Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 1
Session 5 
Creating the
 Service Product 
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 2
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
Supplementary services help to differentiate core products and create competitive advantage by:
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 3
Core Products and Supplementary Services
Service is a ‘performance’ rather than a thing.
When customers purchase manufactured goods they take title to physical ob!ects. "ut service performances are intangible ephemeral and e#perienced rather than o$ned.
What about a meal % a pacemaker % replacement part inside a car&&intangible ephemeral and e#perienced rather than o$ned %
 
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
The Augmented product
Most companies offer their customers a package of benefits
*ore (addressing the basic customer need) and supplementary (augmenting the core product both facilitating its use and enhancing its value and appeal)
+ncreasingly it is the supplementary services that provides the differentiation that separates the top brands from rest.
,he core product tends to become a commodity as competition increases and the industry matures.
,he combination of core and supplementary services is termed as the augmented product .
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 6
Shostack’s Molecular Model of a ‘Total Market Entity’ - Passenger Airline Service (identify , - + elements involved the service delivery)
Distribution Price
Marketing Positioning
In-"lig&t ser!ice
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - ,
Core and Supplementary Services in a u!ury "otel #$ffering %uests Much More than a Cheap Motel&'
R e s e r v a t i o n
V a l e t P a r k i n g
R e c e p t i o n
B a g g a g e S e r v i c e
C o c k t a i l B a r
R e s t a u r a n t E n t e r t a i n m e n t /
S p o r t s / E x e r c i s e
 T e l e p h o n e
W a k e - u p C a l l
R o o m S e r v i c e
B u s i n e s s C e n t e r
C a s h i e r
A B e ! o r t h e " i g h t i n a n
E l e g a n t P r i v a t e R o o m # i t h a
B a t h r o o m
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 -
The (lo)er of Service* Categori+ing Supplementary Services (acilitating services/ 0nhancing services)
Core
Information
Consultation
Order-Taking
Hospitality
Payment
Billing
Exceptions
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - .
(acilitating Services - ,nformation (,able 1.2)
Core
Customers often require information about how to obtain and use a product or  service. They may also need reminders and  documentation
irections. Service hours. prices. usage instructions. )arnings. reminders/
,ncreasingly )e0 driven/
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 1/
(acilitating Services - $rder-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
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 11
(acilitating Services - 1illing
“How much do I owe you!  Customers deserve clear" accurate and intelligible bills and statements
Core
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 12
(acilitating Services - Payment
Customers may pay faster and more cheerfully if you make transactions simple and convenient for them
Core
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 13
Enhancing Services - Consultation
#alue can be added to goods and services by  offering advice and  consultation tailored to each customer$s needs and situation
Core
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 14
Enhancing Services - "ospitality
Customers who invest time and effort in visiting a business and using its services deserve to be treated as welcome guests %after all" marketing invited  them there&'
Core
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 15
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
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 16
Enhancing Services - E!ceptions (,able 1.3)
Customers appreciate some fle)ibility in a business when they make special requests. They e)pect it  when not everything goes according to plan
Core
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 1,
Branding
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 1
Service 1randing* Product ines 3 0rands
Most service organiations follo$ the strategy of brand e#tension rather than offer a single brand to encourage customers to continue patroniing brands $ithin the same family.
+,* Welcome group offers several brands of hotels - resorts under the umbrella brand :
The 8elcomegroup 6 Sheraton hotels (full service hotels in metros)
(ortune "otels (full service hotels in resort areas offering e#tensive sporting - recreational amenities)
,TC 8elcomegroup "otel (medium sied hotels targeted at business travelers)
8elcomegroup "eritage "otel (5ebuilt heritage palaces $ith modern services)
0ach brand promises a distinct mi# of benefits tageted at a different customer segment.
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 1.
Service 1randing* Product ines 3 0rands
"ritish 'ir$ays "rands
0uropean *lub 0urope 0uro8,raveller 
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 2/
New Service
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 21
9e) Service evelopment*
*ompetitive +ntensity and customer e#pectations are increasing in all service industries.
Success lies in not only providing e#isting services $ell but also creating ne$ approaches to services.
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 22
9e) Service evelopment* A "ierarchy of 9e) Service Categories
Ma*or service innovations8 ne$ core products for previously undefined markets ($eb search e"ay<s launch of online auction global ne$s by *==)
Ma*or process innovations 8 using ne$ processes to deliver e#isting products and offer e#tra benefits ( ',M digital classrooms computeried
trading)
+roduct line e)tensions 8 additions to current product lines ( +,* hotels)
+rocess line e)tensions 8 alternative delivery procedures (creating click
and mortar options)
,ervice Improvement 
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 23
9e) Service evelopment* Physical %oods as Source of Service ,deas
?oods and services may be competitive substitutes $hen they offer the same key benefit.
*ustomers can rent goods@use and return for a fee@ instead of purchasing them ("uy a Aa$n mo$er or hire a la$n maintenance service)
*ustomers can hire personnel to operate their o$n or rented euipment
 
 
Creating Services as Su0stitutes for $)ning and2or :sing %oods (;elivery alternatives)
  Perform the
Work neself 
!ire Someone
of a Ph"sical #ood 
• Rent car and drive it
4 Rent word processor and type
4 Hire chauffeur to drive car
4 Hire typist to use word processor
4 Drive own car
Three out of ; of these. offer service opportunities
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 25
9e) Service evelopment* Service evelopment through reengineering elivery $ptions
5eengineering involves analying and redesigning processes to achieve faster and better performance.
Service companies use blueprinting to diagram each aspect of service operations in a systematic manner.
 
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E   4 - 26
Service evelopment through elivery $ptions* Alternative Meal Service (ormats
"ome
Eat Staff cleans