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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 Matching
Marketing Concept with Operations
Concept (Fig. 4.1)
Corporate Objectivesand Resources
Service Delivery
Process
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 incurred
Price/other monetary costs
Time
Mental and physical effort
Neg. sensory experiences
Service Operations Concept
Nature of processes
Geographic scope of ops
Scheduling
Facilities design/layoutHR (numbers, skills)
Leverage (partners, self-service)
Task allocation: front/backstagestaff; customers as co-producers
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Understanding theComponents of the Augmented
Service Product
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Shostacks Molecular Model of a Total
Market Entity - Passenger Airline
Service (Fig. 4-2)DistributionPrice
Marketing Positioning(Weighted toward evidence) Source: Shostack
KEYTangible elementsIntangible elements
Service
frequency
Vehicle
Transport
Pre- andpost-flight
service
Food
anddrink
In-flightservice
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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
In mature industries, core products often become
commodities
Supplementary services help to differentiate coreproducts and create competitive advantage by:
facilitating use of the core service
enhancing the 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
services offeredand how createdand delivered
Delivery Concept
For Core Product
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Supplementary 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 forcustomers?
Is our service package differentiated from the competitionin ways 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 keyattributes (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
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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What Happens, When, and in What Sequence?
The Time Dimension in the Augmented Service Product
Pre
Visit
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)
Th Fl f S i
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The Flower of Service:
Categorizing Supplementary Services(Fig. 4-5)
Core
Information
Consultation
Order-Taking
Hospitality
Payment
Billing
Exceptions
SafekeepingFacilitating elements
Enhancing elements
KEY:
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Facilitating Services - Information(Table 4.1)
Core
Customers often requireinformation about how to
obtain and use a product orservice. They may alsoneed reminders anddocumentation
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Facilitating Services - Order-Taking(Table 4.2)
Many goods and servicesmust be ordered or reservedin advance. Customers needto know what is available andmay want to securecommitment to delivery
Core
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Facilitating Services - Billing(Table 4.3)
How much do I owe you?Customers deserve clear,accurate and intelligiblebills and statements
Core
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Facilitating Services - Payment(Table 4.4)
Customers may pay fasterand more cheerfully if youmake transactions simpleand convenient for them
Core
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Enhancing Services - Consultation(Table 4.5)
Value can be added togoods and services byoffering advice andconsultation tailored toeach customersneeds and situation
Core
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Enhancing Services - Hospitality(Table 4.6)
Customers who invest time
and effort in visiting abusiness and using itsservices deserve to betreated as welcome guests(after all, marketing invited
them there!)
Core
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Enhancing Services - Safekeeping(Table 4.7)
Customers prefer not toworry about looking after
the personal possessionsthat they bring with themto a service site.
They may also want delivery
and after-sales services forgoods that they purchaseor rent
Core
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Enhancing Services - Exceptions(Table 4.8)
Customers appreciate some
flexibility in a businesswhen they make specialrequests. They expect itwhen not everything goesaccording to plan
Core
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BrandingService Products
S i B i
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Service Bran ing:Clarifying Distinctive Service
Offerings Marriott Hotel Brands
Marriott Hotels
Marriott Resorts Courtyard by Marriott
Fairfield Inns
Residence Inns
SpringHill Suites TownePlace Suites
Marriott Vacation Clubs
International
British Airways Brands
Intercontinental
First
Club World World Traveller Plus
World Traveller
European
Club Europe
Euro-Traveller
UK Domestic
Shuttle
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Line:
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
programs) Platinum
Gold
Silver
Bronze
S S t S t
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Sun Spectrum Support:Sub-branding Highlights Four
Service LevelsSub-branding clarifies service levels offered atdifferent 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 Support
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New ServiceDevelopment
New Service Deve opment
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New Service Deve opment:A Hierarchy of New Service
Categories Major service innovations--new core productsfor previously undefined markets
Major process innovations--using new processes
to deliver existing products and offer extra
benefits
Product line extensions--additions to currentproduct lines
Process line extensions--alternative delivery
procedures
New Service Deve opment:
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New Service Deve opment:Physical Goods as Source of Service
Ideas Customers can rent goodsuse and return for afee instead of purchasing them
Customers can hire personnel to operate their
own or rented equipment
Any new durable product may create need for
after-sales services (possession processing) Shipping
Installation
Problem-solving and consulting advice
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Creating Services as Substitutes for
Owning and/or Using Goods(Fig. 4-7)
Perform theWork 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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Delivery Options: Alternative Meal
Service Formats (Fig. 4-8)
Home
DeliveryOrder food,
give address
Driver rings
doorbell
Pay driver,
take food EatTelephone
Restaurant
Drive-InRestaurant(Take Out)
See sign Order via
microphone
Get meal at
pickup, payDrive 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
HomeCatering
Arrange tomeet caterer
Plan meal,pay deposit
Food andstaff arrive
Meal ispreparedand served
EatStaff cleans
up; pay
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Trading off Room Price vs.
Features/Services
External building
design and features
Room features
Food-related services
Lounge facilities
Services (e.g.,
reception)
S F t i N S i
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Success Factors in New Service
Development
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 studies
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