1. Service Development and Design
“Ultimately, only one thing really matters in service encounters-the customers perception of what occurred”

2. Challenges of service design
Oversimplification-words are simply inadequate to describe a whole complex service system.
Incompleteness-In describing services people tend to omit details or elements.
Subjectivity-describing a service in words will be biased by personal experience.
Biased interpretation-NO two people will describe “responsive,” “quick,” or “flexible” in exactly same way.

3. New service Development
NSD system should have four characteristics
It must be objective, not subjective.
It must be precise, not vague
It must be fact driven, not opinion driven
It must be methodological not philosophical

4. Types of new services Major innovations Start up business
New services for currently served market.
Service line extensions
Service improvements
Style changes

5. Service Redesign Self service-move the customer into production mode
Direct service-
Preservice
Bundeled service-

6. Stages in New Service Development
Idea generation-screen ideas against new service strategy
Concept development and evaluation-test concepts with customers and employees
Business analysis-test the profitability and feasibility
Service development and testing-conduct service prototype test
Market testing-test service and other marketing mix elements
Commercialization

7. Business strategy development
Offerings
Current customers
New customers
Existing services
Share building
Market development
New services
Service development
diversification

8. Idea generation Formal solicitation of new ideas Formal brainstorming
Solicitation of new ideas from employees and customers
Observing customers

9. Service development and concept evaluation
Inherent characteristics of the services, particularly intangibility and simultaneous production and consumption place complex demand on this phase of the process.
The new service concept would be evaluated by asking employees and customer whether they are favorable to the concept.
Assuming the service concept is favorably evaluated the next step is determined the feasibility and potential profit implications.

10. Implementation
During this phase the concept is refined to the point where a detailed service blueprint representing the implementation plan can be produced.
Feedback is reviewed and integrated into the design constantly before, during, and after the launch

11. Market testing-at this stage it is important to pilot run the service to be sure that operation details are functioning smoothly.
Commercialization-the service goes live and is introduced to the market place.
Post introduction evaluation-the information gathered during commercialization of the service can be reviewed and changes made to the delivery process, staffing or marketing mix variable.

12. Service blueprinting
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer's point of view.
It is a picture or map that accurately portrays the service system.

13. Service blueprinting Process Service Blueprint Points of contact
Evidence
Service
Blueprint

14. Blueprinting components
Physical evidence
Customer actions
(line of interaction)
Onstage contact employee actions
(Line of visibility)
Backstage contact employee actions
(Line of internal interaction)
Support processes

15. Customer action area encompasses the steps, choices, activities, and interactions that the customer performs in the process of purchasing, consuming, and evaluating the service.
The steps and action that an onstage employee performs that are visible to the customer
The actions that occur behind the scenes to support the onstage activities are contact employees
The support process section of the blueprinting covers the internal services, steps, and interactions that take place to support the contact employees.

16. The four key areas
Line of interaction-representing direct interaction between customer and the organization.
Line of visibility-this separates all service activities that are visible to the customer from those that are not .
Line of internal interaction-it separates contact employees activity from those of other service support people.
At the very top the blue print is physical evidence

17. Blueprint for technology-delivered self service
If there are truly no employees involved in the service the contact person area of the blue print is not needed.
The area above the line of visibility can be used to illustrate the interface between the customer and the computer website .the area can be relabeled onstage technology.

18. Benefits of service blueprinting
Provides an overview so employee can relate.
Identifies fail points
Line of interaction between external customers and employees illuminates the customers role and demonstrate where the customer experiences quality.
Line of visibility promotes a conscious decision on what customers should see and which employees will be in contact with customers.

19. Line of internal interaction clarifies interfaces across departmental lines thus strengthening continuous quality improvement.
Provide a basis for identifying and assessing cost, revenue and capital invested in each element of the service.
Constitute a rational basis for external and internal marketing.
Facilitate top-down, bottom-up approach to quality improvement.

20. Building a blueprint Identify the process to be blueprinted.
Identify the customer or customer segment
Map the process from the customers point of view
Map contact employee actions, onstage and backstage, and/or technology actions
Link contact activities to needed support functions
Add evidence of service at each customer action step

21. Quality Function Deployment
QFD- “a system for translating customer requirement into appropriate company requirements at every stage, from research through production design and development to manufacture ;distribution;installation;and marketing, sales and services.”

22. High- Performance Service Innovations
Choose the right project
Integrate new services
Consider multiple measures of success
Learn from major success
Maintain some flexibility

23. Learn from major success
Market synergy
Market driven new product process
Effective marketing communications
Customer service
Managerial and financial synergy
Launch preparation
Product responsiveness
Product advantage
Innovative technology6

24. Setting service standards
Formal research
On-the job experience

25. Improving Reliability of service process by failure proofing
Fail-Safe method for service Personnel-performing task incorrectly, in the wrong order, or too slowly, or doing work that was not requested in the first place.
Fail-Safe methods for the customers

26. Customer-Defined service standard
Understanding customer expectations and perceptions is the first step in delivering high service quality.
Service companies often experience difficulty in setting standards and goal for the organization.
In most companies, integrating the work of the marketing function and the operations function (functional integration) is not a typical approach.

27. Factors necessary for appropriate service standards
Standardization of service behaviors and actions.
In reality many service tasks are routine.
Even in highly customized services, many aspects of service provision can be routinized.

28. According to one long term observer of service industries standardization of services can take three form.
Substitution of technology for personal contact and human effort.
Improvement in work method
Combination of these two methods

29. Technology and work improvement methods facilitate the standardization, by breaking tasks down and providing them efficiently. it also provide the firm to calibrate service standards such as length of time etc. accuracy with which the operations are performed and the number of problem that occur, with this understanding the more easily establishes appropriate service standards.

30. Formal service target and goals
Companies have an accurate sense of how well they are performing service that is critical to their customers-how long it take to conduct a transaction, how frequently service fails how quickly they settle customer complaints-and strive to improve by defining goals that lead them to meet or exceed customer expectations.

31. Formal goals
There are specific targets for individual behavior or actions.
Overall department or company target, most frequently used as a percentage, across all execution of behavior or action.
Walt Disney calibrates employee performance on a behavioral scale that contribute to guests perception of high service quality. whether they are set and monitored using audits such as timed action) or customer perception such as opinion about courtesy), service standards provide a means for formal goal setting.

32. Customer not company defined standards
To close gap 2. standards set by companies must be based on customer requirement and expectations rather than just on internal company goal.
Through precise measurement of expectations, the company often discovers that it has been over delivering to many customer needs.
Customer defined standards need not conflict with productivity

33. “Hard" Customer defined standards
Thing that can be counted ,timed, or observed through audits. for eg. A study has found that most frequently cited customer complaint was late product and service delivery(44 percent), followed by product and service quality mistakes(31percent)

34. Customer defined hard standard in internet context
Ship to target-the percentage of orders delivered on time with complete accuracy.
Initial field incident rate (IFIR)-the frequency of customer problems.
On time first time fix (OTFTF)-the percentage of problem fixed on the first visit by a service representative arriving at the time promised.

35. “Soft" Customer-Defined Standards
“Not everything that counts can be counted, and not everything that can be counted, counts." for example understanding and knowing the customer.
Soft standards provide direction guidance and feedback to the employees.
They are opinion based measure that cannot be observed and must be collected by talking to customer.

36. Example For a Hotel Customer Priorities—Treat me with respect
Customer defined standards-uniforms are to be immaculate, wear proper and safe footwear, wear name tag, adhere to grooming standards, notify supervisor immediately of hazards, use proper telephone etiquette, do not screen calls,

37. Examples of hard customer defined service
Customer priorities
On time delivery of express mail
Customer defined standards
Number of packages right day late
Number of packages wrong day late
Number of missed pickup

38. Cultural influences lead to different service delivery expectations?
Responsiveness varies by cultures
Reliability varies by culture
Implications for service standards

39. One time fixes
One time fixes are technology, policy, or procedure changes that . When instituted, address customer requirments

40. Building Blocks: The Service Encounter Sequence
Customer-defined standards are established to define processes or human performance operationally to meet the expectations of customer performance

41. Process for developing customer-defined standards
Step 1: Identify existing or desired service encounter sequence
Step 2: Translate Customer Expectations into behaviors and actions for each service encounter.
Step 3: Select Behaviors and actions for standards
Step 4:set hard or soft standards

42. Step 5:Develop feedback mechanism
Step 6:Establis measure and target Level
Step7:Track measure against standard
Step8:provide feedback about performance to employees
Step9:Update target level and measures

43. Step3:select behavior and actions for standards
The standards are based on behavior and actions that are very important to customer
The standards cover performance that needs to be improved or maintained.
The standards cover behavior and actions employee can improve.
The standards are accepted by employees.
The standards are predictive rather than reactive
The standards are challenging but realistic

44. Service Performance Indexes
Service performance indexes are comprehensive composites of most critical performance standards.
Most companies build these indexes by (1) understanding the most important requirements of the customer, (2) Linking these requirements to tangible and measurable aspects of service provision and(3) using the feedback from these indexes to identify and improve service problems.

45. For example Airline Performance Index
On time flights, Number of accidents, Flight problems, pilot error, overbooking, Mishandled baggage, fare complaints, frequent flier awards, other complaints, refund complaints, service complaint, ticket complaints.

46. Physical evidence and services cape
Physical evidence is the environment in which the service is delivered and where the firm and the customer interact, and any tangible commodity that facilitate performance or communication of service.
The physical facility is referred as servicescapes.

47. Element of physical evidence
Servicescape-Facility Exterior-exterior design, Signage, parking, landscape, surrounding environment.
Facility Interior-interior design, equipment, signage, layout, air quality, temperature.
Other tangibles- stationary, billing statements, reports, employee dress, uniforms, brochures, web pages.

48. Virtual Servicescape
Web pages and virtual service tours allow customers to preview a service experience and see tangible evidence of the service.
Internet technology clearly provides tremendous opportunities for firm to communicate about their services

49. For example
Airline
Servicescape-airline gate area, airplane exterior, airplane interior (décor, seat and quality).
Other tangibles-Ticket food, uniforms, website etc.

50. Types of servicescapes
Self service (customer only)-for eg. Golf land, ATM.
Interpersonal services (both customer and employee)-For E.g.. Hotel, restaurant, Health clinic etc.
Remote service (employee only)-For Eg. Telephone company, Insurance company, Many professional services.

51. Roles of the servicescape
Package-it wraps the service and convey an external image to what is inside.
Facilitator-in aiding the performances of persons in the environment.
Socializer- it helps to convey expected roles, behavior, and relationship.
Differentiator-the design of the physical facility can differentiate a firm from its competitor.

52. Framework for understanding Servicescape effect on behavior
Stimulus-organism-response theory
Multidimensional environment is the stimulus, consumer and the employees are the organism that respond to the stimuli

53. Behavior Physical Internal Environmental Responses Dimensions
Holistic
Environment
Internal
Responses
Behavior
Individual
Behaviors
Affiliation
Exploration
Stay Longer
Commitment
Carry out plan
Cognitive
Emotional
Physiological
Belief
Categorization
Symbolic Meaning
Mood & Attitude
Pain
Comfort
Movement
Physical fit
Ambient
Conditions
Temperature
Air Quality
Noise
Music
Odor
Etc.
Space/Function
Layout
Equipment
Furnishings
Signs, Symbols,
& Artifacts
Signage
Personal Artifacts
Style of Décor
Etc
Employee
Responses
Social Interaction
Between & among
customers &
Employees
Perceived
Servicescape
Customer
Responses
Individual
Behaviors
Attraction
Stay/explore
Spend money
Return
Carry out plan
Cognitive
Emotional
Physiological
Belief
Categorization
Symbolic Meaning
Mood & Attitude
Pain
Comfort
Movement
Physical fit

54. Individual behavior
Approach behavior include all positive behavior and avoidance behavior reflect the opposite.
In addition to attracting or deterring entry, the Servicescape can actually influence the degree of success consumers and employees experience in executing their plans once inside.

55. Social interaction
All social interaction is affected by the physical container in which it occur.

56. Internal responses to the Servicescape
Employee and customers respond to dimension of their physical surrounding cognitively, emotionally, and physiologically, and those responses are what influences their behavior in the environment.
It has an effect on peoples belief about a place and their belief about people, products found in that place, in a form of nonverbal communication imparting meaning.

57. In addition to influencing belief, the perceived Servicescape can directly elicit emotional responses, than in turns influence behavior
Environment, whether natural or engineered, will elicit emotions that can be captured by two basic dimensions(1)pleasure/displeasure and(2) degree of arousal

58. Approaches for understanding Servicescape effects
Environment surveys
Direct observation
Experiments
Photographic blueprint

59. Guidelines for physical evidence strategy
Recognize the strategic impact of physical evidence
Map the physical evidence of the service
Clarify roles of the Servicescape
Assess and identify physical evidence opportunities
Be prepared to update and modernize the evidence
Work cross functionally

60. A vast amount of research in engineering and design has addressed human physiological responses to ambient conditions as well as physiological responses to equipment design.
Ambient condition includes background characteristic of the environment such as temperature, lighting, noise, music, scent and color.

61. Assignment
Given the need for customer-defined service standards, do firms need company-defined standards at all? Could all standards in a company be customer defined? Why or why not? What functional department in a firm would object for having all the standards customer defined?
Describe and give example of how Servicescape play each of the following role: package, facilitator, socializer, and differentiator