Utsav Mahendra : Creating the Service Product

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Creating the
Service Product

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Utsav Mahendra : Creating the Service Product

  1. 1. Chapter 4 Creating theService Product
  2. 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. 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. 4. Understanding theComponents of the Augmented Service Product
  5. 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 drinkKEY Tangible elements Intangible elements Marketing Positioning (Weighted toward evidence) Source: Shostack
  6. 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. 7. Core and Supplementary Product Design: What Do We Offer and How Do We Create and Deliver It?Supplementary Delivery Conceptservices offered For Core Productand how created Scheduling Processand delivered Core Service Customer Level Role
  8. 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. 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. 10. What Happens, When, and in What Sequence? The Time Dimension in the Augmented Service ProductReservation 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. 11. The Flower of Service: Categorizing Supplementary Services (Fig. 4-5) Information Payment Consultation Billing Core Order-Taking Exceptions HospitalityKEY:Facilitating elements SafekeepingEnhancing elements
  12. 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. 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. 14. Facilitating Services - Billing (Table 4.3) “How much do I owe you?” Customers deserve clear, Core accurate and intelligible bills and statements
  15. 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. 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. 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. 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. 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. 20. BrandingService Products
  21. 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. 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. 23. Sun Spectrum Support: Sub-branding Highlights Four Service LevelsSub-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. 24. New ServiceDevelopment
  25. 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. 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. 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 itPerform the • Type on own word processor • Rent word processor and typeWork OneselfHire Someone • Hire chauffeur to drive car •• Hire a taxi or limousineto Do the Work • Hire typist to use word processor •• Send work to secretarial service
  28. 28. Service Development through Delivery Options: Alternative Meal Service Formats (Fig. 4-8)Fast-FoodRestaurant See sign Park and Order meal, Pick up Find table Clear table(Eat In) enter and pay meal and eat and leaveDrive-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 doorbellHome Arrange to Plan meal, Food and Meal is Staff cleansCatering meet caterer pay deposit staff arrive prepared Eat up; pay and served
  29. 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. 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

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