Lecture – 3

STRATEGIC SERVICE VISION

Learning objectives

• To formulate strategic service vision in achieving

competitive advantage
2.6 Strategic Service Vision

• Strategic service vision was developed by James L. Heskett

• Strategic service vision is comprised of four basic elements as shown in

Figure 2.8:

FIGURE 2.8: ELEMENTS OF STRATEGIC SERVICE VISION

Service strategy should have a vision of the place and purpose of the service firm,
which is met with basic elements and element integration of Strategic Service
Vision.

• Customer segmentation

– Select & identify customers which service organization is able &

willing to serve

– Customers which will perceive value in the offered service

• Identify a group of customers with common characteristics

– Needs, purchasing behavior, consumption pattern

• Differentiate various segments & devise service strategy appropriately

– Geographic, demographic
Setting target market will help customers in defining their expectations and helps
employees to know which customers to go the extra mile for.

• Why customers prefer a particular service organization?

• Service perceived by

– Internal customers

– External customers

– Stakeholders

• Plan or devise efforts in designing / delivery & marketing service so as to

meet perception of above mentioned entities as shown in Figure 2.9.
 FIGURE 2.9: SERVICE CONCEPT PERCEIVED BY ALL
STAKEHOLDERS

• How should the firm be structured to produce the service concept?

• Set of strategies, plans and policies and allocate resources on organizations

- Operations, Financing, Marketing, Human resources

• Where efforts & investments are concentrated?

 • Specific decisions made by service organization to handle service encounters

• - personnel, job descriptions and procedures, equipment, capacity, facilities,

technology

• How a service organization is placed in competition?

- Quality standards

- Differentiate from competitors

- Provide barriers to entry by competitions

Integration of Elements of Strategic Service Vision

All the elements of Strategic service vision are integrated in form of positioning,
value leveraging and strategy system integration as presented with basic elements
in Figure 2.10 and described in Figure 2.11
FIGURE 2.10: INTEGRATIVE ELEMENTS OF STRATEGIC SERVICE
VISION
FIGURE 2.11: BASIC AND INTEGRATIVE ELEMENTS OF STRATEGIC
SERVICE VISION

2.6.1 Strategic Service Vision: Example of DHL

• DHL is a global market leader in logistics industry with 220 countries linked
in global network. DHL provides parcel and express shipment globally by
road, rail and air.

• DHL has reoriented Strategic Service Vision by following steps:

1. Develop service concept model.

2. Utilize service concept to segment market or target market.

3. Redesign the service delivery system.

DHL Service Concept Model

• DHL utilize discrete choice preference analysis to capture the relative

importance of core and peripheral services perceived by the customers on
various attributes:

1. Reliable performance

2. Price

3. Customer interaction

4. Customer service recovery

5. Supply chain capacity

6. Supply chain innovation

7. Professionalism

DHL Target Market Segments

• Offer different service packages to different segments

• Segmentation was done based on

1. Customer operating platform: Global, regional or local

2. Revenue potential: Large customers, medium customers and small

customers

• DHL allocated similar resources to each segment

1. Segment 1: Dominated by price and supply chain capacity

 2. Segment 2: Customers prefer reliable service

3. Segment 3: Prefer broader value based attributes such as customer

interaction, customer service recovery and supply chain innovation

• Each segment exhibit similar preferences regarding the attributes

DHL Service Delivery Systems

Decisions required regarding service delivery system

• Type of value added services

• Location and frequency of customer contact points

• Allocation of service tasks

• Number and type of distribution channels

• Distribution channels based on service desks, customer visits and dedicated

key account personnel

DHL develop Service Delivery System for different Segments as presented in

Table 2.1.
 TABLE 2.1: DIFFERENT SEGMENTS OF DHL SERVICE DELIVERY
SYSTEM

Segment 1 named Segment 2 named Segment 3 named

Collaborators Perfectionist Price Zealots

Products and services required Products and service required Products and services required

Core product, onboard couriers, next- Core product, global mail, time Onsite mailroom staff,
flight-out and charter options, and day definite services. customization of
shipper’s intrest insurance, global billing/operation/IT solutions,
mail, logistic, inventory key account desk (dedicated
management, time and day definite customer service), and project
services. management of customer
solution.
Value-added services Value-added services Value-added services

Shippers interest insurance, sale in
transit, neutral delivery service,
delivery duty paid, shipment
consolidation, special deliveries and
pickups, free storage for three days,
e-com tools, e-billing, and key
account desk.
Current DHL practices
E-solutions, delivery duty paid,
neutral delivery service, drop
shipment, break bulk express,
cross docking, one-stop
clearance and key account
desk.
Current DHL practices
Domestic service, mailroom
service, and program
management of solution
implementation.
Current DHL practices

Insurance, trade services, pre-export
clearance shipment handling,
regular pickup service, late pickups,
early deliveries, coordination with
third parties for onboard couriers,
and flight-out and charter needs.
Regular pickup service, data
exchange process, late
pickups, early deliveries, on-
site support, e-com tool, e-
billing, special billing,
re-weight report, and daily
shipment e-reports.
IT Solutions and EDI for
billing, regular pickup and
delivery, track and
trace/regular activity
reporting, and same-duty
uplift.
2.7 Customer Criteria for Selecting a Service Provider

• Availability (24 hour ATM)

• Convenience (Site location)

• Dependability (On-time performance)

• Personalization (Know customer’s name)

• Price (Quality surrogate)

• Quality (Perceptions important)

• Reputation (Word-of-mouth)

• Safety (Customer well-being)

• Speed (Avoid excessive waiting)

2.8 Levels of Service–Competitive Dimension

A service organization can be rated as Qualifiers, service winners or service losers based
on the service competition dimension as shown in Figure 2.12 and examples are shown in
Figure 2.13.
FIGURE 2.12: LEVELS OF SERVICE–COMPETITIVE DIMENSION

FIGURE 2.13 EXAMPLES: LEVELS OF SERVICE–COMPETITIVE

DIMENSION
Examples from service industry for Strategic Service Vision

ITeS Mobile communications

service provider
Target market segment Target customers need IT Target customers can be
solutions including segmented as
hardware and services can • Pre-paid and post-
be segmented as paid connections
• Size of the • Corporate
customer based on connections and
their annual individual user
turnover connection
• Different verticals
like banking,
construction, Retail
• Public versus
private sectors
• Geographical
location of clients
whether domestic
or multi national
Service concept Provide integrated end-to- Provide voice telephony
end solution to the clients with good signal and wide
by collaborating with the coverage with low cost
customer to improve the tariffs customized as per
process in cost effective user’s requirements with
manner additional features of
internet
Operating strategy • Human resource • Managing
intensive sector infrastructure and
which involves networking costs
selection of right including location
skill of towers
• Proper training is • Distribution cost of
required to allocate selling talk time
right employee to through retailers.
right project • Human resources
• Huge investments having good
are required in command of
building offices, introducing
providing attractive schemes
 workstations to the • Finance handling
employees and dealing with
acquiring other various banks and
companies retailers through
• Productivity of various modes of
teams in terms of payments
completing the • Abiding regulations
project on time in
telecommunication
industry
• Cost effective
Strategies to be
creative in
introducing internet
and entertainment
related features
Service delivery system • Technical • Provide wide
knowledge, process coverage of
orientation and recharge facilities
project through retailers
management skills • Winning over latest
of the employees of spectrum related
any ITeS company deals like 3G or 4G
can create barriers to create entry
to entry to such barriers
business • Customized talk
• Winning over time based on the
major projects and requirements of
completing the customers like
projects on time in frequency of
a cost effective international calls
manner for both made, SMS usage,
service provider local calls etc.
and client leads to • Strategic locations
competitive of towers
advantage