4. creating the service product
TRANSCRIPT
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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