……………..…. 22
Lesson 3: Service Marketing and Metrics ………..…………… 27
Module Summary ………………………………………………… 30
Module References ………………………………………………… 31
Module Assessment ………………………………………………… 32
Module 3: Role of Service Enterprise in the Economy
Module Overview ………………………………………………… 33
Lesson 1: The Service Economy …………….………….. 34
Lesson 2: Services as Solutions ……... ………………… 37
Lesson 3: Services as Products ………………………… 40
Module Summary ………………………………………………… 43
Module References ………………………………………………… 44
Module Assessment ………………………………………………… 45
Appendices
Appendix A ...………………………………………………………. 46
Appendix B ………………………………………………………… 47
Appendix C ………………………………………………………… 48
Module 1: Understanding the Service Enterprise
In this Module
Introduction to Service Enterprise
Nature of Service Enterprise
Classification of Service Enterprise

Module Overview

Think about all the times you paid for someone to do something for you.
Maybe you paid someone to paint your house, change the oil in your car or even
prepare your meal at a restaurant? You likely paid someone to do these things for you
because you didn't have the time or skills to do them yourself. Or maybe you just
didn't feel like doing it on your own, and it was worth it to you to pay someone else to
do it instead.
Restaurants, car service shops, and the like are all service-based businesses.
Collectively, they are relied upon to satisfy the needs and desires of thousands of
consumers each day. As long as we have limited time, limited knowledge, and simply
don't enjoy doing everything ourselves, service businesses will thrive!

At the completion of this module, you should be able to:

 Understand the concept of service business;
 Define service business and its characteristics and features; and
 Classify different service enterprise.

Are you ready? Then start the lessons now!

1
 Introduction to
Service Enterprise

Learning Outcomes

At the end of the lesson, you should be able to:

Understand the concept of service enterprise; and
Define the services through different studies.

Introduction:

Hello students! Welcome to Lesson 1, in this lesson, you will be introduced the
concept of service business/ enterprise. You will be able to understand what business
service of enterprise is. Now, are you ready to explore? If YES, answer the activity
that follows to set your mind for our discussion.

k about your skills that can be a source of an income by providing service business to the clients. List down at least 2 skills o

Were you able to list down your skills? Now answer the following
question related to our topic this session.
*See Appendix A for the rubric
1. What do you think is the relation of your skills to our topic today?

2. Based on you own understanding, how can you define service

business/enterprise?
Abstraction
In simple words, services are deeds, processes, and performances.
But, the increasing interest in the services sector has been accompanied
by considerable disagreement and debate as to what constitutes a service
and whether service marketing is a distinctive subject area. In order to
develop clarity on service as a concept, it is desirable to look at the way
various researchers and scholars have defined it over the years. One of the
first to define services was the American Marketing Association which as early as in
1960 defined services as “activities, benefits, or satisfactions which are offered for
sale, or provided in connection with the sale of goods”. This definition took a very
limited view of services as it proposed that services are offered only in connection
with the sale of goods. The other definition which was proposed in 1963 by Regan
suggested that “services represent either intangible yielding satisfactions directly
(transportation, housing etc.), or intangibles yielding satisfactions jointly when
purchased either with commodities or other services (credit, delivery, etc.)”. For the
first time services were considered as pure intangibles - capable of providing
satisfaction to the customer and can be marketed like tangible products.
Robert Judd defined service as “a market transaction by an enterprise or
entrepreneur where the object of the market transaction is other than the transfer of
ownership of a tangible commodity”.
In 1973 Bessom proposed that “for the consumer, services are activities
offered for sale that provide valuable benefits or satisfactions; activities that he cannot
perform for himself or that he chooses not to perform for himself’.
Another definition given by Blois in l974 says that, “a service is an activity
offered for sale which yields benefits and satisfactions without leading to a physical
change in the form of a good”.
Stanton proposed a definition in 1974 and defined service as “Separately
identifiable, intangible activities which provide want satisfaction when marketed to
consumers and/or industrial users and which are not necessarily tied to the sale of a
product or another service”.
Kotler and Bloom in 1984, defined service 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. Its production may or may not be tied to a physical product”.
Gronroos defined a service as “an activity or series of activities of more or
less intangible nature that normally, not necessarily, take place in interactions
between the customer and service employees and/or physical resources or goods
and/or systems of the service provider, which are provided as solution to customer
problems”. We may conclude service as, “an activity or series of activities rather than
things which has some element of intangibility associated with it, which involves
some interaction between the customer and the service provider, and does not result in
a transfer of ownership.
 Customer has a vital role to play in the production process as the services
are provided in response to the problems of customers as solution. The production of
the service may or may not be closely associated with a physical product”.

Application
Instructions: Answer the questions below. Discuss it briefly and concisely. Cite the author of the related readings i
borrow the ideas.

*See Appendix A for the rubric

1. How do service enterprises differ from manufacturing enterprises? What are
the unique characteristics of service businesses?

2. Based on the definition stated above, how does service enterprise plays a role
in the market industry?

Congratulations! You have just finished Lesson 1. You did

very well! If there are some clarifications about the topic,
don’t hesitate to ask your instructor.

Now, are you excited for our next lesson? You will be
learning about the Nature of Service Business. If you are
ready, please proceed to Lesson 2.
 Nature of Service
Enterprise

Learning Outcomes

At the end of the lesson, you should be able to:

Understand the features of service enterprise;
Identify the characteristic of services; and
Differentiate between physical goods and physical services.

Introduction:
Hello students! Welcome to Lesson 2, this will be the continuation on the topic
discussed on Lesson 1.You will be able to expand your understanding to the nature of
services. You will be also to identify its characteristics and classification of services.
Now, are you ready to explore? If YES, answer the activity that follows to set your
mind for our discussion.

Scrambled Words INTANIGELB GSOOD

isabilities from the given set of scrambled words. Write your answers
_ _ _ _ _on
_ _the
_ _space
_ below each
_ _ _word.
__

SEVRISECPEISRHBALE PORESSC
_ _ _ _ __ _ _ _ _ _ _ _ _ ____

Were you able to answer all the items correctly? They are
Analysis just some of the many terms you will encounter as we go deeper with our
lesson.
*See Appendix A for the rubric

1. Based on your answer above, conceptualize a definition nature of

service enterprise.

2. What do you think the characteristics of a service enterprise? Discuss briefly

and concisely.
Abstraction Nature of Services

It is utmost important to explore the distinctive features of services,

because recognition of these special characteristics will provide insights for
enlightened and innovative management. One reason for the poor quality of
service levels across different service industries is that managers often tend
to solve service marketing problems with tools and techniques that are essentially
meant for tangible products. It happens because of inadequate understanding about
the nature of services. As our knowledge of the characteristics of services grows, so
does our ability to deal with them from both an economic and marketing perspective.
Services have a number of unique characteristics that make them different from
products.
Some of most commonly accepted characteristics are as follows:

1. Intangibility:
The most basic and universally cited characteristic of services is
intangibility, because services are performances or actions rather than objects, they
cannot be seen, felt, tasted, or touched in the same manner that we can sense tangible
goods.
For example, when we buy a cake of soap, we can see, feel, smell and use
to check its effectiveness in cleaning, but when we pay fees for a semester in the
university, we are paying for the benefits of deriving knowledge, skills and education
which is delivered to us by teachers.
Teaching is an intangible service. When we travel by a plane, the benefit
which we are deriving is a service (transportation) but, it has some tangible aspects
such as the particular plane in which we fly (Boeing, Avro, Concorde, etc.) and the
food and drink which are served.
The broad definition of services implies that intangibility is a key
determinant of whether an offering is or is not a service. While this is true, it is also
true that very few products are purely tangible or purely intangible. Instead, services
tend to be more intangible than manufactured products, and manufactured products
tend to be more tangible than services.
2. Inseparability:
In most cases a service cannot be separated from the person or firm
providing it. A service is provided by a person who possesses a particular skill
(singer, doctor, etc.), by using equipment to handle a tangible product (dry cleaning)
or by allowing access to or use of a physical infrastructure (hotel, train, etc.).
Services are typically produced and consumed at the same time. The
relationship between production and consumption, therefore, dictates that production
and marketing are highly integrated processes. The telephone company produces
telephone service while the telephone user consumes it. A plumber has to be
physically present to provide the service; the beautician has to be available to perform
the massage. The service provider and the client are often physically present when
consumption takes place.
Generally, most goods are produced first, then sold and consumed. On the
other hand, services are usually sold first and produced and consumed simultaneously.
Since services often are produced and consumed at the same time, mass production is
difficult if not impossible. The quality of service and customer satisfaction will be
highly dependent on actions of employees and the interactions between employees
and customers. It is not usually possible to gain significant economies of scale
through centralization. Usually operations need to be relatively decentralised so that
the service can be delivered directly to the consumer at convenient locations. Since
the customer is involved in and observes the production process, and thus may affect
(positively or negatively) the outcome of the service transaction.
3. Heterogeneity:
Since services are performances, frequently produced by human beings,
no two services will be precisely alike. The human element is very much involved in
providing and rendering services and this makes standardization a very difficult task
to achieve. The doctor who gives us complete attention in one visit may behave a
little differently in next visit. The new bank clerk who encashes our cheques may not
be as efficient as the previous one and we may have to spend more time for the same
activity.
This is despite the fact that rules and procedures have been laid down to
reduce the role of the human element and ensure maximum efficiency. Airlines,
banks, hotels, etc. have a large number of standardized procedures. Human contact is
minimal in the computerized reservation systems, but when we go to the hotel there
will be a person at the reception to hand over the key of the reserved room. The way
that person interacts with us will be an important factor in our overall assessment of
the service provided by the hotel. The rooms, the food, the facilities may be all
perfect, but it is the people interacting with us who make all the difference between a
favorable and unfavorable perception of the hotel.
Heterogeneity also results because no two customers are precisely alike;
each will have unique demands or experience the service in a unique way. Thus, the
heterogeneity connected with services is largely the result of human interaction
(between and among employees and customers) and all of the vagaries that
accompany it.

4. Perishability:
Perishability refers to the fact that services cannot be saved, stored, resold,
or returned. Since services are deeds, performances or act whose production and
consumption takes place simultaneously, they tend to perish in the absence of
consumption. Goods can be stored and sold at a later date in the absence of a
customer. Services, on the other hand, go waste if they are not consumed.
A seat on an airplane or in a restaurant, an hour of a professor’s time, or
telephone line capacity not used cannot be reclaimed and used or resold at a later
time.
A primary issue that marketers face in relation to service perishability is
the inability to hold inventory. Demand forecasting and creative planning for capacity
utilisation are, therefore, important and challenging decision areas. The fact that
services cannot typically be returned or resold also implies a need for strong recovery
strategies when things do go wrong.
Kuitz and Boone observed that the utility of most services is short lived;
therefore, they cannot be produced ahead of time and stored for periods of peak
demand. The perishability of services is not a problem when demand is steady
because it is easy to staff for the service in advance. When there are wide fluctuations
in demand there should be a highly flexible production system or idle productive
capacity.

5. No Transfer of Ownership:
When we buy a product, we become its owner-be it a pen, book, shirt, TV
or Car. In the case of a service, we may pay for its use, but we never own it. By
buying a ticket one can see the evening film show in local cinema theatre; by paying
wages one can hire the services of a chauffeur who will drive his car; by paying the
required charges we can have a marketing research firm survey into the reasons for
our product’s poor sales performance, etc.
In case of a service, the payment is not for purchase, but only for the use
or access to or for hire of items or facilities; and transfer of ownership does not take
place.
The above cited characteristics of services make it unique and that is why
services receive special treatment from marketers. There is general agreement that
inherent differences between goods and services exist and that they result in unique,
or at least different, management challenges for service businesses and for
manufacturers that offer services as a core offering. The difference between goods
and services are to be clearly understood on Table 1.

Table 1: Difference between goods and services

Application
Exploring your Imagination
Instructions: Think about of a service business, list down your service
offerings and identifies its characteristics as to the nature of the business.
*See Appendix A for the rubric
Congratulations! You have just finished Lesson 2. You did
very well! If there are some clarifications about the topic,
don’t hesitate to ask your instructor.

Now, are you excited for our next lesson? You will be
learning about the Classification of Service Enterprise. If
you are ready, please proceed to Lesson 3.
 Classification of Service
Enterprise

Learning Outcomes

At the end of the lesson, you should be able to:

Comprehend the classification of service enterprise;
Enumerate the types of services; and
Differentiate services to its category.

Introduction:

Hello students! Congratulations again you made it, Welcome to Lesson 3, the last
part of these module. In this lesson, you will be introduced to the classification of
Service Enterprise. Now, are you ready to explore? If YES, answer the activity that
follows to set your mind for our discussion.

List down at least 2 examples each of service enterprise categories

1. Hospitality ________________ _______________

2. Professional Services _______________ _______________
3. Financial Services ________________ ________________
4. Medicine _________________ _______________
5. Wellness _________________ ________________

Were you able to identify and list down the example of service enterprises?
Now it’s time to analyze and answer the following question:
*See Appendix A for the rubric

1. Based on your answer above, how does a professional service

provides a high value of satisfaction to the customer?

2. How does Professional services and hospitality differ from one another in
providing services to the clients? Discuss briefly and concisely in a paragraph
from.
Abstraction
CLASSIFICATION OF SERVICE

The service sector can best be characterized by its diversity. Service

organizations range in size from huge international corporations in such
fields as airlines, banking, insurance, telecommunication, hotel chains, and
freight transportation to a vast array of locally owned and operated small
businesses, including restaurants, laundries, taxis, and numerous business to business
services. Franchised service outlets- in fields ranging from fast food to book keeping-
combine the marketing characteristics of a large chain that offers a standardized
product with local ownership and operation of a specific facility

Classification of services may be classified into different categories.

1. Consumer Services:
Services which are offered to the consumers are called consumers services

2. Food services:
Food services are offered by hotels, restaurants, canteens. These eating
places sell various items of food which are delicious, tasty & nutritious to millions of
individuals & even family which have developed the habit of eating out. They
Have become very popular all over the world & hence they are growing in size with
increasing volume of business. They sell such food items which differ in variety &
taste & which cannot be often prepared at home by the family people.

3. Hotels & motels:

Modern hotels & motels have been growing in number & size because of
phenomenal increase in the volume of trade, commerce, business etc. Lakhs of people
are taking their food & shelter every day in modern hotels& motels which provides
luxurious life, comforts & most up-to-date services. Most of these hotels earn
valuable foreign exchange by provide a comfortable & luxurious services to foreign
tourists, travelers & b/s magnets. They provide air conditioned rooms with four
channel music, fridge, telephone, T.V set, day & night service, swimming pool & so
on. Their charges for their services are very high but still people with high income,
ministers, cinema stars, cricket players, tourists & travelers do not hesitate to spend on
such services because they know that they are paying for the extra- ordinary services
& tasty food items.

4. Entertainment services:
Because of large increase in their income, availability of more leisure time
& rise in their living standards, people now desire to spend their time & money on
getting entertainment of various types. Therefore there has been a good deal of
increase in movies, music, clubs , circuses, car- racing, horse- racing etc. which have
become the organized forms of entertainment in these days.
 5. Banking & financial services:
Bank & other financial institutions have grown up in number and size to
provide financial assistance to the people. A large number require in these days loans
& advances foe starting or business while many other require finance for purchase of
durable articles like TV sets, fridge, cars, scooters, etc.

6. Industrial services:
Services sold in the industrial market are called industrial services. These
services are offered to the industry for facilitating production, financing & marketing
of goods. There are specialized agencies to provide such services. Even
manufacturers, wholesalers & retailers also sell some services along with the sale of
goods. Similarly they buy such services in the conduct of their business.
7. Financial services
Financial services are provided to the business people by banks, specialized
finance institutions, finance co., investment co, & investment trust. Finance is
absolutely essential for every business concern since finance is the life-blood of
business. The business concern requires both long term & short term finance. Long
term finance is provided to meet the fixed capital requirements while short term
finance is provided to meet working capital requirements

8. Transport & warehousing services:

Goods produced will have to be moved to the places of consumptions & raw
materials etc. have to be moved from the places of their production to the factories for
further production in to finished goods. Thus transport services are required for
physical distribution of goods & people. Goods will have to be stored in warehouses
till demand for them arises. Warehouses provide storage facilities to the business
people.

9. Insurance services:
Business concerns have to bear a number of risks such as risk of loss due to
fire, theft, burglary, perils of the sea, bad debts, accidents in factories etc. many of
these risks cannot be eliminated or avoided. However they can certainly be transferred
to others. Insurance co. help the business people to transfer many of their risks.

10. Engineering & technical services:

The services are provided by the specialized & expert engineers &
technicians. Such services are required by the business people for formulating &
planning new projects, designing & constructing plants & factories etc.

11. Office services:

All business firms cannot have all types of office services they require. They
can buy a variety of these services from specialists & expert on part time basis. Thus
they can buy the services of typist, accountant, auditors etc.
6. Advertising & sales promotion services:
They are specialized advertising agencies which provide expert advice &
guidance to the business people, undertake advertising campaign on behalf of these
business people by preparing attractive & impressive designs & messages in the
advertisements on payment of certain remuneration.
Application
Instructions: Answer the questions below. Discuss it briefly and concisely. Cite the author of the rela
*See Appendix A for the rubric
1. Discuss how service business classified to the manufacturing or production enterprise

2. How do the food services differ to consumer services? Discuss thoroughly.

Congratulations! You have just finished Lesson 3. You did

very well! If there are some clarifications about the topic,
don’t hesitate to ask your instructor.

Now, are you excited for our next lesson? Just wait; let’s
have your module assessment to assess your learning before
you will be learning about Service Processes. If you are
ready, please proceed to Module 2.
Module Summary
 Service as “an activity or series of activities of more or less intangible nature
that normally, not necessarily, take place in interactions between the customer
and service employees and/or physical resources or goods and/or systems of
the service provider, which are provided as solution to customer problems”.
We may conclude service as, “an activity or series of activities rather than
things which has some element of intangibility associated with it, which
involves some interaction between the customer and the service provider, and
does not result in a transfer of ownership.
 Characteristics of Services includes intangibility, inseparability, homogeneity,
perishability and no transfer of ownership
 Classification of Services includes consumer, food services, hotels/motels,
financing, banking and finance, insurance, entertainment, engineering and
mechanics and office services.
Module References

Lesson 1 – https://www.businessmanagementideas.com/service-marketing/service-
process/20903

Lesson 2 – https://www.businessmanagementideas.com/service-marketing/service-
process/20903

Lesson 3 - https://www.businessmanagementideas.com/service-marketing/service-
process/20903
Module Assessment
Test I. Matching Type.(1pt. each)

Column A Column B
1. Divergence a. Provides financial services
2. Entertainment Service b. availability of more leisure time
3. Insurance Service c. Provides benefits of risk loss due
theft, fire and others
4. Service Process d. the fact that services cannot be
saved, stored, resold, or returned
5. Banking and Financial Services e. Services are typically produced
and consumed at the same time
6. Perishability f. Stanton
7. Inseparability g. The degree, to which a service
provider can vary services,
deviating from the standard
service
8. Separately identifiable, intangible h. an activity or series of activities of
activities which provide want more or less intangible nature that
satisfaction when marketed to normally, not necessarily, take
consumers and/or industrial users place in interactions between the
and which are not necessarily tied customer and service employees
to the sale of a product or another
service”.
9. Gronroos i. Kotler and Bloom
10. Any activity or benefit that one j. Interaction of the customers with
party can offer to another that is the system
essentially intangible and does not
result in the ownership of
anything.

Test II. Essay Type

*See Appendix A for the rubric
1. Discuss the classification of service enterprise; give at least two examples
each classification.
2. Distinguish the different characteristics of service enterprise.
Module 2: Service Processes
In this Module
Introduction to Service Processes
Elements of Service Process
Service Marketing and Metrics

Module Overview

Services are intangible products such as accounting, banking, cleaning,

consultancy, education, insurance, expertise, medical treatment, or transportation.
Services deal with processes rather than with thing are experienced rather than
consumed. Whether your organization produces goods or offers services, the service
process defines the customer experience. It will either lead to customer satisfaction,
referrals, or repeat business, or even disappointment. As a business owner or manager,
it is vital for you to be in control of the service process.
The way in which we serve our clients is so important that a systematic process
that will give a company an advantage over its competitors becomes essential. Even
if the goods and services we offer are very similar to those of our competitors, the
way in which we serve our clients (the service process), can give us the competitive
edge. Naturally, if we are in a service industry, the service process is all the more
important.

At the completion of this module, you should be able to:

 Comprehend and understand the service processes;

 Distinguished the different characteristics, elements and phases of service
processes; and
 Explain how marketing management and metrics allow service organizations
to implement and measure marketing strategy.

Are you ready? Then start the lessons now!

 Introduction to
Service Process

Learning Outcomes

At the end of the lesson, you should be able to:

Define Service Processes;
Understand the service process in relation to manufacturing process; and
Identify the different characteristics of service processes.

Introduction:

Hello students! Welcome to Lesson 1, in this lesson, you will be introduced the
concept of service processes. You will be able to understand what service processes in
relation to manufacturing of goods. Now, are you ready to explore? If YES, answer
the activity that follows to set your mind for our discussion.

Scrambled Words
INTANIGELB
isabilities from the given set of scrambled words. Write your answers on the space below eachGSOOD
word.
__________ _____

SEVRIECPORESSC OMCLEPXTIY
_ _ _ _ __ _ _ _ _ _ _ ______

Were you able to list down your skills? Now answer the following
questions related to our topic this session.
*See Appendix A for the rubric
1. What do you think is the relation of your skills to our topic today?

2. Based on you own understanding, how can you define service processes.

Abstraction What is Service Process?

 When place in the factory’s premises, keeping the customers at bay. The customer
manufacturing goods, the rarely comes in contact with the manufacturing process, as those processes
process involved takes that lie with the factory premises, lie in the sole domain of operations.
Interaction of the customers with the system should be a part of the service creation
and hence this makes the customer be a part of the service process. The service
failures often are the result of inadequately and inappropriately designed service
processes.
Interaction of the customers with the system should be a part of the service
creation and hence this makes the customer be a part of the service process. The
service failures often are the result of inadequately and inappropriately designed
service processes.

Services which depend on customer contact or customers are the recipient of

service actions, the customer side of the process can be mapped by identifying service
delivery process. A chart that draws and lists the various contact points when the
system and the customer come in contact to create a value is known as a flow chart.

Characteristics of Service Process

Service production and consumption are inseparable, and therefore the customer
acts as a co-producer of many services. The service delivery is the outcome of the
service process. The process constitutes the service itself. The service characteristics
of inseparability and participation often make the customer, interact and become a
part of the process
Despite such importance of the service process, sometimes service organizations
pay very little systematic attention to this aspect of business. As a result, service
processes evolve on their own with internal bias or no focus at all. Therefore, it is not
surprising that many service organizations are not adequately equipped to serve the
customer well and such processes limit the efficiency of the operations.

Some of the characteristics of Service Process are as follows:

1. Divergence

Often, service providers adapt their services to match customer needs, as a

single service might not cater to all. The degree, to which a service provider
can vary services, deviating from the standard service, is known as
divergence. Divergence provides an opportunity for the service provider to
customize services for his customers, and serve them better. For example,
many tourism companies customize their holiday packages according to
customer needs.

2. Complexity

The process of creating and delivering a service involves many activities.

While some activities might be quite simple, others can be quite complex. The
complexity of a process should take into consideration the contribution of the
different activities to service quality.
 The activities that contribute to service quality in an interaction between a
banker and a customer may include the friendliness shown by the banker, his
knowledge about the products, the speed at which the service is offered to the
customer, etc. At the same time, the number of activities in the production and
delivery of a service increase with the increase in divergence, i.e., complexity
increases with divergence.

3. Service Location

The nature of the service being offered largely determines the service
location. Services can be delivered at the service provider’s location, at the
customer’s location, at a neutral location or virtually, depending on their
nature. For example, customers can either visit a hotel to have dinner or they
can order home delivery.

4. Customer Participation and Interaction

Service processes should be designed depending on the extent of

interaction with the customer and his participation in service production and
delivery. The level of customer interaction and participation differs from
service-to-service. For example, the level of interaction between a banker and
a customer is negligible in mobile banking transactions while the level of
customer participation is high in deciding and ordering a menu for a wedding.

5. Service Itself

Services can be either process-based or technology-based. Process-based

services involve many activities that a customer has to go through before
obtaining the service. For example, a student aspiring to join an IIM (Indian
Institute of Management) course or any other business institution has to fill-up
an application form, take the entrance test and appear for an interview, group
discussion, etc., before gaining admission. Process-based services involve
many people, with high levels of interaction between them.
The service provider has an opportunity to improve the quality of service
at every step and in each interaction. On the other hand, equipment or
technology-based services require very little inter-personal communication
between a service provider and his customer

Service production and consumption are inseparable, and therefore the customer
acts as a co-producer of many services. The service delivery is the outcome of the
service process. The process constitutes the service itself. The service characteristics
of inseparability and participation often make the customer, interact and become a
part of the process.
Despite such importance of the service process, sometimes service organisations
pay very little systematic attention to this aspect of business. As a result, service
processes evolve on their own with internal bias or no focus at all. Therefore, it is not
surprising that many service organisations are not adequately equipped to serve the
customer well and such processes limit the efficiency of the operations.
 Application
Instructions: Answer the questions below. Discuss it briefly and concisely. Cite the author of the rela
*See Appendix A for the rubric

1. How Serviceprocesses workother than in serviceenterprises like manufacturing businesses

2. Cite an example of an enterprise business and draw its service process flow in delivering goods and services towards its

d on you answer in No.2, think about the characteristics of the said enterprise then mention at least 3 of it. Discuss br

Congratulations! You have just finished Lesson 1. You did

very well! If there are some clarifications about the topic,
don’t hesitate to ask your instructor.

Now, are you excited for our next lesson? You will be
learning about the Elements of Service Processes. If you are
ready, please proceed to Lesson 2.
 Elements of Service Process

Learning Outcomes

At the end of the lesson, you should be able to:

Comprehend the elements of service processes;
Understand the phases of service processes; and
Differentiate and identify the different phases.

Introduction:

Hello students! Welcome to Lesson 1, in this lesson, you will be introduced the
concept of service processes. You will be able to understand what service processes in
relation to manufacturing of goods. Now, are you ready to explore? If YES, answer
the activity that follows to set your mind for our discussion.

Scrambled Words
FONRT on
isabilities from the given set of scrambled words. Write your answers STGAE DEGSINE
the space below PAHSE
each word.
__________ _____

SEVRIEC PORESSCPEIRIHSABLIIYT
_ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _

Were you able to list down your skills? Now answer the following
questions related to our topic this session.
*See Appendix A for the rubric

1. In your own understanding, elaborate service processes.

2. If you heard about perishability, how can you define it? How it is related to
service process as a product?

Abstraction The service process is a part of the extended 3 Ps of services.

They are an addition to the are important in defining and understanding services, however, they are
existing or traditional 4 Ps of not sufficient for the same. Hence, for a comprehensive understanding
services. The traditional Ps of services, the additional 3 Ps – People,
Process and Physical Evidence are introduced and studied.

Services are performances or actions done for or with the customers, that is
the reason, they typically involve a sequence of steps and activities. The combination
of these steps constitutes a service process which is evaluated by the customers.
Furthermore, in a service situation customers are likely to have to queue before they
can be served and the service delivery itself is likely to take a certain length of waiting
time.
For example, at a customer service counter of your local telephone service
provider, there is a queue of customers waiting for their turn to register their inquiry,
complaint or grievance. A doctor’s office has patients waiting for their turn in the
‘waiting room’. There are numerous such examples where, the customers have to wait
for the service to be delivered, how fast, effective and efficient is this waiting period
is a task for any marketer.

it helps if marketers ensure that customers understand the process of acquiring a

service and the acceptable delivery times. Creating and managing effective service
processes are essential tasks for service firms. This is the reason behind customer care
department of various companies give a 24 hours’ time window (or more depending
on the efficiency of the service provider) to address the customer complaint or to visit
the customer personally to provide necessary corrective service.

Managing the process factor is essential due to the perishability of services

which means that services cannot be inventoried, stored for reuse or returned. As
services are performances that cannot be stored, it is a challenge for service
businesses to manage situations of over or under demand.

Phases of Service Processes

Product is manufactured away from a customers and the time lag between
manufacturing and consumption is more. But most of the service is processed just few
steps away from customers. Other peculiarity of service processes is that throughout
the process there are interactions between service provider and customers.
There may be duties of the customer that are critical for success or failure of
the service process. For example, it may be necessary that the customer provides
some information to allow the further proceeding of the process. It is important to
emphasize that a service process must describe the interaction between customer and
service provider.

Another vital factor is that the services offered can be divided into two stages
namely:
1. Front stage
2. Back stage

Those activities of the service providers and that of the customers which are
visible are referred to as front stage. On the other hand, those activities which cannot
be seen are referred to as back stage.
Yet another key property in services is that the processes will have to signify the
transfer of resources and related information from customer to the service provider
and the compensation vice versa. Furthermore, service processes are often cross-
organizational. The top-management service providers, who are responsible for
providing the service to the customer coordinates several of sub-processes.
The definition of the lifecycle for service processes is based on the lifecycle which
contains the design phase, the deployment phase, the operation and the evaluation
phase.

1. Design Phase:
Today’s customers are very demanding not only in terms of better quality
services but also how fast they are served. If a company does not want to lose the
customers base they have to design their service process is in such a way that service
is delivered fast and with quality. Service quality is very important for service
providers to build customer loyalty and to achieve competitive edge.
The design phase help to formalize the interaction between the customer and
service provider it helps to define the contacts and the information exchanged in this
contacts. For example a person entering in a restaurant who are the people who will
have first-hand interaction with customers is it the door keeper, the manager who will
guide customers to here table or the waiter who will give the menu card or is it
directly the manager who will take the order.

Service process is divided into two stages, namely, front stage and back stage to
have appropriate execution of interactions. For example, in a restaurant front stage
activities are welcoming the customers, taking order from the customers, serving food
to the customers, collecting plates after customers are done and in the end bringing
the bill whereas, back stage activities are taking order from waiter with regard to what
customer has ordered, cooking, decorating the food, preparing the bill and payment
work.
Both front stages and back stage are so much interlinked that companies should
clearly define the roles and regulations of each and every individual.
The process of design phase is not only concerned with interaction of customer with
the service provider, it is also about designing the interaction that the service provider
has with suppliers. Many service providers use suppliers to provide sub- services for
example many companies are buying space is social networking sites to increase their
sales so the contract with these suppliers have to be taken into account as well so that
they also are accountable for better service delivery.
Estimating the demand of a service is very tough as they are manufactured the
moment they are consumed. Therefore, to assure the customers about the reliability of
the service provider, certification and documentation of the service to be provided is
an important means.
Such a certificate is based on the compliance with rules and structures assuring an
adequate service quality as per requirement. An example for such a surrogate is the
certification of ISO 20000 compliance, which is an essential benefit for a service
provider.
2. Deployment Phase:

The planning which has been defined in the design phase is verified by the
deploying the process. The interactions between the client and the supplier will have
to be identified in order to avoid clashes and problems between them during the
process.
There are many parallel activities which happen in interacting with an employee
such as other customers trying to interact with other service providers outside noise
etc. Particular attention should be paid to synchronize the deployment process in order
to avoid such disturbances.
The certification of the designed process requires a sealing of the process during
deployment. Once the certification is obtained, changes of any kind cannot be
performed as this may result in losing the certificate. To fulfil the service level
requirements concerning readiness and dependability, appropriate resources and
substitute systems have to be allocated and prepared.

3. Operation Phase:

During the operation of the service process, it is essential to record a number of

facts and figures to prove to the customer that the level agreements relating to the
service process have been met.
To begin with, the availability and dependability of the services will have to be
recorded. This log will also include the time required for repair and other broken
services. In case the service providers have experienced failure in the past, caution
will have to be taken to prevent such failure from reoccurring.

Interaction between the client and customer will have to be logged which serves
as a proof of whether the customer’s requests has been catered to, the time taken to
provide the service and other such information. The same applies for the handing over
and restitution of resources at the end of the service process; the customer’s resources
have to be returned to the customer.
This process will have to done by using specified techniques guaranteeing that formal
requirements such as receipts, protocols etc. are used and a suitable documentation is
generated which proves the restitution of the resources.
As the broken services cannot be replaced from the available stock, the service
providers of broken services will have to suggest a remedy wherever possible to
ensure the customers are not affected by the same. In order to achieve this, suitable
backup and retrieval procedures will have to be made available.
Suppose there is a failure during the service process, the agreements entered into by
the parties will play a vital role which safeguards the interest of the customers at first.
There may be different service level agreements for different customers defining
much shorter recovery times for one customer. Thus, this customer should be
supported first.
The challenge here is the tracking of the process status, because the process is cross-
organizational. Several service process certificates such as ISO/IEC 20000 require
that quality control and upgrading mechanisms are stimulated throughout the
operation phase to allow a future estimation and enhancement of the process.
 4. Evaluation Phase:

The evaluation phase is also prejudiced by the exceptional features of service

processes and services. The service providers will have to be in a position to prove to
the customers that the service level agreements have been fulfilled and satisfied all the
provisions stated in the agreement. Besides this, the details about failures, if any, will
be used for recognizing actions for improvement in the service process. Therefore, the
availability and reliability achieved and the failures occurred have to be compared
with the service level agreement, mal-formed interactions shall be traced and
violations of the handover and restitution protocols shall be exposed.

Application
ose you partner to answer this assessment; it’s either your classmate or a neighbor with the same course subject. Conceptu
nd listed all the ideas make a reflection paper out of it.
the rubric

Congratulations! You have just finished Lesson 2. You did

very well! If there are some clarifications about the topic, don’t
hesitate to ask your instructor.

Now, are you excited for our next lesson? You will be learning
about the Service Marketing and Metrics. If you are ready,
please proceed to Lesson 3.
 Service Marketing & Metrics

Learning Outcomes

At the end of the lesson, you should be able to:

Explain how marketing management and metrics allow service organizations to implement and measure marketing strate

S R L M O E A I L
M E T R I C S I E
M A R K E T I N G
B M S V I S E M E
Word Puzzle O N R N I C E R E
C L E A R C D O C
M A R K E T E R S
Find out the 5 important words related to our lessonEtoday. F F E C T I V E

Were you able to find the 5 important words related to

our lesson today? Now, it’s time to define and discuss each word.
*See Appendix A for the rubric

Abstraction Service Marketing Management & Metrics

Marketing management is a business discipline which is

focused on the practical application of marketing techniques and the
management of a firm’s marketing resources and activities. Rapid
globalization has led service providers to market beyond the borders of their home
countries, making marketing management and metrics and integral part of
implementing and measuring an effective marketing strategy.
Service Marketing Management

To create an effective, cost-efficient marketing management strategy, firms must

possess a detailed, objective understanding of their own business and the market in
which they operate. In analyzing these issues, the discipline of marketing
management often overlaps with the related discipline of strategic planning.
After the firm’s strategic objectives have been identified, the target market selected,
and the desired positioning for the company, product, service or brand has been
determined, marketing managers focus on how to best implement the chosen strategy.
Traditionally, this has involved implementation planning across the “4 Ps” of
marketing: product (or service) management, pricing , place and Promotion. A new P
has been added making it a total of five P’s. The fifth P is politics, which affects
service marketing in a significant way.
Part of a service marketing manager’s job is analyzing external influences and current
marketing conditions that are directly or indirectly impacting the business. Tasks for
marketing management may include conducting a competitor and value chain
analysis, putting together a brand audit, and assembling qualitative and quantitative
research. This research, along with an assessment of the business’ own strengths and
weaknesses, go into a marketing plan used to launch future marketing programs and
initiatives. Overseeing the successful development and execution of the marketing
plan falls under service marketing management roles.

Marketing Performance Metrics

Marketing management employs a variety of metrics to measure progress

against objectives. It is the responsibility of marketing managers–in the marketing
department or elsewhere–to ensure that the execution of marketing programs achieves
the desired objectives in a cost-efficient manner. Marketing management therefore
often makes use of various organizational control systems, such as sales forecasts,
sales force and seller incentive programs, sales force management systems, and
customer relationship management tools (CRM).

The marketing metrics continuum, shown here, provides a good framework for
categorizing metrics. Metrics enable marketing professionals to justify budgets based
on returns and to drive organizational growth and innovation. Some common metrics
used to measure performance include lead to conversion rate, click-through rate and
number of new opportunities (i.e., new business deals). Other elements of
measurement include net sales billed, number of product or design registrations, brand
surveys to measure brand awareness, the return on the investment, and website hits.
Numeric data for these metrics can come from a variety of sources such as the service
provider’s website, and industry trade show, or word-of-mouth marketing. Marketers
use these metrics and performance measurement as way to prove value and
demonstrate the contribution of marketing to the organization.
 Figure 3.1 Marketing Metrics Continuum: The Marketing Metrics Continuum
provides a framework for categorizing metrics from tactical to strategic.

The Marketing Metrics Continuum categorizes metrics (activity-based,

operational, outcome-based, leading indicators, and predictive) and looks at counting,
efficiency, business outcome, and likelihood of outcome.

Application
w and watch the video presentation about service marketing. After, make a reflection paper about this topic and how it h

Congratulations! You have just finished Lesson e. You did

very well! If there are some clarifications about the topic, don’t
hesitate to ask your instructor.

Now, are you excited for our next module? But wait, kindly
answer the module assessment to assess you learning’s.
Module Summary
 Service production and consumption are inseparable, and therefore the
customer acts as a co-producer of many services. The service delivery is the
outcome of the service process. The process constitutes the service itself. The
service characteristics of inseparability and participation often make the
customer, interact and become a part of the process
 Characteristics of Service Process include Divergence, Complexity, Service
location, Service Participation and Interaction and Service Itself.
 Service Process includes the 4 phases: Design phase, Deployment Phase,
Operation Phase and Evaluation phase.
 Marketing management is a business discipline which is focused on the
practical application of marketing techniques and the management of a firm’s
marketing resources and activities. Rapid globalization has led service
providers to market beyond the borders of their home countries, making
marketing management and metrics and integral part of implementing and
measuring an effective marketing strategy.
 Marketing management employs a variety of metrics to measure progress
against objectives. It is the responsibility of marketing managers–in the
marketing department or elsewhere–to ensure that the execution of marketing
programs achieves the desired objectives in a cost-efficient manner. Marketing
management therefore often makes use of various organizational control
systems, such as sales forecasts, sales force and seller incentive programs,
sales force management systems, and customer relationship management tools
(CRM).
 The Marketing Metrics Continuum categorizes metrics (activity-based,
operational, outcome-based, leading indicators, and predictive) and looks at
counting, efficiency, business outcome, and likelihood of outcome.
Module References
Lesson 1 – https://www.businessmanagementideas.com/service-
marketing/service-process/20903

Lesson 2 - https://www.businessmanagementideas.com/service-marketing/service-
process/20903

Lesson 3- https://courses.lumenlearning.com/boundless-marekting
Module Assessment

Test I. Modified True or False.

Instructions: Write TRUE if the statement is correct, however if it is wrong
underlined the word that make the statement incorrect and write the correct answer on
the space provided. (2 pts each)

1. Service Metrics provides a good framework for

categorizing metrics.
2. Metrics enable marketing professionals to justify
budgets based on returns and to drive organizational growth and innovation
3. To create an effective, cost-efficient marketing
management strategy, firms must possess a undetailed, objective
understanding of their own business and the market in which they operate.
4. The operation phase is also prejudiced by the
exceptional features of service processes and services.
5. Services are performances or actions done for or
with the customers, that is the reason, they typically involve a sequence of
steps and activities.
6. Services can be either process-based or network-based.
7. The nature of the service being offered largely
determines the service location.
8. Divergence is the process of creating and delivering a
service involves many activities
9. Interaction of the customers with the system should be
a part of the service creation and hence this makes the customer be a part of
the service process.
10. Divergence provides an opportunity for the service
provider to customize services for his customers, and serve them better.

Test II. Essay Type

*See Appendix A for the rubric

1. How service marketing metrics helps in marketing strategy of various

enterprises not limited to service businesses?
2. What are the main characteristics of Service Process? Discuss.
3. Discuss the phases of service process.
Module 3: Role of Service Enterprise
In the Economy

In this Module
 The Service Economy
 Service as Solutions
 Service as Products

Module Overview

The growth of the service sector has long been considered as an indicator of a
country’s economic progress. Service enterprise are continually being launched to
satisfy our existing needs and to meet needs that we did not even know we had.
Service enterprise can vary in size from large corporations to small, locally owned
businesses.
Moreover, if you want customers to buy your services, you need offer them a
solution that costs less than the problem is costing them. No customer will renew a
subscription service or buy more consulting services if they don’t see genuine value in
these services as it relates to fulfilling their business objectives.

At the completion of this module, you should be able to:

 Define the role of a service economy in developed and developing countries;
 Demonstrate knowledge of the skills required to sell services as solutions to
customers and prospects; and
 Describe the characteristics of service products.

Are you ready? Then start the lessons now!

 The Service Economy

Learning Outcomes

At the end of the lesson, you should be able to:

Understand service economy; and
Comprehend the role of service economy in the development.

Introduction:
Hello students! Welcome to Lesson 1, in this lesson, you will learn about the service
economy and you’ll understand the role of service economy in economic
development. Now, are you ready to explore? If YES, answer the activity that follows
to set your mind for our discussion.

Scrambled Words
isabilities from the given set of scrambled words. Write your answers on the space below each word.
YOMECON ELVEDTENMPO
_______ ___________

SEVRIEC OELR
_______ ____

Were you able to answer all the items correctly? They are
Analysis just some of the many terms you will encounter as we go deeper with our
lesson. Now answer the following question related to our topic this
session.
*See Appendix A for the rubric

1. What is the role of the service enterprises in the economy?

Abstraction
The world economy is increasingly characterized as a service
economy. This is primarily due to the increasing importance and share
of the service sector in the economies of most developed and developing
countries. In fact, the growth of the service sector has long been
considered as an indicator of a country’s economic progress. Economic
history tells us that all developing nations have invariably experienced a
shift from agriculture to industry and then to the service sector as the mainstay of the
 economy. This shift has also brought about a change in the definition of goods and
services themselves.

Service organizations vary widely in size. At one end of the scale are huge
international corporations operating in such industries as airlines, banking, insurance,
telecommunications, and hotels. At the other end of the scale are a vast array of
locally owned and operated small businesses, such as restaurants, laundries,
optometrists, beauty parlors, and numerous business-to-business services.
The service sector is going through revolutionary change, which dramatically affects
the way in which we live and work. New services are continually being launched to
satisfy our existing needs and to meet needs that we did not even know we had.
Nearly fifty years ago, when the first electronic file sharing system was created, few
people likely anticipated the future demand for online banking, website hosting, or
email providers. Today, many of us feel we can’t do without them. Similar
transformations are occurring in business-to-business markets.

The Role of the Service Economy In Development

As of 2008, services constituted over 50% of GDP in low income countries.

As their economies continue to develop, the importance of the service sector
continues to grow. For instance, services accounted for 47% of economic growth in
sub-Saharan Africa over the period 2000–2005, while industry only contributed 37%
and agriculture only 16% in that same period. This means that recent economic
growth in Africa relied as much on services as on natural resources or textiles, despite
many of those countries benefiting from trade preferences in primary and secondary
goods.
As a result of these changes, people are leaving the agricultural sector to find work in
the service economy. This job creation is particularly useful as often it provides
employment for unskilled workers in the tourism and retail sectors, which benefits the
poor and represents an overall net increase in employment. The service economy in
developing countries is most often made up of the following industries: financial
services, tourism, distribution, health, and education.

Application
Instructions: Click the link below and watch the video presentation about service economy then make a reflection pape
* See Appendix B for the rubric
Congratulations! You have just finished Lesson 1. You did
very well! If there are some clarifications about the topic,
don’t hesitate to ask your instructor.

Now, are you excited for our next lesson? You will be
learning about Service as Solutions. If you are ready, please
proceed to Lesson 2.
 Services as Solutions

Learning Outcomes

At the end of the lesson, you should be able to:

Appreciate the importance of service enterprises;
Know how to sell services as solutions;
Comprehend customer engagement; and
Determine how to market meaningful solutions bundle.

Introduction:
Hello students! Welcome to Lesson 2, this will be the continuation on the topic
discussed on Lesson 1.You will be able to expand your understanding to the nature of
services. You will be able to identify its characteristics and classification. Now, are
you ready to explore? If YES, answer the activity that follows to set your mind for our
discussion.

ess but doesn’t have enough money for working capital. Now, cite atleast two (2) service enterprises that would serve as so

Were you able to list down atleast two (2) service enterprises that serve
as solution to Maria’s financial problem? Now answer the following
questions related to our topic this session.
*See Appendix A for the rubric

1. What do you think is the relation of the above activity to our

topic today?

2. In your own opinion, what is customer engagement?

Abstraction
Firms need to understand their service and their customers to ensure
that their services will be viewed as solutions to consumer needs.

If you want customers to buy your services, you need offer them a solution
that costs less than the problem is costing them. Your solution might:
 Save your customer money;
 Save your customer time: or
 Improve your customer’s productivity.

This is different from solution selling because instead of defining the solution and
then looking for applicable problems, you are tailoring your services to fit your
prospective customer’s day-to-day problems. In essence, you are in the problem-
solving business and if you can prove that you can solve your customer’s present
problems, you’ll have a long-term customer who will come back for more and more.
In order to accomplish this task you and anyone involved in selling your services,
need to:
 Have an excellent understanding of the services you’re offering and what can
and can’t be tailored to a customer’s requirement;
 Have an solid understanding of the common problems your prospects face and
those that your services can solve; and
 Prepare 20-25 questions to identify possible problems and generate credibility
and confidence in your company’s abilities.

Selling Services As Solutions

Budgets: Services have to be priced fairly

in order to attract customers. People aren’t
willing to pay for services that are too
expensive or that they do not need.
Without genuinely valuable services for
your customer, you have no revenue.
While “what’s the value proposition?” is
an over-used term, below is a more
specific definition of value.

It’s about selling a meaningful solution bundle

When selling services rather than technology, the focus should be on people
and organizations—listening to and understanding their internal projects, and being
considerate of their timelines and budgets. It is important to listen and provide a fair
offer for services that genuinely meet a customer’s need. Budgets are much too
constrained these days for anyone to buy services they don’t really need. This model
can be a good foundation for a company, leading to a sustainable revenue stream that
can help to further fund the development of the product.
In other words, create revenue that can sustain and grow the business, to make the
product better in the long run, and to enable customers to better deploy the software.
This only happens if the software and the services provide real value to an
organization.

It’s about customer engagement

Years ago, the Red Hat Network offered a valuable service for those who
purchased a software subscription. If you passively wait for the renewal, you can
expect that some customers will ask themselves, “Do we use this subscription service
or not? Do we really need to continue to pay for it? ” A proactive approach in this
scenario is to demonstrate ongoing value by regular customer engagement, showing
the customer new features they can access via their subscription, reviewing their
current use of the product, and offering add-on services to help them be better trained
or better able to use more of the product for more of their organization.
The fundamental principle here is value. No customer will renew a subscription
service or buy more consulting services if they don’t see genuine value in these
services as it relates to fulfilling their business objectives, whether that be better
customer service, better IT responsiveness, or better IT management.

Application
Exploring your Imagination
Instructions: Create a service enterprise that serves as solution to the
consumers’ problem. List down your service offerings and determine
the price per offering.
*See Appendix A for the rubric

You have just finished Lesson 2. You did very well! If there
are some clarifications about the topic, don’t hesitate to ask
your instructor.

Now, are you excited for our next lesson? You will be learning
about services as products. If you are ready, please proceed to
Lesson 3.
 Services as Products

Learning Outcomes

At the end of the lesson, you should be able to:

Appreciate the importance of service products; and
Differentiate service products from physical goods.

Introduction:
Hello students! Welcome to Lesson 3, in this lesson, you will be introduced to the
concept of services as products. You will be able to appreciate the importance of
service products and differentiate it from physical goods. Now, are you ready to
explore? If YES, answer the activity that follows to set your mind for our discussion.

Provide atleast two (2) service products that are offered by the
following service enterprises:
1. Professional _____________ ____________
Services ______________ _______________
2. Lending Institutions _______________ ______________
3.Entertainment Services

Were you able to provide atleast two (2) service products offered by
different service enterprises? Now it’s time to analyze and answer the
following questions.
*See Appendix A for the rubric

1. Based on your answer above, how does an entertainment

service enterprise provides high value of satisfaction to the customers?

2. In what way professional services and lending institutions differ from one
another in providing services to the clients? Discuss briefly and concisely in
a paragraph form.
Abstraction
Services represent an integral part of many products and the
correlation of goods and services is represented on a goods-services
continuum.
The increasing importance of the service market in the economy has
brought about a change in the definition of goods and services. No longer
are goods considered separate from services. Rather, services now increasingly
represent an integral part of the product. It is this interconnectedness between goods
and services that is represented on a goods-services continuum.
Services can be alternatively defined as products, such as a bank loan or a home
security, that are to some extent intangible. If totally intangible, they are exchanged
directly from the producer to the user, cannot be transported or stored, and are almost
instantly perishable.

Service products are often difficult to identify, because they come into
existence at the same time that they are bought and consumed. They comprise
intangible elements that are inseparable; they usually involve customer participation
in some important way; they cannot be sold in the sense of ownership transfer; and
they have no title. Today, however, most products are partly tangible and partly
intangible, so the dominant form is to classify them as either goods or services (all are
products).

Taxi Services: A taxi cab

driver provides both a good
and a service, so he provides a
product.
The dichotomy between
physical goods and intangible
services should not be given
too much credence. These are
not discrete categories. Most
business theorists see a
continuum with pure services
on one terminal point and pure
commodity goods on the other
terminal point. Most products
fall between these two
extremes. For example, a
restaurant provides a physical
good (the food), but also
provides service in the form of ambiance, the cooking and the serving of the food, and
the setting and the clearing of the table. And although some utilities actually deliver
physical goods — like water utilities which actually deliver water — utilities are
usually treated as services.
Application
Instructions: Answer the question below. Discuss it briefly and
concisely. Cite the author of the related readings if you intend to
borrow ideas.
*See Appendix A for the rubric
1. Discuss the importance of service products in the economy.
Congratulations!
You have just
finished the last
topics in this
module. You did
very well! If there
are some
clarifications
about the topic,
don’t hesitate to
ask your
instructor.

Now, are you

ready to answer
the module
assessment? If
yes, proceed to
next page.
Module Summary

 The world economy is increasingly characterized as a service economy. This

is primarily due to the increasing importance and share of the service sector in
the economies of most developed and developing countries. In fact, the growth
of the service sector has long been considered as an indicator of a country’s
economic progress.
 Service organizations vary widely in size. At one end of the scale are huge
international corporations operating in such industries as airlines, banking,
insurance, telecommunications, and hotels. At the other end of the scale are a
vast array of locally owned and operated small businesses, such as restaurants,
laundries, optometrists, beauty parlors, and numerous business-to-business
services.
 When selling services rather than technology, the focus should be on people
and organizations—listening to and understanding their internal projects, and
being considerate of their timelines and budgets. It is important to listen and
provide a fair offer for services that genuinely meet a customer’s need.
 Service products are often difficult to identify, because they come into
existence at the same time that they are bought and consumed. They comprise
intangible elements that are inseparable; they usually involve customer
participation in some important way; they cannot be sold in the sense of
ownership transfer; and they have no title. Today, however, most products are
partly tangible and partly intangible, so the dominant form is to classify them
as either goods or services (all are products).
Module References
Lesson 1- https://courses.lumenlearning.com/boundless-marketing/chapter/the-
importance-of-services/

Lesson 2- https://courses.lumenlearning.com/boundless-marketing/chapter/the-
importance-of-services/

Lesson 3- https://courses.lumenlearning.com/boundless-marketing/chapter/the-
importance-of-services/
Module Assessment

Test I
Instructions: Compare service products and physical goods using the diagram below.
* See Appendix C for the rubric

Test II
Instructions: Answer the questions below. Discuss it briefly and concisely.
* See Appendix A for the rubric
1. How can the service enterprises contribute in the economic development?
2. Why customer engagement is important?
3. What are the roles of service enterprises in the economy?
Appendix A – Essay Rubric

Criteria Points
1 2 3 4
You put
What you are
thought into What you are
writing about is
this, but there writing about is
clear. You
is no real clear and well-
There is no answered the
evidence of expressed,
clear or question. Some
learning. including
Ideas and specific support may be
More specific specific
Content explanation in lacking, or
information is examples to
answer to the your sentences
needed or you demonstrate
question. may be a bit
need to what you
awkward.
follow the learned. Well
Overall, a
directions done!
decent job.
more closely.
Your answer
Your answer
included all the
Only one included
terms from the
term from the several terms
No terms lesson that
lesson is used from the
from the applied to the
Use of terms in the answer. lesson,
lesson are question asked.
Try for a few demonstrating
used. All terms are
more, next adequate
fully defined and
time. understanding
used in the
of the material.
proper context.
Some Sentences are
Sentences are sentences are complete and
incomplete or complete and Sentences are they connect to
Sentence too long. It easy to complete and one another
Fluency makes understand. able to be easily when they
reading them Others understood. are read out
difficult. require some loud. Your
work. writing 'flows.'
Mistakes Use of
Few end No punctuation
using end punctuation
marks or or structural
marks or marks and
capital letters. mistakes. No
capitals as capitals, as
Answers spelling errors.
well as well as
Conventions contain Your writing
spelling spelling, is
numerous shows full
mistakes mostly correct.
spelling or awareness of the
make the Few errors
structural rules of English
writing hard exist in your
errors to read. use
answer.
Total
Powered by TeAch-nology.com- The Web Portal For Educators! (www.teach-
nology.com)
Appendix B – Reflection Paper Rubric

CRITERIA EXEMPLAR SATISFACTOR DEVELOPIN BEGINNIN

Y(4) Y(3) G(2) G (1)
Organization The work The work The submitted The work
(Essay is organized submitted submitted work partially submitted
in a sequential manifests manifests manifests the does not
manner. Exhibits qualities required related manifests
basic writing skills which go qualities. qualities. any of the
such as thesis beyond the Certain requirement
statements with requirements. aspects are s.
supporting details, either
consistent verb incomplete or
use, introductory incorrect.
and conclusive
paragraphs.)
Insights and The work The work The submitted The work
Creativity (Fresh submitted submitted work partially submitted
insights are manifests manifests manifests the does not
articulated, qualities required related manifests
especially in terms which go qualities. qualities. any of the
of application to beyond the Certain requirement
actually lived life. requirements. aspects are s.
A new or non- either
typical perspective incomplete or
is taken as the incorrect.
framework of
analysis.)
Writing (The The work The work The submitted The work
writing is free of submitted submitted work partially submitted
grammatical and manifests manifests manifests the does not
typographical qualities required related manifest
errors.) which go qualities. qualities. any of the
beyond the Certain requirement
requirements. aspects are s.
either
incomplete or
incorrect.
Appendix C – Venn Diagram Rubric

1 2 3 4
The identified The identified
The student
character character
highlights 3 or
traits are 4 or traits are 5 or
The identified less character
more and do more and do
character traits traits and does
Similarities not repeat. not repeat.
provided are 1 not repeat.
They include They include
or less. They include
well well
well described
described described
examples.
examples. examples.
The identified The identified
The student
character character
highlights 3 or
traits are 4 or traits are 5 or
The identified less character
more and do more and do
character traits traits and does
Differences not repeat. not repeat.
provided are 1 not repeat.
They include They include
or less. They include
well well
well described
described described
examples.
examples. examples.
The Venn
The Venn
The Venn Diagram is very The Venn
Diagram is
Diagram is very sloppy and it Diagram is
Organization very neat and
sloppy and takes away legible and
well
unreadable. from the organized.
organized.
content.
Total
Powered by TeAch-nology.com- The Web Portal for Educators! (www.teach-
nology.com)