Planning and Creating Service Products

Service Products

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,
 Accompanied by supplementary services

Service products

Service products consist of:

 Core Product -> central component that supplies the principal, problem-solving benefits
customers seek
 Supplementary Services -> augments the core product, facilitating its use and enhancing its
value and appeal
 Delivery Processes -> used to deliver both the core product and each of the supplementary
services

Designing a Service Concept

Service concept design must address the following issues:

 How the different service components are delivered to the customer

 The nature of the customer’s role in those processes
 How long delivery lasts
 The recommended level and style of service to be offered

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
  Information should reflect good understanding of customers, especially their:
o needs
o habits
o expectations

Enhancing supplementary services

 Services that add extra value for the customer
 For example: Concultation, Hospitality, Safe-keeping and Exceptions

Exapmles of consultation:

 Customized advice
 Personal counseling
 Tutoring/training in product use
 Management or technical consulting

Examples of hospitality

Greeting

Food and beverages

Toilets and washrooms

Waiting facilities and amenities

 Lounges, waiting areas, seating

 Weather protection
 Magazines, entertainment, newspapers

Transport
Security

Examples of safekeeping

Caring for Possessions Customer Bring with Them

 Child care, pet care

 Parking for vehicles, valet parking
 Coat rooms
 Baggage handling
 Storage space
 Safe deposit boxes
 Security personnel

Caring for Goods Purchased (or Rented) by Customers

 Packaging
 Pickup
 Tranportation and delivery
 Installation
 Inspection and diagnosis
 Cleaning
 Refueling
 Preventive maintenance
 Repair and renovation

Examples of exceptions

Special Requests in Advance of Service Delivery

 Children's needs
 Dietary requirements
 Medical or disability need
 Religious observances

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 failures
 Assisting customers who have suffered an accident or a medical emergency
 Restitution

 Refunds and compensation

 Free repair of defective goods

Managerial Implications
 Core products do not have to have supplementary elements
 Nature of product helps determine supplementary services offered to enhance value.
 People-processing and high contact services have more supplementary services
 Different levels of service can add extra supplementary services for each upgrade in
service level
 Low-cost, no-frills basis firms needs fewer supplementary elements

Branding Service Product and Experiences

- A service product: is a “bundle of output” that comprises all the elements of the
service performance, both physical and intangible, that create value for customers.
- Product line: Most services organizations offer a line of products rather than just a
single product.
1. Branding Strategies for services
- Firms can use a variety of branding strategies, including:
+ Branded house: applying a brand to multiple, often unrelated services (e.g.,
Virgin Group)
+ Sub-brands: using a master brand (often the firm name) with a specific service
brand (e.g., FedEx Ground service).
+ Endorsed brands: here, the product brand dominates but the corporate brand is
still featured (e.g., Starwood Hotels & Resorts).
+ House of brands: promoting individual services under their own brand name
without the corporate brand (e.g., KFC of Yum! Brands).
2. Offering a branded experience
- Branding can be employed at corporate and product levels:
*Corporate brand:

+ SCOPE: a broad scope, encompassing your entire company

+ TARGET AUDIENCE: A company’s corporate branding is aimed at a variety
of key players. Like product branding, corporate branding will have a presence
for customers.
+ SOURCE: pulls together many aspects to create a unified brand
+ WHO IS RESPONSIBLE: Corporate branding is often first developed by a
company’s founder.
+ DURATION: stays with a company its entire life
*Product brand:

- SCOPE: has a narrow focus on one particular product.

- TARGET AUDIENCE: Product branding is for the end-user. Wherever consumers
interact with the product is a ripe opportunity for branding.
- SOURCE: comes from the marketing team’s decisions, informed by market
research.
 - WHO IS RESPONSIBLE: the responsibility of a product brand manager and their
team
- DURATION: Product branding lasts throughout the life of the product
=> 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

- Don Shultz emphasizes that “The brand promise or value proposition is not a
tagline, an icon, or a color or a graphic element, although all of these may
contribute. It is, instead, the heart and soul of the brand. . . .”
=> An important role for service marketers is to become brand champions, familiar with
and responsible for shaping every aspect of the customer’s experience.

3. Delivering Branded Service Experiences

- To begin with, we must align the service product and brand with the delivery
process, and the servicescape and people with the brand proposition. In order to do
this, it is important to have great processes in place. In addition, the emotional
experience of the service can often be created effectively through the servicescape.
The hardest part of crafting the emotional experience is the building of
interpersonal relationships where trust is established between the consumers and
the firm’s employees. Thus, we need to invest in good employees who can deliver
the brand experience that creates customer loyalty
NEW SERVICE DEVELOPMENT

I/ A Hierarchy of New Service Categories

1. Style changes : represent the simplest type of innovation, typically involving no changes in either
processes or performance.

2. Service improvements : involve small changes in the performance if current products, including
improvements to either the core product or to existing supplementary services.

3. Supplementary service : take the form of adding new facilitating or enhancing service elements
to an existing core service or significantly improving an existing supplementary service.

4. Process line extensions : offer more convenience and a different experience for existing
customers, or attract new customers who find the traditional approach unappealing.

5. Product line extensions : are additions to a company's current product lines.

6. Major process innovations : consist of using new processes to deliver existing core products in
new ways with additional benefits.

II/ Reengineering Service Processes

Reengineering—also called process management, process innovation, or process redesign—involves

reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality,
service, and speed.

Examination of processes can lead to creation of alternative delivery methods:

→ Add or eliminate supplementary services

→ Re-sequence delivery of service elements

=>Offer self-service options

III/Services as Substitutes for Physical Good

 A substitute good is not necessarily just a physical product – it can also be a service

 Goods and services may become competitive substitutes if they offer the same key benefits

 Provides an alternative to owning the physical good that can attain the desired outcome

 Any new good may create need for after-sales services now and be a source of future revenue
stream

Creating Services as Substitutes for Physical Good

1.Perform Work Oneself.

 Own a Physical Good : Use Own Computer

 Rent Use of Physical Good : Rent Use of Computer

2.Hire Someone to Do Work

 Own a Physical Good : Hire a Typist to Type

 Rent Use of Physical Good : Send Work out to a Secretarial Service

IV/ Success Factors in New Service Development

Service development is the end-to-end process of developing and launching a new service to be sold to
customers.

In developing new services:

→ core product is often of secondary importance, many innovations are in supplementary services or
service delivery

→ ability to maintain quality of the total service offering is key

→ accompanying marketing support activities are vital

→ Market knowledge is of utmost importance

Success Factors in New Service Development

1. Market synergy

-The new product fits well with the existing image of the firm, its expertise, and its resources. It is better
than competing products in terms of meeting customers' needs as the firm has a good understanding of
its customers' purchase behavior. It also receives strong support from the firm and its branches during
and after the launch

2. Organizational factors

-There is strong inter-functional cooperation and coordination. Development personnel are fully aware
of why they are involved and of the importance of new products to the company.

3. Market research factors

-Detailed and scientifically designed market research studies are conducted early in the development
process with a clear idea of the type of information to be obtained.