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Stages in new product and service development - BY MAUSUMI MOHANTA



3.service product development

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3.service product development

  1. 1. • Over simplificationService is an intangible product. It cannot bephotographed, touched, verified • Incompletenessand tried out. A service product is bundle of features andcustomer benefit. There are four • Subjectivity risks of attempting to describe service in words alone. • Biased interpretation
  2. 2. A service product is a packageof a series of service elements in proper order in keeping with the needs and wants ofconsumer, with an intention to maximize consumer satisfaction. • Core services There are three elements in BSP. They are • Facilitating services • Supporting services
  3. 3. The basic service package Core service Facilitating service Supporting service
  4. 4. Core service is the reason for being in the market. Like hospital is forhealth care and hotel is for lodging.Facilitating services are those services without which core servicescannot be performed. Thus a hotel requires building consisting ofrooms, toilet and hospital requires doctors, nurses, medical equipmentsetc.Supporting services do not facilitate the consumption or use of a coreservices but increase the value of service offering.
  5. 5. For better understanding let usdescribe the BSP of a tourismproductSuppose that core service of a tourism product offers destinationexperienceThe facilitating services include:(i) Natural places: waterfall, rivers, islands(ii) Historical places: monuments, museums, temples(iii) designed environments: man made such as Essel world, Disney parksand water parks etc.
  6. 6. Supportive service includeTransportationHospitalityHealth careEducationCommunicationInteractionsNeed based special packages
  7. 7. Customer value hierarchyCore benefitBasic productExpected productAugmented productPotential product
  8. 8. Core benefit Rest and sleep (it is the most fundamental benefit the customer purchases)Basic product Hotel room, bed room, bath room, towels, desk, closet, and so on (it is how a marketer translates the core benefit into a service package.Expected Clean bed, fresh towels, working lamps and the relative degree ofproduct quiet (a set of attributes buyers normally expect while purchasing a service)Augmented Supply of food that suits customer health, anything thatproduct surprises and delights the customerPotential New ways of satisfying customerproduct
  9. 9. information Payment consultationbilling Core Order taking product exceptions hospitality Care taking
  10. 10. Information: customers need information on various elements of a service, for evaluation and purchase decisionmaking. Service firms also need to educate the market and prepare and persuade the potential buyer. For e.g.Sign boardsService performance hoursCharges for servicesDirections on using core and supplementary serviceAlerting peopleNotices
  11. 11. Conditions of sale serviceIndicating the changesDocumentationReservation informationActivity summariesBills and receipts
  12. 12. Consultation: consultation involves a dialogue with the customers to probe their requirements so as todesign and develop a tailored solution. Consultation is generally provided in the following areasProviding adviceHelping customers to use the serviceClarifying doubtsCounselling personallyOffering management/ technical consultancy
  13. 13. Order taking: order taking is first step in transaction. Some organisations such as banks andinsurance companies require prospective customer to fill in the application form. Someorganisations make order entry and some others make advance reservations. For e.g.Filling application form for membershipFor reservation of seats tables etcEntry of orders online mail or telephone order
  14. 14. Hospitality: customers may be required to stay at the service outlet for a long time due to the nature ofservice process. Hence hospitality becomes a part of service offerings.GreetingEnquiry and receptionWaiting facilitiesBathroom kitsFood and beveragestransportation
  15. 15. Safe keeping: it is likely that service customers may carry personal possession to the service outletand participate in service production. Service organisations have to make arrangements for thesafe keeping of the customer property. It includesBaby care and pet care servicesParking facilitiesStorage and baggage handling servicesSecurity and safe deposit service
  16. 16. Goods packagingPick upTransportationDeliveryInstallation of goodsCleaning and ensuring a healthy ambience
  17. 17. Exceptions: service providers may be required to providesupplementary services that fall outside the routine to thecustomers, on special considerations. In case of accidents andemergency exceptions should be allowed.Billing: billing is important from the company’s as well as thecustomer’s point of view. Customers expect accuracy, completenessand legibility in the bills prepared by the service providers.Companies also provide periodic statements of account to customersor allow customers to complete bills by themselves for greatertransparency in the process.
  18. 18. Payment: After billing is done customerhave to take action on payment. Activitiessuch as cash handling, chequehandling, credit system, and couponsystem are part of payment system. Thepayment system should facilitatecustomers to get easy and convenientpayment of their dues.
  19. 19. Development of new serviceAccording to Philip kotler, every company must developnew products. New product development shapes the futureof company. Improved and replacement products must becreated to maintain or build sales.A service can be termed as new service when it is totallyinnovative and is created and offered by the company to theworld for the first time. Some new services are adaptivereplacements. They are improved version of existing serviceproducts either in technology, style, status or performance.
  20. 20. According to • New to the world products Booz, Allen • New product lines and • Addition to existing product linesHamiltan, ther • Improvements and revision of e can be six existing products categories of • Repositioningnew products. • Cost reductions
  21. 21. Marketing Concept strategy Idea Screening Business Service Market commerciali development Andgenerations ideas analysis development testing zation and testing development
  22. 22. Idea Generation:The first step in new service developmentprocess is generation of new ideas. An idea isthe fundamental base for any product. Themost scarce product in today’s competitiveworld undoubtedly is a good idea. In most ofthe organization each and every employee isfree to give his or her ideas whether they arefeasible or not, because no one knows aboutwhich unrealistic idea become reality some day.
  23. 23. Screening ideas: The large no. of ideas gathered are screened to make the number manageable for further consideration. Criteria need to be evolved to evaluate each idea on its suitability to the organisation.Services firms generally constitute an expert committee to decide the criteria for the evaluation of ideas and to conduct screening process. • Go error: when bad idea isIn screening two types of errors can forwarded occur • Drop error: when good idea is dropped.
  24. 24. Concept development and testing The ideas selected for further processes need to be developed into concepts. Ideas are general and vague in nature, whereas concepts are specific and concrete. Concept development means translation of an idea into a descriptive form in accurate terms. A clearly defined service concept includes the elements of a BSP, customer employee interaction and the service design document.
  25. 25. The • The problem to which the solution is offered in the form of service service • Reasons for offering a new service • List of sequential service processes design and its benefits.document • A rationale for the consumer as to why he or she should have thedescribes: service.
  26. 26. Service blueprint A popularly used technique for the development of service concept is service blue printing. A service blue print is a picture or map that portrays the service accurately. It is intended to provide a clear picture of the service process to different people involved in the service production and consumption processes. It helps the people involved to understand various processes of service without any confusion. The blue print visually depicts the roles of customers and employees.
  27. 27. Zeithmal and Bitner have • • Identify the process Map the process developed • • Draw the line of interaction Draw the line of visibility eight steps • Map the process from the customer and contact person’s point of view, distinguishing on-stage fromfor building a back-stage actions. • Draw the lines of internal interaction service • Link customer and contact person activities needed to support functions. blueprint. • Add evidence of service at each customer action step. They are
  28. 28. Concept testing The new service concept developed could be tested by presenting the concept through appropriate target consumers and by eliciting their views and opinions. Besides customers, the concept has to be tested with the employees of the organisation, so as to assess their understanding, ability, and willingness in performing the service. The result of concept testing will help the management to find out the need gap level, purchase intention level, the broad and strong consumer appeals, the shortcomings in the concept, the preferential order of influence of various processes and so on.
  29. 29. Marketing strategy development After the • Who are the target customers successful testing • What is the size of market of the concept, a • What is the competitive structure and their behavior preliminary • What is the positioning strategy marketing • What is pricing strategy strategy has to be • What is distribution strategy developed. The • What are the long term sales strategic plan will • What is the expected market share find out answers • What are the profit goals-long term as to the following well as short-term questions:
  30. 30. Business analysis The management of service firm would like to know the business attractive of the service proposal. Business analysis includes estimation of first time sales and repeat sales, sales in the introductory, second, third, fourth and fifth year product life cycle analysis, cost estimation, estimation of profits, projected profits and loss account for the first five years, pay back period and risk analysis. Business analysis helps managers to rank screened ideas.
  31. 31. Service development The service development will be designed with infrastructure, facilities, contact employees, system and tangibles as per the service blueprint. The step is an action- oriented one, involving high expenditure. It is clear shift from desk work to practical execution.
  32. 32. Market testing Now the services are ready for sale. To know how the service offer could really provide satisfactory experiences, it is necessary to test it among different groups of customers. Based on the early feedback, appropriate changes can be made to make offer more attractive or qualitative.
  33. 33. Commercialization The new service developed will be offered for sale. At this • When should the service bestage, service firms have to incur huge costs offered particularly in external • Where should the service be marketing. The major task is to create offeredawareness in the market • To whom should the service beand persuade the target offered market to have the service. At this stage • How should the service be offeredfollowing four decisions are utmost important.
  34. 34. Service line decisionsA service line consists of number of related services. Companiesdivide the service product mix into service lines for administrativeconvenience. Each line can be assessed from the point of view ofcompetition and profitability, and appropriate strategic approachescan be followed to achieve organizational objectives.Service line length: keeping profit maximisation as one of the keyobjectives, service firms decide the length of each service line. Forbuilding a service line companies may adopt the following fourdifferent strategies
  35. 35. Down market stretchUp market stretchTwo way stretchService line filling
  36. 36. Service line modernization: service packages, onceintroduced, cannot be continued as they are for a long time. On theone side, competitors try to overtake in value offering, and on theother side, consumers expect of improved value perceptions. Sothere is need of modernisation as per the need of competitive world.Service line featuring: Not all services of a service line can becampaigned to target consumers due to economic reasons.Companies may select one or two service packages of serviceline, which are capable of creating demand for themselves as well asthe other service packages on the line.
  37. 37. Service line pruning: while new serviceadditions are to increase the profitability ofthe concerns, dropping some services maybe sometimes necessary to protect theprofitability. When a service reaches thedecline stage in its life cycle and becomes aloss-making one, management has to take adecision to drop such a service from the line.
  38. 38. Service differentiationBasic service package: one of the key areas of servicedifferentiation is the design of the BSP itself. There is anenormous scope for differentiating the facilitating services aswell as supporting services. By introducing little changes inBSP, consumers can be made to perceive differentiated value.Accessibility: by making a service more accessible comparedto that of other competitive services, a differentiated valueperception can be granted.
  39. 39. Interaction: yet another area of differentiation service is the design and process of customer interaction. How customers are received, how they were involved in service production and consumption, how they were detached from service outlet after production and consumption process, whom they interact with and how the interaction is organised are the areas providing infinite opportunities to service firms to differentiate and excel.
  40. 40. Customer participation: customer differ in their knowledge, ability and willingness to participate in service production. The responsibility of the service firm lies in ensuring the total, able and involved participation of customer. Service firms can differentiate in their approach to educate, train and convince the customer.
  41. 41. Tangibles used: the quantity, adequacy, maintenance,technology and suitability of various tangibles required forthe service performance can be used to create differentiatedvalue perceptions.Service personnel: human resources plays a pivotal role inservice production. Though some services can be providedthrough machines, they cannot be viewed as perfectsubstitutes to the human resource.
  42. 42. Service channel: the choice of channels such asagents, brokers, franchises or electronic channels; theextensive, exclusive and selective coverage of the channel; theskill and expertise of channel members and their performanceare the areas where differentiation is a possibility.Service image: the image of company at local level andcorporate level differentiates in value perception by thecustomer.
  43. 43. Service recovery: In spite of careful andcautious approach, deficiencies in serviceis not an exception to any serviceorganisation. Successful companies adoptrecovery strategies to win the customersand also use such strategies to differentiatetheir service offerings from that ofcompetitors.
  44. 44. Service life cycleIntroduction stageGrowth stageMaturity stageDecline stage
  45. 45. Branding a service product Branding begins with giving an identity to the service beyond the one it has within trade circles. Consumers feel they are getting more in a branded service than otherwise.
  46. 46. BENEFITS OF BRANDINGProvides corporate identity and recognition.Provides an opportunity to distinguish the competitive productHelps customers to develop perceptions.Helps in developing customer relationshipBuilds up long term equity to the concernMarket penetration becomes easy.New service offers get quick response.
  47. 47. Branding decisions Service firms need to decide whether to brand their services packages or not, because branding requires consistent quality performance and accessibility. The cost of branding must be less than the premium that a marketer can get out of it. Once it is decided to brand a service, there are at least four important decisions a company has to make in branding. They are
  48. 48. Should the company’s own brand be promoted orshould a sponsor be found for branding.What should be the quality of brand.Should a corporate brand or an independent productbrand or a mix of two be promotedShould the existing brand name be extended or a newbrand built
  49. 49. Selection of brand name While selecting a brand company’s vision, mission and objective should be kept in mind. Generally a committee which consists of product managers, other marketing personnel, advertising agencies, branding consultants is constituted for selection of brand name. keeping the company’s objective in mind, the committee carefully reviews the BSP, its benefits, the target market and the proposed marketing strategies. A list of potential brand names ranging from 100 to 200 is prepared at the first stage . After this 10 or 20 names are selected after screening. Then company studies the customer’s reaction on different brand names and finally a brand name is selected.
  50. 50. Qualities of a good brandThe name should be associated with pleasant things and quality.The name should suggest something about the product’s benefit.It should be easy to pronounce and recallIt should lay stress on those characteristics of a service that are to be impressed on customerIt should be distinctive and should have motivational valueThe name should be capable of translation into foreign languageThe name should be free for legal protection and registration.
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