Developing service concepts
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The document discusses developing service concepts, including distinguishing core and supplementary elements. It describes augmenting the core product with supplementary services and delivery processes. Flowcharts can document the sequence of service delivery over time. The "Flower of Service" model identifies core products and two types of supplementary services - facilitating and enhancing. There are various branding alternatives for services. New services can be developed through reengineering processes, using physical goods as ideas, and research.
Developing service concepts
- 1. DEVELOPING SERVICE CONCEPTS- CORE AND SUPPLEMENTARY ELEMENTS 1 st P= Product
- 2. OVERVIEW Creating a service concept- first part in creating a service model Focus on first P- product element All service org- face choices concerning the type of products to offer and how to deliver Useful to distinguish the core elements and supplementary elements which enhance the use
- 3. WHAT IS A SERVICE PRODUCT? Mfged goods- camera fuel- title to physical objects Service performances- are experienced than owned- even when there are physical elements involved to the title- cooked meal, valve replacement – significant portion of the price paid by customers is for value added by service elements- expert labor and special equipment Service element comprises all the elements of the service performance both tangible and intangible that create value for customers
- 4. CORE PRODUCT AUGMENTATION Services- defined with ref to a particular industry- based on core set of benefits and solutions delivered to the customer Core product is typically accompanied by variety of other service related activities such as supplementary services These ss facilitate the use of the core product and add value and differentiation to the customers overall experience Core products- commodities as the industry matures and competition increases- hence emphasize on supplementary services
- 5. SHOSTACK MOLECULAR MODEL Service concept: core and supplementary combination Centre: core benefit- addressing the basic customer need- linked to a series of other service characteristics Helps in identification of tangible and intangible elements in a service delivery Eg airline: intangible:transportation,service frequency, pre,in and post flight service. Tangible: aircraft and food
- 6. Key Tangible Elements Intangible Elements AUGMENTING THE CORE PRODUCT Marketing Positioning (weighted toward evidence) Shostack’s Molecular Model: Passenger Airline Service Distribution Pre- & Postflight Service Service Frequency In-flight Service Food & Drink Vehicle Transport Price Source: Shostack
- 7. SERVICE CONCEPT DESIGN Marketers recognize the need to take a holistic view of the overall performance that they want the customers to experience, highlighting the specific dimensions on which the firm plans to compete Value proposition- must address and integrate the 3 comp: core product + supplementary service and delivery process
- 8. Core product • Central component that supplies the principal problem solving need that the customers need • Eg transport,repair services etc Supplementary services • Augment the core product ,both facilitating its use and enhancing its value and appeal • These help- extent and value in differentiating and positioning core product against competing services • Adding more ss- enhances the perceived value of the core product for prospects and enables the service providers to charge a higher price Delivery process • Concerns the process used to deliver core product and ss • Service design usually addresses: how differently service components are delivered to the customer,nature of customers role in process,length of delivery,and Rxed level and style of service offered
- 9. 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
- 10. SERVICE OFFERING FOR OVERNIGHT HOTEL STAY Cor e Reservatio n Parking Checkin/o ut Porter Meal Cable tv Phone Room Service Core Delivery process Supplement ary services
- 11. CORE AND SUPPLEMENTARY SERVICES AT LUXURY HOTEL (OFFERING MUCH MORE THAN CHEAP MOTEL!) Reservation Valet Parking Reception Baggage Service Cocktail Bar Restaurant Entertainment/ Sports/ Exercise Internet Wake-up Call Room Service Business Centre Cashier A Bed for the Night in an Elegant Private Room with a Bathroom
- 12. WHAT HAPPENS, WHEN, IN WHAT SEQUENCE? TIME DIMENSION IN AUGMENTED PRODUCT Before Visit Reservation internet Parking Get car Check in Porter Use room Meal Pay TV Room service Internet Check out Time Frame of An Overnight Hotel Stay (Real-time service use) USE GUESTROOM OVERNIGHT Internet
- 13. DOCUMENTING THE DELIVERY SEQUENCE OVER TIME Design the service concept – will address the sequence in which customers will use each of the core and supplementary services and to determine the approx length of time in each instance Req good understanding of customer needs ,habits, expectations- for mktg, planning, operations and personnel allocation Certain industries: neither core nor supplementary services are delivered continuously
- 14. FLOWCHARTING FC: a technique for displaying the nature and sequence of steps involved in delivering service to customers- to understand the totality of the customers service experience Useful for distinguishing steps at which customer uses the core service and those involving service elements that supplement the core product nature of customers involvement with service org varies amongst each category of service- people processing, mental stimulus, possession and information
- 15. PEOPLE PROCESSING Arrive at hotel Check in Spend night in room Breakfast Checkout 1 2 3 4 5 3: core product 1,2,4,5: visible action 3: benefits recvd
- 16. POSSESSION PROCESSING Travel to store Tech examines player, diagnoses the problem Leave store Return,pick and play Play at home 1 2 3 4 5 5: core product 1,2,3,4, : visible action Tech repair: invisible action
- 17. INFORMATION PROCESSING Learn abt options Select plan,complete forms Pay Insurance cover begins Printed policy arrives 1 2 3 4 5 4: core product 1,2,3,5, : visible action Terms of coverage,cust info in database: invisible action
- 18. THE FLOWER OF SERVICE
- 19. THE FLOWER OF SERVICE Core Information Consultation Order Taking Hospitality Payment Billing Exceptions Safekeeping Facilitating elements Enhancing elements KEY:
- 20. THE FLOWER OF SERVICE Supplementary services- play one of the two roles Facilitating ss: are required for service delivery or aid in the use of core product Enhancing supplementary services add extra value for customers
- 21. HOW TO DETERMINE WHAT SUPPLEMENTARY SERVICES SHOULD BE OFFERED Not every core product is surrounded by all eight supplementary elements Nature of product helps to determine: Which supplementary services must be offered Which might usefully be added to enhance value and ease of use People-processing and high-contact services have more supplementary services Market positioning strategy determines which supplementary services should be included Firms with different levels of service often add extra supplementary services for each upgrade in service level
- 22. 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
- 23. 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
- 24. 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
- 25. 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
- 26. 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
- 27. 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
- 28. 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
- 29. 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
- 30. MANAGERIAL IMPLICATIONS To develop product policy and pricing strategy, managers need to determine: Which supplementary services should be offered as a standard package or as fee based options Firms that compete on a low-cost, no-frills basis needs fewer supplementary elements than those marketing expensive, high-value-added services Each flower petal must receive consistent care and concern to remain fresh and appealing
- 31. Planning and Branding Service Products
- 32. BRANDING ALTERNATIVES Purpose of branding is to establish a mental picture of the service and clarify the value proposition Service marketers need to be their brand champions Branding alternatives are: Branded House – brand name to multiple offerings in unrelated fields e.g. Virgin Group Sub Brands – master brand is primary frame of reference but product has a distinctive name e.g. Singapore Airlines Raffles Class Endorsed Brands – Product brand dominates the corporate name e.g. hotels House of Brands – corporation with a number of products, each promoted under its own brand name e.g. Proctor & Gamble
- 34. A HIERARCHY OF NEW SERVICE CATEGORIES Range from major innovations to simple style changes: 1. Major service innovations New core products for previously undefined markets 2. Major process innovations Using new processes to deliver existing products with added benefits 3. Product-line extensions Additions to current product lines 4. Process-line extensions Alternative delivery procedures
- 35. A HIERARCHY OF NEW SERVICE CATEGORIES 5. Supplementary service innovations Addition of new or improved facilitating or enhancing elements 6. Service improvements Modest changes in the performance of current products 7. Style changes Visible changes in service design or scripts
- 36. REENGINEERING SERVICE PROCESSES Reengineering involves analyzing and redesigning processes to achieve faster and better performance Running tasks in parallel instead of sequence can reduce/eliminate dead time Examination of processes can lead to creation of alternative delivery methods that constitute new service concepts Add/eliminate supplementary services Resequence delivery of service elements Offer self-service options
- 37. PHYSICAL GOODS AS A SOURCE OF NEW SERVICE IDEAS Services can be built around rentals: Alternatives to owning a physical good and/or doing work oneself Customers can rent goods—use and return for a fee—instead of purchasing them Customers can hire personnel to operate own or rented equipment Any new durable good may create need for after-sales services now and in future—possession processing Shipping Installation Problem-solving and consulting advice Cleaning and maintenance Upgrades Removal and disposal
- 38. CREATING SERVICES AS SUBSTITUTES FOR OWNING AND/OR USING GOODS Drive Own Car Use Own Computer Rent a Car and Drive it Rent Use of Computer Hire a Chauffeur to Drive Hire a Typist to Type Hire a Taxi or Limousine Send Work Out to a Secretarial Service Own a Physical Good Rent Use of a Physical Good Perform Work Oneself Hire Someone to Do Work
- 39. CATERPILLAR PROMOTES ITS SERVICE BUSINESSES (FIG 3.11) Reprinted Courtesy of Caterpillar, Inc.
- 40. ACHIEVING SUCCESS IN DEVELOPING NEW SERVICES Services are not immune to high failure rates that plague new manufactured products “dot.com” companies In developing new services Core product is of secondary importance Ability to maintain quality of the total service offering is key Accompanying marketing support activities are vital Market knowledge is of utmost importance
- 41. SUCCESS FACTORS IN NEW SERVICE DEVELOPMENT Market synergy Good fit between new product and firm’s image/resources Advantage versus 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
- 42. SUMMARY : DEVELOPING SERVICE CONCEPTS Planning and creating services involve: Augmenting core product Designing core product, supplementary services, and delivery process Documenting delivery sequence over time with flowcharts Gaining insights from flowcharting Flower of service includes core product and two types of supplementary services: facilitating and enhancing Facilitating services include information, order taking, billing, and payment Enhancing services include consultation, hospitality, safekeeping, and exceptions Spectrum of branding alternatives exists for services Branded house Sub-brands Endorsed brands House of brands
- 43. SUMMARY : DEVELOPING SERVICE CONCEPTS Seven categories of new services: Major service innovations Major process innovations Product-line extensions Process-line extensions Supplementary service innovations Service improvements Style changes To develop new services, we can Reengineer service processes Use physical goods as a source of new service ideas Use research to design new services Achieve success in developing new services