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(10)Differentiation New Services


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(10)Differentiation New Services

  1. 1. Service Differentiation
  2. 2. Service Differentiation <ul><li>The act of designing a set of meaningful differences to distinguish the company’s offering from competitors’ offerings. </li></ul><ul><ul><ul><ul><ul><li>Kotler (1997) </li></ul></ul></ul></ul></ul><ul><li>Differentiation is closely related to the concepts of positioning and branding. </li></ul>
  3. 3. Bases for Differentiation <ul><li>Cost * </li></ul><ul><li>Service product </li></ul><ul><li>Personnel </li></ul><ul><li>Channel </li></ul>* Probably not ideal, unless you’re the biggest player in a volume industry
  4. 4. Cost Differentiation
  5. 5. Service Product Differentiation
  6. 6. <ul><li>In product industries, services differentiation can be extremely effective. </li></ul>
  7. 7. Personnel Differentiation
  8. 8. Channel Differentiation
  9. 9. How Can We Discover New Points of Differentiation? <ul><li>Map the consumer’s CONSUMPTION CHAIN : </li></ul><ul><li>“… the first step toward strategic differentiation is to map your customer’s entire experience with your product or service.” </li></ul><ul><li>(MacMillan and McGrath (1997, pg. 144) </li></ul>
  10. 10. Mapping the Consumption Chain <ul><li>How do people know they need your service? </li></ul><ul><li>How do consumers find your offering? </li></ul><ul><li>How do consumers make their final selections? </li></ul><ul><li>How do customers order and purchase your service? </li></ul><ul><li>How is your service delivered? </li></ul><ul><li>What happens when your service is delivered? </li></ul><ul><li>How is your service paid for? </li></ul><ul><li>What is the customer really using your service for? </li></ul><ul><li>What do customers need help with when they use your service? </li></ul><ul><li>How are service failures handled? </li></ul>Source: Adapted from MacMillan and McGrath (1997)
  11. 11. Developing New Services
  12. 12. Why Do New Services Fail? <ul><li>Lack of clear advantage over existing competition </li></ul><ul><li>Lack of well-developed PROTOCOL : “a statement that identifies a well-defined target market before product development begins; specifies customers’ needs, wants, and preferences; and carefully sates what the product would be and do.” </li></ul><ul><ul><ul><ul><ul><li>- Berkowitz et al. </li></ul></ul></ul></ul></ul>
  13. 13. Developing New Services <ul><li>Should involve customers </li></ul><ul><li>Should involve service workers </li></ul><ul><li>Should be objective, rigorous process </li></ul>
  14. 14. New Service Continuum RISK REWARD Style Changes New Services for Existing Markets Major Innovations
  15. 15. NEW SERVICE DEVELOPMENT PROCESS Concept Development and Evaluation Service Development and Testing Idea Generation and Screening Business Analysis Market Testing Commercialization
  16. 16. Developing New Services <ul><li>“ Our biggest competitor, by the way, isn’t IBM or Sony. It’s the way in which people currently do things.” </li></ul><ul><ul><ul><ul><li>Mil Ovan, marketing executive with Motorola </li></ul></ul></ul></ul>