Classification of Services

Schmenner³ categorized services into four categories in the service process matrix as shown in Figure 16.1. The four categories are named service factory, service shop, mass service and professional service. This matrix considers one variable, which is the degree of interaction and customization. The services categorized in service shop and professional services fall within a high degree of interaction and customization.

For example, in professional services provided by lawyers, every lawsuit involves differ­ent sections of the law and has its own unique points to be considered. In hospitals, every patient has a unique problem and the doctor has to provide a customized prescription for the problem. Similarly, in auto repair shops, every vehicle coming for service has unique repair requirements.

There are two types of parameters considered in the service process matrix. The first parameter is the degree of interaction and customization and the second parameter is the degree of labour intensity. The degree of labour intensity is measured by the ratio of labour cost to capital cost.

The services categorized under service factory and mass service have a low degree of inter­action and customization. For example, airlines provide very few options to the passengers— the business class and economy class of services. The customers are rarely provided with customized services. The menu service onboard has mainly two options—non-vegetarian and vegetarian. Similarly, in schools, every student in a class is given the same standard treatment and education.

Mass service and professional services have a high degree of labour intensity. For exam­ple, services provided by architects, accountants, etc. The cost of capital is low since there is no requirement for costly equipment. A team of professionals may be involved, thereby accounting for high labour costs.

Service factories and service shop have a low degree of labour intensity. For example, in the airlines industry, the cost of capital required is quite high as the cost of equipment is very high compared to labour costs. In the case of hospitals also, the cost of equipment such as X-ray machines, pathology labs, surgical equipment, CAT scan machines, etc. is very high compared to the cost of labour.

From the point of view of service quality, it is easier to manage the category of services coming under the service factory as these involve a low degree of labour intensity as well as a low degree of interaction and customization, while it is most difficult to manage the service quality of the professional services category, which involves a high degree of interaction and customization and a high degree of labour intensity. For service shop and mass services that involve a low-high combination of the two variables in the matrix, service quality manage­ment has a moderate level of difficulty.

Source: Poornima M. Charantimath (2017), Total Quality Management, Pearson; 3rd edition.