SM Lecture 4

8/2/2019 SM Lecture 4

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www.bradford.ac.uk/management

Session 4

Developing service concepts

By

Dr Mei-Na Liao


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Learning Objectives

To understand the concept of core andsupplementary services

To understand the process of service

creation To understand the concept of service

branding

To explore the issue relating to servicesinnovation and new servicesdevelopment


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Value Added by Tangible vsIntangible

Elements in Goods and Services Shostack (1977)

Fast food restaurantPlumbing repair

Office cleaningHealth club

Airline flight

Retail banking

Insurance

Weather forecast

Salt

Soft drinks

CD PlayerGolf clubs

New carTailored clothing

Furniture rental

LoHi

Hi

TangibleElements

Intangible Elements


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Aspects of servicesShostacks model of service components

(example theatre visit)

COREVisit totheatre

Support

equipment

Ticketreservation

Props etc

Performance

Fooddrink

Delivery

method

Building

Atmosphere

Tangible

Intangible


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The nature of the service offering

The design of a service offering mustaddress and integrate three keycomponents:

Core product

Supplementary Services

Delivery process


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Core Products andSupplementary Services

Most firms offer customers a package of benefits:

core product (a good or a service)

supplementary services that add value to thecore

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 service


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Delivery Process

This element deal with the procedures used todeliver both the core product and each of thesupplementary services.

Flowcharting can be used to illustrate thedelivery process, offers a excellent way tounderstand the customers experience and

identify the many type of supplementary servicesaccompanying a core product


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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

services offeredand how createdand delivered

Delivery Concept

For Core Product


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Core and Supplementary Services in a Luxury Hotel(Offering Guests Much More than a Cheap Motel!)

Reservation

ValetParking

Reception

BaggageService

CocktailBar

RestaurantEntertainment/

Sports / Exercise

Telephone

Wake-upCall

RoomService

Business

Center

Cashier

A Bed for theNight in an

Elegant PrivateRoom with a

Bathroom


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The Time Dimension in the Augmented ServiceProduct

What Happens, When, and in What Sequence?

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)


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The flower of service

Core

InformationConsultation

Order

Taking

Hospitality

SafekeepingExceptions

Billing

Payment

The flower of service:Core product surrounded by cluster of supplementary services,Adopted from Lovelock & Writz (2004) p.103

Enhancing

services

Facilitatingservices


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Exceptions

These involve supplementary services that fall outside

the routine of normal service delivery

Special requests

Problem solving

Handling of complaints/suggestions/compliments

Restitution (compensation)


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Implications

An integrated approach must be taken when design aservice offering, any mis-management or ill designedof the three key complements will affect the quality of

the service.

In a well designed and well managed serviceorganisation, the petal and core are fresh and wellformed. A badly designed or poorly executed service

is like flower with missing, wilted, or discolouredpetals. Even if the core is perfect the overallimpression of the flower is unattractive.


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Main issues- when deciding the Core andSupplementary Elements of a 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 inways that are meaningful to target customers?

What are current levels of service on the core product andeach 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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Corporate brand vs.

Product/service brand

Corporatebranding

Individual product/service branding

Branded house Subbrands Endorsed brands

House of Brands

e.g.BA, Virgin,HSBC bank

Marriott Group

e.g.BA-Club worldVirgin airline,

music etc

e.g.Ritz-Carlton-MarriottFirst Direct - HSBC

e.g.

Yum! Brands Inc.(KFC, Pizza Hut, Taco Bell etc.)

Corporate Branding- communicate recognizable brand, meaning forcustomer and stands for a particular way of doing business (e.g. Virgin,BA, Easy.com, Google, HSBC etc.)Product/service branding communicate a to the target market thedistinctive experiences and benefit associated with a specific service

concept.


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Branded customer experienceCustomers experience is shaped in a specific and meaningful way

2.Understand targetcustomers value

1.Segmentby behaviour

3. Create a

brand promise

4.Differentiatedcustomer experience

5.Give employees skills, tools

and supporting process

8. Measure andmonitor forconsistency

6 everyone is a

brand manager andsupporter

7. Make promise that

your process can exceed


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Hierarchy of New service categories

Major service innovations new core products for markets

Major process innovations using new processes to deliver existing coreproducts in new ways with additional benefits (e.g. online retailing,Amazon).

Product line extensions-additions o current product lines by existing firms.(BT-broadband & TV, TESCOInsurance, post office -broadband)

Process-line extensions- represent distinctive new ways of delivery existingservices/products. (Lloyds TSB online banking,)

Supplementary service innovations- add or improve supplementary service.(adding entertainment in a caf, shopping centre, The Post office provide24/7 online tracking of parcel delivery)

Service Improvement make improvement on current core orsupplementary services.

Style changes- involve no changes in process or performance but highlyvisible change of appearance (colour schemes of showroom, vehicles, staffuniforms, new design of invoice or letter hand etc.)


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Why do new services often fail?

90% of 30,000 new products introducedeach year fail, services are not exception!(e.g. the failing of dot.com)

Main reason:

Not meeting a demonstrable consumer need

Inability to cover costs from revenues

Poor execution


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Success in developing New

services The core product is of secondary important, the

total service offering and the marketing supportthat goes with it is vital. (Storey & Easing wood,1998)

Edgett &Parkinson (1994) identify three factorscontribute to success: Market synergy fit with the existing image of the firm

and position.

Organisational factors importance of servicepersonnel, efficient co-ordination in the deliveryprocess

Market research factors, (Involving user in theprocess)


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Revision questions

Use Flow of Services model to illustratea service offering that you are familiarwith and discuss how it should be

managed to delivered promised benefitto customer.

Discuss what a branded experience

mean and how can it be achieved. Useexamples to support your answer.

SM Lecture 4

Documents

Transcript of SM Lecture 4