creating the service product

8/2/2019 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 Matching

Marketing Concept with Operations

Concept (Fig. 4.1)

Corporate Objectivesand 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/layoutHR (numbers, skills)

Leverage (partners, self-service)

Task allocation: front/backstagestaff; customers as co-producers


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Understanding theComponents of the Augmented

Service Product


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Shostacks Molecular Model of a Total

Market Entity - Passenger Airline

Service (Fig. 4-2)DistributionPrice

Marketing Positioning(Weighted toward evidence) Source: Shostack

KEYTangible elementsIntangible elements

Service

frequency

Vehicle

Transport

Pre- andpost-flight

service

Food

anddrink

In-flightservice


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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 coreproducts and create competitive advantage by:

facilitating use of the core service

enhancing the 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

services offeredand how createdand delivered

Delivery Concept

For Core Product


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Supplementary 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 forcustomers?

Is our service package differentiated from the competitionin ways that are meaningful to target customers?

What are current levels of service on the core product andeach of the supplementary elements?

Can we charge more for higher service levels on keyattributes (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

ValetParking

Reception

BaggageService

CocktailBar

RestaurantEntertainment/

Sports / Exercise

Telephone

Wake-upCall

RoomService

Business

Center

Cashier

A Bed for theNight in an

Elegant PrivateRoom with a

Bathroom


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What Happens, When, and in What Sequence?

The Time Dimension in the Augmented Service Product

Pre

Visit

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)

Th Fl f S i


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The Flower of Service:

Categorizing Supplementary Services(Fig. 4-5)

Core

Information

Consultation

Order-Taking

Hospitality

Payment

Billing

Exceptions

SafekeepingFacilitating elements

Enhancing elements

KEY:


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Facilitating Services - Information(Table 4.1)

Core

Customers often requireinformation about how to

obtain and use a product orservice. They may alsoneed reminders anddocumentation


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Facilitating Services - Order-Taking(Table 4.2)

Many goods and servicesmust be ordered or reservedin advance. Customers needto know what is available andmay want to securecommitment to delivery

Core


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Facilitating Services - Billing(Table 4.3)

How much do I owe you?Customers deserve clear,accurate and intelligiblebills and statements

Core


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Facilitating Services - Payment(Table 4.4)

Customers may pay fasterand more cheerfully if youmake transactions simpleand convenient for them

Core


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Enhancing Services - Consultation(Table 4.5)

Value can be added togoods and services byoffering advice andconsultation tailored toeach customersneeds and situation

Core


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Enhancing Services - Hospitality(Table 4.6)

Customers who invest time

and effort in visiting abusiness and using itsservices deserve to betreated as welcome guests(after all, marketing invited

them there!)

Core


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Enhancing Services - Safekeeping(Table 4.7)

Customers prefer not toworry about looking after

the personal possessionsthat they bring with themto a service site.

They may also want delivery

and after-sales services forgoods that they purchaseor rent

Core


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Enhancing Services - Exceptions(Table 4.8)

Customers appreciate some

flexibility in a businesswhen they make specialrequests. They expect itwhen not everything goesaccording to plan

Core


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BrandingService Products

S i B i


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Service Bran ing: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


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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

S S t S t


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Sun Spectrum Support:Sub-branding Highlights Four

Service LevelsSub-branding clarifies service levels offered atdifferent 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 Support


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New ServiceDevelopment

New Service Deve opment


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New Service Deve opment:A Hierarchy of New Service

Categories Major service innovations--new core productsfor previously undefined markets

Major process innovations--using new processes

to deliver existing products and offer extra

benefits

Product line extensions--additions to currentproduct lines

Process line extensions--alternative delivery

procedures

New Service Deve opment:


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New Service Deve opment:Physical Goods as Source of Service

Ideas Customers can rent goodsuse and return for afee 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


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Creating Services as Substitutes for

Owning and/or Using Goods(Fig. 4-7)

Perform theWork 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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Delivery Options: Alternative Meal

Service Formats (Fig. 4-8)

Home

DeliveryOrder food,

give address

Driver rings

doorbell

Pay driver,

take food EatTelephone

Restaurant

Drive-InRestaurant(Take Out)

See sign Order via

microphone

Get meal at

pickup, payDrive 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

HomeCatering

Arrange tomeet caterer

Plan meal,pay deposit

Food andstaff arrive

Meal ispreparedand served

EatStaff cleans

up; pay


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Trading off Room Price vs.

Features/Services

External building

design and features

Room features

Food-related services

Lounge facilities

Services (e.g.,

reception)

S F t i N S i


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Success Factors in New Service

Development

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 studies

creating the service product

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