Service Strategy

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Service Strategy

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Service Strategy

  1. 1. Service Strategy
  2. 2. Learning Objectives <ul><li>Identify strategic opportunities available in the design of the service concept. </li></ul><ul><li>Understand the competitive environment of services. </li></ul><ul><li>Explore the dimensions of service competition. </li></ul><ul><li>Identify methods of winning customers in the marketplace </li></ul><ul><li>Discuss the limits in the use of information </li></ul><ul><li>Discuss the competitive role of information in services. </li></ul>
  3. 3. The Strategic Service Concept <ul><li>Structural: Delivery system (front & back office) Facility design (aesthetics, layout) Location (competition, site characteristics) Capacity planning (number of servers ) </li></ul><ul><li>Managerial Service encounter (culture, empowerment) Quality (measurement, guarantee) Managing capacity and demand (queues) Information (data collection, resource) </li></ul>
  4. 4. Competitive Environment of Services <ul><li>Relatively Low Overall Entry Barriers </li></ul><ul><li>Economies of Scale Limited </li></ul><ul><li>High Transportation Costs </li></ul><ul><li>Erratic Sales Fluctuations </li></ul><ul><li>No Power Dealing with Buyers or Suppliers </li></ul><ul><li>Product Substitutions for Service </li></ul><ul><li>High Customer Loyalty </li></ul><ul><li>Exit Barriers </li></ul>
  5. 5. Competitive Service Strategies (Overall Cost Leadership) <ul><li>Seeking Out Low-cost Customers </li></ul><ul><li>Standardizing a Custom Service </li></ul><ul><li>Reducing the Personal Element in Service Delivery </li></ul><ul><li>Reducing Network Costs </li></ul><ul><li>Taking Service Operations Off-line </li></ul>
  6. 6. Competitive Service Strategies (Differentiation) <ul><li>Making the Intangible Tangible </li></ul><ul><li>Customizing the Standard Product </li></ul><ul><li>Reducing Perceived Risk </li></ul><ul><li>Giving Attention to Personnel Training </li></ul><ul><li>Controlling Quality Note : Differentiation in service means being unique in brand image, technology use, features, or reputation for customer service. </li></ul>
  7. 7. Competitive Service Strategies (Focus) <ul><li>Buyer Group: (e.g. USAA insurance and military officers) </li></ul><ul><li>Service Offered: (e.g. Shouldice Hospital and hernia patients) </li></ul><ul><li>Geographic Region: (e.g. Austin Cable Vision and TV watchers) </li></ul>
  8. 8. Customer Criteria for Selecting a Service Provider <ul><li>Availability (24 hour ATM) </li></ul><ul><li>Convenience (Site location) </li></ul><ul><li>Dependability (On-time performance) </li></ul><ul><li>Personalization (Know customer’s name) </li></ul><ul><li>Price (Quality surrogate) </li></ul><ul><li>Quality (Perceptions important) </li></ul><ul><li>Reputation (Word-of-mouth) </li></ul><ul><li>Safety (Doing things to people) </li></ul><ul><li>Speed (Avoid excessive waiting) </li></ul>
  9. 9. Service Purchase Decision <ul><li>Service Qualifier : To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline. </li></ul><ul><li>Service Winner : The competitive dimension used to make the final choice among competitors. Example is price. </li></ul>
  10. 10. Service Purchase Decision (cont.) <ul><li>Service Loser : Failure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization) or late delivery of package (speed). </li></ul>
  11. 11. Competitive Role of Information in Services <ul><li>Strategic Focus Competitive Use of Information </li></ul><ul><li>On-line Off-line </li></ul><ul><li>(Real time) (Analysis) </li></ul><ul><li>Creation of barriers to entry: Data base asset: </li></ul><ul><li>External Reservation system Selling information </li></ul><ul><li>(Customer) Frequent user club Development of services </li></ul><ul><li>Switching costs Micro-marketing </li></ul><ul><li>Revenue generation: Productivity enhancement: </li></ul><ul><li>Internal Yield management Inventory status </li></ul><ul><li>(Operations) Point of sale Data envelopment </li></ul><ul><li>Expert systems analysis (DEA) </li></ul>
  12. 12. Limits in the Use of Information <ul><li>Anti-competitive (Barrier to entry) </li></ul><ul><li>Fairness (Yield management) </li></ul><ul><li>Invasion of Privacy (Micro-marketing) </li></ul><ul><li>Data Security (Medical records) </li></ul><ul><li>Reliability (Credit report) </li></ul>
  13. 13. Discussion Topics <ul><li>What are the characteristics of service that will be affected by the emerging electronic and communications technology? </li></ul><ul><li>When does information collected through service membership become an invasion of privacy? </li></ul><ul><li>Discuss the concept of service ‘winners’ and service ‘losers’ for a service you are familiar with. </li></ul><ul><li>What are the implications of the growing use of personal computers for the customization of services and elimination of human interactions? </li></ul>
  14. 14. America West Airlines Generic Competitive Strategy <ul><li>Target Strategic Advantage </li></ul><ul><li>Low cost Uniqueness </li></ul><ul><li>Entire Overall cost Differentiation </li></ul><ul><li>Market leadership </li></ul><ul><li>Market Focus </li></ul><ul><li>Segment </li></ul>
  15. 15. America West Airlines Competitive Features <ul><li>Service Qualifiers: </li></ul><ul><li>Service Winners: </li></ul><ul><li>Service Losers: </li></ul>
  16. 16. America West Airlines Strategic Service Concept <ul><li>Delivery System: </li></ul><ul><li>Location: </li></ul><ul><li>Facility Design: </li></ul><ul><li>Capacity Planning </li></ul>
  17. 17. America West Airlines Strategic Service Concept (cont.) <ul><li>Service Encounter: </li></ul><ul><li>Quality: </li></ul><ul><li>Managing Capacity and Demand: </li></ul><ul><li>Information: </li></ul>
  18. 18. America West Airlines Positioning <ul><li>CABIN SERVICE </li></ul><ul><li>Full Service </li></ul><ul><li>PREFLIGHT SERVICE </li></ul><ul><li>Inconvenient Convenient </li></ul><ul><li>No Amenities </li></ul>

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