1 FORMULATING SERVICE STRATEGY Strategy formulation process. SWOT Mgt. 339 –External factors: Economy, Social, Political/legal, technology, International –External factors: Competition, Customers, Suppliers Competitive analysis p. 40 Customer analysis; market segments Service vision and mission p. 38 Competitive service strategies p –Cost Leadership, Differentiation, Focus Strategy implementation p. 39 –Service concept, Service delivery system, Operating Strategy, Policies

2 SERVICE DESIGN Starts with service strategy –Cost leadership or Differentiation with Focus Designing for Cost leadership p. 137 Standard services, standard operating procedures, procedures that reduces labor and time, facilities – simple, easy to maintain, flexible cost control features, facilitating goods – simple, inexpensive, disposable. (Discuss: what type of labor, technology, customer participation ?)

3 SERVICE DESIGN Designing for Differentiation in services p. 79 –Major innovation, service to a new market, new service to current market –Adding variety, modifying features of service, faster service, personalized/luxury service, customized service to individual or group needs/tastes. –Improved quality – reliability, responsiveness, empathy, assurance, tangibles.

4 SERVICE DESIGN Positioning your service by appropriate process selection p. 85 –Complexity: low (simple) to high (complex) –Flexibility: low (standard) to high (customization) –Degree of customer contact –Degree of customer participation 90- –Product line approach 88

5 SERVICE DESIGN Service design elements p. 81 Structural elements: Delivery system, Location, Facilities design, Capacity planning, Technology Managerial elements Service encounter, employees, quality, capacity and demand management 91, information systems., empowerment levels – customer, employee 93. Service blueprinting p. 83 Customer value = (direct results + service process quality) / (price = acquiring costs) p. 95