3.service product development
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This document discusses the process of developing new services. It begins by outlining the key steps: idea generation, screening ideas, concept development and testing, marketing strategy development, business analysis, service development, market testing, and commercialization. It then provides more details on each step, including screening criteria, concept development using service blueprints, and elements included in a service design document. The overall summary is that this document outlines the full process that companies use to develop new service offerings from the initial idea through testing and commercialization.
3.service product development
- 2. • Over simplification Service is an intangible product. It cannot be photographed, touched, verified • Incompleteness and tried out. A service product is bundle of features and customer benefit. There are four • Subjectivity risks of attempting to describe service in words alone. • Biased interpretation
- 3. A service product is a package of a series of service elements in proper order in keeping with the needs and wants of consumer, with an intention to maximize consumer satisfaction. • Core services There are three elements in BSP. They are • Facilitating services • Supporting services
- 4. The basic service package Core service Facilitating service Supporting service
- 5. Core service is the reason for being in the market. Like hospital is for health care and hotel is for lodging. Facilitating services are those services without which core services cannot be performed. Thus a hotel requires building consisting of rooms, toilet and hospital requires doctors, nurses, medical equipments etc. Supporting services do not facilitate the consumption or use of a core services but increase the value of service offering.
- 6. For better understanding let us describe the BSP of a tourism product Suppose that core service of a tourism product offers destination experience The facilitating services include: (i) Natural places: waterfall, rivers, islands (ii) Historical places: monuments, museums, temples (iii) designed environments: man made such as Essel world, Disney parks and water parks etc.
- 7. Supportive service include Transportation Hospitality Health care Education Communication Interactions Need based special packages
- 8. Customer value hierarchy Core benefit Basic product Expected product Augmented product Potential product
- 9. Core benefit Rest and sleep (it is the most fundamental benefit the customer purchases) Basic product Hotel room, bed room, bath room, towels, desk, closet, and so on (it is how a marketer translates the core benefit into a service package. Expected Clean bed, fresh towels, working lamps and the relative degree of product quiet (a set of attributes buyers normally expect while purchasing a service) Augmented Supply of food that suits customer health, anything that product surprises and delights the customer Potential New ways of satisfying customer product
- 10. information Payment consultation billing Core Order taking product exceptions hospitality Care taking
- 11. Information: customers need information on various elements of a service, for evaluation and purchase decision making. Service firms also need to educate the market and prepare and persuade the potential buyer. For e.g. Sign boards Service performance hours Charges for services Directions on using core and supplementary service Alerting people Notices
- 12. Conditions of sale service Indicating the changes Documentation Reservation information Activity summaries Bills and receipts
- 13. Consultation: consultation involves a dialogue with the customers to probe their requirements so as to design and develop a tailored solution. Consultation is generally provided in the following areas Providing advice Helping customers to use the service Clarifying doubts Counselling personally Offering management/ technical consultancy
- 14. Order taking: order taking is first step in transaction. Some organisations such as banks and insurance companies require prospective customer to fill in the application form. Some organisations make order entry and some others make advance reservations. For e.g. Filling application form for membership For reservation of seats tables etc Entry of orders online mail or telephone order
- 15. Hospitality: customers may be required to stay at the service outlet for a long time due to the nature of service process. Hence hospitality becomes a part of service offerings. Greeting Enquiry and reception Waiting facilities Bathroom kits Food and beverages transportation
- 16. Safe keeping: it is likely that service customers may carry personal possession to the service outlet and participate in service production. Service organisations have to make arrangements for the safe keeping of the customer property. It includes Baby care and pet care services Parking facilities Storage and baggage handling services Security and safe deposit service
- 17. Goods packaging Pick up Transportation Delivery Installation of goods Cleaning and ensuring a healthy ambience
- 18. Exceptions: service providers may be required to provide supplementary services that fall outside the routine to the customers, on special considerations. In case of accidents and emergency exceptions should be allowed. Billing: billing is important from the company’s as well as the customer’s point of view. Customers expect accuracy, completeness and legibility in the bills prepared by the service providers. Companies also provide periodic statements of account to customers or allow customers to complete bills by themselves for greater transparency in the process.
- 19. Payment: After billing is done customer have to take action on payment. Activities such as cash handling, cheque handling, credit system, and coupon system are part of payment system. The payment system should facilitate customers to get easy and convenient payment of their dues.
- 20. Development of new service According to Philip kotler, every company must develop new products. New product development shapes the future of company. Improved and replacement products must be created to maintain or build sales. A service can be termed as new service when it is totally innovative and is created and offered by the company to the world for the first time. Some new services are adaptive replacements. They are improved version of existing service products either in technology, style, status or performance.
- 21. According to • New to the world products Booz, Allen • New product lines and • Addition to existing product lines Hamiltan, ther • Improvements and revision of e can be six existing products categories of • Repositioning new products. • Cost reductions
- 22. Marketing Concept strategy Idea Screening Business Service Market commerciali development And generations ideas analysis development testing zation and testing development
- 23. Idea Generation: The first step in new service development process is generation of new ideas. An idea is the fundamental base for any product. The most scarce product in today’s competitive world undoubtedly is a good idea. In most of the organization each and every employee is free to give his or her ideas whether they are feasible or not, because no one knows about which unrealistic idea become reality some day.
- 24. Screening ideas: The large no. of ideas gathered are screened to make the number manageable for further consideration. Criteria need to be evolved to evaluate each idea on its suitability to the organisation. Services firms generally constitute an expert committee to decide the criteria for the evaluation of ideas and to conduct screening process. • Go error: when bad idea is In screening two types of errors can forwarded occur • Drop error: when good idea is dropped.
- 25. Concept development and testing The ideas selected for further processes need to be developed into concepts. Ideas are general and vague in nature, whereas concepts are specific and concrete. Concept development means translation of an idea into a descriptive form in accurate terms. A clearly defined service concept includes the elements of a BSP, customer employee interaction and the service design document.
- 26. The • The problem to which the solution is offered in the form of service service • Reasons for offering a new service • List of sequential service processes design and its benefits. document • A rationale for the consumer as to why he or she should have the describes: service.
- 27. Service blueprint A popularly used technique for the development of service concept is service blue printing. A service blue print is a picture or map that portrays the service accurately. It is intended to provide a clear picture of the service process to different people involved in the service production and consumption processes. It helps the people involved to understand various processes of service without any confusion. The blue print visually depicts the roles of customers and employees.
- 28. Zeithmal and Bitner have • • Identify the process Map the process developed • • Draw the line of interaction Draw the line of visibility eight steps • Map the process from the customer and contact person’s point of view, distinguishing on-stage from for building a back-stage actions. • Draw the lines of internal interaction service • Link customer and contact person activities needed to support functions. blueprint. • Add evidence of service at each customer action step. They are
- 29. Concept testing The new service concept developed could be tested by presenting the concept through appropriate target consumers and by eliciting their views and opinions. Besides customers, the concept has to be tested with the employees of the organisation, so as to assess their understanding, ability, and willingness in performing the service. The result of concept testing will help the management to find out the need gap level, purchase intention level, the broad and strong consumer appeals, the shortcomings in the concept, the preferential order of influence of various processes and so on.
- 30. Marketing strategy development After the • Who are the target customers successful testing • What is the size of market of the concept, a • What is the competitive structure and their behavior preliminary • What is the positioning strategy marketing • What is pricing strategy strategy has to be • What is distribution strategy developed. The • What are the long term sales strategic plan will • What is the expected market share find out answers • What are the profit goals-long term as to the following well as short-term questions:
- 31. Business analysis The management of service firm would like to know the business attractive of the service proposal. Business analysis includes estimation of first time sales and repeat sales, sales in the introductory, second, third, fourth and fifth year product life cycle analysis, cost estimation, estimation of profits, projected profits and loss account for the first five years, pay back period and risk analysis. Business analysis helps managers to rank screened ideas.
- 32. Service development The service development will be designed with infrastructure, facilities, contact employees, system and tangibles as per the service blueprint. The step is an action- oriented one, involving high expenditure. It is clear shift from desk work to practical execution.
- 33. Market testing Now the services are ready for sale. To know how the service offer could really provide satisfactory experiences, it is necessary to test it among different groups of customers. Based on the early feedback, appropriate changes can be made to make offer more attractive or qualitative.
- 34. Commercialization The new service developed will be offered for sale. At this • When should the service be stage, service firms have to incur huge costs offered particularly in external • Where should the service be marketing. The major task is to create offered awareness in the market • To whom should the service be and persuade the target offered market to have the service. At this stage • How should the service be offered following four decisions are utmost important.
- 35. Service line decisions A service line consists of number of related services. Companies divide the service product mix into service lines for administrative convenience. Each line can be assessed from the point of view of competition and profitability, and appropriate strategic approaches can be followed to achieve organizational objectives. Service line length: keeping profit maximisation as one of the key objectives, service firms decide the length of each service line. For building a service line companies may adopt the following four different strategies
- 36. Down market stretch Up market stretch Two way stretch Service line filling
- 37. Service line modernization: service packages, once introduced, cannot be continued as they are for a long time. On the one side, competitors try to overtake in value offering, and on the other side, consumers expect of improved value perceptions. So there is need of modernisation as per the need of competitive world. Service line featuring: Not all services of a service line can be campaigned to target consumers due to economic reasons. Companies may select one or two service packages of service line, which are capable of creating demand for themselves as well as the other service packages on the line.
- 38. Service line pruning: while new service additions are to increase the profitability of the concerns, dropping some services may be sometimes necessary to protect the profitability. When a service reaches the decline stage in its life cycle and becomes a loss-making one, management has to take a decision to drop such a service from the line.
- 39. Service differentiation Basic service package: one of the key areas of service differentiation is the design of the BSP itself. There is an enormous scope for differentiating the facilitating services as well as supporting services. By introducing little changes in BSP, consumers can be made to perceive differentiated value. Accessibility: by making a service more accessible compared to that of other competitive services, a differentiated value perception can be granted.
- 40. Interaction: yet another area of differentiation service is the design and process of customer interaction. How customers are received, how they were involved in service production and consumption, how they were detached from service outlet after production and consumption process, whom they interact with and how the interaction is organised are the areas providing infinite opportunities to service firms to differentiate and excel.
- 41. Customer participation: customer differ in their knowledge, ability and willingness to participate in service production. The responsibility of the service firm lies in ensuring the total, able and involved participation of customer. Service firms can differentiate in their approach to educate, train and convince the customer.
- 42. Tangibles used: the quantity, adequacy, maintenance, technology and suitability of various tangibles required for the service performance can be used to create differentiated value perceptions. Service personnel: human resources plays a pivotal role in service production. Though some services can be provided through machines, they cannot be viewed as perfect substitutes to the human resource.
- 43. Service channel: the choice of channels such as agents, brokers, franchises or electronic channels; the extensive, exclusive and selective coverage of the channel; the skill and expertise of channel members and their performance are the areas where differentiation is a possibility. Service image: the image of company at local level and corporate level differentiates in value perception by the customer.
- 44. Service recovery: In spite of careful and cautious approach, deficiencies in service is not an exception to any service organisation. Successful companies adopt recovery strategies to win the customers and also use such strategies to differentiate their service offerings from that of competitors.
- 45. Service life cycle Introduction stage Growth stage Maturity stage Decline stage
- 46. Branding a service product Branding begins with giving an identity to the service beyond the one it has within trade circles. Consumers feel they are getting more in a branded service than otherwise.
- 47. BENEFITS OF BRANDING Provides corporate identity and recognition. Provides an opportunity to distinguish the competitive product Helps customers to develop perceptions. Helps in developing customer relationship Builds up long term equity to the concern Market penetration becomes easy. New service offers get quick response.
- 48. Branding decisions Service firms need to decide whether to brand their services packages or not, because branding requires consistent quality performance and accessibility. The cost of branding must be less than the premium that a marketer can get out of it. Once it is decided to brand a service, there are at least four important decisions a company has to make in branding. They are
- 49. Should the company’s own brand be promoted or should a sponsor be found for branding. What should be the quality of brand. Should a corporate brand or an independent product brand or a mix of two be promoted Should the existing brand name be extended or a new brand built
- 50. Selection of brand name While selecting a brand company’s vision, mission and objective should be kept in mind. Generally a committee which consists of product managers, other marketing personnel, advertising agencies, branding consultants is constituted for selection of brand name. keeping the company’s objective in mind, the committee carefully reviews the BSP, its benefits, the target market and the proposed marketing strategies. A list of potential brand names ranging from 100 to 200 is prepared at the first stage . After this 10 or 20 names are selected after screening. Then company studies the customer’s reaction on different brand names and finally a brand name is selected.
- 51. Qualities of a good brand The name should be associated with pleasant things and quality. The name should suggest something about the product’s benefit. It should be easy to pronounce and recall It should lay stress on those characteristics of a service that are to be impressed on customer It should be distinctive and should have motivational value The name should be capable of translation into foreign language The name should be free for legal protection and registration.