2. AFTER COMPLETING THIS CHAPTER,WE WILL BE ABLE TO :
1.Formulate a strategic service vision.
2.Critically discuss the competitive environment of services.
3.Describe ,with examples,how a service competes using the
generic service strategies of overall cost leadership
,differentation,and focus.
4.Discuss the service purchase decision in the context of
qualifiers , service winners,and service losers.
5.Discuss the competitive role of information in services.
6.Explain the concept of the virtual value chain and its role in
service innovation.
7.Discuss the limits in the use of information.
8.Categorize a service firm according to its stage of
competitiveness.
9.Conduct a data envelopment analysis.
3. THE STRATEGIC SERVICE VISION
Service strategy must begin with vision of the place
and purpose of enterprise. A vision is formulated by
this four question.
Target market
Service concept
Operating strategy
Delivery system
4. SERVICE DELIVERY SYSTEM;
What are important features of the service
delivery system including.
The role of people?
Technology?
Equıpment?
Layout?
Procedures?
5. OPERATING STRATEGY;
What are important elements of the strategy?
Operations?
Financing?
Marketing?
Organization?
Human resources?
Control?
6. SERVICE CONCEPTS;
What are important elements of this service to be
provided, stated in terms of results produced for
customers?
How are these elements supposed to be perceived by
the target market segment?
By the market in general
By employees
By others
7. TARGET MARKETS SEGMENT
What are common characteristics of important market
segments?
What dimensions can be used to segment the market?
Demographic?
Psychographics?
8.
9. UNDERSTANDING THE COMPETITIVE ENVIRONMENT
OF SERVICES.
In general,service firms compete in a diffucult economic
enviroment,and there are many reason for this diffuculty.
Relatively low overall entry barriers: service innovations are not
patentable thus innovations can easily be coppied by competitors.
Minimal opportunities for economies of scale: The necessity of
physical travel limits the market area and result in small-scale outlets.
Erratic sales fluctuations: service demand varies as a function of the
time of day and the day of the week.
10. No advantage of size in dealing with buyers or suppliers: the
small size of many service firms palace them at a disadvantage
in bargaining with powerful buyers or suppliers.
Product substitutions: product innovations can be substitute
for services.
Customer loyallty: Established firms using personalized service
create a loyal customer base which becomes a barrier to entry
by new services.
Exit barriers: Marginal service firms may continue to oparate
despite low even noneexistent, profits.
12. OVERALL COST LEADERSHIP;
Having a low-cost position provide a defense against
competition
Because efficient competitors will suffer first from
competitive pressures.
Seeking out low-cost customers:some customers cost
less to serve than others, and they can betargetted by
the service provider.
Standardizing a custom service: the key word here is
routine.(ne kadar standartlaştırırsan o kadar ucuzlar)
13. Overall cost leadership;
• Reducing the personal element in service delivery: the
potentially high-rsik strategy of reducing the personal element
in service delivery can be accepted by customers if increased
convenience results.
• Reducing network costs: Unusal start-up costs are
encountered by service firms that require a network to knit
together providers and customers.
• Taking service operations offline: for services in which the
customer need not to be present, the service transaction can
be “decoupled” with some content performed “offline”.
Performing services offline represent significant cost saving.
14. DIFFERENTIATION;
The essence of the differentiation stratgey lies in creating a
service that is perceived as being unique.
Making the intangible tangible
Customizing the standart product
Reducing perceived risk
Giving attention to personnel training
Controlling quality
15. FOCUS
The focus strategy is built around idea of servicing a
particular target market very vell by addressing
customers’ specific needs.
As a result the firm achives competitive advantage
in its market segment by meeting specific customers
needs and/or by lower costs through specialization.
16. WINNING CUSTOMERS IN THE MARKETPLACE
Depending on the competition and personal needs,
costumers select a service provider using creteria
listed here.
Availability: how accesible is the service?
Convienience: isn’t service closee to customer.
Dependability: how reliable is the service.
Personalization: are you treated as an individual?
17. Winning customers in the
marketplace
• Price : is it enough cheap?
• Quality: can you satisfy your customers’ prior
expectations.
• Reputation : how are you known in market?
• Safety : is your service safe enough?
• Speed: how long must ı wait for services?
18. QUALIFIERS
Criteria used by a customer a subset of service
firms meetin minumum performance requirements.
19. Criteria used by a
customers tomake the
final purchase decision
among competitors that
have been previously
qualified.
Price
Convenience
Reputation
e.g ATM use by banks
Criteria representing
failure to deliver a
service at or above the
expected level, resulting
in adissatisfied customer
who is lost forever.
Dependabilty
Personalization
Speed
e.g delivering package on
time.
Service Winner Service Losers
20. COMPETITIVE ROLE OF INFORMATION IN
SERVICES
For service management, information technology
is helping to define the competetive strategy of
succesful firms
21.
22. CREATION OF BARRIERS TO ENTRY
Many services exist in market that have low entry
barriers. There are three examples.
Reservation system (birer cümle)
Frequent user club
Switching costs.
23. REVENUE GENERATION
Real time information technologies with a focus
on internal operation can play a competitive role in
increasing revenue opporunities.
Yield management
Point of sale
Expert system
24. Yield management : An information system that
attempts to maximize revenue for service with
time-perishable capasity(e.g airline, hotels)
Point of sale : It is a system that helps to
facilitate sales.
Expert system: a computer program that can
make inferences using a knowledge base and
decision rules.
25. DATABASE ASSET
Database aservice firm posseses can be a hidden
asset of strategic importance. The expense of
assembling and maintaining a large database is
itself a barrier to entry by competitors.
Selling informations
Devoloping services
Micromarketing
28. Inventory status;
Knowledge about the
ınventory helps us to
control productivity and
provide to profitable
Data envelopment
analysis;
A linear programing
technique that measure
the performance of
service units to
determine an efficiency
frontier for internal
benchmarking.
29. THE VIRTUAL VALUE CHAIN
Stage in the customer relationship where
information is gathered, organized, selected
synthesized, and disturbuted to create innovative
service products to meet customer needs.
First stage(visibility)
Second stage(mirroring capability)
Third stage ( new customer relationship)
30. LIMITS IN THE USE OF INFORMATION
Anticompetitive
Fairness
İnvasion of privacy
Data security
Reliability
31. Anticompetitive: to create entry barriers, the use of
reservation system and frequent user programs has
been ıdentified as potentially anticpmatitive.
Fairness : Do firms behave equal to each
customers?
İnvasion of privacy: Do firms follow their customers’
behaving and their purchase.
32. Data security: Do firms use or sell their customers
datas without consent of the customer?
Reliability: Are the data accurate?
33. USING INFORMATION TO CATEGORIZE
CUSTOMERS.
Firms want to catogorize in terms of customer
profitability. There are popular 4 techniques that
given here.
Coding grade: customers based on how profitable
their business is.
Routing: firms distributed different queues
customers based on their code.
34. Targetting; they interest customers' based on the
value of their business
Sharring;corporate data about your transaction
history with other firms is a source of revenue.
35. STAGES IN SERVICE FIRM
COMPETITIVENESS
If a service firm is to remain competetive,
continuous improvment in productivity and quality
must be part of its strategy and corporate culture.
Available for service
Journeyman
Distinctive competence achieved
World-class service delivery
36. AVAIABLE FOR SERVICE
Some services firms and often, government services
in particular , fall into this category because they view
operations as a necessery evil to be performed at
minimum cost. This firms are noncompetitive, and they
only exist in this stage until they are challenged by
competition.
37. JOURNEYMAN
After maintaining a sheltered existence in stage
1, a service firm may face competition and, thus
may be forced to reevaluate its delivery
system.Operations managers then must adopt
industry practices to maintain parity with new
competitors and avoid a significant loss of market
share.
38. DISTINCTIVE COMPETENCE ACHIVED
Firms in stage 3 are fotunate to have senior
managers with a vision of what createsvalue for the
customer and who understand the role that
operations managers must play in delivering the
service.
39. WORLD-CLASS SERVICE DELIVERY
Not satisfied with just meeting customer expectations,
world-class firms expand on these expectations to
levels that competitors find difficult to meet.
Management is pro active in performing higher
standarts of performance and identifying new business
opportunities by listening to customers.world- class
service firm such as disney,marriot and american
airlines define the quality standarts by whic others are
judged.
