1.

PLANNING AND CREATING SERVICE PRODUCTS

All service organizations face choices concerning the types of products to offer and how
to deliver them to customers. To better understand the nature of services, it’s useful to
distinguish between the core product and the supplementary elements that facilitate its
use and enhance its value for customers. Designing a service product is a complex task
that requires an understanding of how the core and supplementary services should be
combined, sequenced, delivered, and scheduled to create a value proposition that meets
the needs of target segments.

1.1. Service Product

Service performances are experienced rather than owned. A service product comprises
all of the elements of the service performance, both physical and intangible, that create
value for customers. For instance, if you go to a restaurant for a meal, the physical
elements are food, utensils, and tableware, and the ambiance (decor, lighting, furniture,
or cleanliness); the intangible ones consist of atmosphere, online ordering,, and delivery
or waiting time.

1.2. Designing the Service Concept

Experienced service marketers recognize the need to take a holistic view of the entire
performance they want customers to experience. The value proposition must address
and integrate three components: (1) core product, (2) supplementary services, and (3)
delivery processes.

CORE PRODUCT: The core product is the central component that supplies the
principal, problem-solving benefits customers seek. For example, a gym service
provides access to equipment and facilities that solve the need to maintain or improve
physical fitness, and repair services restore a damaged or malfunctioning machine to
good working order.

SUPPLEMENTARY SERVICES: Delivery of the core product is usually

accompanied by a variety of other service-related activities referred to collectively as
supplementary services. These services augment the core product, facilitating its use
and enhancing its value and appeal to the customer’s overall experience. Adding
supplementary elements should be done in ways that enhance the perceived value of the
core product and enable the service provider to charge a higher price.

For example, while the core product remains access to equipment and facilities for
exercise, there are many supplementary services that enhance the overall experience
such as personal training, nutrition coaching, or wearable tech integration (offering
compatibility with fitness trackers and apps to track workout data).

DELIVERY PROCESSES: The third component concerns the processes used to

deliver both the core product and the supplementary services. The design of the service
offering must address the following issues:

• How the different service components are delivered to the customer.

• The nature of the customers’ role in those processes.
• How long does the delivery last?
• The prescribed level and style of service to be offered.

The picture below illustrates the integration of the 3 components of the service offering
for an overnight stay at a luxury hotel.

Surrounding the core product is a variety of supplementary services. These range from
reservations to meals, to in-room service elements. Delivery processes must be
specified for each of these elements. The more expensive the hotel is, the higher the
level of service required for each element. For example, very important guests might
receive greater flexibility with arrival and departure times, allowing for a more relaxed
stay.

1.3. Documenting the delivery sequence over time

A crucially important part of the process design is the sequence in which customers will
use each of the core and supplementary services and the approximate length of time
required in each instance. In some instances, as in the script for teeth cleaning services
at the dentist, certain service elements must be delivered in a prescribed sequence. In
other instances, there may be some flexibility.

Time plays a key role in services, not only from an operational standpoint as it relates
to allocating and scheduling purposes but also from the perspective of customers. In the
hotel industry, neither the core service nor its supplementary elements are delivered
continuously throughout the duration of the service performance. Certain services must
necessarily be used before others.

The following figures add a temporal dimension to the different elements of the
Sheraton Saigon Grand Opera Hotel service concept, identifying when and for how long
they are likely to be consumed by a typical guest from a given segment. Not every guest
uses every service (spa treatments, fitness center access, or childcare services), and
schedules may vary.
An important aspect of service planning is determining the amount of time customers
may spend on different service elements. In some instances, customers expect to budget
a specific amount of time for a given activity that has value for them and would not
wish to be rushed (for instance, eight hours for sleeping, an hour and a half for a business
dinner, 20 minutes for breakfast). In other instances, such as making a reservation,
checking in and out, or waiting for a car to be retrieved from valet parking, customers
may wish to minimize or even eliminate time spent on what they perceive as nonvalue-
adding activities.

2. FLOWER OF SERVICE - MANAGERIAL IMPLICATION

To ensure a brand's services are competitive and stand out from the competition, it is
not enough to rely on the core product; Businesses also need to develop supplementary
services. However, many business owners often overlook these elements when
designing services, leading to a situation where, no matter how good the core product
is, achieving customer satisfaction in terms of service quality remains difficult.

2.1. Supplementary services and The flower of service

So what are supplementary services?

Supplementary services are additional services provided to ensure the smooth usage of
the core product and to enhance the customer experience. These services demonstrate
the company's professionalism and create a competitive edge for the brand. Examples
include valet parking at restaurants or lower-cost periodic health checkups at general
clinics.

Supplementary services are comprehensively illustrated through the “The Flower of

Service" model invented by Associate Professor Christopher Lovelock of Harvard
University. In it, the "flower" has the core product as the center and it is surrounded by
8 petals corresponding to 8 types of supplementary services. The model clearly reflects
the optimal service combination that businesses need to provide to customers from the
moment they have a need until they finish using the product in order to optimize value
for consumers, while also building their brand loyalty

According to the flower of service model, we can identify two main parts from a service
product, they are core product and supplementary services. Core product is offered for
the purpose of providing solutions to key customer problems. It is the central component
of overall service. Supplementary services are offered for the purpose of facilitating the
consumption of core products. It helps to enhance the value of core products and
customer satisfaction. Also it is useful to differentiate your service from competitive
services
In reality, there are many types and forms of additional services, depending on the
service model. Broadly speaking, these services can be categorized into two main types
with different roles: Facilitating Services and Enhancing Services.

2.2. Facilitating services

Facilitating Services aim to ensure the main service runs smoothly and can be divided
into four groups:

First is Information, which includes basic details such as addresses, operating hours,
service packages, terms, etc. This information should be posted on channels that
customers can easily access, such as websites, fan pages, hotlines, etc. This makes it
convenient for customers to find and choose services that suit their needs.

Ex: To meet customers' information needs, 30Shine has built a website, fan page, and a
mobile app to provide customers with all the details about the 30Shine brand
(introduction, vision, core values) and their services (pricing of service packages,
products sold, promotional packages, hairstyle reviews). Customers can even find out
the location of each 30Shine branch, whether it has available slots, and which branch is
closest to them, facilitating their travel plans.

Next is Order Taking, the process of receiving service requests from customers.

First, Order entry can be received through a variety of sources such as through sales
personnel, phone and email, or online. The process of order-taking should be polite,
fast, and accurate so that customers do not waste time.

Reservations (including appointments and check-in) represent a special type of order-

taking that entitles customers to a specified unit of service. These can be a restaurant
table, a hotel room, or admission to a facility such as a theater or sports arena with
designated seating.

Technology can be used to make order-taking and reservations easier and faster for both
customers and suppliers.

For example, airlines now make use of ticketless systems, based on email and mobile
apps. Customers receive a confirmation number when they make the reservation and
need only show identification (or the ticket as shown on a mobile app) at the airport to
claim their seats and receive a boarding pass.

And the last, Applications: Banks, insurance companies, utilities, and universities
usually require potential customers to go through an application process.
Ex: Order taking is a unique feature of 30Shine, as it is the first hair salon brand to
develop a booking feature for selecting barbers, times, and locations on its website, fan
page, and mobile app. This allows customers to manage their time better, arriving just
in time for their appointment and avoiding long waits like at traditional barber shops.

After customers use the service, the third group is Billing, the service of issuing
invoices. A standard invoice must include customer information, the time and place of
service, and detailed costs.

- Inaccurate, unclear, or late bills can create frustration, even for customers who
were happy when using the service before.
- Billing can happen before or after customers use the service, depending on each
business's practices.
- Here are some invoice forms:
• Periodic statements of account activity.
• Invoices for individual transactions.
• Verbal statements of the amount due.
• Online or machine display of the amount due for self-payment transactions.

Ex: Billing is a delicate aspect of 30Shine's service model. Their hairdressing services
are diverse and integrated into combos with multiple steps, making it hard for customers
to remember all the details of their combo. To make it convenient for customers,
30Shine issues invoices before customers start their haircuts, so when they meet the
barber, they simply present the invoice with their combo information, and the barber
can proceed without needing to ask the customer again.

Finally, there is Payment. Currently, there are two common methods: cash or bank card
payments. Additionally, vouchers and coupons are used. Moreover, e-wallets are
increasingly popular among young, dynamic customers.

Customers expect payment options to be easy and convenient.

Some common self-service payment options include inserting a card, cash, or token into
a machine, as well as electronic funds transfer, mailing a check, entering credit card
information online, and using online payment systems like PayPal, Google Wallet, or
Bitcoins.

Another category of payment options involves direct payments to the payee or an

intermediary. These include cash handling or giving change, check handling,
credit/debit card handling, and coupon redemption.
The third type of payment option is an automatic deduction from financial deposits.
This includes automated systems like machine-readable tickets for entry gates, as well
as pre-arranged automatic deductions for bills like bank loans and phone plans.

Ex: 30Shine also offers a variety of payment services, including cash, card payments,
vouchers, and e-wallets such as VNPAY and MoMo.

2.3. Enhancing services

Besides the basic services mentioned above, businesses need to establish enhancing
services to elevate the customer experience and demonstrate professionalism and
differentiation from competitors. Specifically, there are four groups of services:

First is Consultation includes

• Customized advice
• Personal couseling
• Tutoring/training in product use
• Management or technical counsulting

This is particularly important in services with complex processes and characteristics,

such as legal litigation, medical surgery, aesthetics, etc., requiring staff with specialized
knowledge to explain and personalize services for customers. For instance, before
deciding to buy insurance, customers need consultation to determine which package
suits their needs and to understand the terms and benefits after purchase.

Ex: At 30Shine, their barbers are well-trained, experienced, and have an eye for
hairstyling. They always consult with customers before, during, and after the haircut to
ensure they get the best hairstyle.

Alongside this, staff need to demonstrate Hospitality—welcoming and warmth in

customer reception. Though essentially an additional service, it is indispensable in any
current business model. For example, beauty spas might have staff welcoming
customers at the door or set up a relaxing waiting area with cool towels, hot tea, fruits,
and a pleasant scent with soothing music, easing the fatigue of waiting for customers.
This additional service creates a thoughtful, sophisticated, and high-class image in the
customer's mind.

Hospitality-related services should ideally reflect pleasure at meeting new customers

and greeting old ones when they return.Courtesy and consideration for customers’ needs
apply to both face-to-face encounters and telephone interactions.

Some example of Hospitality

 • Greeting (welcome)
• Food and beverages(drinks)
• Toilets and washrooms
• Waiting facilities and other amenities(facilities)
• Lounges, waiting areas, seating
• Weather protection
• Magazines, entertainment, newspapers
• Transport
• Security

Ex: 30Shine excels in this aspect by designing clean, modern haircuts and waiting
spaces to create a relaxing and enjoyable experience for customers during their service
and while waiting. They even offer soft drinks, served by staff, while customers wait.

Furthermore, to ensure customers feel secure using the service, businesses need to
incorporate Safekeeping—protecting the safety of users and their tangible assets. The
most typical example is businesses providing security guards to watch over vehicles
and personal belongings for customers..

Safekeeping includes:

• Caring for Possessions Customer Bring with Them

In some spas or gyms, customers are provided with lockers and locks to securely store
and retrieve their personal items without needing staff assistance

• Caring for Goods Purchased (or Rented) by Customers

For example, when shopping at IKEA, you will be provided with home delivery service,
and there will be staff to support installation for you.

Lastly, there are Exceptions—handling exceptional cases, and showcasing the

professionalism of the business. Here, staff need to flexibly handle incidents or special
requests from customers. These could be requests for vegetarian food, non-alcoholic
drinks, or complaints about allergic reactions after a massage treatment, for instance.
Depending on the situation, staff should offer appropriate solutions. However,
businesses should be mindful of the reasonableness of exceptions. Requiring staff to
perfectly handle every exceptional request can lead to stress and disrupt existing
processes. If too many exceptions occur, businesses need to consider adjusting their
service processes. For instance, if a restaurant receives many requests for vegetarian
dishes, it should consider adding vegetarian options to the menu.
There are several types of exceptions:

• Special requests
• Problem-solving
• Handling of complaints/suggestions/compliments: Customers should easily
express dissatisfaction, give improvement ideas, or share compliments, and
service providers should respond quickly.

For example, on platforms like Shopee, customers can easily leave reviews and rate
their shopping experience. Service providers can then quickly address issues and
improve service quality.

• Restitution: This can include repairs under warranty, legal settlements, refunds,
an offer of free service, or other form of payment-in-kind

For example, if you purchase a concert ticket and the event gets canceled last minute,
the organizer might offer you a refund or a ticket to another event as compensation for
the inconvenience

2.4. Conclusion

Effective differentiation is what every brand aims for when marketing its products, and
even more so for services. The service flower model is an important theoretical
foundation for helping service companies develop, elevate, differentiate, and optimize
their services, thereby creating a competitive advantage and surviving in a market where
services are proliferating.

Moreover, depending on the initial brand positioning, each business should consider
incorporating suitable additional services to highlight its uniqueness. For instance, a spa
system wanting to emphasize specialized facial treatments should showcase detailed
treatment processes, advanced technology, and the reputation of its medical team in the
Information petal. If a spa wants to emphasize luxury, it should focus on the Hospitality
petal by serving fruit juices, and confectionery, and engaging in conversations or
consultations with customers during their wait. Alternatively, if the spa's strategy is
price competition, it should not focus on additional services but rather convey the core
service in the best possible way.

3. BRANDING SERVICE PRODUCT AND EXPERIENCES

3.1. Branding strategies for services

Next, we will take a look at branding strategies for services.

3.1.1. Branded house

First, Branded house is a term that describes a company that uses a single brand name
for all product lines, even if they are in unrelated areas

For example, the Virgin Group, that applies its brand name to multiple offerings in often
unrelated fields. The danger of such a branding strategy is that the brand gets
overextended and weakened.

3.1.2. Sub-brands

Next is Subbrands. This is a popular form of brand extension, new products carry both
the parent brand name and their name. For example, Muong Thanh Hotel Group. This
group manages many different hotel brands, including Muong Thanh Grand, Muong
Thanh Luxury, Muong Thanh Holiday, and Muong Thanh Apartment.

3.1.3. Endorsed brand

The third one is Endorsed brand. This is a combination between Branded House and
House of Brands. Is the use of a parent brand that already has the power to sponsor the
development of a child brand, using the influence of the parent brand to create
momentum for the child brand.

This is common in the Hotel field.

The Intercontinental Hotel Group itself is very famous. Although its product brands are
dominant, the corporate is still featured. These include Intercontinental Hotels &
Resorts, the Crowne Plaza Hotels & Resorts, Hotel Indigo, Holiday Inn, Holiday Inn
Club Vacations, Holiday Inn Resort, Holiday Inn Express, Staybridge Suites,
Candlewood Suites, Even Hotels, Hualuxe, and Loyalty.

For a multi-brand strategy to be successful, each brand must promise a distinctive value
proposition, aimed at a different customer segment. A multi-brand strategy aims to
encourage customers to continue purchasing from within the brand family. Loyalty
programs are often used to encourage this.

3.1.4. House of brands

House of brands: each distinct brand has its own strategies, images, identities, and
different products developed under one business.

For example: Yum is a conglomerate, that owns more than 40,000 restaurants around
the world and many brands such as: Kentucky Fried Chicken, Pizza Hut, Taco Bell,
Wingstreet. Each brand has its own image, story, and customer segment.
 Branded
Feature Subbrands Endorsed Brand House of Brands
House

Leverages parent Leverages parent Individual brands

Brand Strong, unified brand strength brand trust builds build strength, with
Strength brand image builds individual individual brand less reliance on
brand identities identities parent brand

Requires
Streamlined Requires some Requires marketing
Marketing marketing for
marketing variation for sub- for each individual
Efficiency both parent and
efforts brands brand
endorsed brand

This may cause Requires clear

Clear brand May dilute parent
Brand Clarity confusion about differentiation
message brand message
product offerings between brands

Can target various Leverages parent

Well-suited for Can target diverse
Target segments with brand recognition
focused target markets with distinct
Market different sub- for endorsed
audience brands
brands product

Easier launch Requires

Requires brand Easy launch for new
New Product under marketing for
development for brand, less risk to
Launch established both new product
each sub-brand existing brands
brand and parent brand

Negative impact
Negative
Negative impact on on endorsed Negative impact on
Risk impact on one
one sub-brand may product may one brand does not
Management product affects
not affect others affect parent affect others
all
brand

PHÂN CẤP SẢN PHẨM (TIERING SERVICE)

3.2. Tiering Service Products with Branding

In the next part, we will tier service products with branding. In some service industries,
branding is used not only to differentiate core services but also to clearly differentiate
service levels. Usually based on service delivery by price, level of service, performance,
and features of the service
This is called service tiering. It is popular in industries such as hotels, airlines, car
rentals, and computer hardware and software support. Other examples of tiering include
health insurance, cable television,...

Key service attributes and physical elements used in

Service Tiers
tiering

Architecture; landscaping; room size, furnishings, and decor;

restaurant facilities and menus; room service hours; array of
Lodging Star
services and physical amenities; staffing levels; caliber and
attitudes of employees.

Seat pitch (distance between rows), seat width, and reclining

Airline Classes capacity; meal and beverage service; staffing ratios; check-in
speed; departure and arrival lounges; baggage retrieval speed

Class of Based on vehicle size (from subcompact to full size) degree

Car rental
vehicle of luxury, plus special, vehicle types (minivan, SUV, sedan)

Hours and days of service; speed of response; speed of

Hardware and
Support delivering replacement parts; technician-delivered service
software
levels versus advice on self-service; availability of additional
support
services.

The first example is Vietnam Airlines, which offers 3 tiers of service on their aircraft:
Economy, Premium Economy, and Business. Each tier has different flying equipment,
goods, offerings, and services from the crew. The next example is in ride-hailing,
XanhSM has the XanhSM and XanhSM Luxury with different cars and prices.

3.3. Offering a Branded Experience

3.3.1. Branding at a Corporate and Product level

Next, we have Offering a Branded Experience.

First is the Corporate brand. Branding can be employed at both the corporate and
product levels by almost any service business. In a well-managed firm, the corporate
brand is not only easily recognized but also has meaning for customers, standing for a
particular way of doing business.

Feature Corporate Brand Product Brand

 Focus The overall image and Applying distinguishing marks to individual
reputation of the company products

Target It encompasses potential It targets potential customer who might be

Audience customer, existing customers, interested in using that specific service
investor, partner even the
community the company serves

Purpose Not only easily recognized but Allows a company to communicate to target
also has meaning for customers, markets the distinctive experiences and
standing for a particular way of benefits associated with a particular service
doing business. concept

Example Pizza 4Ps. At the corporation Talking about Pizza 4Ps product brand,
level, it is well-known for the mental pictures you remember are the
leaning toward the warm restaurant design, nice servants,
environment and treating treating you like at home, and focusing on
everyone, from employees to the small things like a polaroid photo or
customers like a family happy birthday ice cream even though you
member. didn’t ask for it in advance

Second is the Product brand. Applying distinguishing marks to individual products

allows a company to communicate to target markets the distinctive experiences and
benefits associated with a particular service concept.

In short, it helps marketers to establish a mental picture of the service in customers’

minds and to clarify the nature of the value proposition.

3.3.2. Moving toward the branded customer experience

When developing and delivering the Branded Customer Experience, you can follow
these basic steps by Forum Corporation:

1. Target profitable customers, employing behavior rather than demographic

segmentation as behavior is a more accurate indicator of tastes and preferences.

Haidilao doesn't just target hotpot lovers; they target those who value social dining
experiences and are willing to pay a premium for excellent service. They use behavioral
segmentation by analyzing past customer data to identify target customers.
2. Achieve a superior understanding of what your targeted customers value.

Haidilao goes beyond just delicious hotpot. They understand customers value gathering
with loved ones, having fun, and receiving exceptional service.

3. Create a brand promise - an articulation of what target customers can expect from
their experience with your organization - that is of value to customers, addresses a need,
is actionable, can be incorporated into standards, and provides focus for the
organization and its employees.

Their brand promise creating a memorable and joyful dining experience with attentive
service.

4. Apply that understanding to shape a truly differentiated customer experience.

Haidilao goes above and beyond with extras like:

Free manicures while waiting

Complimentary snacks and drinks

Showcases with toys for children

Staff performing a celebratory noodle dance for birthdays

These elements create a unique and memorable experience that sets them apart from
competitors.

5. Give employees the skills, tools, and supporting processes needed to deliver the
defined customer experience.

Haidilao invests heavily in employee training. Staff are equipped with the skills and
tools to deliver the promised service standards and go the extra mile for guests.

6. Make everyone a brand manager who is behind the brand and supports the brand.

Haidilao fosters a culture where every employee is a brand ambassador. They are
encouraged to anticipate customer needs and proactively contribute to a positive
experience.

7. Make promises that your processes can exceed.

Haidilao doesn't just meet their brand promise; they aim to exceed it. This could involve
offering unexpected treats or going out of their way to resolve minor issues.
8. Measure and monitor: Consistency of delivery is paramount.

Haidilao prioritizes consistency and actively gathers customer feedback. They use this
data to monitor service quality and refine their processes for continuous improvement.

A key role for services marketers is to be brand champions, familiar with and
responsible for shaping every aspect of the customer experience we can relate to.

The concept of a branded service experience addresses the "Service Flower" metaphor
by emphasizing the need for consistency in the color and texture of each petal.
Unfortunately, many service experiences are still very messy and give the impression
of a flower sewn together with petals drawn from various plants.

4. NEW SERVICE DEVELOPMENT

Now we will move on to the new service development. In a time when competition is
tough, and consumer expectations are higher and higher, a great brand can’t just deliver
existing services well, but they need to continuously improve, and create new ways to
deliver services or even new services.

4.1. A Hierarchy of new service categories

First, we will see a Hierarchy of new service categories. There are many ways for a
service provider to innovate. From simple style changes to major innovations, there are
7 new service categories:

- Change in representative style: the simplest type of innovation, usually involving

no changes in process or performance. However, they are often highly visible,
create excitement, and can be used to motivate employees.

For example: Recently, Phuc Long has redesigned their stores to offer a more airy,
vibrant atmosphere than before. Those stores are brighter, use more white, and less
black paint, and the green accent is also brighter, resulting in a more friendly feel.

- Service innovation: is the most common type of innovation. They involve minor
changes in the performance of existing products, including improvements to the
core product or to existing complementary services. Often, it's the little things
that matter, and customers appreciate that.

Some retail/supermarket chains have lockers areas that don’t need any employee
standby. You just push a few buttons to open a locker, receive a barcode, or use your
face to unlock the locker later. This gives introverts a more pleasant experience.
 - Complementary service innovation: the form of adding new supporting or
enhanced service elements to an existing core service or significantly improving
an existing supplementary service.

Have you ever wanted to buy something on Shopee but realized that it is the end of the
month or you don’t have enough money at the moment? Then SPayLater comes in. This
pay-later service allows you to pay in 1, 3 or 6 months with a minimum fee. It saved me
a few times when I was out of skincare products.

- Process line extensions: often represent distinctive new ways of distributing

existing products. The aim is to offer more convenience and a differentiated
experience to existing customers or attract new customers who find the
traditional approach unappealing. Typically, they involve adding a lower-touch
distribution channel to an existing high-touch channel.

The easiest example is the traditional retail store went online so they can attract more
customers that have a busy lifestyle.

- Product line extensions: are additions to the company's current product lines. The
first company on the market to offer such a product can be considered an
innovator. Others are merely watchers, often in self-defense. These new services
can be targeted at existing customers to serve more needs or designed to attract
new customers with different needs, or both.

Hoa Lo Prison Relic is the first historical landmark in Vietnam to organize a night tour.
Their product has a unique story, combined with storytelling, music, and lighting to
create a brand-new experience. They attract tourists who don't just want to go to a relic
but want a special story to go with it.

- Core process innovation: involves using new processes to deliver existing core
products in new ways with additional benefits.

During the Covid-19 outbreak, many online teaching centers had been established. They
offer the same core product, which is education, but online and in a different interactive
environment.

- Core service innovations: are new core products for previously undefined
markets. They often include both new service features and entirely new
processes.

Examples include FedEx’s introduction of overnight, nationwide,

express package delivery in 1971 and eBay’s launch of online auction services.
 4.2. Reengineering service processes

Now we come to Re-engineering service processes. The service process affects not only
the customer but also the cost, speed and productivity of achieving the desired results.
Improving productivity in services often requires speeding up the entire process (or
cycle time), since the cost of creating a service is often related to the time taken to
execute each step in the process, plus downtime between each step. Reengineering
involves analyzing and redesigning processes to achieve faster and better performance.

To reduce overall process time, analysts must identify each step, measure execution
time, look for opportunities to speed it up (or even eliminate it entirely), and cut out
downtime. Performing tasks in parallel rather than sequentially is a well-established
approach to speeding up processes. Service companies can systematically use service
operations blueprints.

The examination of processes can also lead to the creation of alternative delivery
methods that are so radically different as to constitute entirely new service concepts.
Possible options include

- Add or eliminate supplementary services

- Re-sequence delivery of service elements
- Offer self-service options

For example Many coffee chains have developed processes to cut down the time of the
process, including making sub-products in advance, and drink recipes that are easier to
make, especially cutting the supplementary services like at-table servants, self-
pickup,...

4.3. Physical goods as a source of new service idea

Physical goods as a source of new service ideas is because Goods and services can be
competitive substitutes when they provide the same key benefits.

For example, you can choose between buying a washing machine or using a laundry
service. Using the service can give you labor and machinery efficiency.

Such decisions can be shaped by the customer's skills, physical capabilities and time
budget as well as factors such as cost comparisons between purchase price (plus running
costs) and service charges, storage space for purchased products and expected
frequency of demand.
Many services can be built around providing an alternative to owning physical goods
and allowing customers to do the work themselves. The example about cars in the
textbook is the perfect example.

Any new physical product is likely to create demand for related asset disposal services
(especially if the product is a high-value, durable item).

Own a physical good Rent use of physical good

Perform work oneself Drive own car Rent a car and drive it

Hire someone to do the work Hire a chauffeur to drive Hire a taxi or limousine

For example, when you buy a laptop, a lot of asset disposal services appear. From
financing, shipping, cleaning, repairing, finally is disposal.

4.4. Using research to design new service

Now we come to Using research to design new service

The challenge for companies crafting entirely new services lies in identifying the ideal
features and pricing to maximize customer value. Since success relies on customer
needs, conducting thorough research is important to uncovering this sweet spot.

Singapore Airlines sees that their high-end customers need premium meal service, and
food that fits their diet and needs. So they developed a “Book the Cook” service,
allowing business class customers to choose from a special menu prepared by Singapore
Airlines’ International Culinary Panel. This makes their service become e ven more
unique and enhanced.

4.5. Achieving success in new service development

Now is Achieving success in new service development. Consumer goods is a graveyard

of innovation, with a staggering failure rate exceeding 90% for the 30,000 new products
launched annually. Unfortunately, services aren't much safer from this new product
problem. When developing new services, you need to understand some key takeaways:

- Core product is often of secondary importance, many innovations are in

supplementary services or service delivery.
- Ability to maintain the quality of the entire service offering is key.
- Accompanying marketing support activities are very important.
- Market knowledge is utmost important.
Let’s turn back to XanhSM and see why they have the success in a competing market.
Their core product is very common: a ride-hailing service just like Grab, Be or Gojek.
But their supplementary services, goods are different from electric vehicles, and have
better customer service than competitors. They can target the group of people who live
an environmentally friendly life. The service quality is decent across drivers. And the
marketing is well-executed. This helps XanhSM to compete well with others.

4.6. Success factors in new service development

Lastly, we will mention Success factors in new service development. Several studies
have found that the following three factors contribute the most to success:

Market synergy: The new product fits well with the company's current image, its
expertise and resources; it is better than competing products in terms of meeting
customer needs, because the company has a clear understanding of customer purchasing
behavior and receives strong support during and after launch from the company and its
partners. branch.

Organizational factors: There is close cross-functional cooperation and coordination.

Development staff need to be fully aware of why they are involved and the importance
of the new product to the company. Before launch, employees must understand the new
product and its underlying processes, as well as detailed information about direct
competitors.

Market research element: Detailed and scientifically designed market studies are
conducted early in the development process with a clear idea of the type of information
that will be obtained. A good definition of the product concept is developed before
conducting field surveys.

5. SUMMARY

5.1. Planning and creating service products

Service Product: All parts of a service that deliver value to customers:

- Physical

- Intangible

Designing the Service Concept

- Core Product

- Supplementary services
- Delivery processes

Documenting the delivery sequence over time

- Service sequence & timing

- Business & customer time needs

- Customer time expectations

5.2. Flower of Service - managerial implication

The flower of service: consists of two main parts from a service product
products can be:
- physical (goods), merchandises
- Center - Core product - service

- 8 petals - 8 types of supplementary services => CORE PRODUCT CÓ THỂ LÀ PHYSICAL OR

INTANGIBLE

Supplementary services:

- Facilitating services:

● Information

● Order taking

● Billing

● Payment

- Enhancing services:

● Consultation

● Hospitality

● Safekeeping

● Exceptions

5.3. Branding service product and experiences

Service product: “bundle of output”, supported by supplementary services

Branding strategies:

- Branded house
- Subbrands

- Endorsed brand

- House of brands

Tiering Service Products with Branding : hierarchy based on service delivery by price,
level of service, performance, and features of the service

Offering a Branded Experience:

- Employed at corporate and product levels

- Moving toward the branded customer experience: 8 basic steps

5.4. New Service Development

+ Create a hierarchy of new service categories

+ Reengineer service processes

+ Use physical goods as a source of new service ideas

+ Use research to design new services

+ Understand how to achieve success in new service development