Developing Core Concepts Core And Supplementary Elements
- 1. Developing Core Concepts Core And Supplementary Elements Group Members: Muhammad Salman Arshad Mahnoor Shah Bisma Siddiqui Mohsin Memon Shahnawaz Soomro
- 2. Understanding what constitutes a service product
- 3. CREATING SERVICE PRODUCTS A product is a bundle of output which has the ability to differentiate itself with other bundles of outputs. Service Firms can also differentiate products in a similar manner by offering different products and its models to its customers. ▪ For example, restaurants can differentiate their products because they are tangible. If you buy a burger , you can easily differentiate a Mcdonald’s Mc chicken and Big Mac. Yu can also differentiate it with the product of others firms like you can differentiate Mcdonald’s Mc Crispy with OPTP’s Zinger Burger. Similarly, the providers of intangible products can also differentiate their products by offering different models of their products through providing value added supplementary services with their core product. ▪ For example, Credit Card company provides different cards in which there are different offers like different fees and benefits. Insurance companies offer different types of policies like life insurance, education insurance and car insurance. Universities also offers different courses and each course would provide a different benefit to their consumers. 3
- 4. Every service organization has choices to make regarding how to deliver their product what type of products they have to offer. To make that choice wisely, the understanding of core and supplementary product is very important which would help the organization to distinguish and determine that which supplementary service is going to benefit their customers the most and which supplementary service we have to provide with a specific product. The combination of the supplementary and core product is very important as the organization has to deliver the services in a sequence that would help their customers to gain as much value as they can from the consumption of a specific product. This way the organization would be able to meet the needs of their targeted segment. 4
- 5. COMPONENTS OF SERVICE PRODUCT When the consumer buys or takes the title of ownership of a specific products he not only pays for the product but also pays for the value added services provided by the organization because the labor or the equipment's provided by the organization are specialized and they incur cost for the organization. Designing a service product requires combining three components that are going to create value for customer. Those components are as follows: CORE PRODUCT SUPPLEMENTARY SERVICE DELIVERY PROCESSES 5
- 6. CORE PRODUCT ▪ A core product is what the customer is initially or actually buying. For example, A night stay at a hotel. Here the core product is accommodation and security. When paying to have a package delivered, the core product is to get the package delivered in time and undamaged. The core product is something which provides principle benefits and fulfills the initial demand of the customer that what the customers actually seeks for. It provides the desired experience and problem solving benefit that the customer is looking for. ▪ The core product can be tangible ( Buying a part of your car) or intangible ( Credit card and travel insurance). Take the example of exchange traded funds (ETFs) as an intangible product. These are a type of mutual funds which are cheap. tax efficient and allow the investors to invest in a diversified portfolio. 6
- 7. SUPPLEMENTARY SERVICES After the customer has bought or acquired the core product, it is followed by providing him the supplementary services to create the most value out of the core product. The supplementary services facilitates the use of the core product and also enhances its value. When there is a lot of competition in the market a the services are homogenous then it is important for the service organization to provide such supplementary services that would provide the a competitive advantage and attract customers to them more than their competitors. Providing a different and valuable supplementary service would help the organization to differentiate and position the core product 7
- 8. DELIVERY PROCESSES ▪ Delivery processes comprises of the process used to deliver the core product and the supplementary services. The design of service offering must addresthe following issues: ▪ How the different service components are delivered to the customer. ▪ The nature of customers’ role in those processes ▪ How long the delivery lasts ▪ The prescribed level and style of service to be offered. 8
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- 10. The Flower of Service 10
- 11. The Flower of Service Facilitating Services 1. INFORMATION 2. ORDER TAKING 3. BILLING 4. PAYMENT Enhancing Services 1. CONSULTATION 2. COUNSELLING 3. HOSPITALITY 4. SAFE KEEPING 5. EXCEPTIONS 11
- 12. INFORMATION ▪ To obtain full value from any good or service, customers need relevant information. Information includes the following: ▪ Direction to service site ▪ Schedules/service hours ▪ Price information ▪ Terms and conditions of sale/service 12
- 13. ORDER TAKING ▪ Once customers are ready to buy, a key supplementary element comes into play — order-taking. Order-taking includes: ▪ Order entry – On-site order entry – Mail/telephone/email/online/mobile app order ▪ Reservations or check-ins – Seats/tables/rooms – Vehicles or equipment rental – Professional appointment 13
- 14. BILLING Billing is common to almost all services (unless the service is provided free-of- charge). Inaccurate, illegible, or incomplete bills risk disappointing customers who may, up to that point, have been quite satisfied with their experience. Billing can be: ▪ Periodic statements of account activity. ▪ Invoices for individual transactions. ▪ Verbal statements of amount due. ▪ Online or machine display of amount due for self-payment transactions. 14
- 15. PAYMENT A bill requires the customer to take action on payment (and such action may be very slow in coming). Exceptions include bank statements and other direct debit payment services, which shows the charges to be deducted from a customer’s account. A variety of payment options exist, but customers expect them to be easy to use and convenient. They include: ▪ Self-service ▪ Direct to payee or intermediary ▪ Automatic deduction from financial deposits 15
- 16. CONSULTATION Consultation involves a dialog to probe for customer requirements and then develop a tailored solution. At its simplest, consultation consists of advice from a knowledgeable service person in response to the request: “What do you suggest?” For example, you might ask your hairstylist for advice on different hairstyles and products. Examples of consultation include: 1. Customized advice 2. Personal counseling 16
- 17. COUNSELLING It represents a more subtle approach to consultation because it involves helping customers to better understand their situations so they can come up with their “own” solutions and action programs. For example, diet centers like Weight Watchers use counseling to help customers change behaviors so that weight loss can be sustained after the initial diet is completed 17
- 18. HOSPITALITY Hospitality-related services should ideally reflect pleasure at meeting new customers and greeting old ones when they return. Well-managed businesses try, at least in small ways, to ensure that their employees treat customers as guests. ▪ Hospitality elements include: ▪ Greeting ▪ Food and beverages ▪ Toilets and washrooms ▪ Waiting facilities and amenities – Lounges, waiting areas, seating – Weather protection – Magazines, entertainment, newspapers ▪ Transport 18
- 19. SAFE KEEPING When customers are visiting a service site, they often want assistance with their personal possessions. Safekeeping includes caring for: ▪ Child care, pet care ▪ Parking for vehicles, valet parking ▪ Coat rooms ▪ Baggage handling ▪ Storage space ▪ Safe deposit boxes ▪ Security personnel 19
- 20. EXCEPTIONS Exceptions involve supplementary services that fall outside the routine of normal service delivery. For example, ▪ Special requests. A customer may request service that requires a departure from normal operating procedures. Common requests relate to personal needs, including the care of children, dietary requirements, medical needs, religious observance, and personal disabilities. ▪ Problem-solving. Sometimes normal service delivery (or product performance) fails to run smoothly as a result of accident, delay, equipment failure, or a customer having difficulty in using a product. 20
- 21. Branding strategies for services firms. Examine how services firms use different branding strategies
- 22. ▪ Branding, by definition, is a marketing practice in which a company creates a name, symbol or design that is easily identifiable as belonging to the company. This helps to identify a product and distinguish it from other products and services 22
- 23. Branded House A Branded House is the most common form of brand. Major brands like Google and Apple are exemplary models of this style, where in both have smaller sub-brands, but all are marketed and operated under the umbrella of the parent brand. For instance, you might check for appointments in your Google Calendar. Later, you write a message in Gmail. FedEx is another company that has done an excellent job with their branding and has certainly reaped the benefits of taking the Branded House approach. 23
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- 25. House of Brands A House of Brands is the exact opposite of a Branded House. a House of Brands is home to numerous brands, each independent of one another, and each with its own audience, marketing, look and feel. P&G and Unilever are great examples of a House of Brands. For instance, you wash your laundry with Tide, not with P&G’s Tide Detergent. 25
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- 27. Sub-brands The sub-brands is closer to a branded house strategy, in that the master brand most often acts as a key driver. In some cases both the master brand and sub-brands are considered co- drivers, but the sub-brand is never stronger than the master brand. The sub-brands is convenient when you want to extend your main brand to new target audiences – for example, Disney Junior targeting a younger audience than the Disney master brand. 27
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- 29. Endorsed brands In contrast to sub-brands, endorsed brands are closer to the house of brands. As with a house of brands, endorsed brands see many products and offerings under separate brands, but they are supported by the master brand. Examples of brands fitting this strategy include Kit Kat with endorsement from Nestlé, Xbox from Microsoft, Courtyard by Marriott and Munchies strongly supported by Vice, Examples include Nescafe, based on master brand Nestlé. 29
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- 32. Building Brand Equity What is brand equity ? Brand equity is the value premium that comes with a brand. It is what customers are willing to pay for the service, beyond what they are willing to pay for a similar service that has no brand. 32
- 33. Main components of brand equity 1. Brand perception Brand perception is what customers believe a product or service represents, not what the company owning the brand says it does. Brand recognition – Brands have recognizable features that identify a product as belonging to a certain brand. Brand awareness – Being aware of what the brand stands for their unique selling point can provide a level of familiarity and transparency that can impact a customer’s perception of a branded product. 33
- 34. 2. Positive or negative effects Customer experience The positive user experience of a branded product can create a favorable impression of the brand. Quality The brand name is associated with a good supply chain, reputation, and trust level. Most reputable companies in the world repeatedly based on its performance across several reputation markers products, governance, leadership, financial performance, how innovative they are, and their citizenship. Customer preference The success of the sale relies on whether this brand represents the customer’s beliefs and values, and could easily feature within their life now. 34
- 35. Positive and negative brand equity examples: 1-Coca-Cola Company 2-WW (formerly Weightwatchers) The Coca-Cola Company The Coca-Cola brand is worth an estimated $83.8 billion and sells in every country of the world. It is consistently adapting to suit its customers’ lives, with past products offering label personalization for younger audiences, creating Christmas advertising featuring a Santa in a red-suit to welcome in the holidays, and past taglines emphasizing positive experiences: “Make it real” , “Open happiness” and “Taste the feeling”. WW (formerly Weightwatchers) In 2008, the dieting company then called Weightwatchers rebranded to try to focus on general wellness and self-care, by dropping the word ‘weight’ from their name and adding the tagline: ‘Wellness that works’. 35
- 36. Benefits of developing your brand equity Greater market share Developing your brand equity will give you a competitive edge in the marketplace. Your brand needs to stand out and appeal to customers through your unique selling point or distinct branding. Price premium When you have better brand equity, you’re able to charge more for the product and increase your price premium percentage over the market average. This can be a good overall metric to measure your product’s financial performance. Extend your product line easily When you have a high level of brand equity, customers will be more likely to continue their business with you and be the first to try your latest products and services. Greater impact as a company Your increased revenue and market dominance, you may find yourself in a powerful situation. You can use your high brand equity to form new partnerships, look around for better supplier rates. 36
- 37. How to build brand equity 1. Build greater brand awareness ▪ Using the same logo or image to ensure your branding is consistent ▪ Great customer service ▪ A heart-warming story behind the brand ▪ Keeping the brand in front of your market ▪ Providing ongoing value ▪ Keeping in touch via email or newsletters ▪ Tap into social media and share more – blogs, tweets, Facebook groups, Instagram photos ▪ Word of mouth, positive customer experience, and targeted marketing all help you develop greater brand awareness. 37
- 38. 2. Communicate brand meaning A company that produces a useful product, and genuinely commits to social or environmental responsibility will attract customers and employees who share those values IKEA, for example, has invested in sustainability throughout its entire business operation: 50% of its wood is from sustainable sources, 100% of its cotton is Better Cotton standard and 700,000 solar panels power its stores. 38
- 39. 3. Foster positive customer feelings and judgments Positive feelings can be excitement, fun, peer approval, security, trust, and self- respect. A brand that can maintain positive judgments and feelings is a winner. 4. Build a strong bond of loyalty with your customers Loyal customers are customers that have formed a psychological bond with your brand. They make repeat purchases. They may feel part of a community of fellow consumers. 39
- 41. A HIERARCHY OF NEW SERVICE CATEGORIES 1. Style changes 2. Service improvements 3. Supplementary service innovations 4. Process line extensions 5. Product line extensions 6. Major process innovations 7. Major service innovations 41
- 42. STYLE CHANGES ▪ It represents the simplest type of innovation and typically involving no changes in wither performance or processes. ▪ They are often highly visible and motivate employees. ▪ For example, redesigning retail branches, websites or new uniforms for service employees. 42
- 43. SERVICE IMPROVEMENTS It is the most common type of innovation. They involve small changes in the performance of current products , including improvements to either the core product or to supplementary services. It is the little things that customers appreciate it. For example, Passport size Photo in one hour instead of 5-6 hours 43
- 44. SUPPLEMENTARY SERVICE INNOVATIONS It include adding new facilities enhancing service elements or significantly improving an existing supplementary service. For example, giving parking facility at a retail site or agreeing to accept payment via smartphone. 44
- 45. PROCESS LINE EXTENSIONS It represents distinctive new ways of delivering existing products. The intension is to offer more convenience and a different experience for existing customers or attract new customers who find the traditional way unappealing. For example, App based service delivery 45
- 46. Product line extensions These are additions to a company’s current product lines. The first company in a market to offer such a product maybe seen as an innovator. These new services maybe targeting at existing customers or are designed to attract new customers in order meet their needs and wants. For example, Hyderabad Darbar extended their product line by introducing Dhakka Chicken in order to attract their existing or new customers 46
- 47. MAJOR PROCESS INNOVATIONS It consist of using new processes to deliver existing core products in new ways with additional benefits. For example, COURSERA is providing variety of online courses in almost every field and it is free and many people can take advantage of it by enrolling themselves in any course. Hence, it substitutes the traditional way of teaching courses where an individual has to go centers for attending their course classes. 47
- 48. 48 THANKS!