11/5/2019

SERVICES
MARKETING
Session 6 & 7: Service Products and Brands

What are service “products”?

■ A product implies a defined and consistent “bundle of output”, where one bundle of
output can be differentiated from another
■ A service product comprises of all the elements of the service performance, both
physical and intangible, that create value for customers.
■ For service firms, products represent an assembly of carefully prescribed value-
added supplementary services built around a core product
– Examples
■ Different credit cards come with a distinct bundle of benefits and fees
■ Insurance policies, universities

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Components of service products

■ Core product
– The main component that supplies principal benefits; experience; or problem
solving benefits
– Some core products can be highly intangible (travel insurance)
■ Supplementary services
– Other service related activities which augment the core product through
facilitation of use and enhancement of value
– Supplementary services help in creating competitive differentiation when core
product gets commoditized
■ Delivery processes
– How are services delivered to customers
– Customers’ role in these processes
– Prescribed level and style of service to be offered

Example: Service elements of a hotel

Supplementary services
Reservation, Parking,
Check-in/Check-out
Meal, TV, Room Service,
Wi-fi

Core Core service

Accommodation
Security

Core delivery process

Service level
Scheduling
Nature of process
Customer role

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The Flower of Service

■ Consists of core service and range of supplementary services

Source: https://www.chinaabout.net/wp-content/uploads/2015/03/Case-study-of-Dell.jpg

The Flower of Service

■ Supplementary services can be classified into eight clusters divided into two groups
– Facilitating supplementary services required for service delivery (e.g. making a
reservation) or aiding in the use of a core product (e.g. information)
■ Information
■ Order taking
■ Billing
■ Payment
– Enhancing supplementary services add extra value and appeal to customers (e.g.
consultation and hospitality in the healthcare industry)
■ Consultation
■ Hospitality
■ Safekeeping
■ Exceptions

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Facilitating Supplementary Services

■ Information: To obtain full value from a service, customers need relevant

information
– Price information
– Terms and conditions of sale/ service
– Schedules/ service hours
– Advice on how to get the most value from a service
– Confirmation of reservations
– Notifications of changes

Facilitating Supplementary Services

■ Order-Taking: Once the customer is ready to buy, order taking is the next step
– Order entry
■ On-site order entry
■ Mail/ telephone/ email/online/ mobile app order
– Reservations or check-ins (special type of order taking that entitles a customer
to a specific unit of service)
■ Professional appointment
■ Seats/ tables/ rooms
– Applications (to screen out those who do not meet the enrolment criteria)
■ Membership in clubs/ programs
■ Subscription services
■ Enrolment based services

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Facilitating Supplementary Services

■ Billing
– Billing can be in the form of:
■ Periodic statements of account activity
■ Invoices for individual transactions
■ Verbal statements of amount due
■ Online or machine display of amount due for self payment transactions
■ Express checkouts to avoid billing delays

Facilitating Supplementary Services

■ Payment Options
– Self service
■ Inserting card, or token into machine
■ Electronic funds transfer
■ Entering credit card details online
■ E-wallet payment
– Direct to payee or intermediary
■ Cash/ credit card
■ Coupon redemption
– Automatic deduction from financial deposits
■ Automated systems (machine readable systems)
■ Pre-arranged automatic deduction for bill payment

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Enhancing supplementary services

■ Consultation/ Counseling
– Consultation
■ It involves a dialogue to probe for customer requirements and then develop a tailored
solution
■ Effective consultation requires understanding of each customer’s current situation
before suggesting a course of action
■ Examples of consultation
– Customized advice
– Personal counseling
– Management or technical consulting
– Tutoring/ training in service use
– Counseling
■ More subtle approach to consultation
■ Involves helping customers to better understand their situations so that they can come
up with their “own” solutions and action programs
■ Example: post operation health counseling

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Enhancing supplementary services

■ Hospitality
– Hospitality related services should ideally reflect pleasure at meeting new
customers and greeting old ones when they return
– Is applicable for both face-to-face and telephonic interaction
– Hospitality elements include
■ Greeting
■ Food and beverages
■ Toilets and washrooms
■ Waiting facilities and amenities
– Lounges, waiting areas, seating
– Weather protection
– Magazines, entertainment, newspapers
■ Transport

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Enhancing supplementary services

■ Safekeeping
– When customers visit a service site, they often want assistance with their
personal possessions
– Safekeeping includes care for
■ Childcare, pet care
■ Parking for vehicles, valet parking
■ Baggage handling
■ Storage space
■ Safe deposit boxes
■ Security personnel

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Enhancing supplementary services

■ Exceptions
– Services which fall outside the routine or normal service delivery
– Requires advance planning for contingencies
– Types of exceptions
■ Special requests: like care for children, dietary requirements, medical needs,
personal disabilities, and religious observance
■ Problem solving: sometimes normal service delivery fails due to accident,
equipment failure, or customer having difficulty in using a product
■ Handling of complaints/ suggestions/ compliments: requires well defined
procedures
■ Restitution: Many customers expect to be compensated for serious performance
failures – repairs under warranty, refunds, offer for free service, legal settlements
etc.

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Exercise

■ Identify the service elements for the following services

– Banks (SBI/ ICICI)
– Dry cleaning and laundry services (moustache laundry/ pepwash)
– Car repair services

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Branding strategies for services

■ Brand plays an important role in services

■ A brand signifies a promise and hence reduce customers’ perceived monetary,
social of safety risks
■ Branding strategy alternatives
– Branded house
– Sub-brands
– Endorsed brands
– House of brands

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Branding strategies for services

■ Branded house
– Using the same brand name across multiple offerings in often unrelated fields
– Example: Virgin uses its brand name for its core business areas like travel and
entertainment; and also for its financial services, healthcare, media and
telecommunication services
– Challenge is that brand gets overstretched and weakened
■ Sub-brands
– The corporate or master brand is the main reference point, but the product itself
has a distinct name
– Example: British Airways Club World, World Traveler, World Traveler Plus
– Example: FedEx Home Delivery, FedEx Freight, FedEx Supply Chain

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Branding strategies for services

■ Endorsed brands
– Product brand dominates but the corporate name is still featured
– Commonly used by hotel companies
– Intercontinental Hotel Group has a family of endorsed brands including Crowne
Plaza Hotels & Resorts, Holiday Inn, Staybridge Suites etc.
– Indian Hotels – Taj, Vivanta by Taj, Gateway Hotels, Ginger
■ House of brands
– Typically a company have distinct brands which are known in their own right,
and are viewed as distinct entities
– Example: Yum! Brands owns several brands like KFC, Pizza Hut and Taco Bell

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Tiering service products with branding

■ Service tiering: Using branding to differentiate service levels

Industry Tiers Key service attributes and physical elements

used in tiering
Lodging Star or diamond rating Architecture, landscaping, room size,
furnishings, décor, restaurant facilities and
menu etc.
Airline Classes, First, business, Seat width, meal and beverage services,
premium economy, economy departure and arrival lounges
Car rental Class of vehicle Based on vehicle size, degree of luxury

Hardware and Support levels Hours and days of service, speed of response,
software support speed of delivering replacement parts etc.

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Brand equity
■ Brand equity is the value premium that comes with a brand. It is what customers are
willing to pay for the service, beyond what they are willing to pay for a similar service
that has no brand.
■ Service branding model

Source: Berry, L.L. (2000: p. 130)

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Elements of the service branding model

■ Company’s presented brand – mainly through advertising, service facilities and

personnel
■ External brand communication – from word of mouth and publicity. These are outside of
the firm’s control
■ Customer experience with the company – what the customer has gone through when
they patronized the company
■ Brand awareness – the ability to recognize and recall a brand when provided with a cue
■ Brand meaning – what comes to the customer’s mind when a brand is mentioned
■ Brand equity – the degree of marketing advantage that a brand has over its components

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New service development

■ A hierarchy of new service categories

– Style changes (e.g. designing retail branches, websites or new uniforms for
service employees) – no change in processes or performance
– Service improvements – small changes in the performance of current
products, including improvements either to the core product or to existing
supplementary services
– Supplementary service improvements – adding new facilitating or enhancing
service elements to existing core service (e.g. accepting payment through
payment apps)
– Process life extension – distinctive new ways of delivering existing products
(e.g. having both self service and service by service personnel; creating online
or app based delivery)

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New service development

■ A hierarchy of new service categories

– Product line extensions – addition to current product lines of the company
– Major process innovation – using new processes to deliver existing core
products in new ways with additional benefits e.g. online courses for higher
education
– Major service innovations – new core products for markets that have not been
previously defined e.g. Virgin Galactic (sub-orbital space flights); Amazon web
services

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Determinants of success in new service

development
■ Market synergy
– The new product fits well with the existing image of the firm, its expertise, and
resources
■ Organizational factors
– A strong cooperation and coordination between various functional
departments within the organization
■ Market research factors
– A detailed and scientifically designed market research study is conducted early
in the development process

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