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Service development and design


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Service development and design: Challenges of service design, types of new services, core and supplementary elements, new service development process

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Service development and design

  1. 1. MBA 9061 Services Marketing Service development and design: Challenges of service design, types of new services, core and supplementary elements Course Instructor: Sneha Sharma (PhD*, MBA, Dip T & D)
  2. 2. MBA 906 Service Development and design For a good service idea to succeed, it is important to focus on development, design and specification of service.
  3. 3. MBA 906 Service Design Begins with a choice of service strategy, which determines the nature and focus of the service, and the target market – Key issues in service design • Degree of variation in service requirements • Degree of customer contact and involvement
  4. 4. MBA 906 Service Design Definitions • Something that is done to, or for, a customer Service • The facilities, processes, and skills needed to provide a service Service delivery system • The combination of goods and services provided to a customer Product bundle
  5. 5. MBA 906 CHARACTERISTICS TO BE STUDIED IN DETAIL Service characteristics: • meeting the need of the customer • advantage over the competitors in the market. • technological edge Strategy characteristics: • dedicated workforce who believe in the new service • dedicated R&D focus on the new service initiative. Process characteristics: • marketing • predevelopment • technological and launch proficiencies Marketplace characteristics: • relates to the market potential of the new service
  6. 6. MBA 906 Planning and Creating Services 6 Design a Service Concept Document Delivery Sequence over Time Flowchart Service Delivery
  7. 7. MBA 906 Step 1- Service Concept 7 The service concept is represented by: -A core product -core products often become commodities -Accompanied by supplementary services -Supplementary services help to differentiate core products and create competitive advantage by: -Facilitating use of core product (a service or a good) -Enhancing the value and appeal of the core product
  8. 8. MBA 906 Designing a Service Concept 8 Core Product • Central component that supplies the principal, problem- solving benefits customers seek Supplementary Services • Augment the core product, facilitating its use and enhancing its value and appeal Delivery Processes • Used to deliver both the core product and each of the supplementary services
  9. 9. MBA 906 Core and Supplementary Product Design Scheduling Nature of Process Service Level Customer Role Supplementary services offered and delivered Delivery Concept for Core Product
  10. 10. MBA 906 Core and Supplementary Services at Luxury Hotel Reservation Valet Parking Reception Baggage Service Cocktail Bar Restaurant Entertainment/ Sports/ Exercise Internet Wake-up Call Room Service Business Center Cashier A Bed for the Night in an Elegant Private Room with a Bathroom
  11. 11. MBA 906 Step 2: Documenting Delivery Sequence Over Time 11 Question: Do customers’ expectations change during service delivery in light of perceived quality of each sequential encounter? Must address sequence in which customers will use each core and supplementary service Determine length of time for each step Information should reflect good understanding of customers, especially their: • Needs • Habits • Expectations
  12. 12. MBA 906 What Happens, When, in What Sequence? Time Dimension in Augmented Product Before Visit Reservation internet Parking Get car Check in Porter Use room Meal Pay TV Room service Internet Check out Time Frame of An Overnight Hotel Stay (Real-time service use) USE GUESTROOM OVERNIGHT Internet
  13. 13. MBA 906 Step 3: Flowcharting Service Delivery • Offers way to understand totality of customer’s service experience • Useful for distinguishing between core product itself and service elements that supplement core – Restaurants: Food and beverage (core) – Reservations (supplementary services) • Shows how nature of customer involvement with service organizations varies by type of service: – People processing – Possession processing – Mental Stimulus processing – Information processing
  14. 14. MBA 906 Simple Flowchart for Delivery of a People-Processing Service Park Car Check In Spend Night in Room Breakfast Check Out Breakfast Prepared Maid Makes up Room People Processing – Stay at Motel
  15. 15. MBA 906 Simple Flowchart for Delivery of a Possession-Processing Service Possession Processing – Repair a DVD Player Travel to Store Technician Examines Player, Diagnoses Problem Leave Store Return, Pick up Player and Pay Technician Repairs Player (Later) Play DVDs at Home
  16. 16. MBA 906 Simple Flowchart for Delivery of Mental Stimulus-Processing Service Mental Stimulus Processing – Weather Forecast Turn on TV, Select Channel View Presentation of Weather Forecast TV Weatherperson Prepares Local Forecast Confirm Plans for Picnic Meteorologists Input Data to Models and Creates Forecast from Output Collect Weather Data
  17. 17. MBA 906 Simple Flowchart for Delivery of An Information-Processing Service Information Processing – Health Insurance Learn about Options Select Plan, Complete Forms Pay Customer Information Entered in Database Printed Policy Documents Arrive Insurance Coverage Begins University and Insurance Company Agree on Terms of Coverage
  18. 18. MBA 906 The Flower of Service Core Information Consultation Order Taking Hospitality Payment Billing Exceptions Safekeeping Facilitating elements Enhancing elements KEY:
  19. 19. MBA 906 The Flower of Service: Facilitating Services—Information Core Customers often require information about how to obtain and use a product or service. Examples of elements:  Directions to service site  Schedule/service hours  Prices  Conditions of sale  Usage instructions
  20. 20. MBA 906 The Flower of Service: Facilitating Services—Order Taking Core Customers need to know what is available and may want to secure commitment to delivery. The process should be fast and smooth. Examples of elements:  Applications  Order entry  Reservations and check-in
  21. 21. MBA 906 The Flower of Service: Facilitating Services—Billing Core “How much do I owe you?” Bills should be clear, Accurate, and understandable. Examples of elements:  Periodic statements of account activity  Machine display of amount due
  22. 22. MBA 906 The Flower of Service: Facilitating Services—Payment Core Customers may pay faster and more cheerfully if you make transactions simple and convenient for them. Examples of elements:  Self service payment  Direct to payee or intermediary  Automatic deduction
  23. 23. MBA 906 Core The Flower of Service: Enhancing Services—Consultation Value can be added to goods and services by offering advice and consultation tailored to each customer’s needs and situation. Examples of elements:  Customized advice  Personal counseling  Management consulting
  24. 24. MBA 906 The Flower of Service: Enhancing Services—Hospitality Customers who invest time and effort in visiting a business and using its services deserve to be treated as welcome guests— after all, marketing invited them! Examples of elements:  Greeting  Waiting facilities and amenities  Food and beverages  Toilets and washrooms  Security Core
  25. 25. MBA 906 Core The Flower of Service: Enhancing Services—Safekeeping Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site. Examples of elements:  Looking after possessions customers bring with them  Caring for goods purchased (or rented) by customers
  26. 26. MBA 906 Core The Flower of Service: Enhancing Services—Exceptions Customers appreciate some flexibility when they make special requests and expect responsiveness when things don’t go according to plan. Examples of elements:  Special requests in advance  Complaints or compliments  Problem solving  Reimbursement
  27. 27. MBA 906 Performance Priorities in Service Design Treatment of the customer Speed and convenience of service delivery Price Variety Quality of the tangible goods Unique skills that constitute the service offering
  28. 28. MBA 906 Phases in Service Design Conceptualize Identify service package components Determine performance specifications Translate performance specifications into design specifications Translate design specifications into delivery specifications
  29. 29. MBA 906 The Service Design Process Performance Specifications Service Delivery Specifications Physical items Sensual benefits Psychological benefits Design Specifications Service Provider Customer Customer requirements Customer expectations Activities Facility Provider skills Cost and time estimates Schedule Deliverables Location Service Concept Service Package Desired service experience Targeted customer
  30. 30. MBA 906 Service Systems  Service systems range from those with little or no customer contact to very high degree of customer contact such as: – Insulated technical core (software development) – Production line (automatic car wash) – Personalized service (hair cut, medical service) – Consumer participation (diet program) – Self service (supermarket)
  31. 31. MBA 906 Three Contrasting Service Designs The production line approach • ex. McDonald’s The self-service approach • ex. automatic teller machines The personal attention approach • ex. Ritz-Carlton Hotel Company
  32. 32. MBA 906 Characteristics of a Well-Designed Service System Each element of the service system is consistent with the strategic and operating focus of the firm It is user-friendly It is robust and easy to sustain It is structured so that consistent performance by its people and systems is easily maintained It provides effective links between the back office and the front office so that nothing falls between the cracks It manages the evidence of service quality in such a way that customers see the value of the service provided It is cost-effective It ensures reliability and high quality
  33. 33. MBA 906 Challenges of Service Design Variable requirements Difficult to describe High customer contact Service – customer encounter
  34. 34. MBA 906 New Service Development
  35. 35. MBA 906 NEW SERVICE DEVELOPMENT New services should be developed in a systematic step by step framework, which must be objective, not subjective. must be precise, not ambiguous. must be based on facts, not on opinions. must be methodological, not philosophical
  36. 36. MBA 906 NEW SERVICE DEVELOPMENT PROCESS  Business Strategy Development or Review  New Service Strategy Development  Idea Generation  Concept Development and Evaluation  Business Analysis  Service Development and Testing  Postintroduction Evaluation  Commercialization  Market Testing Screen ideas against new service strategy Test concept with customers and employees Test for profitability and feasibility Conduct service prototype test Test service and other marketing-mix elements Front End Planning Implementation
  37. 37. MBA 906 A Hierarchy of New Service Categories Major service innovations •New core products for previously undefined markets Major process innovations •Using new processes to deliver existing products with added benefits Product-line extensions •Additions to current product lines Process-line extensions •Alternative delivery procedures Supplementary service innovations •Addition of new or improved facilitating or enhancing elements Service improvements •Modest changes in the performance of current products Style changes •Visible changes in service design or scripts
  38. 38. MBA 906 Creating Services as Substitutes for Owning and/or Using Goods  Drive Own Car  Use Own Computer  Rent a Car and Drive it  Rent Use of Computer  Hire a Chauffeur to Drive  Hire a Typist to Type  Hire a Taxi or Limousine  Send Work Out to a Secretarial Service Own a Physical Good Rent Use of a Physical Good Perform Work Oneself Hire Someone to Do Work
  39. 39. MBA 906 Achieving Success in developing New Services • In developing new services Core product is of secondary importance Ability to maintain quality of the total service offering is key Accompanying marketing support activities are vital Market knowledge is of utmost importance
  40. 40. MBA 906 Success Factors in New Service Development Market synergy Good fit between new product and firm’s image/resources Advantage versus competition in meeting customers’ needs Strong support from firm during/after launch Firm understands customer purchase decision behavior Organizational factors Strong inter-functional cooperation and coordination Internal marketing to educate staff on new product and its competition Employees understand importance of new services to firm Market research factors Scientific studies conducted early in development process Product concept well defined before undertaking field studies