The document discusses service design and innovation. It describes the challenges of developing new services and outlines the key characteristics and processes that should be considered, including meeting customer needs, having a competitive advantage, and dedicating resources to research and development. The document also discusses types of service innovations, such as major innovations that create new markets or start-up businesses entering existing markets. It emphasizes that new services should be developed through a systematic, step-by-step process based on facts rather than opinions.

1. SERVICE DESIGN AND
INNOVATION
Challenges of Service Design, Types of
New Services, Core and Supplementary
Elements, New Service Development
Process
Aijaz Ahmed Rather
I.K Gujral P.T University

2. • For a good service idea to succeed, it is
important to focus on development, design
and specification of service.

3. To develop or launch a new service, the following
characteristics need to be studied in detail:
(a) Service characteristics:
-meeting the need of the customer
-advantage over the competitors in the market.
-technological edge.
(b) Strategy characteristics:
-dedicated workforce who believe in the new service
-dedicated R&D focus on the new service initiative.

4. (c) Process characteristics:
-marketing
-predevelopment
-technological and launch proficiencies
(d) Marketplace characteristics:
-relates to the market potential of the new service

5. CHALLENGES
• It is difficult to describe services verbally
due to the intangible and heterogeneous
characteristics of services.
The risks involved are:
(1) oversimplification
(2) incompleteness
(3) subjectivity
(4)biased interpretation

6. New Service Development Process
People
Technology Systems
Product
Full Launch Development
Design Analysis
Tools
Enablers
• Formulation
of new services
objective / strategy
• Idea generation
and screening
• Concept
development and
testing
• Business analysis
• Project authorization
• Full-scale launch
• Post-launch review
• Service design
and testing
• Process and system
design and testing
• Marketing program
design and testing
• Personnel training
• Service testing and
pilot run
• Test marketing

7. NEW SERVICE DEVELOPMENT
• New services should be developed in a
systematic step by step framework, which
-must be objective, not subjective.
-must be precise, not ambiguous.
-must be based on facts, not on opinions.
-must be methodological, not philosophical

8. STAGES IN NEW SERVICE
DEVELOPMENT
(1)FRONT END PLANNING:
-business strategy development: review the
overall strategic vision and mission of the
organisation.
-new service strategy development: In terms of
markets, types of services, profit criteria, time
frame etc.

9. Continued…
- Idea generation:
(a) Screen ideas against new service
strategy.
(b) brainstorming, inviting ideas from
employees and customers, lead user
research and studying the competitors’
offerings.

10. -Concept development and evaluation: Test
the concept with customers and
employees.
-Business analysis: Test for profitability and
feasibility.

11. (2) IMPLEMENTATION
-Service development and testing:
(a) A service blueprint that represents the implementation
plan has to be prepared.
(b) Conduct service prototype test
-Market testing:
(a) Test the service and other marketing mix elements.
(b) Pilot run the service.
(c) Study the responses

12. -Commercialization:
(a) Train and monitor the service delivery
employees for service quality.
(b) Monitor costs and operating efficiency.
-Post introduction evaluation

13. Core Products and Supplementary Services
• In mature industries, core products often become
commodities
• Supplementary services help to differentiate core
products and create competitive advantage by:
– Facilitating use of core product (a service or a
good)
– Enhancing the value and appeal of the core
product

14. a) Designing a Service Concept
• Core Product
– Central component that supplies the principal, problem-
solving benefits customers seek
• Supplementary Services
– Augment the core product, facilitating its use and
enhancing its value and appeal
• Delivery Processes
– Used to deliver both the core product and each of the
supplementary services

15. Core and Supplementary Product
Design: An Integrated Perspective
Scheduling
Nature of
Process
Service
Level
Customer
Role
Supplementary
services offered
and delivered
Delivery Concept
for Core Product

16. Core and Supplementary Services at Luxury Hotel
Reservation
Valet
Parking
Reception
Baggage
Service
Cocktail
Bar
Restaurant
Entertainment/
Sports/
Exercise
Internet
Wake-up
Call
Room
Service
Business
Center
Cashier
A Bed for the
Night in an
Elegant Private
Room with a
Bathroom

17. Defining Core and Supplementary Elements
of Our Service Product
• How is our core product defined and what supplementary
elements augment it?
• What product benefits create most value for customers?
• What are current levels of service on core product and each
supplementary element?
• Can we charge more for higher service levels? For example:
• Alternatively, should we cut service levels and charge less?

18. b) Documenting Delivery Sequence
Over Time
• Must address sequence in which customers will use each
core and supplementary service
• Determine length of time for each step
• Information should reflect good understanding of
customers, especially their:
– Needs
– Habits
– Expectations
• Question: Do customers’ expectations change during
service delivery in light of perceived quality of each
sequential encounter?

19. 2. The Flower of Service
Core
Information
Consultation
Order Taking
Hospitality
Payment
Billing
Exceptions
Safekeeping
Facilitating elements
Enhancing elements
KEY:

20. The Flower of Service:
Facilitating Services—Information
Core
Customers often require
information about how to obtain
and use a product or service.
Examples of elements:
 Directions to service site
 Schedule/service hours
 Prices
 Conditions of sale
 Usage instructions

21. The Flower of Service:
Facilitating Services—Order Taking
Core
Customers need to know what
is available and may want to
secure commitment to
delivery. The process should
be fast and smooth.
Examples of elements:
 Applications
 Order entry
 Reservations and check-in

22. The Flower of Service:
Facilitating Services—Billing
Core
“How much do I owe you?”
Bills should be clear,
Accurate, and intelligible.
Examples of elements:
 Periodic statements of
account activity
 Machine display of amount
due

23. The Flower of Service:
Facilitating Services—Payment
Core
Customers may pay faster
and more cheerfully if you
make transactions simple
and convenient for them.
Examples of elements:
 Self service payment
 Direct to payee or intermediary
 Automatic deduction

24. Core
The Flower of Service:
Enhancing Services—Consultation
Value can be added to goods
and services by offering advice
and consultation tailored to
each customer’s needs and
situation.
Examples of elements:
 Customized advice
 Personal counseling
 Management consulting

25. The Flower of Service:
Enhancing Services—Hospitality
Customers who invest time and
effort in visiting a business and
using its services deserve to be
treated as welcome guests—
after all, marketing invited them!
Examples of elements:
 Greeting
 Waiting facilities and amenities
 Food and beverages
 Toilets and washrooms
 Security
Core

26. Core
The Flower of Service:
Enhancing Services—Safekeeping
Customers prefer not to worry
about looking after the personal
possessions that they bring
with them to a service site.
Examples of elements:
 Looking after possessions
customers bring with them
 Caring for goods purchased
(or rented) by customers

27. Core
The Flower of Service:
Enhancing Services—Exceptions
Customers appreciate some
flexibility when they make
special requests and expect
responsiveness when things
don’t go according to plan.
Examples of elements:
 Special requests in advance
 Complaints or compliments
 Problem solving
 Restitution

28. • MAJOR OR RADICAL INNOVATIONS-
– New services for markets as yet undefined.
– new service driven by information and computer
based technology
– Often these innovations create brand- new markets.
– Past example- the first television broadcast service
TYPES OF SERVICE INNOVATIONS

29. TYPES OF SERVICE INNOVATIONS
• START- UP BUSINESSES
– Consists of new service for a market that is already
being served by existing products that meet the
same generic needs.
– Examples- online banking for financial transactions

30. TYPES OF SERVICE INNOVATIONS
• NEW SERVICES FOR THE CURRENTLY SERVED
MARKET
– Offer existing customers of the organization a service not
previously available from the company.
– Examples- retailers adding a coffee bar or children’s play
area, a health club offering nutrition classes.

31. TYPES OF SERVICE INNOVATIONS
• SERVICE- LINE EXTENSIONS
– Augmentations of the existing service lines.
– Examples- a restaurant adding new menu items, an
airline offering new routes, a university adding new
courses.

32. TYPES OF SERVICE INNOVATIONS
• SERVICE IMPROVEMENTS
– Changes in features of services already offered
– Might involve faster execution of an existing service
process
– Examples- extended hours of service

33. TYPES OF SERVICE INNOVATIONS
• STYLE CHANGES
– Most modest service innovations
– Highly visible
– Can have significant effects on consumer
perceptions, emotions and attitudes.
– Examples, changing the color scheme of a
restaurant, revising the logo of an organization,
redesigning a website

34. SERVICE BLUEPRINTING
• It is a pictorial representation that accurately
portrays the service system so that it can be
easily understood.
• It visually displays the service by depicting the
various processes involved in the service
delivery, points of customer contact, the roles
of customer and employees etc.

35. • Components of service blueprint:
In the diagrammatic representation the
components could be are the:-
-customer actions area
-onstage contact employee action area
-backstage contact employee action area
-support process

36. • Building a Blueprint:
(a) Identify the process to be blueprinted
(b) Identify the customer or customer segment.
(c) Map the process from the customer’s point of
view.
(d) Map contact employee actions, onstage
backstage and technological actions.
(e) Link contact activities to needed support
functions.
(f) Add evidence of service at each customer
action step.