Service Development and Design: MKTG/HTM 386 Spring 2001

MKTG/HTM 386 - Spring 2001
Service Development and Design

MKTG/HTM 386 Spring 2001
Class Outline
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Team case assignment

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Presenting team written and in-class Critiquing team written and in-class
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Individual case assignment Creating and delivering services

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Marketing mix elements Product-service levels Service blueprinting Planning, creating and delivering new services
Provider GAP 2
CUSTOMER
COMPANY
Customer-Driven Service Designs and Standards

GAP 2
Company Perceptions of Consumer Expectations

Part 3 Opener
Marketing Mix Elements

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Hospitality marketing mix

Product-service mix n Presentation mix n Communications mix n Distribution mix
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Product-Service Levels
The formal product n Core product n Augmented product
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Product Issues
Accessibility n Atmosphere n Customer interaction with the service system n Customer interaction with other customers n Participation
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Brand Decisions
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What is it? What is brand equity? Conditions that support branding

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Product is easy to identify by brand or trademark Perceived as best value Quality and standards are easy to maintain Demand for product class is sufficient Economies of scale
Risks of Relying on Words Alone to Describe Services

Lynn Shostack n Oversimplification n Incompleteness n Subjectivity n Biased Interpretation
Product Development Process

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Idea generation Idea screening Concept development and testing Marketing strategy development Business analysis Product development/Prototype Market testing Commercialization
New Service Development Process

h Business Strategy Development or Review
Front End Planning
h New Service Strategy Development h Idea Generation Screen ideas against new service strategy h Concept Development and Evaluation Test concept with customers and employees h Business Analysis Test for profitability and feasibility h Service Development and Testing Conduct service prototype test
Implementation
h Market Testing Test service and other marketing-mix elements h Commercialization h Postintroduction Evaluation
Source: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.
New Service Strategy Matrix for Identifying Growth Opportunities

Markets Offerings
Existing Services Current Customers New Customers
SHARE BUILDING
MARKET DEVELOPMENT
New Services
SERVICE DEVELOPMENT
DIVERSIFICATION
Service Mapping/Blueprinting
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customers point of view.
Process
Service Mapping
Points of Contact Evidence
McGraw-Hill
2000 The McGraw-Hill Companies
Service Blueprinting
Based on Gap 2, matching service specifications to customer expectations n Display the service delivery system n Useful at design and re-design stages
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Service Blueprint Components

CUSTOMER ACTIONS line of interaction ONSTAGE CONTACT EMPLOYEE ACTIONS line of visibility BACKSTAGE CONTACT EMPLOYEE ACTIONS line of internal interaction SUPPORT PROCESSES
Express Mail Delivery Service

CONTACT PERSON CUSTOMER PHYSICAL EVIDENCE (Back Stage) (On Stage)
Truck Packaging Forms Hand-held Computer Uniform

Customer Calls Customer Gives Package
Truck Packaging Forms Hand-held Computer Uniform

Receive Package
Driver Picks Up Pkg.
Deliver Package
Customer Service Order
Dispatch Driver
Airport Receives & Loads
Fly to Sort Center Load on Airplane Sort Packages
SUPPORT PROCESS
Fly to Destinatio n
Unload & Sort
Load On
Truck
Overnight Hotel Stay

CUSTOMER PHYSICAL EVIDENCE Hotel Exterior Parking Cart for Bags Desk Elevators Cart for Registration Hallways Bags Papers Room Lobby Key
Check in Go to Room Receive Bags
Room Menu Amenities Bath
Delivery Food Tray Food Appearance
Bill Desk Lobby Hotel Exterior Parking

Check out and Leave
Arrive at Hotel
Give Bags to Bellperson
Sleep Shower
Call Room Service
Receive Food
Eat
CONTACT PERSON SUPPORT PROCESS (Back Stage) (On Stage)
Greet and Process Take Registration Bags
Deliver Bags
Deliver Food
Process Check Out
Take Bags to Room
Take Food Order
Registration System
Prepare Food
Registration System
Building a Service Blueprint

Step 11 Step
Identify the Identify the process to process to be bluebe blueprinted. printed.
Step 22 Step
Identify the Identify the customer customer or or customer customer segment. segment.
Step 33 Step
Map the Map the process process from the from the customers customers point of point of view. view.
Step 44 Step
Map Map contact contact employee employee actions, actions, onstage onstage and backand backstage. stage.
Step 55 Step
Link Link customer customer and contact and contact person person activities to activities to needed needed support support functions. functions.
Step 66 Step
Add Add evidence of evidence of service at service at each each customer customer action step. action step.
Application of Service Blueprints

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New Service Development

concept development market testing
Supporting a Zero Defects Culture

managing reliability identifying empowerment issues
Service Recovery Strategies

identifying service problems conducting root cause analysis modifying processes
Blueprints Can Be Used By:

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Service Marketers
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Human Resources
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creating realistic customer expectations

service system design promotion
empowering the human element

job descriptions selection criteria appraisal systems
Operations Management
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rendering the service as promised

managing fail points training systems quality control
System Technology
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providing necessary tools:

system specifications personal preference databases
Benefits to Services Blueprinting

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Employee overview Identify fail points Line of interaction b/n external customers and employees Line of visibility promotes decision about what customers should see Line of internal interaction clarifies dept lines
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Promotes big picture or strategic thinking Provides basis for assessing cost, revenue and capital invested in each element of the service Provides a rational basis for internal and external marketing decisions Promotes quality improvements
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Planning, Creating and Delivering Services

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Christopher Lovelock:
Market opportunity analysis n Resource allocation analysis n Service delivery process
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Evaluating Alternative Delivery Channels

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Speed of Delivery is an important competitive factor

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Customers are demanding more convenience Expecting services to be delivered where and when they want them. Customers no longer need to visit service facilities Physical processes have become faster The service product and its means of delivery are often closely linked High-contact Services
physical environment and way tasks are performed by customercontact personnel shape the customers experience and enhance productivity and quality
Services marketing strategy must address place and time

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Low-contact services
Are expanding in number due to advance in electronic technology. Designed with improved productivity in mind are often being delivered via self-service
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Delivery Channels Continued

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Distribution Strategy
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Depends on the nature of the service A variety of options exist

should be selected based on needs of target segment price and other costs (time and effort) must be acceptable
Delivery Channels Options include:

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firms own retail site delegation to an intermediary or franchisee coming into the customers home or business serving customers at a distance through physical or electronic channels
Options for Service Delivery

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Key Question is:

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Does the nature of the service or the firms positioning strategy require customers to be in direct contact with its personnel, equipment, and facilities/ If so do customers have to visit the facilities or will the firm send personnel and equipment to the customers own site
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Methods of Service Delivery

Availability of Service Outlets Nature of Interaction Between Customer and Service Organization Customer goes to service organization Theater Barbershop Service organization comes to customer Lawn care service Taxi Customer and service organization transact at arms length (mail or electronic communications) Credit card company Local TV station Bus Service Fast-food chain Mail delivery Auto club road service Broadcast company Telephone company Single Site Multiple Sites
Physical Evidence of the Servicescape

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Firms are paying more attention to the design of the Servicescapes that they offer their customers. Examples include:
Airlines The restaurant design industry Modern hotels and resort hotels that invest enormous sums to create exotic gardens and surroundings
The role of physical environment

Shape feelings and reactions Create positive first impressions
Impact of physical evidence and accompanying atmosphere

As attention-creating medium to standout from competition As message-creating medium to communicate with intended audience As an effect-creating medium (using colors, smells, sounds,and scents to enhance services and experiences
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Place and Time Decisions

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Should reflect:
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customer needs customer expectations competitive offerings and activity the nature of the service operation core and supplementary services noise and environmental factors (i.e. airports, rail stations) definitional constraints (i.e. beach resorts) economies of scale (i.e. large multi-service hospitals) co-location near customers (i.e. ATMs, restaurants)
Services delivery considerations:

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Place and Time Decisions Continued

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Delivery timing considerations:

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Traditional retail schedules (i.e. 40 - 50 hours per week) 7 X 24 service (service that is available 7 days per week 24 hours per day)
Factors driving the move for extended operating hours:

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Economic pressure from consumers Changes in legislation Economic incentives to improve asset utilization Availability of employees to work during unsocial hours Automated self-service facilities
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The Process of Service Delivery

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Design of a new service delivery system is more than:

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physical facilities equipment a specification of the service personnel required.
Planning and configuring service delivery system should address the following questions:
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What should the sequencing of the various steps in the service be? (where/location and when/scheduling) Should service elements be bundled or unbundled for delivery purposes? What should the nature of the contact between the service provider and it customers be? What should be the nature of the service process at each step? What should be the serving protocol? What imagery and atmosphere should the service delivery environment strive to create? (servicescape)
Planning Service Delivery Processes

Service Marketing Concept Service Operations Concept
Service Delivery Process - Sequencing of service delivery steps (what steps, in what order, where, when and how quickly)
- Extent of Delegation (Should the firm take responsibility for a ll steps or delegate some to intermediaries?) - Nature of contact between customers and provider (Customer come to provider, Provider goes to customer, Arms length transactions) - Nature of the process (Customers served in batches, customers s erved individually, Customers serve themselves/self-service) Protocol for allocating limited capacity (reservations procedures, Queuing procedures) Imagery and Atmosphere (Employees scripts and protocols, Variations in dcor, lighting and music)
Performance Evaluation (By customer, by managers, and By Employees)
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MKTG/HTM 386 - Spring 2001