DEVELOPING SERVICE CONCEPTS: CORE AND SUPPLEMENTARY ELEMENTS

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SUM OF ALL SERVICE COMPONENTS

PLANNING ANG CREATING SERVICES

!!A service product comprises all elements of service performance, both tangible and intangible, that create value for customers !!The service concept is represented by: !!A core product (benefit) !!Accompanied by supplementary services

PLANNING ANG CREATING SERVICES

!!In mature industries, core products often become commodities !!Supplementary services help to differentiate core products and create competitive advantage by: !!Facilitating use of core product (a service or a good) !!Enhancing the value and appeal of the core product !!Pierre Eigler and Eric Langeard model

Shostacks Molecular Model: Total Market Entity

Distribution Price

Other Service Characteristics Changes in one element may alter the nature of the entity
CORE BENEFIT

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Shostacks Molecular Model: Passenger Airline Service

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Transport Pre- & Postflight Service

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Shostacks Molecular Model: Haircut Service

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!!3 Components of Service Concept !!Core Product !!Central component that supplies the principal, problemsolving benefits customers seek !!Ex: Transport, Consultancy !!Supplementary Services !!Augment the core product, facilitating its use and enhancing its value and appeal !!Extent of supplementary differentiated from competition

DESIGNING A SERVICE CONCEPT

!!Delivery Processes !!Used to deliver both the core product and each of the supplementary services !!Answer the following issues: !!How the different service components are delivered to the customer !!The nature of the customers role !!How long delivery lasts !!The prescribed level and style of service to be offered

DESIGNING A SERVICE CONCEPT

!!Delivery Processes !!4 Categories has different implications for operations procedures, degree of contact, and requirements for supplementary service !!Ex: People Processing more supplementary service Why?

DESIGNING A SERVICE CONCEPT

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DOCUMENTING DELIVERY SEQUENCE OVER TIME

!!Must address sequence in which customers will use each core and supplementary service !!Determine approximate length of time required for each step !!Customers may budget a specific amount of time for an activity !!Information should reflect good understanding of customers, especially their: !!Needs !!Habits !!Expectations

WHAT HAPPENS, WHEN, IN WHAT SEQUENCE? TIME DIMENSION IN AUGMENTED PRODUCT

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FLOWCHARTING SERVICE DELIVERY HELPS TO CLARIFY PRODUCT ELEMENTS !!Offers way to understand totality of customers service experience !!Useful for distinguishing between core product itself and service elements that supplement core
!!Restaurants: Food and beverage (core) !!Reservations (supplementary services)

!!Shows how nature of customer involvement with service organizations varies by type of service

SIMPLE FLOWCHART FOR DELIVERY OF A PEOPLE-PROCESSING SERVICE

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SIMPLE FLOWCHART FOR DELIVERY OF A POSSESSION-PROCESSING SERVICE

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SIMPLE FLOWCHART FOR DELIVERY OF MENTAL STIMULUS-PROCESSING SERVICE

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SIMPLE FLOWCHART FOR DELIVERY OF AN INFORMATION-PROCESSING SERVICE

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CAN YOU FLOWCHART THE ENROLLMENT IN DLSU-D?

THE FLOWER OF SERVICE

!!There are two types of supplementary services !!Facilitating: either needed for service delivery, or help in the use of the core product !!Enhancing: add extra value for the customer !!In a well-managed service organization, the petals and core are fresh and well-formed

THE FLOWER OF SERVICE

Information Payment Billing
Core

Order Taking

Consultation Hospitality

Exceptions Safekeeping

HOW TO DETERMINE WHAT SUPPLEMENTARY SERVICES SHOULD BE OFFERED

!!People-processing and high-contact services tend to have more supplementary services !!Market positioning strategy helps to determine which supplementary services should be included !!Firms that offer different levels of service often add extra supplementary services for each upgrade in service level

HOW TO DETERMINE WHAT SUPPLEMENTARY SERVICES SHOULD BE OFFERED

!!Not every core product is surrounded by supplementary elements from all eight clusters !!Nature of product helps to determine: !!Which supplementary services must be offered !!Which might usefully be added to enhance value and ease of doing business with the organization

FACILITATING INFORMATION

!!Customers often require information about how to obtain and use a product or service. !!Examples of elements: !!Directions to service site !!Schedule/service hours !!Prices !!Conditions of sale !!Usage instructions

Core

FACILITATING ORDER TAKING

Core

!!Customers need to know what is available and may want to secure commitment to delivery. The process should be fast and smooth. !!Applications !!Memberships in clubs/programs !!Subscription services (e.g., utilities) !!Prerequisite based services (e.g., financial credit, college enrollment) !!Order Entry !!On-site order fulfillment !!Mail/telephone/e-mail/web order !!Reservations and Check-in !!Seats/tables/rooms !!Vehicles or equipment rental !!Professional appointments

FACILITATING BILLING

!! How much do I owe you? !!Bills should be clear, accurate, and intelligible. !!Periodic statements of account activity !!Invoices for individual transactions !!Verbal statements of amount due !!Self-billing (computed by customer) !!Machine display of amount due

Core

FACILITATING PAYMENT

!! Customers may pay faster and more cheerfully if you make transactions simple and convenient for the customer
!! Self-Service !! Insert card, cash or token into machine !! Electronic funds transfer !! Mail a check !! Enter credit card number online !! Direct to Payee or Intermediary !! Cash handling or change giving !! Check handling !! Credit/charge/debit card handling !! Coupon redemption !! Automatic Deduction from Financial Deposits !! Automated systems (e.g., machine-readable tickets that operate entry gate) !! Human systems (e.g., toll collectors)

Core

ENHANCING CONSULTATION

!! Value can be added to goods and services by offering advice and consultation tailored to each customers needs and situation. !! Customized advice !! Personal counseling !! Tutoring/training in product use !! Management or technical consulting

Core

ENHANCING SAFEKEEPING

!! Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site. !! !! !! !! !! !! !! Child care, pet care Parking for vehicles, valet parking Coat rooms Baggage handling Storage space Safe deposit boxes Security personnel

Core

ENHANCING SAFEKEEPING

Core

!! Caring for Goods Purchased (or Rented) by Customers !! Packaging !! Pickup !! Transportation and delivery !! Installation !! Inspection and diagnosis !! Cleaning !! Refueling !! Preventive maintenance !! Repair and renovation

ENHANCING EXCEMPTION

!! Customers appreciate some flexibility when they make special requests and expect responsiveness when things dont go according to plan. !! Special Requests in Advance of Service Delivery !! Childrens needs !! Dietary requirements !! Medical or disability needs !! Religious observances

Core

ENHANCING EXCEMPTION

!! Handling Special Communications !! Complaints !! Compliments !! Suggestions

!! Problem Solving !! Warranties and guarantees !! Resolving difficulties that arise from using the product !! Resolving difficulties caused by accidents, !! service failure !!Assisting customers who have suffered an accident or a medical emergency !!Restitution !!Refunds and compensation !!Free repair of defective goods

Core

MANAGERIAL IMPLICATIONS
!!To develop product policy and pricing strategy, managers need to determine
!!Which supplementary services should be offered as a standard package accompanying the core !!Which supplementary elements could be offered as options for an extra charge

!!In general, firms that compete on a low-cost, no-frills basis needs fewer supplementary elements than those marketing expensive, high-value-added services !!Each flower petal must receive consistent care and concern to remain fresh and appealing

BRANDING

BRANDING FOR SERVICE PRODUCTS

!!A product implies a defined and consistent bundle of output and also ability of firm to differentiate its bundle of output from competitors !!Service firms can differentiate their products in similar fashion to various models offered by manufacturers !!Providers of more intangible services also offer a menu of products !!Represent an assembly of elements that are built around the core product !!May include certain value-added supplementary services

BRANDING FOR SERVICE PRODUCTS !!Most service organizations offer a line of products rather than just a single product !!They may choose among three broad alternatives: 1.! Single brand to cover all products and services 2.! A separate, stand-alone brand for each offering 3.! Some combination of these two extremes

OFFERING A BRANDED EXPERIENCE

!!Branding can be employed at both corporate and product levels !!Corporate brand:
!!Easily recognized !!Holds meaning to customers !!Stands for a particular way of doing business

!!Product brand:
!!Helps firm communicate distinctive experiences and benefits associated with a specific service concept

!!Moving toward branded customer experience includes:

!!Create brand promise !!Shape truly differentiated customer experience !!Give employees skills, tools, and supporting processes to deliver promise !!Measure and monitor

DEVELOPMENT OF NEW SERVICES

NEW SERVICE CATEGORIES 1.! Major service innovations !!New core products for previously undefined markets 2.! Major process innovations !!Using new processes to deliver existing products with added benefits

A HIERARCHY OF NEW SERVICE CATEGORIES

3.! Product-line extensions !!Additions to current product lines 4. Process-line extensions !!Alternative delivery procedures

A HIERARCHY OF NEW SERVICE CATEGORIES 5.! Supplementary service innovations !!Addition of new or improved facilitating or enhancing elements 7.! Service improvements !!Modest changes in the performance of current products

A HIERARCHY OF NEW SERVICE CATEGORIES 7.! Style changes !!Visible changes in service design or scripts

REENGINEERING SERVICES
!!Service processes affect not only customers, but also cost, speed, and productivity with which desired outcome is achieved !!Reengineering involves analyzing and redesigning processes to achieve faster and better performance !!Running tasks in parallel instead of sequence can reduce/eliminate dead time !!Examination of processes can lead to creation of alternative delivery methods that constitute new service concepts !!Add/eliminate supplementary services !!Resequence delivery of service elements !!Offer self-service options

PHYSICAL GOODS AS A SOURCE OF NEW SERVICE IDEAS

!!Services can be built around rentals: Alternatives to owning a physical good and/or doing work oneself !!Customers can rent goodsuse and return for a fee instead of purchasing them !!Customers can hire personnel to operate own or rented equipment !!Any new durable good may create need for after-sales services now and in futurepossession processing !!Shipping !!Installation !!Problem-solving and consulting advice !!Cleaning and maintenance !!Upgrades !!Removal and disposal

CREATING SERVICES AS SUBSTITUTES FOR OWNING AND/OR USING GOODS

Own a Physical Good Rent Use of a Physical Good

Perform Work Oneself

!! Drive Own Car !! Use Own Computer

!! Rent a Car and Drive it !! Rent Use of Computer

Hire Someone to Do Work

!! Hire a Chauffeur to Drive !! Hire a Typist to Type

!! Hire a Taxi or Limousine !! Send Work Out to a Secretarial Service