The document discusses key steps in service planning, including matching marketing opportunities to a firm's resources. It describes how the service design involves matching the marketing concept with the operations concept. Several models of service products are presented, including core products and supplementary services. The document outlines different types of supplementary services that can facilitate or enhance the core product. It also discusses how to categorize supplementary services and the importance of branding service products.

1. Chapter 4
Creating the
Service Product

2. Key Steps in Service Planning:
Matching Opportunities to Resources
• Must relate marketing opportunities to firm’s resources
(physical, financial, technological, human)
• Identify, evaluate firm’s marketing assets
– Customer portfolio/lifetime value (customer equity)
– Market knowledge
– Marketing implementation skill
– Product line
– Competitive positioning strategies
– Brand reputation (brand equity)
• Identify, evaluate firm’s operating assets
– Physical facilities, equipment
– Technology and systems (especially IT)
– Human resources (numbers, skills, productivity)
– Leverage through alliances and partnerships
– Potential for customer self service
– Cost structure

3. Service Design Involves Matching
Marketing Concept with Operations
Concept (Fig. 4.1)
Corporate Objectives
and Resources
Marketing Assets Operating Assets
(Customer Base, Mkt. Knowledge, (Facilities/Equipment, IT Systems,
Implementation Skills, Brand Reput.) People, Op. Skills, Cost Structure)
Service Marketing Concept
Service Operations Concept
•Benefits to customer from core/
•Nature of processes
supplementary elements, style,
•Geographic scope of ops
service level, accessibility
•Scheduling
•User costs/outlays incurred •Facilities design/layout
•Price/other monetary costs •HR (numbers, skills)
•Time •Leverage (partners, self-service)
•Mental and physical effort •Task allocation: front/backstage
•Neg. sensory experiences Service Delivery staff; customers as co-producers
Process

4. Understanding the
Components of the Augmented
Service Product

5. Shostack’s Molecular Model of a Total
Market Entity - Passenger Airline
Service (Fig. 4-2) Distribution
Price
Vehicle
Service
frequency
Transport In-flight
service
Pre- and
post-flight Food
service and
drink
KEY
Tangible elements
Intangible elements
Marketing Positioning
(Weighted toward evidence) Source: Shostack

6. Core Products and Supplementary
Services
• Most firms offer customers a package of benefits:
– core product (a good or a service)
– supplementary services that add value to the core
• In mature industries, core products often become
commodities
• Supplementary services help to differentiate core
products and create competitive advantage by:
– facilitating use of the core service
– enhancing the value and appeal of the core

7. Core and Supplementary Product Design:
What Do We Offer and How Do We Create and Deliver It?
Supplementary Delivery Concept
services offered For Core Product
and how created Scheduling Process
and delivered
Core
Service Customer
Level Role

8. What Should Be the Core and
Supplementary Elements of Our
•
Service Product?
How is our core product defined and what supplementary
elements currently augment this core?
• What product benefits create the most value for
customers?
• Is our service package differentiated from the competition
in ways that are meaningful to target customers?
• What are current levels of service on the core product and
each of the supplementary elements?
• Can we charge more for higher service levels on key
attributes (e.g., faster response, better physical amenities,
easier access, more staff, superior caliber personnel)?
• Alternatively, should we cut service levels and charge less?

9. Core and Supplementary Services in a Luxury Hotel (Offering Guests
Much More than a Cheap Motel!)
Reservation
Cashier Valet
Parking
Business
Center Reception
A Bed for the
Room Night in an Baggage
Service Elegant Private Service
Room with a
Bathroom
Wake-up Cocktail
Call Bar
Telephone Restaurant
Entertainment/
Sports / Exercise

10. What Happens, When, and in What Sequence?
The Time Dimension in the Augmented Service Product
Reservation
Parking Get car
Check in Check out
USE ROOM Phone
USE GUESTROOM OVERNIGHT
Porter
Pay TV Room service
Meal
Pre Time Frame of an Overnight Hotel Stay
Visit (real-time service use)

11. The Flower of Service:
Categorizing Supplementary Services
(Fig. 4-5)
Information
Payment Consultation
Billing Core Order-Taking
Exceptions Hospitality
KEY:
Facilitating elements Safekeeping
Enhancing elements

12. Facilitating Services - Information
(Table 4.1)
Customers often require
information about how to
obtain and use a product or
Core service. They may also
need reminders and
documentation

13. Facilitating Services - Order-Taking
(Table 4.2)
Many goods and services
must be ordered or reserved
in advance. Customers need
Core
to know what is available and
may want to secure
commitment to delivery

14. Facilitating Services - Billing
(Table 4.3)
“How much do I owe you?”
Customers deserve clear,
Core
accurate and intelligible
bills and statements

15. Facilitating Services - Payment
(Table 4.4)
Customers may pay faster
and more cheerfully if you
Core
make transactions simple
and convenient for them

16. Enhancing Services - Consultation
(Table 4.5)
Value can be added to
goods and services by
Core
offering advice and
consultation tailored to
each customer’s
needs and situation

17. Enhancing Services - Hospitality
(Table 4.6)
Customers who invest time
and effort in visiting a
business and using its
Core services deserve to be
treated as welcome guests
(after all, marketing invited
them there!)

18. Enhancing Services - Safekeeping
(Table 4.7)
Customers prefer not to
worry about looking after
the personal possessions
that they bring with them
Core
to a service site.
They may also want delivery
and after-sales services for
goods that they purchase
or rent

19. Enhancing Services - Exceptions
(Table 4.8)
Customers appreciate some
flexibility in a business
when they make special
Core requests. They expect it
when not everything goes
according to plan

20. Branding
Service Products

21. Service Branding:
Clarifying Distinctive Service
Offerings
• British Airways Brands
• Marriott Hotel Brands
Intercontinental
– Marriott Hotels – First
– Marriott Resorts – Club World
– Courtyard by Marriott – World Traveller Plus
– Fairfield Inns – World Traveller
– Residence Inns European
– SpringHill Suites – Club Europe
– TownePlace Suites – Euro-Traveller
– Marriott Vacation Clubs UK Domestic
International – Shuttle

22. Line:
A Family of Brands at Sun
• Microsystems
Corporate umbrella brand
– Sun Microsystems
• Product line brand (system support services)
– Sun Spectrum Support
• Sub-brands (4 levels of support service
programs)
• Platinum
• Gold
• Silver
• Bronze

23. Sun Spectrum Support:
Sub-branding Highlights Four
Service Levels
Sub-branding clarifies service levels offered at
different fees
– Platinum: “Mission Critical”
On-site service 24/7, two-hour response;
telephone support 24/7, onsite parts replacement;
additional services available
– Gold: “Business Critical”
Onsite service Mon-Fri 8am-8pm, four-hour response;
telephone support 24/7; onsite parts replacement
– Silver: “Basic Support”

24. New Service
Development

25. New Service Development:
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 and offer extra
benefits
• Product line extensions--additions to current
product lines
• Process line extensions--alternative delivery
procedures

26. New Service Development:
Physical Goods as Source of Service
Ideas
• Customers can rent goods—use and return for a
fee— instead of purchasing them
• Customers can hire personnel to operate their
own or rented equipment
• Any new durable product may create need for
after-sales services (possession processing)
– Shipping
– Installation
– Problem-solving and consulting advice

27. Creating Services as Substitutes for
Owning and/or Using Goods (Fig. 4-7)
Own a Physical Good Rent the Use
of a Physical Good
• Drive own car • Rent car and drive it
Perform the
• Type on own word processor • Rent word processor and type
Work Oneself
Hire Someone • Hire chauffeur to drive car •• Hire a taxi or limousine
to Do the Work • Hire typist to use word processor •• Send work to secretarial service

28. Service Development through
Delivery Options: Alternative Meal
Service Formats (Fig. 4-8)
Fast-Food
Restaurant See sign Park and Order meal, Pick up Find table Clear table
(Eat In) enter and pay meal and eat and leave
Drive-In See sign Stop car at Order via Get meal at Drive away,
Restaurant order point microphone pickup, pay eat later
(Take Out)
Home Telephone Order food, Driver rings Pay driver,
Delivery take food Eat
Restaurant give address doorbell
Home Arrange to Plan meal, Food and Meal is Staff cleans
Catering meet caterer pay deposit staff arrive prepared Eat up; pay
and served

29. Elements of a Hotel Offering:
Trading off Room Price vs.
Features/Services
• External building
design and features
• Room features
• Food-related services
• Lounge facilities
• Services (e.g.,
reception)

30. Success Factors in New Service
Development
• Market synergy
– Good fit between new product and firm’s image/resources
– Advantage vs. competition in meeting customers’ needs
– Strong support from firm during/after launch
– Firm understands customer purchase decision behavior
• Organizational factors
– Strong interfunctional 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