1. Service Strategy, New Service Development, and Technology in Services
MD254
Service Operations
Professor Joy Field

2. Strategic Service Vision Target Market Segments
What are common characteristics of important market segments?
What dimensions can be used to segment the market (e.g. demographic, psychographic)?
How important are various segments?
What needs does each have?
How well are these needs being served, in what manner, by whom?

3. Strategic Service Vision Service Concept
What are important elements of the service to be provided, stated in terms of results produced for customers (i.e., how is value created for the customer)?
How are these elements supposed to be perceived by the target market segment, by the market in general, by employees, by others?
How do customers perceive the service concept?
What efforts does this suggest in terms of the manner in which the service is designed, delivered, marketed?

4. Strategic Service Vision Operating Strategy
What are important elements of the strategy: structural and managerial decisions and interfaces with other functional areas?
On which will the most effort be concentrated?
Where will investments be made?
How will quality and cost be controlled: measures, incentives, rewards?
What results will be expected versus competition in terms of, quality of service, cost profile, productivity, etc.?

5. Strategic Service Vision Service Delivery System
How is the service delivery system implemented, including: role of people, technology, equipment, layout, procedures?
What capacity does it provide, normally, at peak levels?
To what extent does the service delivery system help insure quality standards, differentiate the service from competition, provide barriers to entry by competitors?

6. Competitive Environment of Services
How do each of these factors affect the competitiveness of service firms?
Entry Barriers
Economies of Scale
Sales Fluctuations
Power Dealing with Buyers or Suppliers
Product Substitutions for Service
Customer Loyalty
Exit Barriers

7. Examples of Competitive Priorities
Availability (24 hour ATM)
Convenience (Site location)
Dependability (On-time performance)
Customization (Personalization)
Price (Quality surrogate)
Quality (Perceptions important)
Reputation (Word-of-mouth)
Safety (Customer well-being)
Speed (Avoid excessive waiting)

8. Winning Customers in the Marketplace
Service Qualifier
To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline.
Service Winner
The competitive dimension used to make the final choice among competitors. Example is price.
Service Loser
Failure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization), or late delivery of package (speed).

9. Competitive Role of Information in Services
Creation of barriers to entry
Reservation systems
Frequent use club
Switching costs
Revenue generation
Yield management
Point of sale
Expert systems
Database asset
Selling information
Developing services
Micromarketing
Productivity enhancement
Inventory status
Determining relative efficiency and productivity improvement levers

10. Limits in the Use of Information
Anti-competitive (e.g. barrier to entry)
Fairness (e.g. yield management)
Invasion of Privacy (e.g. micro-marketing)
Data Security (e.g. medical records)
Reliability (e.g. credit report)

11. Service Design Elements
Structural
Delivery system: Process structure, service blueprint, strategic positioning
Facility design: Servicescapes, architecture, process flows, layout
Location: Geographic demand, site selection, location strategy
Capacity planning: Strategic role, queuing models, planning criteria
Managerial
Information: Technology, scalability, use of Internet
Quality: Measurement, design quality, recovery, tools, Six Sigma
Service encounter: Encounter triad, culture, supply relationships, outsourcing
Managing capacity and demand: Strategies, yield management, queue management

12. Customer Value Equation
Results produced for the customer
Process quality
Price to the customer
Cost of acquiring the service

13. Hotel Service Blueprint

14. Strategic Positioning through Process Structure
Degree of Complexity
Measured by the number of steps in the service blueprint. For example, a medical clinic is less complex than a general hospital.
Degree of Divergence
Amount of discretion permitted the server to customize the service. For example, a high-end vs. low-end hotel has more personalized services.

15. Generic Approaches to Service Design
Production Line
Limit Discretion of Personnel
Division of Labor
Substitute Technology for People
Standardize the Service (low divergence)
Customer as Co-Producer
Self-Service (matching capacity with demand)
Smoothing Service Demand (appointments, reservations, waiting)
Customer-Generated Content
Customer Contact
Degree of Customer Contact
Separation of High and Low Contact Operations
Sales Opportunity and Service Delivery Options (channels)
Information Empowerment
Employee empowerment
Customer empowerment

16. Role of Technology in the Service Encounter
Customer
Server
Customer
Server
Customer
Server
A. Technology-Free
Service Encounter
B. Technology-Assisted
Service Encounter
C. Technology-Facilitated
Service Encounter
Technology
Technology
Customer
Server
Customer
Server
D. Technology-Mediated
Service Encounter
E. Technology-Generated
Service Encounter

17. Technology Convergence Enabling E-Business
Internet
Global telephone system
Communications standard TCP/IP
Addressing system of URLs
Personal computers and cable TV
Customer databases
Sound and graphics
User-friendly free browser

18. Uses for Websites Retail channel (amazon.com)
Supplemental channel (Barnes & Noble)
Technical support (Dell Computer)
Embellish existing service (HBS Press)
Process orders (Delta Airline)
Convey information (Kelly Blue Book)
Communicate with membership (POMS.org)
Play games (addictinggames.com)

19. E-Business Models Content Provider: Reuters Direct-to-Customer: Dell
Full-Service Provider: GE Supply Co.
Intermediary: eBay
Shared Infrastructure: SABRE
Value Net Integrator: 7-Eleven Japan
Virtual Community: Monster.com
Whole-of-Enterprise: Government

20. Economics of E-Business
Sources of Revenue
Transaction fees
Information and advice
Fees for services and commissions
Advertising and listing fees
Ownership of customer data
Sources of Cost Reduction
Efficiencies (self-service)
Scalability
Network effects

21. Challenges of Adopting New Technologies in Services
Loss of personal attention
Customer acceptance
Customer skills
Tradeoffs (e.g. convenience vs. cost or time)
Standardization (e.g. RFID)
Lack of patent protection impedes innovation