Service Product Development


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A presentation on new service development

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Service Product Development

  1. 1. Service Product Development Group III- Arjun, Deepa, Jeev, Saanwin & Sonia
  2. 2. <ul><li>Service is an act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. </li></ul><ul><li>- Philip Kotler </li></ul>What is a Service?
  3. 3.
  4. 4. Difference between goods & services SERVICES GOODS <ul><li>Intangible in nature </li></ul><ul><li>Inseparability of production and consumption </li></ul><ul><li>Perishable nature </li></ul><ul><li>Lack of ownership </li></ul><ul><li>Tangible in nature </li></ul><ul><li>Separable </li></ul><ul><li>Non perishable </li></ul><ul><li>Can be owned </li></ul>
  5. 5. TYPES OF NEW SERVICES <ul><li>Major/Radical Innovations : Are new services for markets as yet undefined. E.g., First broadcast television services </li></ul><ul><li>Start up businesses : New services for a market that is already served by existing products E.g., online banking for financial transactions </li></ul><ul><li>New services for the currently served market : Attempts to offer existing customers of the organization, a service not previously available from the company E.g., Barnes and Noble offering coffee </li></ul>
  6. 6. <ul><li>Service line extensions : augmentation of the existing service line. E.g., restaurant adding new menu items, an airline offering new routes </li></ul><ul><li>Service improvements : changes in features of service that are already offered. E.g., extended hours of service (24x7),added amenities in a hotel room. </li></ul><ul><li>Style changes : the most modest service innovations, which have a significant effect on customer perception, emotion and attitude. E.g., changing the color scheme, revising the logo </li></ul>
  7. 7. SERVICE PRODUCT DEVELOPMENT <ul><li>Research suggests that products that are designed and introduced in a structured planning framework have a greater likelihood of ultimate success than those not developed within a framework. </li></ul>
  8. 8. <ul><li>Characteristics given by Lynn Shostack:- </li></ul><ul><li>It must be objective and not subjective- based on customer perceptions, market needs & feasibility </li></ul><ul><li>It must be precise and not vague </li></ul><ul><li>It must be fact driven and not opinion driven </li></ul><ul><li>It must be methodological and not philosophical. </li></ul><ul><li>Employees and customers should be </li></ul><ul><li>involved in the new service development. </li></ul><ul><li>Ex: Metropolitan Life Insurance, </li></ul><ul><li>Marriott Corporation. </li></ul>
  10. 10. <ul><li>Business strategy development or review </li></ul><ul><li>New service strategy development </li></ul><ul><li>Idea Generation </li></ul><ul><ul><li>Screen Ideas against new service strategy </li></ul></ul><ul><li>Concept Development & evaluation </li></ul><ul><ul><li>Test concept with customers and employees </li></ul></ul><ul><li>Business Analysis </li></ul><ul><ul><li>Test for profitability and feasibility </li></ul></ul><ul><li>Service development & testing </li></ul><ul><ul><li>Conduct service prototype test </li></ul></ul><ul><li>Market testing </li></ul><ul><ul><li>Test service & other marketing mix elements </li></ul></ul><ul><li>Commercialization </li></ul><ul><li>Post introduction evaluation </li></ul>Front-end Planning Implementation
  11. 11. FRONT-END PLANNING <ul><li>Business strategy development or Review </li></ul><ul><li>Review mission & vision </li></ul><ul><li>Orientation towards growth </li></ul><ul><li>Primary strategic orientations </li></ul><ul><li>-prospectors seek to be innovative, searching out new opportunities and taking on risk. </li></ul><ul><li>-defenders are experts in their pwn areas & tend not to seek new opportunities outside their domain or expertise. </li></ul><ul><li>-analyzers maintain stability </li></ul><ul><li>-reactors seldom make adjustments </li></ul><ul><li>Cost leadership strategy </li></ul>
  12. 12. Our promise is to help people feel close to what is important to them
  13. 14. 2. New Service Strategy Development <ul><li>By Defining a new service strategy, the organization will be in a better position to begin generating specific ideas </li></ul><ul><li>One way to begin is to use the framework </li></ul><ul><li>The other one is to use the matrix </li></ul>
  14. 15. 3. Idea Generation <ul><li> Ideas generated at this phase can be passed through the new service strategy screen. </li></ul><ul><li>many methods and avenues are available for searching out new service ideas. </li></ul><ul><li>Methods:- </li></ul><ul><li>Interacting with others </li></ul><ul><li>Creativity techniques </li></ul><ul><ul><ul><ul><ul><li> - </li></ul></ul></ul></ul></ul>
  15. 16. 4.Concept Development and Evaluation <ul><li>Who is the target market and who is the decision maker in the purchasing process. </li></ul><ul><li>What features must the product incorporate. </li></ul><ul><li>What benefits will the service provide to the customer and to the organization. </li></ul><ul><li>How will client react to the service. </li></ul><ul><li>How the service can be delivered most cost effectively. </li></ul><ul><li>What will be the cost to deliver the service. </li></ul>
  16. 17. <ul><li>Evaluation by employees and customers on -whether they understand the idea of the proposed service, </li></ul><ul><li>-whether they are favorable to the concept, and </li></ul><ul><li>-whether they feel it satisfies an unmet need. </li></ul>
  17. 18. 5. Business Analysis <ul><li>Marketing Assessment </li></ul><ul><li>Financial Assessment </li></ul>
  18. 19. A. Marketing Assessment <ul><li>Target market </li></ul><ul><li>Forecasting of sales volume </li></ul><ul><li>Indication of product positioning </li></ul><ul><li>Competitor reaction </li></ul><ul><li>Specification of new product development </li></ul>
  19. 20. B. Financial Assessment <ul><li>Sales volume and value </li></ul><ul><li>Variable cost of production </li></ul><ul><li>Incremental fixed cost </li></ul><ul><li>Contribution and profitability of the new service </li></ul>
  20. 21. Implementation “ The Beauty of Every Idea Lies in How We Implement it…”
  21. 22. Implementation Stages <ul><li>Once the new service concept has passed all the front-end planning hurdles, it is ready for the implementation stage process. </li></ul><ul><ul><li>Service Development & Testing </li></ul></ul><ul><ul><li>Market Testing </li></ul></ul><ul><ul><li>Commercialization </li></ul></ul><ul><ul><li>Post-Introduction Evaluation </li></ul></ul>
  22. 23. 6. Service Development & Testing <ul><li>The intangibility presents unique challenges. </li></ul><ul><li>The stage should involve all who have a stake in the new service. </li></ul><ul><li>The concepts are refined to the point at which a detailed service blueprint can be constructed. </li></ul>
  23. 24. Service Blueprint <ul><li>Picture or map that accurately portrays the service system. </li></ul><ul><li>Helps different people involved to understand and deal with it objectively. </li></ul><ul><li>Displays the service by simultaneously depicting the process of delivery, the points of customer contact, the roles of customers and employees, and the visible elements of service. </li></ul>
  24. 25. Service Blueprint
  25. 26. <ul><li>The final step is to transform the blueprint into specific implementation plans for its part of service delivery process. </li></ul><ul><li>All parties involved in any aspect of the new service need to work together to delineate the details of the new service. </li></ul>
  26. 27. 7. Market Testing <ul><li>Difficult to test in isolated markets. </li></ul><ul><li>e.g. Hospital has only one point of delivery. </li></ul><ul><li>The new service may be offered to the employees and their families for assessing responses. </li></ul><ul><li>An alternate is to test variations in pricing and promotions in a less realistic context by presenting customers with hypothetical mixes and getting their responses in terms of intentions to try the service under different conditions. </li></ul>
  27. 28. <ul><li>It is also important to do a pilot run of the service to check the smoothness in the functioning of operations. </li></ul>
  28. 29. 8. Commercialization <ul><li>Service goes live & is introduced at the market space. </li></ul><ul><li>The stage has 2 objectives </li></ul><ul><ul><li>Built & maintain acceptance of new service among large number of service delivery personnel responsible for service quality. </li></ul></ul><ul><ul><li>Monitor all aspects of service during introduction and through the complete service cycle. Every detail of the service is assessed. Operating efficiency and costs are tracked. </li></ul></ul>
  29. 30. 9. Post-Introduction Evaluation <ul><li>The information gathered during commercialization of service is reviewed and changes are made in </li></ul><ul><ul><li>Delivery process </li></ul></ul><ul><ul><li>Staffing </li></ul></ul><ul><ul><li>Service mix </li></ul></ul><ul><li>No service will stay same. Services are exposed to deliberate or unplanned changes. </li></ul><ul><li>This calls for formalizing the review process to enhance quality and understand customer perceptions. </li></ul>
  30. 31. Achieving success in New service development <ul><li>Unlike in the development of a product, in developing a service, the product core is of only secondary importance. </li></ul><ul><li>Quality of the total service offering & of the marketing support that goes with it. </li></ul>
  31. 32. <ul><li>Three factors contributing most to success are, </li></ul><ul><li>Market synergy </li></ul><ul><li>Organizational factors </li></ul><ul><li>Market research factors </li></ul>
  32. 33. Saintgits Institute of Management