Creating service product-lovelock04

Jamil Ahmed AKASH
Creating the
Service Product
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Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 1

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

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

Understanding the
Components of the
Augmented Service Product

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

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

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

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?

Core and Supplementary Services in a Luxury Hotel
(Offering Guests Much More than a Cheap Motel!)
R e s e r v a t i o n
V a l e t
P a r k i n g
R e c e p t i o n
B a g g a g e
S e r v i c e
C o c k t a i l
B a r
R e s t a u r a n t
C a s h i e r
A B e d f o r t h e
N i g h t i n a n
E l e g a n t P r i v a t e
R o o m w i t h a
B a t h r o o m
E n t e r t a i n m e n t /
S p o r t s / E x e r c i s e
B u s i n e s s
C e n t e r
R o o m
S e r v i c e
W a k e - u p
C a l l
T e l e p h o n e

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

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

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

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

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

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

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

Enhancing Services - Hospitality
(Table 4.6)
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 there!)
Core

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

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

Branding
Service Products

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

Branding a High-Tech, B2B Product 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

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”
Onsite service Mon-Fri 8am-5pm, four-hour response;
telephone support Mon-Fri 8am-8pm; onsite parts replacement
 Bronze: “Self Support”
Phone support Mon-Fri 8am-5pm; parts replacement by courier

New Service
Development

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
 Supplementary service innovations--adding new or
improved facilitating or enhancing elements
 Style changes--visible changes in service design or scripts

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
 Cleaning
 Maintenance
 Repair
 Upgrading
 Disposal

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

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

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)
 Leisure facilities
 Security—people/systems

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

Creating service product-lovelock04

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