SERVICE MANAGEMENT, T.Y.

BBA (SEM 5), VNSGU-Surat

CHAPTER 2

SERVICE PRODUCT

PLANNING AND CREATING SERVICE

Following are the steps necessary to plan and create services;
a) Design a Service Concept
b) Document Delivery Sequence over Time
c) Flowchart Service Delivery

A. DESIGN A SERVICE CONCEPT:

Service concept or service product can be designed keeping in mind the following three components;
(1) Core product, (2) Supplementary services, and (3) Delivery processes.
The core product is based on the core (basic) set of benefits and solutions delivered to customers. For
example, in healthcare, the core product may be to becoming healthy.
There are varieties of activities which surround the core product. These activities are known as
supplementary services. Supplementary services augment (improve) the core product by facilitating its
use and increasing its value and appeal. The supplementary services play an important role in
differentiating and positioning the core product against the competing services. Delivery Processes are
used to deliver both the core product and each of the supplementary services.

Figure: The various levels of Service Product - Hotel

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CORE PRODUCT DELIVERY:
1. People processing
2. Customer role
3. Scheduling stay at various places:
4. Service level designing and package

EXAMPLE: Core and Supplementary Services in a Luxury Hotel

The core product is the customer stay at the hotel for some days. The delivery processes surrounding
this core product are:

People processing — Hotel staff working to offer room to the customer

Customer’s role — What customers are expected to do for themselves; what the hotel will do for them,
such as making the bed, supplying bathroom towels, and cleaning the room.
Scheduling — How long the room may be used before another payment becomes due.
Service level— Level and style of service to be provided to the customer.

Surrounding the core product is a variety of supplementary services. These services range from
reservations to meals and in-room service elements. Delivery processes must be specified for each of
these elements. The more expensive the hotel is, the higher the level of service is required of each
element. For example, very important guests might be received at the airport and transported to the
hotel in a limousine. Check-in arrangements can be done on the way to the hotel. By the time the
guests arrive
at the hotel, they are ready to be escorted to their rooms, where a butler is ready to serve them.

SUPPLEMENTARY SERVICE DELIVERY: THE FLOWER OF SERVICE

There are two kinds of supplementary services:
1. Facilitating supplementary services are either needed for service delivery, or help in the use of
the core product.
2. Enhancing supplementary services add extra value for the customer. These different
supplementary services can be classified into one of the following eight forms as shown in the
figure below;

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In the above figure, the eight forms are displayed as petals of flower surrounding the center of a flower,
hence we call it the Flower of Service. The petals are arranged in a clockwise sequence depending on
how they are likely to be encountered by customers. However, the sequence may sometimes vary. For
instance, payment may have to be made before service is delivered rather than afterwards. In a well-
designed and well-managed service organization, the petals and core are fresh and well-formed. A
service that is badly designed or poorly delivered is a like a flower with missing or dried petals. Even if
the core is perfect, the flower looks unattractive.
In the above figure of flower;

1) Facilitating Services:
 Information: Customers often require information about how to obtain and use a product or
service. They may also need reminders and documentation.
 Order-taking: Many goods and services must be ordered or reserved in advance. Customers
need to know what is available and may want to get the service.
 Billing: Customers deserve clear and accurate bills and statements.
 Payment: Customers may pay faster if you make transactions simple and convenient for them.

2) Enhancing Services:
 Consultation: Value can be added to goods and services by offering advice and consultation
according to each customer’s needs and situation.
 Hospitality: Customers who invest time and effort in visiting a business and using its services
deserve to be treated as welcome guests.
 Safekeeping: Customers prefer not to worry about looking after the personal possessions that
they bring with them to a service site. They may also want delivery and after-sales services for
goods that they purchase or rent.
 Exceptions: Customers appreciate some flexibility in a business when they make special
requests. They expect it when not everything goes according to plan.

B. DOCUMENT DELIVERY SEQUENCE OVER TIME:

The sequence of Services delivery must be properly and timely documented. The document of service
delivery must be prepared keeping the following things in mind;
 It must address sequence in which customers will use each core and supplementary service
 It must determine length of time for each step
 The information should indicate good understanding of customers, especially their:
 Needs
 Habits
 Expectations

C. PREPARE FLOWCHART OF SERVICE:

All the elements of service are drawn as a flowchart. This;

 Helps us understand totality of customer’s service experience
 Is useful for distinguishing between core product itself and service elements that supplement
core
 Restaurants: Food and beverage (core)
 Reservations (supplementary services)
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 Shows how nature of customer involvement with service organizations varies by type of
service:
 People processing
 Possession processing
 Mental Stimulus processing
 Information processing

EXAMPLE OF PEOPLE PROCESSING SERVICE: STAYING AT HOTEL

Spend
Park Car Check In Night in Breakfast Check
Room Out

Maid Makes
Breakfast
up Room
Prepared

EXAMPLE OF INFORMATION PROCESSING SERVICE: GETTING INSURANCE POLICY

Information Processing – Health Insurance

Select Plan, Insurance Coverage Printed Policy

Learn about
Pay Begins Documents
pland Complete Forms
Arrive
pl
Options
University and Insurance
Customer Information
Company Agree on Terms of
Entered in Database
Coverage

MANAGERIAL IMPLICATIONS:
Important implications are;

 To develop product policy and pricing strategy, managers need to determine:

 Which supplementary services should be offered as a standard package or as options
 Firms that compete on a low-cost basis needs fewer supplementary elements.
 Each flower petal must receive consistent and continuous care and concern to remain fresh and
appealing.

BRANDING SERVICE PRODUCTS

DEFINITION:
The American Marketing Association defines a brand as :
‘A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or
services of one seller or group of sellers and to differentiate them from competitors’.

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Uses of Branding are:
• identification of source of product
• assignment of responsibility to product maker
• reduction of risk
• reduction of search costs
• promise with maker of product
• signal of quality.

SERVICE BRANDING DECISIONS:

1. To brand or not to brand: There are instances in service segments such as home loans and credit
collection agencies, which work for leading banking brands, such as ICICI and HDFC. On their own, they
would find it difficult to sustain their operations.

2. Brand sponsor decisions: These decisions are about whether the brand would be a manufacturer’s
brand, distributor’s brand, or licensed brand. Firms such as Wills Lifestyle have opened their own
stores for retailing its brand of clothes. Superstores, such as Marks and Spencers, retail products using
their own brand names.

3. Brand name decisions: These decisions are related to whether individual names, blanket family
names, separate family names, or company trade names should be combined with an individual
product name. Most service firms offer a line of products rather than just a single product. As a result,
they must choose among three broad alternatives:

1. Using a single brand to cover all products and services (corporate brand / umbrella brand)
Benefits:
 Easily recognized
 Holds meaning to customers
 Stands for a particular way of doing business
2. A separate brand for each offering (individual brand)
Benefit: Helps firm communicate distinctive experiences and benefits associated with service concept
3. Some combination of the above 2 strategies (sub-brands, endorser brand)
Benefit: It gets the advantage of both the corporate brand as well as individual product brand.
4. Brand strategy decisions: These are related to brand positioning decisions.

EXAMPLE: Mc Donald's Brand Strategy revolves around the following objectives:

Increasing Customer Base: McDonald's, all over the world, mostly attract the upper or upper middle
class consumer segment. Generally, the middle income customer group goes away from the Mc
Donald's due to a perception of high range food products. Hence Mc Donald's is trying to capture this
market segment by offering:
 Low priced food.
 Family oriented environment where a person could chill out with his/her family.
In India, McDonald's is offering ice-creams within the range of ten rupees which is accessible to the
middle section people. People from this class have started thinking of spending time with their family
in these food outlets.

DR. ZAKIR A PATEL, ASST. PROF., NARAN LALA COLLEGE OF COMM & MNGT, NAVSARI 5
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Re-inventing Its Brand Image: McDonald's has brought change in its traditional color composition for
re-inventing its brand image. The dominant yellow color would be replaced with golden and red with
terra cotta. Color combination would also include sage green and olive.
Stressing on the Value Aspect of the Consumer: McDonald's is focusing on the value acquired by the
consumer on per unit of money spent. Primary goal of this strategy is to attract the middle class
families which are a huge market in the developing countries, especially India. Mc Donald's has started
offering food articles which are relatively cheap.
Expansion of Food Items: McDonald is extending its food item base in accordance with the special
needs of women and children. For women they are providing premium salads. They are also offering
skimmed milk and sliced apples to children.

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DR. ZAKIR A PATEL, ASST. PROF., NARAN LALA COLLEGE OF COMM & MNGT, NAVSARI 6
Mobile: 9586075954