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Lesson 2 - Strategic Management

The document discusses products, services, customer experience, new product development, and service design. It provides definitions and explanations of these concepts. It also discusses the importance of customer experience management and innovation for businesses.

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39 views

Lesson 2 - Strategic Management

The document discusses products, services, customer experience, new product development, and service design. It provides definitions and explanations of these concepts. It also discusses the importance of customer experience management and innovation for businesses.

Uploaded by

snkrsboxph
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Lesson 2

Products,
Services and
Customer
Experience
Products and Services Defined
When a customer makes a purchase, they expect value from that exchange.

Products are tangible items that are part of an exchange between a buyer and seller. Products
can be seen, touched, owned, and stored. For example, the computer or tablet you’re using to
read this textbook is a product. You may have visited a store to see and touch the product
before purchasing to ensure it met your needs. Post-purchase, the computer or tablet is yours
to own and store for later use as you please. The tangible nature of the product allows the
consumer to possess it.
u Services are intangible solutions that are also an exchange between buyer and seller. Unlike
products, services cannot be touched, owned, or stored for later use. For example, a college
course on marketing is a service. Students cannot own the course; they cannot store it for
later, nor will they have a tangible object representing the course. Another defining feature
of a service is the customer is typically a part of the service experience. Imagine buying
tickets to your favorite band in concert. You will have to attend the concert to realize the full
benefit of the service experience.
u While a computer is a true product and a marketing class is a true service, many exchanges
between buyer and seller fall somewhere in the middle of the product–service continuum.
Think back to the restaurant breakfast at the top of this section; restaurants are a prime
example of an exchange that includes products and services. Marketers are typically
working with an offering that falls on the product–service continuum. This means that they
need to understand how to influence consumer behavior in the search for products and
services.
Customer Experience

u Customer experience (CX) is the overarching impression that customers have of a


brand. Therefore, each touchpoint with a product or service becomes a part of the
customer experience. A strong customer experience integrates technology, marketing,
sales, and customer service to deliver a strong brand perception.
u For example, if you have ever visited an Apple Store, you probably have experienced
one of the most lauded customer experiences there is. From the moment you walk in,
you are surrounded by products and transported into a world of technology. Each
touchpoint, from the check-in on an iPad to the latest products that are available for
use, reinforces the brand through customer experience. Brands with strong customer
experience tend to have more loyal customers who become brand advocates.
Classifications of Business and Industrial Products
Businesses purchase products to aid in manufacturing or creating consumer products or
services. For example, if you have ever been to a doughnut shop, you might think about
how the bakers produce a doughnut. The bakers have probably purchased baking
equipment, ingredients for the doughnuts, boxes to package the doughnuts, and a service
to make deliveries. Business and industrial products are classified as follows:
1. Raw materials are the products that a business needs to purchase in order to make a
consumer good, such as flour, sugar, and yeast in our doughnut example.
2. Manufactured materials and parts are products used to create the product. For
example, large baking sheets are manufactured materials specific to a bakery and
purchased to enable product creation.
3. Capital items are assets that are valuable to the business and have tangible value. For
example, our bakery’s large ovens would be considered a capital item.
4. Supplies and services are goods and services that are typically disposed of and do not
contain a tangible value. For example, the bakery’s boxes are part of its supplies to
package doughnuts.
What is New Product Development (NPD)?

New Product Development (NPD) is a comprehensive multi-disciplinary process that


transforms a market opportunity into a marketable new product to satisfy customer
requirements.
It’s sometimes referred to as New Product Introduction (NPI) or new product planning and
development, and it applies to tangible products such as phones, coffee makers, TV, etc.
and intangible products like mobile phone apps, software programs, etc.
The new product development process
Why is New Product Development necessary?

NPD is the driving force of companies and vital for their organic growth. Insatiable
consumer appetite, strong worldwide competition, and changing consumer behavior and
technology force companies to invest in new products to succeed or for their survival.
• Changing consumer
• Increasing competition
• Technological advancement
• New opportunities (growth and development)
• Risk diversification
• To increase company & brand reputation
• To utilize excess capacity
Importance of New Product Development strategy
Why do you need a thorough NPD strategy? Consider these 4 statistical facts about
how products fair according to data from Mckinsey global institute.
• Only 4 in 7 product ideas enter the product development stage
• Only 3 products get launched from 14 product ideas
• Only 1 in 7 product ideas will yield a successful product
• Launched products have a failure rate of 25% to 45%
Research shows that some NPD failures can be attributed to the lack of a structured NPD process. According to
Wheelwright and Clark (1992), companies who approach NPD in a structured manner have more success than
those with an ad-hoc approach.
By following a well-planned set of procedures & milestones, companies can avoid some of
the common pitfalls that lead to the failure of NPD, such as;
• Overestimate market size
• Customer requirement misinterpretation
• Launched at the wrong time
• Poor product design
• Target customer’s requirement mismatch
• Price too high
• Poor advertising and marketing
• High product development cost due to overrun & resource overuse
• Competition risks and threats
What is a Service Design Process?
Service design process is the technique of research and analysis to
understand users better and offer them the best services in line with
their needs. It also involves using observation and experience to
understand products and existing services better. Ultimately, it is a
continual process in a firm that aims to improve the existing products
and create better, more useful customer services. Service design
requires close contact with customers, making the company's
marketing team a significant part of the process. However, the
management carries out the implementation because it may involve
changes in various aspects of the company.
Service Design Elements
1. Understand your brand’s purpose, the demand for it and the ability of
all associated service providers to deliver on promises.
2. The customers’ needs come ahead of the brand’s internal ones.
3. Focus on delivering unified and efficient services holistically—as
opposed to taking a component-by-component approach.
4. Include input from users.
5. Streamline work processes to maximize efficiency.
6. Co-creation sessions are vital to prototyping.
7. Eliminate anything (e.g., features, work processes) that fails to add
value for customers.
8. Use agile development to adapt to ever-changing customer needs.
u Service design applies both to not-so-tangible areas (e.g., riders buying
a single Uber trip) and tangible ones (e.g., iPhone owners visiting Apple
Store for assistance/repairs). Overall, service design is a conversation
where you should leave your users and customers satisfied at all
touchpoints, delighted to have encountered your brand.
Understanding Customer Experience
Management

Customer experience management (CEM) is the processes a company uses to


track, oversee and organize every interaction between a customer and the
organization throughout the customer lifecycle and journey.

Customers no longer base their loyalty on price or product. Instead, they stay loyal
with companies due to the experience they receive.
The objectives of CEM are to:

1. Optimize the customer’s experience with the company as an entity

CEM uses experiential data to deliver on the things that matter most to customers. When
customer’s expectations are met, or better yet exceeded by a company, the experience is
optimized.

2. Foster customer conversion and retention


Customer experience → Loyalty → Growth. CEM helps you build a loyal customer base who
spend more with your business, and refer their friends and family.

3. Improve brand image


When you improve customer experience for a single customer, their perception of your brand
increases. When you improve customer experience for your entire customer base, you
become known as the best in the business.
Why customer experience management is
important

Customer experience has become a critical differentiator in today’s hyper-


competitive, hyper-connected global marketplace. There’s tangible business value
in managing the customer experience effectively.
Good customer experience management can:
• Strengthen brand preference through differentiated experiences.
• Boost revenue with incremental sales from existing customers and new sales
from word of mouth.
• Improve customer loyalty (and create advocates) through valued and
memorable customer interactions.
• Lower costs by reducing customer churn.
What is Innovation is the process of realizing new products, processes,
propositions, or business models to create added value for customers,
innovation? the organization, and the employees.
What are the types of innovation?

Understanding the many forms of innovation is advantageous. It isn’t easy to focus


on a single area when a concept encompasses all of them. Recognizing each form
of innovation will help you reach out to the best groups and sponsors so you can
manage your resources better.
Here are the following types of
innovation from a strategic standpoint:
1. Process Innovation
Process innovation is concerned with how commercial solutions are manufactured
and delivered by the company. These items are not altered in any way. It’s more
about the activities associated with their sales and development.
It also refers to profit-generating innovation involving the organization’s valuable
assets. Within the firm, this kind of innovation utilizes its workforce’s
capabilities, expertise, and skills in optimizing processes leading to product and
service development.
2. Delivery Innovation
Delivery innovation involves three aspects — platform, marketing, and customer
engagement. This type of innovation focuses on distributing products and services
to a specific market or through a new network while improving consumer
happiness.
Nowadays, businesses can exhibit innovation in the way that the product line is
supplied to customers. Currently, there are several options for bringing the product
portfolio to market. It might be through B2B, B2C, online, outlet shops, and a
multitude of other channels.
3. Finance Innovation
Finance innovation is largely concerned with how to generate money and who you
can collaborate with in order to achieve revenue-related objectives. It covers new
business formats, payment methods for goods and services, and how the supply
chain operates.
Companies have begun to use multiple commercialization methods, such as
flexible pricing, membership, and subscription services. These are examples of
applying this type of innovation to gain more customers and obtain consumer
loyalty.
4. Product Innovation
Product innovation is concerned with the items produced by the organization, as
well as its product lines and services in general.
This type of innovation may be used to expand, improve, or defend the existence of
the company’s present market share while also making it future-proof for
upcoming trends in the industry.
Despite being the most popular in comparison to other kinds, product innovation
isn’t necessarily about the product but rather the entire ecosystem. It also has to
do with customer service as the brand tries to resolve customer problems through
overall product improvement.

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