love lock 04
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Chapter 4TRANSCRIPT
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 1
Chapter 4
Creating the
Service Product
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 2
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 3
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/layout•HR (numbers, skills)•Leverage (partners, self-service)•Task allocation: front/backstage staff; customers as co-producers
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 4
Understanding the Components of the
Augmented Service Product
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 5
Shostack’s Molecular Model of a Total Market Entity - Passenger Airline Service (Fig. 4-2)
DistributionPrice
Marketing Positioning (Weighted toward evidence) Source: Shostack
KEY Tangible elements Intangible elements
Service frequency
Vehicle
Transport
Pre- and post-flight
serviceFood and drink
In-flight service
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 6
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 serviceenhancing the value and appeal of the core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 7
Core and Supplementary Product Design: What Do We Offer and How Do We Create and Deliver It?
Core
Scheduling Process
Service Level
Customer Role
Supplementaryservices offeredand how createdand delivered
Delivery Concept For Core Product
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 8
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?
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 9
Core and Supplementary Services in a Luxury Hotel (Offering Guests Much More than a Cheap Motel!)
Reserva tio nVa let
Pa rking
Receptio n
Ba gga geService
C o ckta il Ba r
Resta u ran tEnterta inment/
Spo rts / Exercise
Teleph o ne
W a ke - upC a ll
Ro o mService
BusinessC enter
C a sh ier
A Bed fo r theN igh t in an
Elega n t Priva teRo o m w ith a
Ba th ro o m
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 10
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
PhoneCheck out
Time Frame of an Overnight Hotel Stay(real-time service use)
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 11
The Flower of Service:Categorizing Supplementary Services (Fig. 4-5)
Core
Information
Consultation
Order-Taking
Hospitality
Payment
Billing
Exceptions
Safekeeping Facilitating elements
Enhancing elements
KEY:
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 12
Facilitating Services - Information (Table 4.1)
Core
Customers often requireinformation about how toobtain and use a product orservice. They may alsoneed reminders anddocumentation
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 13
Facilitating Services - Order-Taking(Table 4.2)
Many goods and services must be ordered or reservedin advance. Customers need to know what is available andmay want to secure commitment to delivery
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 14
Facilitating Services - Billing(Table 4.3)
“How much do I owe you?”Customers deserve clear, accurate and intelligiblebills and statements
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 15
Facilitating Services - Payment(Table 4.4)
Customers may pay faster and more cheerfully if youmake transactions simpleand convenient for them
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 16
Enhancing Services - Consultation(Table 4.5)
Value can be added to goods and services byoffering advice andconsultation tailored toeach customer’sneeds and situation
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 17
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 invitedthem there!)
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 18
Enhancing Services - Safekeeping(Table 4.7)
Customers prefer not toworry about looking afterthe personal possessions that they bring with themto a service site.
They may also want deliveryand after-sales services forgoods that they purchaseor rent
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 19
Enhancing Services - Exceptions(Table 4.8)
Customers appreciate some flexibility in a businesswhen they make special requests. They expect itwhen not everything goesaccording to plan
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 20
Branding
Service Products
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 21
Service Branding: Clarifying Distinctive Service Offerings
Marriott Hotel Brands
Marriott HotelsMarriott ResortsCourtyard by MarriottFairfield InnsResidence InnsSpringHill SuitesTownePlace SuitesMarriott Vacation Clubs
International
British Airways Brands
Intercontinental FirstClub WorldWorld Traveller PlusWorld TravellerEuropeanClub EuropeEuro-TravellerUK DomesticShuttle
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 22
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 23
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 24
New Service
Development
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 25
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 26
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 27
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 Useof 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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 28
Service Development through Delivery Options: Alternative Meal Service Formats (Fig. 4-8)
HomeDelivery
Order food,
give address
Driver rings
doorbell
Pay driver,take food Eat
Telephone
Restaurant
Drive-InRestaurant(Take Out)
See sign Order viamicrophone
Get meal atpickup, pay
Drive away,eat later
Stop car atorder point
Fast-FoodRestaurant(Eat In)
See sign Park and
enter
Order meal,
and pay
Pick upmeal
Find tableand eat
Clear tableand leave
HomeCatering
Arrange to meet caterer
Plan meal, pay deposit
Food and staff arrive
Meal ispreparedand served
EatStaff cleans
up; pay
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 29
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 30
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