paul trott, innovation management and new product development, 4 th edition, © pearson education...
TRANSCRIPT
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.1
Chapter 14
New service innovation
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.2
1. Introduction2. Growth in services3. Technology and new services4. Characteristics of services5. Customer relationship process6. New service innovations7. NSD process8. Summary & recap
New service development (NSD)
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.3
Introduction
• Growth in services• Characteristics of services
Services are processes where customer is part of it• Viewed differently to products• Services contribute to new business models:
eBay new way of conducting businessRyanair new way of flyingAmazon new way of viewing and buying booksNapster new way to buy music
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.4
Within the EU services now account for 60% of GDP (Eurostat, 2006).
Growth in knowledge intensive business services (KIBS)
Growth in services – but what does this mean?
huge growth in coffee bars, smoothie bars and hair salons?
Since 2003, shares in oil companies have doubled.
Halliburton and Schlumberger, the world market leader for oil services, have more than tripled.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.5
cleaners, decorators, maintenance workers, canteen staff, etc
would now purchase the services of road and rail transport.
So, a company that was earlier employing
Growth in services – but what doesthis mean? (Continued)
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.6
Outsourcing and service growth
Expected gains that companies can derive from outsourcing include:
• the reduction of operational costs;• the ability to transform fixed costs into variable costs;• the ability to focus on core competencies;• access to the industry-leading external competencies
and expertise.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.7
Business-to- business services (traditional)
Business-to- business services (KIBS)
Consumer services
Internal firm services
Public services
Not-for-profit services
Description Services provided for businesses
Specialist services provided to businesses
Services provided to individuals
Services provided by internal functions
Services provided by local and national government
Services provided by charities
Examples AccountancyLegal adviceTraining
Management consultancyIT consultancy
ShopsHotelsBankingHealth and beauty
FinancePersonnelIT
HealthEducationLeisurePrisons
HospicesCounsellingAid agencies
Customers Frequently purchased by professionals, who may not be end users
Frequently purchased by professionals, who may not be end users
Purchased by consumer of the service
Consumers of the service have no choice of provider
Funded through taxation and little choice for consumer
Funded through charities maybe government grants consumers chosen or choose.
Challenges Providing high-quality tailored and personal service
Providing high quality services to businesses who have high purchasing power
Providing a consistent service to a wide variety of customers
Delivering customised, personal service. And demonstrating value for money.
Delivering acceptable public services against a backcloth of political pressures.
Balancing needs of volunteers, donors and overwhelming needs of customers.
Typology of services
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.8
Technology and new service development
Technology has become the most significant enabler of innovation in services.
Transforming the roles of both employees and customers.
Easing the connectivity between service developers andcustomers.
E.g. ebay . . .
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.9
Founded in September 1995
eBay, Inc. is possibly the most successful web-based enterprise in existence.
Four service dimensions
Illustration
New service concept On-line auction community of traders
New client interface Introduction of payment system that helps eBayers trade more easily – Paypal
New service delivery system
Huge investment in technology infrastructure to improve reliability and performance
Technological options Introduction of voice over internet protocol service – SKYPE
Technology and new servicedevelopment (Continued)
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.10
Company Industry sector New service/new business model
eBay On-line auction A new way of buying and selling through a community of individual users
Ryanair Airline A new way of consuming air-travel with no frills service and emphasis on economy
Amazon Retailer New way to buy goods – on-line retailer
Napster; iTunes
Music retailer New way to buy and download music
Google Internet search engine
A fast way to search for information on the internet
Partygaming On-line gambling Gambling and gaming from the comfort of your own home
Myspace Social networking A community of users on-line who can chat and share music, images, news from their own home
You-Tube On-line video and film archive
A community of users sharing home made video clips plus recorded favourite clips from movies
A range of new services that also create new business models, where technology plays a key role
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.11
Services areprocesses
Services areco-producedby the customer
Services areintangible
Services areperishableServices cannot
be transported
Services areproduced andconsumedsimultaneously
Services areheterogeneous
Characteristics of Services
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.12
The customer relationship process
Servicesmarketing
Servicequality
Relationshipquality
Servicevalue
Customersatisfaction
Customerretention
Customervalue
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.13
New service innovation
As with products service, innovations can be classifiedin many ways: • eBay was new to the market; Google’s on-line auction
is new to Google;• Internal process innovations, e.g. Amazon: delivering
books to consumer is not new, but using internet;• Line extensions to services, e.g. banks offering
insurance;• Service modifications, e.g internet access to airline
passengers.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.14
Booz et al. (1982) Lovelock (1984)
New to the world products: new products that not only represent a major new challenge to the supplier, but which are also seen to be quite new in the eyes of customers
Major innovation: new services for markets as yet undefined; innovations usually driven by information and computer-based technologies
New product lines: new products which represent major new challenges to the supplier
Start-up business: new services in a market that is already served by existing services
Additions to existing product lines: new products that supplement a company’s established product lines, so rounding out the product mix
New services for the market presently served: new service offerings to existing customers of an organisation (although the services may be available from other companies)
Improvements and revisions to existing products: new products that provide improved performance and so replace existing products
Service line extensions: augmentations of the existing service line such as adding new menu items, new routes and new courses
Repositionings: existing products that are targeted to new markets or market segments
Service improvements: changes in feature of services that currently are being offered
Cost reductions: new products that provide similar performance at a lower cost of supply
Style changes: the most common of all “new services”; modest forms of visible changes that have an impact on customer perceptions, emotions and attitudes, with style changes that do not change the service fundamentally, only its appearance
Typology for innovations (Ozdemir, 2007)
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.15
Customer roles in NPD (Nambisan, 2002)
Customer role NPD phase
Customer as resource
Ideation
Customer as co-creator
Design and development
Customer as user Product testingProduct support
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.16
The service innovation process
Different from NPD: customer is part of the process
• Blueprinting the service Identify every activity and every possible outcome in the process• ‘Prick-eared’ market research
Direct contact facilitates dialogue• Service prototypes
Difficult because customer is part of processLevel of integration determines ability to prototype
E.g. a doctor’s home visita visit to the cinema
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.17
Customer interaction process
CustomerServiceprovider
Customer roles
Encountermanagement
Critical incidents
Serviceencounter
Determinants
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.18
Perceived service quality . . .Perceived service value . . .Customer expectations . . .
How do customers evaluate services?
• Reliability• Responsiveness• Assurance• Empathy• Tangibles
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.19
• Reliability– Providing service as promised– Dependability in handling customers’ problems– Performing services right first time– Performing services at the promised time– Maintaining error free records
• Responsiveness– Keeping customer informed when service will be performed– Prompt service to customers– Willingness to help customers– Readiness to respond to customers’ requests
• Assurance– Employees who instil confidence in customers– Making customers feel safe in their transactions– Employees who are consistently courteous– Employees who have knowledge to answer questions
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.20
• Empathy– Giving customers individual attention– Employees who deal with customers in a caring manner– Having the customers best interests at heart– Employees who understand the needs of their customers– Convenient business hours
• Tangibles– Modern equipment– Visually appealing facilities– Employees who have neat, professional appearance– Visually appealing materials associated with service
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.21
1. Pure tangible good2. Tangible good with accompanying services3. Hybrid4. Major service with accompanying minor goods
and services5. Pure service
Categories of service mix
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.22
New service innovation
For many years the literature overlooked this concept!Innovation deemed to require a new physical “thing”But, the world of business suggested new services coulddeliver even more significant changes (new businessmodels):
First DirectRyanaireBayApple’s iTunes