Chapter 4 Creating the Service Product

Operating Assets (Facilities/Equipment, IT Systems, People, Op. Skills, Cost Structure) Service Design Involves Matching Marketing Concept with Operations Concept Corporate Objectives and 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/layout HR (numbers, skills) Leverage (partners, self-service) Task allocation: front/backstage staff; customers as co-producers

Understanding the Components of the Augmented Service Product

Shostack’s Molecular Model of a Total Market Entity - Passenger Airline Service Distribution Price Marketing Positioning (Weighted toward evidence) Source: Shostack KEY Tangible elements Intangible elements Service frequency Vehicle Transport Pre- and post-flight service Food and drink In-flight service

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 core products and create competitive advantage by:  facilitating use of the core service  enhancing the value and appeal of the core

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

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 Meal Pay TV Room service Phone Check out Time Frame of an Overnight Hotel Stay (real-time service use)

The Flower of Service: Categorizing Supplementary Services Core Information Consultation Order-Taking Hospitality Payment Billing Exceptions Safekeeping Facilitating elements Enhancing elements KEY :

Facilitating Services - Information Core Customers often require information about how to obtain and use a product or service. They may also need reminders and documentation

Facilitating Services - Order-Taking Many goods and services must be ordered or reserved in advance. Customers need to know what is available and may want to secure commitment to delivery Core

Facilitating Services - Billing “How much do I owe you?” Customers deserve clear, accurate and intelligible bills and statements Core

Facilitating Services - Payment Customers may pay faster and more cheerfully if you make transactions simple and convenient for them Core

Enhancing Services - Consultation Value can be added to goods and services by offering advice and consultation tailored to each customer’s needs and situation Core

Enhancing Services - Hospitality Customers who invest time and effort in visiting a business and using its services deserve to be treated as welcome guests (after all, marketing invited them there!) Core

Enhancing Services - Safekeeping Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site. They may also want delivery and after-sales services for goods that they purchase or rent Core

Enhancing Services - Exceptions Customers appreciate some flexibility in a business when they make special requests. They expect it when not everything goes according to plan Core

New Service Development

New Service Development: A Hierarchy of New Service Categories  Major service innovations--new core products for previously undefined markets  Major process innovations--using new processes to deliver existing products and offer extra benefits  Product line extensions--additions to current product lines  Process line extensions--alternative delivery procedures  Supplementary service innovations--adding new or improved facilitating or enhancing elements  Style changes--visible changes in service design or scripts

Creating Services as Substitutes for Owning and/or Using Goods Perform the Work Oneself Hire Someone to Do the Work Own a Physical GoodRent 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

Service Development through Delivery Options: Alternative Meal Service Formats Home Delivery Order food, give address Driver rings doorbell Pay driver, take food Eat Telephone Restaurant Drive-In Restaurant (Take Out ) See sign Order via microphone Get meal at pickup, pay Drive away, eat later Stop car at order point Fast-Food Restaurant (Eat In) See sign Park and enter Order meal, and pay Pick up meal Find table and eat Clear table and leave Home Catering Arrange to meet caterer Plan meal, pay deposit Food and staff arrive Meal is prepared and served Eat Staff cleans up; pay