BITM 2010-12 - Services MKTG - 07 - Service Decisions

Session 07
Service Decisions
Services Marketing
Girish Ketkar Session 07
BITM 2010-12 (Semester 2)
Agenda
 Core, expected, augmented and potential services

 New service decisions
Services Marketing
1
Reading
 Services Marketing: Integrating Customer Focus

Across The Firm
(Zeithaml, Bitner, Gremler, Pandit)
– Chapter 9: Service Innovation and Design
 Services Marketing: People, Technology, Strategy

(Lovelock, Wirtz, Chatterjee)
– Chapter 4: Creating the Service Product
Services Marketing
Reading
 Service Marketing: Concepts, Applications and Cases

(Rampal, Gupta)
– Chapter 14: Product
 “Developing Services Consumers Want”

– by John Senior
• Harvard Business Review - Blogs - Best Practices, 21 Nov 2008
Services Marketing
2
Reading
 “R&D Comes to Services”

– by Stefan Thomke
• Harvard Business Review, Apr’03
 “Stop Trying to Delight Your Customers”

– by Matthew Dixon, Karen Freeman, and Nicholas Toman
• Harvard Business Review, Jul-Aug’10
Services Marketing
Context
Word of Mouth
Personal Needs Past Experience
Communications
Consumer Expected Service
GAP 5
Perceived Service
Service Delivery
GAP 1 (including pre- and post- External Communications to
contacts) Consumers
GAP 3 GAP 4
Translation of Perceptions GAP 4

Marketer into Service Quality Specs
GAP 2
Management Perceptions of
Consumer Expectations
Services Marketing
3
New Service Development
 CSF:
– Involvement of customers and employees (especially front-

line staff) at appropriate stages
Services Marketing
Stages in New Service Development

• Business strategy development or review
• New service strategy development

Front-end • Idea generation
planning
• Concept development and evaluation
• Business analysis
• Service development and testing
• Market testing
Implementation
• Commercialization
• Post-introduction evaluation
Services Marketing
4
Business Strategy Development or Review
 Define or review the organization’s vision, mission,

strategy
 New service strategy must fit within organization’s

vision, mission, strategy
Services Marketing
Vision / Mission / Strategy (examples)
Jet Airways’ mission is to be the most SpiceJet’s mission is to become India’s

preferred domestic airline in India. It preferred low-cost airline, delivering the
will be the automatic first choice carrier lowest air fares with the highest
for the travelling public and set consumer value, to price sensitive
standards, which other competing consumers. We hope to fulfill
airlines will seek to match. everyone’s dream of flying!
Jet Airways will achieve this pre-eminent More and more Indians are traveling for
position by offering a high quality of business and pleasure, and everyone
service and reliable, comfortable and needs to save both time and money.
efficient operations. SpiceJet’s vision is to address that and
ensure that flying is for everyone.
Source: Respective company websites (accessed on 01 Feb 11)
Services Marketing
5
1st Source is a partnership of people ING DIRECT exists to help you save your
bound together by: money.
Our Mission – to help individuals, We do business online, over the phone

institutions, businesses and and by mail.
communities achieve security, build
wealth and realize their dreams. Without the overhead and high
operational costs of other banks, we can
Our Vision – viewing the future while pass those savings onto Customers.
mapping goals that are ambitious,
diverse and within our reach.
Services Marketing
Mission Our Mission

To inspire hope and contribute to health To operate as a world-class heart
and well-being by providing the best hospital, incorporating the latest
care to every patient through integrated technological advances and ethical
clinical practice, education and research. practices to provide quality heart care at
reasonable cost.
Primary value
The needs of the patient come first.
Services Marketing
6
New Service Strategy Development
Markets
Current New
customer segments customer segments
Existing Market
Share building
services development
Offerings
New Service
Diversification
services development
Q: What would be examples of these four growth opportunities for

Sri Balaji Society?
Services Marketing
Idea Generation
 Several methods…
– Brainstorming
– Soliciting ideas from employees
• Customer contact personnel as well as back office staff
– Learning from competitors
– Collaborating with vendors, partners, competitors
– Empathic design
• Observing how customers use firm’s products and services
 Remember Thomson case study in the session on Segmentation?
– Soliciting ideas from customers
• User groups, social networks
Services Marketing
7
Idea Generation
 CSF:
– Formal mechanism for ensuring ongoing idea generation

and evaluation
– e.g. Innovation & Development Team, Bank of America

• Ref: “R&D Comes to Services” by Stefan Thomke (HBR, Apr’03)
Services Marketing
Service Concept Development
 Clear definition of the concept

 Customer needs addressed by the service
 Features, characteristics, benefits
 Reasons why customers should purchase the service
 Roles of customers and employees
 Levels of service
– Core, Expected, Augmented, Potential
– Core, Supplementary
Services Marketing
8
Business Analysis
 Verify economic feasibility

– Demand analysis
– Revenue-cost-profit analysis
 Verify operational feasibility

– Personnel
– Delivery systems
– Facilities
Services Marketing
Service Development and Testing
 Detailing the service concept

 Testing for consumer acceptance
 Translating into implementation plan
 CSF: Involvement of all stakeholders

– Customers
– Front-line staff, marketing, HR, operations
 “Service blueprinting”
Services Marketing
9
Service Development and Testing: CSF
The I&D Team created a prototype branch in the bank’s Charlotte

headquarters where team members could rehearse the steps
involved in an experiment and work out any process problems
before going live with customers. By the time an experiment was
rolled out in one of the Atlanta branches, most of the kinks had
been worked out.
The use of the prototype center reflects an important tenet of
service experiments: Design and production problems should be
worked out off-line, in a lab setting without customers, before the
service delivery is tested in a live environment.
“R&D Comes to Services”

by Stefan Thomke (HBR, Apr’03)
Services Marketing
Market Testing
 Test the service and other marketing mix elements
 Key challenge
– Difficult to test new service in isolation, because
• New service offerings are often intertwined with the delivery
system for existing services
Services Marketing
10
Market Testing
 Read the paragraph:
– “The challenges in applying the discipline of formal R&D

processes to services… … … … … … …whether the variable
you’re testing for is the one that actually causes the effect
you observe.”
• “R&D Comes to Services” by Stefan Thomke (HBR, Apr’03)
Services Marketing
Commercialization
 Going live!!
 CSFs:
– Build and maintain acceptance of new service among
service delivery personnel
– Monitor all aspects of the service during introduction and
through the complete service cycle
Services Marketing
11
Post-introduction Evaluation
 Ongoing review of and changes in delivery processes,

staffing, or marketing mix based on market feedback
Services Marketing
READ !!
Services Marketing
12
Types of New Services
 Read:
– “Types of Service Innovations”

• Chapter 9, Page 266
• Services Marketing: Integrating Customer Focus Across The Firm
• by Zeithaml, Bitner, Gremler, Pandit
– “A Hierarchy of New Service Categories”

• Chapter 4, Pages 109-110
• Services Marketing: People, Technology, Strategy
• by Lovelock, Wirtz, Chatterjee
Services Marketing
Exercise
 Write down the service elements for “hotel stay”

service
 For example:
– For airline service, some of the elements could be:
• Check-in
• Baggage handling
• Transportation from city A to city B
• Onboard services: food & beverages; duty-free shopping;
communication facilities; internet facilities
• Pick-up and drop service between home/hotel and airport
Services Marketing
13
Levels of Service
 Core-Expected-Augmented-Potential
Theodore Levitt
 Core-Supplementary
Lovelock, Wirtz, Chatterjee
Services Marketing
Core-Expected-Augmented-Potential
Core Need
Core Benefit
Services Marketing
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Exercise (contd.)
 Classify the service elements for “hotel stay” into:

– Core
– Expected
– Augmented
– Potential
Services Marketing
Core-Supplementary
 Core service
– What is the customer really purchasing?
– What business are we in?
 Supplementary services
– Services that improve/enable the core service
• Facilitating services
 Enabling the use of core service
• Enhancing services
 Improving the appeal and value of core service
Services Marketing
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Supplementary Services
Facilitating Services Enhancing Services

 Information  Consultation
 Order taking  Hospitality
 Billing  Safekeeping (Caretaking)
 Payment  Exceptions
Services Marketing
The Flower of Service
Services Marketing
16
Facilitating Services
 “Information” elements
– Examples:
• Instructions for using the core/supplementary services
• Terms & conditions
• Pricing information
 “Order taking” elements

– Examples:
• Application for membership of a club
• Reservation and check-in at a hotel
• Placing an order through website
Services Marketing
Facilitating Services
 “Billing” elements
– Examples:
• Monthly/quarterly billing statements
• SMS alerts
• Bills generated at check-out counters
 “Payment” elements
– Examples:
• Cash handling, Returning change
• Online payments using credit cards or auto-pay facilities
• Gift coupon redemption
Services Marketing
17
Enhancing Services
 “Consultation” elements
– Examples:
• Advising (such as: barber recommending a particular hair-style)
• Counseling (such as: training institute helping a student choose
the right course)
 “Hospitality” elements
– Examples:
• Waiting area and amenities
• Offering transport to and from service site
• Availability of shopping carts from check-out counter to parking lot
Services Marketing
Enhancing Services
 “Safekeeping/caretaking” elements
– Examples:
• Cloakrooms / coatrooms in restaurants
• Safe deposit boxes in hotel rooms
 “Exceptions” elements
– Examples:
• Special requests (such as: availability of “Jain” meals in flights)
• Handling special communications (such as: complaint handling)
• Problem solving (such as: help desk facilities)
• Restitution (such as: refunds)
Services Marketing
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Exercise (contd.)
 Classify the service elements for “hotel stay” into:

– Core
– Supplementary
• Facilitating
 Information, Order taking, Billing, Payment
• Enhancing
 Consultation, Hospitality, Safekeeping/caretaking, Exceptions
Services Marketing
Service Decisions – Other Decision Variables
 Range
– For example
• Hotel stay: Ordinary rooms, Executive rooms, Deluxe rooms…
• Air travel: Economy class, Business class, First class…
 Quality levels
– Reliability, Responsiveness, Assurance, Empathy, Tangibles
 Brand
 Guarantees
 Service recovery
Services Marketing
19
What We Covered Today
 New service decisions

– Stages in new service development
– Growth opportunity matrix
• Share building
• Market development
• Service development
• Diversification
– CSFs, Challenges
 Types of new services
Services Marketing
What We Covered Today (contd.)
 Levels of service
– Core-expected-augmented-potential
– Core-supplementary
• Core services, Facilitating services, Enhancing services
• “The Flower of Service”
 Other decision variables

– Range, Quality levels, Brand, Guarantees, Service recovery
 Case study: Bank of America

Services Marketing
20

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Session 07

 Core, expected, augmented and potential services

 Services Marketing: Integrating Customer Focus

 Services Marketing: People, Technology, Strategy

 Service Marketing: Concepts, Applications and Cases

 “Developing Services Consumers Want”

 “R&D Comes to Services”

 “Stop Trying to Delight Your Customers”

Consumer Expected Service

Translation of Perceptions GAP 4

– Involvement of customers and employees (especially front-

Stages in New Service Development

• New service strategy development

• Service development and testing

 Define or review the organization’s vision, mission,

 New service strategy must fit within organization’s

Vision / Mission / Strategy (examples)

Jet Airways’ mission is to be the most SpiceJet’s mission is to become India’s

Our Mission – to help individuals, We do business online, over the phone

Source: Respective company websites (accessed on 01 Feb 11)

Vision / Mission / Strategy (examples)

Mission Our Mission

Source: Respective company websites (accessed on 01 Feb 11)

Q: What would be examples of these four growth opportunities for

– Formal mechanism for ensuring ongoing idea generation

– e.g. Innovation & Development Team, Bank of America

Service Concept Development

 Clear definition of the concept

 Verify economic feasibility

 Verify operational feasibility

Service Development and Testing

 Detailing the service concept

 CSF: Involvement of all stakeholders

The I&D Team created a prototype branch in the bank’s Charlotte

“R&D Comes to Services”

 Test the service and other marketing mix elements

 Read the paragraph:

– “The challenges in applying the discipline of formal R&D

• “R&D Comes to Services” by Stefan Thomke (HBR, Apr’03)

 Ongoing review of and changes in delivery processes,

– “Types of Service Innovations”

– “A Hierarchy of New Service Categories”

 Write down the service elements for “hotel stay”

 Classify the service elements for “hotel stay” into:

Facilitating Services Enhancing Services

The Flower of Service

 “Order taking” elements

 Classify the service elements for “hotel stay” into:

Service Decisions – Other Decision Variables

 New service decisions

 Types of new services

What We Covered Today (contd.)

 Other decision variables

 Case study: Bank of America

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