Birat Shrestha

NCM, BBA,
KU,
March
2020
Augmenting the Core Product
Designing the Service Concept
Documenting the Delivery
Sequence Over Time
 Services are based on the core set of benefits and
solutions delivered to customers
 Delivery of this core product is typically
accompanied
by a variety of other service-related activities referred
as supplementary services
 Supplementary services facilitate use of the core
product and add value and differentiation to
the customer’s overall experience
 Competitive advantage emphasizes performance on
supplementary services
 Supplementary services can be facilitating services (or
goods), which facilitates use of core or supporting
services that increases the value of the service and
help differentiate it – enhancing service
 Lynn Shostack developed a molecular model that uses
chemical analogy to help marketer visualize “total
market entity”
 At the center is the core benefit, addressing the basic
customer need linked to a series of customer service
characteristics
 In a chemical formulation, a change in one element
may completely alter the nature of entity
 Surrounding molecules are a series of bands
representing price, distribution, and market
positioning
 The molecular model help identify tangible and
intangible service elements in service delivery
– airlines
◦ Intangible elements – transportation, service frequency, pre-
flight, in-flight, post-flight service
◦ Tangible elements – aircraft, food and beverages
Shostack’s Molecular Model: Passenger Airline Service
 Core Product
◦ It is the central component of problem-solving benefits customer seek
◦ Classes at academic institution and medical check-ups and
medications at hospitals
 Supplementary Services
◦ It augment the core product, both facilitating its use and enhancing its
value and appeal
◦ It plays the role of differentiating and positioning the core product
against the competition
◦ Adding more supplementary services or increasing the level of
performances enhances the perceived value of the core product
 Delivery Processes
◦ How the different service components are delivered to the
customer
◦ The nature of the customer’s role in those processes
◦ How long delivery lasts
◦ The prescribed level and style of service offered
(people processing services involve more supplementary services than
possession processing services)
Depicting the Service Offering for an Overnight Hotel Stay
 Addressing the sequence in which customers will use core
and supplementary services with length and time required in
each of the cases
 A good understanding of customer needs, habit, and
expectation is required for facilities planning, operations
management and allocation of personnel
 Time plays a key role in services from operational
standpoint and allocating and scheduling purposes
 Consumption of core services is often sandwiched between
use of supplementary services that are needed earlier or
later in the delivery sequence
 Flowcharting – a technique for displaying the nature and
sequence of the different steps involved in delivering service
to customers – steps involved in the use of core service and
steps involving service elements that supplement the core
product
◦ Core product in restaurant – food and beverages served
◦ Supplementary services - reservations, valet parking, a coat
room, being escorted to the table, ordering from menu, billing,
payment system, washroom usages
Facilitating Services
Enhancing
Services
Facilitating Services Enhancing Services

 Information  Consultation
 Order Taking  Hospitality

 Billing  Safekeeping

 Payment  Expectations
The Flower of Service
 Information (customers need relevant, accurate
information for full value for any goods or
services)
◦ Direction, advise, confirmation, receipts
◦ Prices, discounts, account activity
◦ Service hours, reminders
 Order Taking (process of order taking, its way
and approaches – politeness, fast, accurate and
usage of technology in order taking)
◦ Application (memberships in clubs)
◦ Order Entry (Email, website, telephone, on-site)
◦ Reservations and Check-In (tables, hotels, vehicles)
 Billing (accurate amounts with good fonts and
layout with laser prints)
◦ Invoices and account statements in print and verbal
◦ Machine display and self billing (computed by
customer)
 Payment (acceptance various modes of
payments)
◦ Self-service (insert card, electronic fund transfer, credit
card number)
◦ Direct to Payee or Intermediary (cash, cheque, coupon,
vouchers)
◦ Automatic Deduction from Financial Deposits (Banks)
Control and Verifications (automated systems, human
systems)
 Consultation (counseling customers to help
adopt meaningful behaviors in fitness to
supplement health care services)
◦ Customized Advice and Personal Counseling
◦ Tutoring and Training in Product Use
◦ Management or Technical Consulting
 Hospitality (treating customers as guests)
◦ Greetings, Food and Beverages
◦ Waiting Facilities and Amenities (lounge,
magazines, newspapers, electronic screens,
entertainments)
◦ Toilets and Washrooms
◦ Transport and Security
 Safekeeping (assistance in personal possessions
– baggage handlings, storage, parking)
◦ Caring for Possessions Customers Bring with Them (child
care, per care, parking facilities, safe deposit boxes,
security personal)
◦ Caring for Goods Purchased by Customers (packaging,
installations, repairs, delivery)
 Exceptions (supplementary services out of the
routine service deliveries)
◦ Special Requests (children’s needs, dietary and medical
needs, religious observations, deviations from SOPs)
◦ Problem Solving (warranties, guarantees, assisting,
resolving difficulties arising from products)
◦ Handling of Complaints/Suggestions/Compliments
◦ Restitution (refunds, compensation, free services)
 Product Lines and Brands
◦ Service organizations offer a line of products than just a single product
◦ Alternatives: using a single brand to cover all products and services or a
separate stand-alone brand for each offerings or combination of two
 Branded house: Virgin Group applies its brand name to multiple offerings in
unrelated fields
 Sub-brands: master-brand is the primary frame of reference but the product
itself also has a distinctive name (Singapore Airlines Raffles Class)
 Endorsed brands: product brand dominates but the corporate name is still
featured (Courtyard from Marriot)
 House of brand: promoted individually with corporate logo
◦ Hotel Branding: usage of sub-brands/endorsed brands (Hilton Hotels
Corporation, Intercontinental, Starwood, Marriot International) – brand
extension help retain customers within the group of subbrands
◦ Sun Microsystems Hardware and Software Support: SunSpectrum Support
sub-branded from platinum to bronze service plans with different service
levels
◦ British Airways: First (deluxe service), Club World business class), World
Traveler Plus (premium economy class), World Traveler (economy class)
Club Europe (business class), Euro Traveler (economy class) – with
different aircrafts and preflight, in-flight, and pre-arrival services
 Offering a Branded Experience
◦ Branding can be at corporate level or
product level
◦ Corporate brands are recognized by
customers and are meaningful to them
◦ Applying distinctive brand names to
individual products enables the firm to
communicate to the target market the
distinctive experiences and benefits
associated with a specific service concept
 A Hierarchy of New Service Development
◦ Major Service Innovation: new service characteristics and radical
new processes (FedEx overnight, nationwide express package
delivery and eBay’s online auction services)
◦ Major Process Innovation: using new processes to deliver existing
core products with additional benefits (online course from
University)
◦ Product-line Extensions: additions to current product lines by
existing firms (telephone companies offering call waiting and call
forwarding services; banks offering insurance policies)
◦ Process-line Extensions: distinct new ways of delivering existing
products to offer convenience to the existing customers and
appeal to new customers (“clicks & mortar” selling through store
and online, token system in Banks)
◦ Supplementary Service Innovation: adding new facilities or
enhancing service elements to an existing core service or
improving supplementary service (cafes & restaurants having
electronic screens, soft music, live music)
◦ Service Improvements: changes in the core or supplementary
services
◦ Style Changes: changes in processes and performances (new
interior, new vehicles, new bank check designs)
Reengineering Service
Processes
◦ The design of service processes has
implications for customers and for the cost,
speed, and productivity
◦ Improving productivity in services often
requires speeding up the overall process or
cycle time
◦ Reengineering involves analyzing and
redesigning processes to achieve faster and
better performance – running tasks in parallel
rather than in a sequence is an approach to
speeding up processes
 Physical Goods as a Source of New Service Ideas
◦ Goods and services may be competitive substitutes
when they offer the same key benefits
◦ Owning a physical goods and enabling the
customers
to the work themselves
◦ Choosing between ownership and rental of the
physical goods and between performing self-service
or hiring another person to perform the task
If your lawn needs mowing – you could buy the lawn
mower and do it yourself, or you could contract the lawn
mowing service avoiding ownership and renting both
machine and labor, depending upon your skills, time, and
budget
 Services as Substitutes for Goods
Ownership and Personal Tasks
Performance
OWN A PHYSICAL GOOD RENT THE USE OF A
PHYSICAL GOOD

PERFORM WORK • Drive your own car • Rent a car & drive
ONESELF • Type on own computer • Rent a computer & type

HIRE SOMEONE TO • Hire a chauffeur • Hire a taxi

DO THE WORK • Hire a typist • Send a work to secretary
 Using Research to Design New Services
◦ To figure out features and price that create best value for
customers
◦ The new service concept should fill the gap in the market
with the product that represented the best balance between
the price consumers were prepared to pay and the physical
and service features they most desired
 Achieving Success in Developing New Service
◦ Market synergy (the service concept will fit with the customer
needs and requirements with superior advantage)
◦ Organizational factors (inter-functional cooperation
and coordination by knowing then importance of the
service product to customers)
◦ Market research factors (well designed research in prior to the
service development)
Thank You/Best Wishes