4. creating the service product

8/13/2019 4. Creating the Service Product

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Chapter 4

Creating the

Service Product


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Key Steps in Service Planning:Matching Opportunities to Resources

Must relate marketing opportunities to firms resources(physical, financial, technological, human) Identify, evaluate firms marketing assets

Customer portfolio/lifetime value (customer equity) Market knowledge Marketing implementation skill

Product line Competitive positioning strategies Brand reputation (brand equity)

Identify, evaluate firms 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


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Operating Assets(Facilities/Equipment, IT Systems,

People, Op. Skills, Cost Structure)

Service Design Involves MatchingMarketing Concept with Operations

Concept

Corporate Objectivesand Resources

Service DeliveryProcess

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 incurredPrice/other monetary costsTimeMental and physical effortNeg. sensory experiences

Service Operations Concept

Nature of processesGeographic scope of opsSchedulingFacilities design/layoutHR (numbers, skills)Leverage (partners, self-service)Task allocation: front/backstagestaff; customers as co-producers


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Understand ing the

Components of theAugmented Serv ice Product


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Shostacks Molecular Model of a TotalMarket Entity - Passenger Airline Service

DistributionPrice

Marketing Positioning(Weighted toward evidence) Source: Shostack

KEY

Tangible elementsIntangible elements

Service

frequency

Vehicle

Transport

Pre- andpost-flight

service

Food

anddrink

In-flightservice


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Core Products and SupplementaryServices

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 becomecommodities

Supplementary services help to differentiate coreproducts and create competitive advantage by:

facilitatinguse of the core service enhancingthe value and appeal of the core


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Core and Supplementary Product Design:

What Do We Offer and How Do We Create and

Deliver It?

Core

Scheduling Process

Service

Level

Customer

Role

Supplementary

serv ices o f feredand how created

and del ivered

Delivery Conc ept

For Core Produ ct

h t Sh ld th C d


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What Should Be the Core andSupplementary Elements of Our Service

Product?

How is our core product defined and what supplementaryelements 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?


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Core and Supplementary Services in a Luxury Hotel(Offering Guests Much More than a Cheap Motel!)

Reservation

Valet

Parking

Reception

Baggage

Service

CocktailBar

RestaurantEntertainment/

Sports / Exercise

Telephone

Wake-up

Call

Room

Service

Business

Center

Cashier

A Bed for the

Night in an

Elegant Private

Room with a

Bathroom


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What Happens, When, and in What Sequence?

The Time Dimension in the Augmented Service

Product

PreVisit

Reservation

USE GUESTROOM OVERNIGHT

Parking Get car

Check in

Porter

USE ROOM

MealPay TV

Room service

Phone

Check out

Time Frame of an Overnight Hotel Stay(real-time service use)

h l f S i


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The Flower of Service:Categorizing Supplementary Services

Core

Information

Consultation

Order-Taking

Hospitality

Payment

Billing

Exceptions

SafekeepingFacilitating elementsEnhancing elements

KEY:


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Facilitating Services - Order-Taking

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


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Facilitating Services - Billing

How much do I owe

you?Customers deserve clear,accurate and intelligiblebills and statements

Core


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Facilitating Services - Payment

Customers may pay fasterand more cheerfully if you

make transactions simple

and convenient for themCore


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Enhancing Services - Safekeeping

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


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Enhancing Services - Exceptions(Table 4.8)

Customers appreciate some

flexibility in a businesswhen they make special

requests. They expect it

when not everything goes

according to plan

Core


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Branding

Service Products

S i B di


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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 ClubsInternational

British Airways BrandsIntercontinental

First

Club World

World Traveller Plus World Traveller

European

Club Europe

Euro-Traveller

UK Domestic

Shuttle


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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 program

Platinum

GoldSilver

Bronze

S S S


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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 CriticalOnsite service Mon-Fri 8am-8pm, four-hour response;telephone support 24/7; onsite parts replacement

Silver:Basic SupportOnsite service Mon-Fri 8am-5pm, four-hour response;telephone support Mon-Fri 8am-8pm; onsite parts replaceme

Bronze:Self SupportPhone support Mon-Fri 8am-5pm; parts replacement by cou


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New Serv ice

Development


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New Service Development:A Hierarchy of New Service Categories

Major service innovations--new core products for previouslyundefined markets

Major process innovations--using new processes to deliverexisting 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 improvedfacilitating or enhancing elements

Style changes--visible changes in service design or scripts

N S i D l t


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New Service Development:Physical Goods as Source of Service Ideas

Customers can rent goodsuse and return for a feeinstead of purchasing them

Customers can hire personnel to operate theirown or rented equipment

Any new durable product may create need for after-sale

services (possession processing)Shipping

Installation

Problem-solving and consulting advice

Cleaning

Maintenance

Repair

Upgrading

Disposal

C ti S i S b tit t f


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Creating Services as Substitutes forOwning and/or Using Goods

Perform the

Work Oneself

Hire Someone

to Do the Work

Own a Physical Good Rent the Use

of a Physical Good

Hire a taxi or limousine

Send work to secretarial service

Rent car and drive it

Rent word processor and type

Hire chauffeur to drive car

Hire typist to use word processor

Drive own car

Type on own word processor


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Service Development through DeliveryOptions: Alternative Meal Service Formats

Home

DeliveryOrder food,

give address

Driver rings

doorbell

Pay driver,

take food EatTelephone

Restaurant

Drive-InRestaurant(Take Ou t)

See sign Order via

microphone

Get meal at

pickup, pay

Drive away,

eat later

Stop car at

order point

Fast-FoodRestaurant

(Eat In)

See sign Park and

enter

Order meal,

and pay

Pick up

meal

Find table

and eat

Clear table

and leave

Home

Catering

Arrange tomeet caterer

Plan meal,

pay depositFood and

staff arrive

Meal ispreparedand served

EatStaff cleans

up; pay

l t f t l Off i di ff


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Elements of a Hotel Offering: Trading offRoom Price vs. Features/Services

External building design andfeatures

Room features

Food-related services

Lounge facilities

Services (e.g., reception)

Leisure facilities

Securitypeople/systems


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Success Factors in New ServiceDevelopment

Market synergy Good fit between new product and firms 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 stud

4. creating the service product

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