Successfully reported this slideshow.

Strategic Service Core Concepts

662 views

Published on

Aftermarket Services and Reverse Logistics firms in high-tech industries. Strategic Service Core Concepts Presentation related to marketing and selling service logistics.

Published in: Business, Education
  • Be the first to comment

  • Be the first to like this

Strategic Service Core Concepts

  1. 1. MARKETINGAND SELLING SERVICE LOGISTICS Presented byMICHAEL R. BLUMBERG © Copyright, 2006
  2. 2. What we do…• Business & Strategic Advisory Services – Strategic & Business Planning – Market Research & Customer Satisfaction – Benchmarks & Best Practices – Systems Design, Evaluation, & Recommendation – Mergers & Acquisitions• Founded in 1969• Headquartered In Suburb of Philadelphia• Global Focus• Broad Industry Expertise in Aftermarket
  3. 3. Who we have helped…• IBM Global Services • Network Appliance• ABB • Eastman Kodak• Siemens • AGFA• General Motors • Xerox• Nokia • Boston Scientific• Johnson Controls • Carrier• NAACO • Panasonic• Lucent • National Archives• 3Com • Bank of America
  4. 4. STRATEGIC SERVICE CORE CONCEPTS
  5. 5. 10 Reasons why businesses fail• Choosing a business that’s not profitable• Inadequate cash reserves• Failure to clearly define and understand your market, your customers, and your customers’ buying habits• Failure to price your product or service correctly• Failure to anticipate or react to competition, technology, or other changes in the marketplace• Overgeneralization• Over dependence on a single customer• Uncontrolled growth• Believing you can do everything yourself• Not understanding dynamics of the service industry
  6. 6. STRATEGIC SERVICE BASIC CONCEPTS Every product includes and/or generates service needs Service is greater and worth more than tangible product to the customer over life cycle Service is primarily perception as seen through customer view point; customer perceptions determine service level Service price is largely determined by value-in-use to customer Service must by managed, delivered, and controlled, just like a product
  7. 7. COMPARISON OF PRODUCT AND SERVICE BUSINESS MODELSProduct Firm Market INVENTORY LABOR PRODUCT PRODUCTION UNITS OF GOODS REALITY MATERIAL FINANCE ( REVENUE -COST) PAYMENT FOR GOODSService Firm Market SERVICE PERCEPTION DEFINED CAPABILITY OF SERVICE “CAPABILITY TO DATA SERVE” (SPEED, RESPONSIVENESS, COVERAGE, ETC...) REALITY LABOR SERVICE PRODUCTION UNITS OF SERVICE MATERIAL FINANCE ( REVENUE -COST) PAYMENT FOR SERVICES
  8. 8. COMPARISON OF TYPICAL PRODUCT AND SERVICE BUSINESS RATIOS* KEY PARAMETERS PRODUCT BUSINESSES SERVICE BUSINESSES REVENUE 100% 100% GROSS MARGIN 40% 45% RESEARCH & 6% - 8% 1% -2% DEVELOPMENT OTHER, INCLUDING 5% - 8% 2% -3% INVENTORY CORPORATE 20% -30% 15% OVERHEAD & G&A PROFIT BEFORE TAXES 6% -15% 15% - 30% ROA 7% - 15% 70% - 80%
  9. 9. Summary Comparison Between Product and Service Sales Process COMMENT STEPS SERVICE PRODUCT • LOOK FOR FORM, • STEPS USUALLY PERFORMED1. IDENTIFY AND • LOOK FOR FIT AND FUNCTION AT A CORPORATE OR ESTABLISH PERCEPTION, VALUE- PRODUCT STRATEGIES IN-USE, AND TIME MANAGEMENT LEVEL FORAND PRODUCTS PRODUCTS • OFTEN LACKING FOR SERVICE • IDENTIFY PROBLEM IN • LOOK FOR NEEDS FOR • STEPS USUALLY PERFORMED2. MARKET RESEARCH CUSTOMER TERMS FORM, FIT AND AT • MEASURE TIME FUNCTION A CORPORATE OR MARKETING PARAMETERS AND • MEASURE REALITY LEVEL, BUT NOT NORMALLY OTHER REQUIREMENTS IN SERVICE • MEASURE PERCEPTION • TYPICALLY DONE BY SALES3. DEVELOP SALES • CUSTOMIZED SALES • SELL FORM, FIT, AND • PERSONNEL FOR SERVICETO SALES APPROACH TENDS APPROACH APPROACH TO FUNCTION BE DEFINED BY PRODUCT SPECIFIC CUSTOMER FORM, FIT, AND FUNCTION SEGMENTS AND NEEDS •SERVICE APPROACH MUST BE DEVELOPED4. CARRY OUT SALES • ELIMINATE • SELL AGAINST • SELLING APPROACH APPROACH COMPETITION COMPETITION AND CLOSE DIFFERENT & CLOSE • FOCUS ON VALUE- • FOCUS ON COST PLUS IN-USE PRICE OR COMPETITIVE PRICE • DELIVERY IMMEDIATE FOR • INSURE DELIVERY OF • DELIVERY REALITY PRODUCT5. DELIVER “WARMS & FUZZIES” OFF-THE-SHELF • DELIVERY IN FUTURE FOR • MEET PERCEPTIONS SERVICES ART-160- P
  10. 10. Product Versus Service Revenues Over Product Life Cycle INTRODUCTION GROWTH MATURATION PRODUCT SALESREVENUE SERVICE SALES TIME
  11. 11. PRODUCT VERSUS SERVICE SUPPORT REVENUE STREAM CONTRIBUTION CUMULATIVE REVENUE STREAMREVENUE INSTALLATION $ PRODUCT INITIAL MAINTENANCE & REPAIR WARRANTY 1 2 3 4 5 6 YEARS
  12. 12. STRATEGIC SERVICE VALUES SERVICE VALUES KEY FACTORS • Service is most critical to the customer in finalDIRECTLY INFLUENCING SALES Selection decision AND ADDING VALUE • Service adds value • Customers are willing to pay for the Service directlyGENERATING REVENUE AND PROFITS DIRECTLY • Customer’s willingness to pay is Based on value in use – not cost • Service customers tend to stay with PROVIDING MARKET Provider once satisfied CONTROL • Perceived satisfaction levels generate substantial loyalty ART-160- PC
  13. 13. CRITICAL TIME FACTORS IN SERVICE ISSUES - CHECK CASHING SERVICES - BANK A BANK B BANK C
  14. 14. Relationship of Desired Service Completion Time to Customer Satisfaction Levels 80 % RESPONDENTS % DESIRED SERVICE COMPLETION TIME 100 % SERVICESATISFACTION LEVEL 50 % SERVICE PERFORMANCE TIME
  15. 15. Service Price Elasticity of Demand QUALITY SURROGATE HIGHER HIGHLY INELASTICDEMAND LINEAR OR NEAR LINEAR LOWER HIGHLY ELASTIC LOWER HIGHER PRICE
  16. 16. Product / Service Cross Elasticity Alternatives HIGH SERVICE / PRODUCT PRODUCT BIASED CROSS LOW CROSS ELASTICITY ELASTICITY; PRODUCT PULLS THROUGH SERVICE SALESPRODUCTDEMAND SERVICE BIASED LOW CROSS ELASTICITY; SERVICE PULLS THROUGH PRODUCT SALES SERVICE PRICE
  17. 17. Marketing Components of Product and Services MARKET PRODUCTS DIMENSIONS SERVICE FORM, FIT AND YES YES FUNCTION PERCEPTION, LABEL YES YESADDED VALUE OF LABEL OR PERCEPTION FOR 10 - 25 % 50 - 500 %EQUIVALENT FORM, FIT, AND FUNCTION
  18. 18. Conclusion 500 Office Center Drive Suite 400 Ft. Washington, PA 19034 Phone: 855-643-9060 Ext. 703 Website: www.blumberg-advisor.com Email: michaelb@blumberg-advisor.com

×