8/7/2019 Services Marketing Class
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New Service Development
8/7/2019 Services Marketing Class
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Learning Objectives
x Discuss the new service development process.
x Prepare a blueprint for a service operation.
x Describe a service process using the dimensions of divergence and complexity.
x Use the taxonomy of service processes to classify a
service operation.
x Compare and contrast the generic approaches to
service system design.
8/7/2019 Services Marketing Class
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Levels of Service InnovationRadical Innovations
x Major Innovation: new service driven by information and computer based technology (eBay)
x Start-up Business: new service for existing market
x New Services for the Market Presently Served: new services toexisting customers of an organization
Incremental Innovationsx Service Line Extensions: augmentation of existing service line (e.g.
new menu items)
x
Service Improvements: changes in features of currently offeredservice
x Style Changes: modest visible changes in appearances
8/7/2019 Services Marketing Class
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Service Design Elements
x Structural- Delivery system- Facility design
- Location- Capacity planning
x Managerial- Service encounter
- Quality- Managing capacity and demand- Information
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x Service Design Elements: Structural
x Delivery system
x How to manage front office and back office?
x To what extent automation has been implemented?
x What is the role and extent of participation of customer
x Facility design
x
Size, Layout x Location
x Customer demographics, no. of sites, competition
x Capacity planning
x Managing queues, number of servers, capability to
x accommodate peak demand
8/7/2019 Services Marketing Class
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x Service Design Elements: Managerial
x Service encounter
x What matters when customer is actually being
x served?
x Quality
x Gap between perception and expectation
x Managing capacity and demand
x Can we alter the demand or control supply
x Information
x Competitive resource, data collection
8/7/2019 Services Marketing Class
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New Service Development Cycle
People
Technology Systems
Product
Full Launch Development
Design Analysis
Org an
iz ationa
l
Con
text T
e a m s
Tools
Enablers
• Formulation
of new servicesobjective / 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
8/7/2019 Services Marketing Class
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Service Blueprint of Luxury Hotel
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Strategic Positioning
Through Process Structure
x Degree of Complexity: Measured by the number
of steps in the service blueprint. For example a
clinic is less complex than a general hospital.
x 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.
8/7/2019 Services Marketing Class
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Structural Alternatives for a Restaurant
No Reservations
Self-seating. Menu on Blackboard
Eliminate
Customer Fills Out Form
Pre-prepared: No Choice
Limit to Four Choices
Sundae Bar: Self-service
Coffee, Tea, Milk only
Serve Salad & Entree Together:Bill and Beverage Together
Cash only: Pay when Leaving
TAKE RESERVATION
SEAT GUESTS, GIVE MENUS
SERVE WATER AND BREAD
TAKE ORDERS
PREPARE ORDERS
Salad (4 choices)
Entree (15 choices)
Dessert (6 choices)
Beverage (6 choices)
SERVE ORDERS
COLLECT PAYMENT
Specific Table Selection
Recite Menu: Describe Entrees & Specials
Assortment of Hot Breads and Hors D’oeuvres
At table. Taken Personally by Maltre d’
Individually Prepared at table
Expand to 20 Choices: Add Flaming Dishes;
Bone Fish at Table; Prepare Sauces at Table
Expand to 12 Choices
Add Exotic Coffees; Sherbet between
Courses; Hand Grind Pepper
Choice of Payment. Including House Accounts:
Serve Mints
LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE
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Taxonomy of Service ProcessesLow 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 D ocumenting 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 information
Direct service) in a library
Customer Customer Food Giving a Providing Home Portrait Haircutting
Contact service service in a lecture public carpet painting Performing
worker restaurant Handling t ransport- cleaning Counseling a surgical
interaction Hand car routine bank a tion Landscaping operation
washing transactions Providing service
mass
vaccination
8/7/2019 Services Marketing Class
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Generic Approaches to Service Design
x Production-line
• Limit Discretion of Personnel
• Division of Labor
• Substitute Technology for People
• Standardize the Service
x Customer as Coproducer • Self Service• Smoothing Service Demand
x Customer Contact• Degree of Customer Contact
• Separation of High and Low Contact Operationsx Information Empowerment
• Employee
• Customer
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8/7/2019 Services Marketing Class
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Discussion Questions
x What are the limits in the production-lineapproach to service?
x Give an example of a service in which isolation of the technical core would be inappropriate.
x What are some drawbacks of customer participation in the service delivery process?
x What ethical issues are raised in the promotion of sales during a service transaction?
8/7/2019 Services Marketing Class
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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 100Yen Sushi House service delivery concept.
8/7/2019 Services Marketing Class
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100 Yen Sushi House Layout
Miso and Tea Station
CONVERSATION AREA
CONVERSA
TION
A
REA
Dishwashing Counter in Back
ENTRANCE
CONVEYOR
BELT
TAKE-OUT
POSITION
= CHEF
8/7/2019 Services Marketing Class
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Commuter Cleaning - New Venture Proposal
1. Prepare a service blueprint for Commuter Cleaning.
2. What generic approach to service design isillustrated by Commuter Cleaning, and whatcompetitive advantage does this offer?
3. Using the data in Table 4.6 calculate a break-evenprice per shirt if monthly demand is expected to be20,000 shirts and the contract with a cleaning plantstipulates a charge of $0.50 per shirt.
4. Critique the business concept, and makerecommendations for improvement.
8/7/2019 Services Marketing Class
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Golfsmith
1. Prepare a service blueprint for Golfsmith.
2. What generic approach to service design
does Golfsmith illustrate and whatcompetitive advantages does this design
offer?
3.
Why is Golfsmith a good candidate for Internet sales?
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INTERACTIVE CLASS EXERCISE
The class breaks into small groups and
prepares a service blueprint for Village
Volvo.