CHAPTER 4 - DEVELOPING SERVICE COCEPTS: CORE AND SUPPLEMENTARY

ELEMENTS

Understand the key ingredients in a service product

Marketers have traditionally used the concept of the augmented product (also called the extended
product or the product package) to describe the supplementary elements that add value to
manufactured goods. Several similar frameworks have been developed to describe augmented
products in a service context. You will learn about several models that seek to represent the
ingredients of a service product.

 Shostack’s molecular model, uses a chemical analogy to help marketers visualize their
offerings as a “total market entity” (see Figure 4.2). The core benefit is at the center of the
molecular model and is linked to a series of other service characteristics. Shostack argues
that as in chemical formulations, a change in one element may completely alter the nature
of the identity. Surrounding the core is a series of bands representing price, distribution,
and communication efforts. This model helps identify the tangible and intangible
elements involved in service delivery.

 Eiglier and Langeard’s model is based on the concept of core and peripheral services. The
core service is surrounded by a circle containing a series of peripheral services specific to
that particular product. This model, like Shostack’s, emphasizes the interdependence of
the various components. Eiglier and Langeard distinguish between peripheral elements
needed to facilitate use of the core service and those needed to enhance its appeal.

Document the delivery sequence over time

Documenting the delivery sequence over time has many benefits:

 Necessary for marketing

 Necessary for facilities planning
 Necessary for operations management
 Necessary for allocation of personnel
 Shows how certain services must be used before others
 Shows the amount of time that customers may spend on different service elements

Know the role of flowcharting in clarifying product elements

Flowcharting is useful for several reasons:

 Offers a way to understand the totality of the customer’s service experience

 Distinguishes between steps at which customers use the core service and those involving
supplementary services

The Flower of Service: Categorize supplementary services that surround the core product

You will learn that supplementary services can be divided into two broad groups, facilitating and
enhancing, each of which can subsequently be divided into four clusters (for a total of eight),
based on their more specific functions. Facilitating supplementary services are those that are
required in service production, although enhancing supplementary services add extra value to the
product core.

The Flower of Service (Figure 4.4) is a compelling visual framework for understanding the
supplementary service elements that surround and add value to the product core. There are eight
clusters—or petals—of supplementary services that surround the core:

Facilitating Services

 Information: supplementary services that facilitate purchase and use by telling customers
about service features and performance before, during, and after service delivery.
 Order-taking: supplementary services that facilitate purchase by establishing fast,
accurate, and responsive procedures for taking applications, placing orders, or making
reservations.
 Billing: supplementary services that facilitate purchase by providing clear, timely,
accurate and relevant documentation of what customers owe, plus information about how
to pay.
 Payment: supplementary services that facilitate purchase by offering a choice of easy
procedures for making prompt payments.

Enhancing Services

Consultation: supplementary services that add value by providing responses to customers who
require advice, counseling, or training to help them obtain maximum benefit from the service
experience. Figure 4.11 provides examples of several supplementary services in the consultation
category.
 Hospitality: supplementary services that add value by treating customers like guests and
providing amenities that anticipate their needs during interactions with the service
provider.
 Safekeeping: supplementary services that add value by assisting customers with personal
possessions that they have brought with them to a service delivery facility site or
purchased there.
 Exceptions: supplementary services that add value by responding to special requests,
resolving problems, handling complaints and suggestions, and providing compensation
for service failures.

Understand the role of branding for different service products

Branding is used at the product level (as opposed to the corporate level) to transform a series of
service elements and processes into a consistent and recognizable service experience, offering a
definable and predictable output. Within a company, branding of products can serve to
differentiate one service package from another—as exemplified by the array of hotel brands
offered by Marriott, the support levels available from Sun Microsystems, and the travel classes
offered by Singapore Airlines and British Airways. In the competitive arena, branding serves to
differentiate one firm’s offering from another’s. The marketer’s objective is to become a “brand
champion,” by creating preference for a specific brand and build loyalty.

Know the hierarchy of new service categories

There are seven categories of new service, ranging from major innovations to simple style
changes.
 1) Major service innovations
2) Major process innovations
3) Product-line extensions
4) Process-line extensions
5) Supplementary service innovations
6) Service improvements
7) Style changes

QUESTIONS AND EXERCISES

Explain what is meant by core product and supplementary services.

Services usually are defined with reference to a particular industry—for instance, health care or
transportation—based on the core set of benefits and solutions delivered to customers. The core
product is the central component that supplies the principal, problem-solving benefits customers
seek. Supplementary services can enhance any type of core product—a service or a physical
good. In many industries, most core products are relatively mature; without differentiation and
augmentation. Such products could easily become commodities with competition based solely on
price. The concept of supplementary services emerged from the notion of the “augmented
product” in which services were often seen as a way to add value to manufactured goods. The
essence of the Flower of Service concept is that supplementary services can be categorized into
eight distinct groups. Because supplementary services are often common to many different types
of core products, marketing managers can benchmark performance on any given supplementary
element outside their own industry, as well as within it. The marketing significance of
supplementary services is fourfold:

1) Different segments may seek different levels of supplementary services.

2) The cost of providing an increased level of supplementary service on any one element can
be related to the extra perceived value that it offers the customer and to the incremental
price increase that the customer might be willing to pay to obtain it.
3) Supplementary services offer the possibility for differentiation against competitive
offerings.
4) In a mature product category, product innovation usually centers on improvements or
additions to supplementary service elements.

2. Explain the “Flower of Service” concept and identify each of the petals. What insights
does this concept provide for service marketers?

The “Flower of Service” concept is used to illustrate the relationship between the core service and
its supplementary services. The latter consists of facilitating (information, order taking, billing,
and payment) and enhancing (consultation, hospitality, safekeeping, and exceptions) services
which serve to augment the “beauty” of the service. In a well-designed and well-managed service
organization, the petals and core are fresh and well formed. This makes the service attractive to
customers. Conversely, a badly designed or poorly executed service is like a flower with missing,
wilted, or discolored petals. Even if the core is perfect, the overall impression of the flower is
unattractive. This concept is useful for service marketers in identifying supplementary services
needed to increase the attractiveness of the overall service. Also, it serves as a guide for
marketers for areas in the service that may need to be improved to prevent the flower from
wilting further.
3. Explain the distinction between enhancing and facilitating supplementary services. Give
several examples of each, citing services that you have used recently.

Enhancing supplementary services add extra value for customers and help to position the core
product away from the competition. The nature of these enhancements is often tailored to suit the
needs of customers in specific market segments. Facilitating supplementary services facilitate use
of the core product or are required for service delivery and sale. If well executed, they make the
company “easy to do business with.”

4. How is branding used in services marketing? What is the distinction between a corporate
brand such as Marriott and the names of its various inn and hotel chains?

A brand is a name, phrase, design, symbol, or some combination of these that identifies a
company or its individual service offerings, servicing to distinguish these from the competitions.
Branding is used at both the corporate level (e.g., Marriott versus Hilton; British Airways versus
United), and also at the product level (e.g., branding the different levels of hotel offered by
Marriott, or the different types of service offered by a specific airline such as BA, or by a
software support firm such as Sun Microsystems. The corporate brand is often referred to as the
umbrella brand because it stands for a certain service style and set of corporate values, being held
above all the product sub-brands. Historically, service companies emphasized the corporate name
but today, in an era of greater competition and product proliferation, product brand names
(sometimes referred to as sub-brands) have been given greater prominence.

5. What are the approaches firms can take to create new services?

Style changes, service improvements, supplementary service innovations, price line extensions,
product line extensions, major process innovations, and major service innovations are seven ways
that a service provider can use to innovate. With the use of flowcharts, students can also discuss
that the core products may differ widely and common supplementary elements like billing,
information etc. may keep recurring. Different types of supplementary services play different
roles. In designing a service concept however, both core and supplementary service elements
must meet consistent standards and mutually reinforce each other.

6. Why do new services often fail? What factors are associated with successful
development of new services?

The failure of new services may be attributed to the inability of meeting a demonstrable consumer
need, inability to cover costs from revenues, and poor execution. For success development of new
services, some will argue that it is the quality of the total service offering, and also of the
marketing support that goes with this, that are vital. In order to achieve this, deep market
knowledge is essential. The core product is also important, but it may take on a secondary role as
compared to those listed above.