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New Service Development and Process Design

Customer Benefit Package
Hierarchy Level Category First Second Element Core Good Example Custom clothier Business suits Garment bag Deferred payment plans Coffee lounge Core Service Example Business hotel Room for the night Bath robe Business Core Peripheral Good Peripheral Service Third Variant

In house restaurant Airport shuttle

Prepare a blueprint for a service operation. Compare and contrast the generic approaches to service system design. Describe a service process using the dimensions of divergence and complexity. Discuss the managerial issues associated with the adoption of new technology. Use the taxonomy of service processes to classify a service operation. Place an example of service automation in it proper category. .Learning Objectives        Discuss the new service development process.

new menu items) Service Improvements: changes in features of currently offered service Style Changes: modest visible changes in appearances .Levels of Service Innovation Radical Innovations    Major Innovation: new service driven by information and computer based technology Start-up Business: new service for existing market New Services for the Market Presently Served: new services to customers of an organization Incremental Innovations    Service Line Extensions: augmentation of existing service line (e.g.

New Service Development Cycle • Full-scale launch • Post-launch review Full Launch Enablers Development • Formulation of new services objective / strategy • Idea generation and screening • Concept development and testing People • Service design and testing • Process and system design and testing • Marketing program design and testing • Personnel training • Service testing and pilot run • Test marketing Product Technology Tools Systems Design Analysis • Business analysis • Project authorization .

Astroturf  Methods .JIT and TQM  Information .Technology Driven Service Innovation  Power/energy .Enclosed sports stadiums  Materials .International flights with jet aircraft  Physical design .E-commerce using the Internet .

animation  Intelligent (I) .ATM  Playback (P) .EFT .answering machine  Numerical controlled (N) .Classification of Service Automation  Fixed-sequence (F) .parking lot gate  Variable-sequence (V) .medical diagnosis  Totally automated system (T) .autopilot  Expert system (E) .

Adoption of New Technology in Services  Challenges of Adopting New Technology The Process is the Product Back Office vs Front Office Changes Need for Standardization  Managing the New Technology Adoption Process Ten step process with concern for employees and customers .

cloth) Collect payment 15 secs Seen by customer Clean shoes 45 secs Fail point Line of visibility Not seen by customer but necessary to performance Select and purchase supplies .Example of Service Blueprinting Standard execution time 2 minutes Total acceptable execution time 5 minutes Brush shoes 30 secs Apply polish 30 secs Buff 45 secs Wrong color wax Materials (e.. polish.g.

=== ==== ==== w Officer Pay book ===== $ 0 $ w ==== ===== Line of visibility Decline F Verify income data Initial screening 1 day Notify customer Deny Credit check 2 days Receive Payment Final payment Issue check Print payment book Confirm F Close account Accept 3 days Delinquent F Verify payer F Employer Bank accounts Data base records Credit bureau F Branch records Accounting F F Fail point W Customer wait Employee decision .Service Blueprinting (Bank Lending Operation Example) Loan application Branch 30min--1hr.

Service Blueprint of Luxury Hotel .

For example the activities of an attorney contrasted with those of a paralegal.  Degree of Divergence: Amount of discretion permitted the server to customize the service. For example a clinic is less complex than a general hospital. .Strategic Positioning Through Process Structure  Degree of Complexity: Measured by the number of steps in the service blueprint.

Tea. GIVE MENUS SERVE WATER AND BREAD TAKE ORDERS PREPARE ORDERS Salad (4 choices) Entree (15 choices) Dessert (6 choices) Beverage (6 choices) SERVE ORDERS HIGHER COMPLEXITY/DIVERGENCE Specific Table Selection Recite Menu: Describe Entrees & Specials Assortment of Hot Breads and Hors D’oeuvres At table. Sherbet between Courses. Hand Grind Pepper COLLECT PAYMENT Choice of Payment. Milk only Serve Salad & Entree Together: Bill and Beverage Together Cash only: Pay when Leaving Individually Prepared at table Expand to 20 Choices: Add Flaming Dishes. Prepare Sauces at Table Expand to 12 Choices Add Exotic Coffees. Including House Accounts: Serve Mints . Bone Fish at Table. Menu on Blackboard Eliminate Customer Fills Out Form CURRENT PROCESS TAKE RESERVATION SEAT GUESTS. Taken Personally by Maltre d’ Pre-prepared: No Choice Limit to Four Choices Sundae Bar: Self-service Coffee.Structural Alternatives for a Restaurant LOWER COMPLEXITY/DIVERGENCE No Reservations Self-seating.

g.Structural Positioning of Healthcare Services HIGH COMPLEXITY * Forensic-Testing Lab * Hospitals Services * General Practitioner: Diagnosis & Treatment * Diagnostic services only Specialist: * Treatment only HIGH DIVERGENCE Outpatient Clinic: Limited * Treatment: e. Broken Bones/Minor Burns only LOW DIVERGENCE * Retailer of Orthopedic Supplies * X-Ray Lab * Medical Counseling LOW COMPLEXITY .

Taxonomy of Service Processes No Customer Contact Low divergence (standardized service) Processing Processing of goods Information Dry Check Cleaning processing Restocking Billing for a a vending credit card machine Ordering groceries from a home computer No customerservice worker interaction (selfservice) Customer service worker interaction Operating a vending machine Assembling premade furniture Food service in a restaurant Hand car washing Withdrawing cash from an ATM Processing of people High divergence (customized service) Processing Processing of goods Information Auto repair Computer Tailoring a programming suit Designing a b uilding Supervision of a landing by an air controller Operating Sampling Documenting an elevator food at a medical Riding an buffet dinner history escalator Bagging of groceries Searching for information in a library Providing Home Portrait public carpet painting transportcleaning Counseling a tion Landscaping Providing service mass vaccination Driving a rental car Using a health club facility Processing of people Indirect customer contact Direct Customer Contact Giving a lecture Handling routine bank transactions Haircutting Performing a surgical operation .

Generic Approaches to Service Design     Production-line • Limit Discretion of Personnel • Division of Labor • Substitute Technology for People • Standardize the Service Customer as Coproducer • Substitution of Customer Labor for Provider • Smoothing Service Demand Customer Contact • Degree of Customer Contact • Separation of High and Low Contact Operations Information Empowerment • Employee and Customer .

Production-line Approach to Service Design  Limit Discretion of Personnel of Labor Technology for People the Service  Division  Substitute  Standardize .

Customer Participation  Encourage Co-production by Customer Free air miles for Internet ticketing  Promote Demand Smoothing Half-price drinks before 6:00pm .

and Low-Contact Operations Sales Opportunity and Production Efficiency Tradeoff  Separate  Consider .Customer Contact View of Services  Degree of Customer Contact Influences Potential Efficiency of Service High.

Service-System Design Matrix Degree of customer/server contact High Buffered core (none) Permeable system (some) Reactive system (much) Face-to-face total customization Low Sales Opportunity Internet & on-site Mail contact technology Phone Contact Face-to-face loose specs Face-to-face tight specs Production Efficiency Low High .

Information Empowerment  Employees Relational Databases  Customers Internet Web Site .

Discussion Questions  What ethical issues are raised in the promotion of sales during a service transaction?  What are some drawbacks of customer participation in the service delivery process?  What are the limits in the production-line approach to service?  Give an example of a service in which isolation of the technical core would be inappropriate. .

INTERACTIVE CLASS EXERCISE The class breaks into small groups and prepares a service blueprint for Village Volvo. .