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Service value in hospitality industry 127
Intangibility simply means that the result of a service transaction is not a transfer of
ownership, as in the case of physical goods. A service is a process or an act.
Simultaneity means that the realisation of a service implies the presence of
provider as well as consumer; both play an active role in the realization of services.
Production and consumption are intertwined and services come into being in the
simultaneous interaction between consumer and provider.
To summarize this all services can thus be defined as: all those economic activities
that are intangible and imply an interaction to be realised between service
provider and consumer.
Service management is a total organizational approach that makes quality of
service, as perceived by the customer, the number one driving force for the operation
of the business 17 . To ensure that the expectations of customer are met timely is
a need of having a specific value chain for service, which will integrate all activities/attributes,
which are necessary for the qualitative delivery systems of service.
Gabott and Hogg tried to find an answer – what are the characteristics of services
– and they found out thirteen answers, which indicate that services management
is very complicated and that there is a need to understand the customer with
his/her specific needs before serving him/her. (Elisante ole Gabriel/M.Gabott and
H.Hogg 1997) 18 . In service management interactive communication should not be a
choice but a must. This will make the customers feel active participants of service
creation and delivery system. (Elisante ole Gabriel, 2009) 19 .
As stipulated in characteristics above, services are produced and consumed
simultaneously. Therefore, there is a need for the value to be created both by service
provider and service user. If there is no co-creation of value, there is great
chance of mismatch in the delivery system 20 . This in any case will lead to dissatisfaction
of customers, since they will be passive in the system. Every hotel manager
has to ensure that co-creation becomes a joint job of everyone involved in the service
delivery system. The service system will therefore consist of value co-creation
and value co-delivery system.
An important part of value co-creation system is value chain, which can be
very different as it depends to whom a value will be delivered – to guests, to service
providers, to employers.
The term “Value Chain” was first used by Michael Porter 21 . He classified all
activities generally as either primary (inbound logistics, operations, outbound logis-
17
M. Bruhn, Services Marketing: Managing the Service Value Chain, FT Prentice Hall,
2005.
18
http://www.docstoc.com, 15.01.2010.
19
Ibidem.
20
Ibidem.
21
M.E. Porter, Competitive Advantage: Creating and sustaining superior Performance,
The Free Press, New York 1985.