services marketing class

8/7/2019 Services Marketing Class

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New Service Development



Learning Objectives

x Discuss the new service development process.

x Prepare a blueprint for a service operation.

x Describe a service process using the dimensions of divergence and complexity.

x Use the taxonomy of service processes to classify a

service operation.

x Compare and contrast the generic approaches to

service system design.



Levels of Service InnovationRadical Innovations

x Major Innovation: new service driven by information and computer based technology (eBay)

x Start-up Business: new service for existing market

x New Services for the Market Presently Served: new services toexisting customers of an organization

Incremental Innovationsx Service Line Extensions: augmentation of existing service line (e.g.

new menu items)

x

Service Improvements: changes in features of currently offeredservice

x Style Changes: modest visible changes in appearances



Service Design Elements

x Structural- Delivery system- Facility design

- Location- Capacity planning

x Managerial- Service encounter

- Quality- Managing capacity and demand- Information



x Service Design Elements: Structural

x Delivery system

x How to manage front office and back office?

x To what extent automation has been implemented?

x What is the role and extent of participation of customer

x Facility design

x

Size, Layout x Location

x Customer demographics, no. of sites, competition

x Capacity planning

x Managing queues, number of servers, capability to

x accommodate peak demand



x Service Design Elements: Managerial

x Service encounter

x What matters when customer is actually being

x served?

x Quality

x Gap between perception and expectation

x Managing capacity and demand

x Can we alter the demand or control supply

x Information

x Competitive resource, data collection



New Service Development Cycle

People

Technology Systems

Product

Full Launch Development

Design Analysis

Org an

iz ationa

l

Con

text T

e a m s

Tools

Enablers

• Formulation

of new servicesobjective / strategy

• Idea generation

and screening

• Concept

development and

testing

• Business analysis• Project authorization

• Full-scale launch

• Post-launch review

• Service design

and testing

• Process and system

design and testing• Marketing program

design and testing• Personnel training

• Service testing and

pilot run• Test marketing



Service Blueprint of Luxury Hotel



Strategic Positioning

Through Process Structure

x Degree of Complexity: Measured by the number

of steps in the service blueprint. For example a

clinic is less complex than a general hospital.

x Degree of Divergence: Amount of discretion

permitted the server to customize the service. For

example the activities of an attorney contrasted

with those of a paralegal.



Structural Alternatives for a Restaurant

No Reservations

Self-seating. Menu on Blackboard

Eliminate

Customer Fills Out Form

Pre-prepared: No Choice

Limit to Four Choices

Sundae Bar: Self-service

Coffee, Tea, Milk only

Serve Salad & Entree Together:Bill and Beverage Together

Cash only: Pay when Leaving

TAKE RESERVATION

SEAT GUESTS, GIVE MENUS

SERVE WATER AND BREAD

TAKE ORDERS

PREPARE ORDERS

Salad (4 choices)

Entree (15 choices)

Dessert (6 choices)

Beverage (6 choices)

SERVE ORDERS

COLLECT PAYMENT

Specific Table Selection

Recite Menu: Describe Entrees & Specials

Assortment of Hot Breads and Hors D’oeuvres

At table. Taken Personally by Maltre d’

Individually Prepared at table

Expand to 20 Choices: Add Flaming Dishes;

Bone Fish at Table; Prepare Sauces at Table

Expand to 12 Choices

Add Exotic Coffees; Sherbet between

Courses; Hand Grind Pepper

Choice of Payment. Including House Accounts:

Serve Mints

LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE



Taxonomy of Service ProcessesLow divergence High divergence

(standardized service) (customized service)

Processing Processing Processing Processing Processing Processing

of goods Information of people of goods Information of people

Dry Check Auto repair Computer

No Cleaning processing Tailoring a programming

Customer Restocking Billing for a suit Designing a

Contact a vending credit card building

machine

Ordering Supervision

Indirect groceries of a landing

customer from a home by an air

contact computer controller

No Operating Withdrawing Operating Sampling D ocumenting Driving a

customer- a vending cash from an elevator food at a medical rental car

service machine an ATM Riding an buffet dinner history Using a

worker Assembling escalator Bagging of health club

interaction premade groceries Searching for facility

(self- furniture information

Direct service) in a library

Customer Customer Food Giving a Providing Home Portrait Haircutting

Contact service service in a lecture public carpet painting Performing

worker restaurant Handling t ransport- cleaning Counseling a surgical

interaction Hand car routine bank a tion Landscaping operation

washing transactions Providing service

mass

vaccination



Generic Approaches to Service Design

x Production-line

• Limit Discretion of Personnel

• Division of Labor

• Substitute Technology for People

• Standardize the Service

x Customer as Coproducer • Self Service• Smoothing Service Demand

x Customer Contact• Degree of Customer Contact

• Separation of High and Low Contact Operationsx Information Empowerment

• Employee

• Customer



Discussion Questions

x What are the limits in the production-lineapproach to service?

x Give an example of a service in which isolation of the technical core would be inappropriate.

x What are some drawbacks of customer participation in the service delivery process?

x What ethical issues are raised in the promotion of sales during a service transaction?



100 Yen Sushi House

1. Prepare a service blueprint for the 100 Yen Sushi

House.

2. What features differentiate 100 Yen Sushi House

and how do they create a competitive advantage?

3. How has the 100 Yen Sushi House incorporated

the just-in-time system into its operations?

4. Suggest other services that could adopt the 100Yen Sushi House service delivery concept.



100 Yen Sushi House Layout

Miso and Tea Station

CONVERSATION AREA

CONVERSA

TION

A

REA

Dishwashing Counter in Back

ENTRANCE

CONVEYOR

BELT

TAKE-OUT

POSITION

= CHEF



Commuter Cleaning - New Venture Proposal

1. Prepare a service blueprint for Commuter Cleaning.

2. What generic approach to service design isillustrated by Commuter Cleaning, and whatcompetitive advantage does this offer?

3. Using the data in Table 4.6 calculate a break-evenprice per shirt if monthly demand is expected to be20,000 shirts and the contract with a cleaning plantstipulates a charge of $0.50 per shirt.

4. Critique the business concept, and makerecommendations for improvement.



Golfsmith

1. Prepare a service blueprint for Golfsmith.

2. What generic approach to service design

does Golfsmith illustrate and whatcompetitive advantages does this design

offer?

3.

Why is Golfsmith a good candidate for Internet sales?



INTERACTIVE CLASS EXERCISE

The class breaks into small groups and

prepares a service blueprint for Village

Volvo.

services marketing class

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