New Service Development
Learning Objectives
Discuss the new service development process. Prepare a blueprint for a service operation. Describe a service process using the dimensions
of divergence and complexity. Use the taxonomy of service processes to classify
a service operation. Compare and contrast the generic approaches to
service system design.
Levels of Service InnovationRadical Innovations
Major Innovation: new service driven by information and computer based technology
Start-up Business: new service for existing market New Services for the Market Presently Served: new services to
customers of an organization
Incremental Innovations Service Line Extensions: augmentation of existing service line
(e.g. new menu items) Service Improvements: changes in features of currently offered
service Style Changes: modest visible changes in appearances
Technology Driven Service Innovation
Power/energy - International flights with jet aircraft
Physical design - Enclosed sports stadiums Materials - Astroturf Methods - JIT and TQM Information - E-commerce using the Internet
Service Design Elements
Structural- Delivery system- Facility design- Location- Capacity planning
Managerial- Service encounter- Quality- Managing capacity and demand- Information
New Service Development Cycle
People
Technology Systems
Product
Full Launch Development
Design Analysis
Org
aniz
atio
nal
Con
text Team
s
Tools
Enablers
• Formulation of new services objective / strategy• Idea generation and screening• Concept development and testing
• Business analysis• Project authorization
• Full-scale launch• Post-launch review
• Service design and testing• Process and system design and testing• Marketing program design and testing• Personnel training• Service testing and pilot run• Test marketing
Service Blueprint of Luxury Hotel
Strategic Positioning Through Process Structure
Degree of Complexity: Measured by the number of steps in the service blueprint. For example a clinic is less complex than a general hospital.
Degree of Divergence: Amount of discretion permitted the server to customize the service. For example the activities of an attorney contrasted with those of a paralegal.
Structural Alternatives for a Restaurant
No Reservations
Self-seating. Menu on BlackboardEliminate
Customer Fills Out Form
Pre-prepared: No Choice
Limit to Four Choices
Sundae Bar: Self-service
Coffee, Tea, Milk onlyServe Salad & Entree Together:
Bill and Beverage Together
Cash only: Pay when Leaving
TAKE RESERVATIONSEAT GUESTS, GIVE MENUSSERVE WATER AND BREAD
TAKE ORDERSPREPARE ORDERS
Salad (4 choices)
Entree (15 choices)
Dessert (6 choices)
Beverage (6 choices)SERVE ORDERS
COLLECT PAYMENT
Specific Table SelectionRecite Menu: Describe Entrees & SpecialsAssortment of Hot Breads and Hors D’oeuvresAt table. Taken Personally by Maltre d’
Individually Prepared at table
Expand to 20 Choices: Add Flaming Dishes;Bone Fish at Table; Prepare Sauces at TableExpand to 12 Choices
Add Exotic Coffees; Sherbet betweenCourses; Hand Grind Pepper
Choice of Payment. Including House Accounts:Serve Mints
LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE
Taxonomy of Service Processes Low divergence High divergence (standardized service) (customized service) Processing Processing Processing Processing Processing Processing of goods Information of people of goods Information of people Dry Check Auto repair Computer No Cleaning processing Tailoring a programming Customer Restocking Billing for a suit Designing a Contact a vending credit card building machine Ordering Supervision Indirect groceries of a landing customer from a home by an air contact computer controller No Operating Withdrawing Operating Sampling Documenting Driving a customer- a vending cash from an elevator food at a medical rental car service machine an ATM Riding an buffet dinner history Using a worker Assembling escalator Bagging of health club interaction premade groceries Searching for facility (self- furniture informationDirect service) in a libraryCustomer Customer Food Giving a Providing Home Portrait HaircuttingContact service service in a lecture public carpet painting Performing worker restaurant Handling transport- cleaning Counseling a surgical interaction Hand car routine bank a tion Landscaping operation washing transactions Providing service mass vaccination
Generic Approaches to Service Design
Production-line• Limit Discretion of Personnel• Division of Labor• Substitute Technology for People• Standardize the Service
Customer as Coproducer• Self Service• Smoothing Service Demand
Customer Contact• Degree of Customer Contact• Separation of High and Low Contact Operations
Information Empowerment• Employee• Customer
Customer Value Equation
erviceuiringtheSCostsofAcqice
tyocessQualioducedsultsValue
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Discussion Questions
What are the limits in the production-line approach to service?
Give an example of a service in which isolation of the technical core would be inappropriate.
What are some drawbacks of customer participation in the service delivery process?
What ethical issues are raised in the promotion of sales during a service transaction?
100 Yen Sushi House
1. Prepare a service blueprint for the 100 Yen Sushi House.
2. What features differentiate 100 Yen Sushi House and how do they create a competitive advantage?
3. How has the 100 Yen Sushi House incorporated the just-in-time system into its operations?
4. Suggest other services that could adopt the 100 Yen Sushi House service delivery concept.
100 Yen Sushi House Layout
Miso and Tea Station
CONVERSATION AREA
CO
NV
ER
SA
TIO
N A
RE
A
Dishwashing Counter in Back
ENTRANCE
CONVEYOR BELT
TAKE-OUT POSITION
= CHEF
Commuter Cleaning - New Venture Proposal
1. Prepare a service blueprint for Commuter Cleaning.2. What generic approach to service design is
illustrated by Commuter Cleaning, and what competitive advantage does this offer?
3. Using the data in Table 4.6 calculate a break-even price per shirt if monthly demand is expected to be 20,000 shirts and the contract with a cleaning plant stipulates a charge of $0.50 per shirt.
4. Critique the business concept, and make recommendations for improvement.
Golfsmith
1. Prepare a service blueprint for Golfsmith.
2. What generic approach to service design does Golfsmith illustrate and what competitive advantages does this design offer?
3. Why is Golfsmith a good candidate for Internet sales?
INTERACTIVE CLASS EXERCISE
The class breaks into small groups and prepares a service blueprint for Village Volvo.