Chapter 4: Developing Service Products: Core and Supplementary Elements

Planning and Creating Service Products Service Products - defining service products A service product comprises of all elements of service performance, both tangible and intangible, that create value for customers. Service products consist of: Core Product - central component that supplies the principal, problem-solving benefits customers seek Supplementary Services - augments the core product, facilitating its use and enhancing its value and appeal Delivery Processes - used to deliver both the core product and each of the supplementary services

Designing a Service Concept- delivery processes Service concept design delivery proceses 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 delivery lasts The recommended level and style of service to be offered

Service Products example - defining service products Service products consist of in a luxury hotel example Core Product - central component that supplies the principal, problem-solving benefits customers seek core: an overnight stay in / rental of a bedroom dimensioned by service level, schedule (period), process (people processing), role of customer (make the bed, bathroom towels, cleaning the room)

Supplementary Services - augments the core product, facilitating its use and enhancing its value and appeal transportation from airport, reservation system, a butler to serve them etc Delivery Processes - used to deliver both the core product and each of the supplementary services ease of using the reservation system, the limousine drivers behaviour, the process on arrival at the hotel, the butlers behaviour

Chapter 4: Developing Service Products: Core and Supplementary Elements

Documenting Delivery Sequence over Time Must address sequence in which customers will use each core and supplementary service Determine approximate length of time required for each step ref. fig. 4-3 p 108 Information should reflect good understanding of customers, especially their: needs habits expectations

Integration of Core Product, Supplementary Elements, and Delivery Process

Temporal Dimension to Augmented Product

Chapter 4: Developing Service Products: Core and Supplementary Elements

The Flower of Service There are two types of supplementary services Facilitating: either needed for service delivery, or help in the use of the core product Enhancing: add extra value for the customer

In a well-managed service organization, the petals and core are fresh and well-formed Market positioning strategy helps to determine which supplementary services should be included

Facilitating Services Information Directions to service site Schedules on / service hours (ex trains, airline, opening hours) Prices Reminders Warnings Conditions of sale/service Notification of changes Documentation Confirmation of reservations Summaries of account activities Receipts and tickets

Chapter 4: Developing Service Products: Core and Supplementary Elements

Facilitating Services Order-Taking Applications Memberships in clubs/programs Subscription services (e.g., utilities) Prerequisite based services (e.g., financial credit, college enrollment) Order Entry On-site order fulfillment Mail/telephone/e-mail/web order Reservations and Check-in Seats/tables/rooms Vehicles or equipment rental Professional appointments

Facilitating Services Billing Periodic statements of account activity Invoices for individual transactions Verbal statements of amount due Self-billing (computed by customer) Machine display of amount due Accuracy is essential

Facilitating Services Payment Self-Service Insert card, cash or token into machine Electronic funds transfer Mail a check Enter credit card number online Direct to Payee or Intermediary Cash handling or change giving Check handling Credit/charge/debit card handling Coupon redemption

Automatic Deduction from Financial Deposits Automated systems (e.g., machine - readable tickets that operate entry gate) Human systems (e.g., toll collectors)

Chapter 4: Developing Service Products: Core and Supplementary Elements

Enhancing Services Consultation Consultation involves a dialogue Customized advice (ex a hairdresser for advice) Personal counseling - a more detailed approach to consultation (ex Weight Watchers) Tutoring/training in product use Management or technical consulting ref. to BtB sales

Enhancing Services Hospitality Greeting Food and beverages Toilets and washrooms Waiting facilities and amenities Lounges, waiting areas, seating Weather protection Magazines, entertainment, newspapers Transport Security

Enhancing Services Safekeeping Caring for Possessions Customer Bring with Them Child care, pet care Parking for vehicles, valet parking Coat rooms Baggage handling Storage space Safe deposit boxes Security personnel Caring for Goods Purchased (or Rented) by Customers Packaging Pickup Transportation and delivery Installation Inspection and diagnosis Cleaning Refueling Preventive maintenance Repair and renovation

Chapter 4: Developing Service Products: Core and Supplementary Elements

Enhancing Services Exceptions Special Requests in Advance of Service Delivery Childrens needs Dietary requirements Medical or disability needs Religious observances Problem Solving Warranties and guarantees Resolving difficulties that arise from using the product Resolving difficulties caused by accidents, service failures Assisting customers who have suffered an accident or a medical emergency

Handling Special Communications Complaints Compliments Suggestions

Restitution Refunds and compensation Free repair of defective goods

Managerial Implications Core products do not have to have supplementary elements Nature of product helps determine supplementary services offered to enhance value People-processing and high contact services have more supplementary services Different levels of service can add extra supplementary services for each upgrade in service level Low-cost, no-frills basis firms needs fewer supplementary elements

Branding Service Products and Experiences Service Products, Product Lines, and Brands Service Product: A defined and consistent bundle of output Supported by supplementary services (assembly of elements that are built around the core product) Differentiated by bundle of output

Product Line: Most service organizations offer a line of products rather than just a single product. There are three broad alternatives for product lines ref. fig 4-16: Branded house - Single brand to cover all products and services House of brands - A separate, stand-alone brand for each offering Some combination of these two extremes subbrands and endorsed brands

Chapter 4: Developing Service Products: Core and Supplementary Elements

Spectrum of Branding Alternatives

Example: British Airways Subbrands

Offering a Branded Experience Branding can be employed at corporate and product levels Corporate brand: Easily recognized, Holds meaning to customers, Stands for a particular way of doing business

Product brand: Helps firm communicate distinctive experiences and benefits associated with a specific service concept

Chapter 4: Developing Service Products: Core and Supplementary Elements

Service perspective 4.1 Moving Towards a Branded Experience

New Service Development A Hierarchy of New Service Categories

Reengineering Service Processes Service processes affect customers and also cost, speed, and productivity Reengineering analyzing and redesigning processes to achieve faster and better performance ref. chap. 8 Examination of processes can lead to creation of alternative delivery methods: Add or eliminate supplementary services Re-sequence delivery of service elements Offer self-service options

Chapter 4: Developing Service Products: Core and Supplementary Elements

Physical Goods as a Source of New Service Ideas Goods and services may become competitive substitutes if they offer the same key benefits Provides an alternative to owning the physical good that can attain the desired outcome Any new good may create need for after-sales services now and be a source of future revenue stream

Creating Services as Substitutes for Physical Good

Achieving Success in Developing New Services Services are not immune to high failure rates that plague new manufactured products In developing new services: core product is often of secondary importance, many innovations are in supplementary services or service delivery ability to maintain quality of the total service offering is key accompanying marketing support activities are vital Market knowledge is of utmost importance

Success Factors in New Service Development Market synergy Good fit between new product and firms image Advantage in meeting customers needs Strong support from firm during and after launch Understands customer purchase decision behavior

Organizational factors Strong inter-functional cooperation and coordination Internal marketing to educate staff on new product and its importance

Market research factors Scientific studies conducted early in development process Product concept well defined before undertaking field studies