Creating the

Service Product
Maria Saeed Khattak
Key Steps in Service Planning:
Matching Opportunities to Resources

▪ Must relate marketing opportunities to firm’s resources

(physical, financial, technological, human)
▪ Identify, evaluate firm’s marketing assets
➢ Customer portfolio/lifetime value (customer equity)
➢ Market knowledge
➢ Marketing implementation skill
➢ Product line
➢ Competitive positioning strategies
➢ Brand reputation (brand equity)

▪ Identify, evaluate firm’s operating assets

➢ Physical facilities, equipment
➢ Technology and systems (especially IT)
➢ Human resources (numbers, skills, productivity)
➢ Leverage through alliances and partnerships
➢ Potential for customer self service
➢ Cost structure
 Service Design Involves Matching Marketing Concept with
Operations Concept

Corporate Objectives
and Resources

Marketing Assets Operating Assets

(Customer Base, Mkt. Knowledge, (Facilities/Equipment, IT Systems,
Implementation Skills, Brand Reput.) People, Op. Skills, Cost
Structure)
Service Marketing Concept
Service Operations Concept
• Benefits to customer from • Nature of processes
core/ supplementary • Geographic scope of ops
elements, style, service level, • Scheduling
accessibility • Facilities design/layout
• User costs/outlays incurred • HR (numbers, skills)
• Price/other monetary • Leverage (partners, self-service)
costs • Task allocation: front/backstage
• Time staff; customers as co-producers
• Mental and physical effort
• Neg. sensory
Service Delivery
experiences Process
WHAT IS A SERVICE PRODUCT?
What is CORE PRODUCT?
 Understanding the
Components of the
Augmented Service Product
What is the Augmented Product?
 Each product has a specific purpose: To cover an original need, for which it was
designed.
 The concept Augmented product refers to everything a product offers that is not
directly related to its original purpose.

 For example:
 The “buying experience”.
 The delivery.
 Customer service.
 Side products or services included.
 etc.
Shostack’s Molecular Model
Shostack’s Molecular Model
 Shostack (1977) designed a Molecular Model to visualize
and manage a market entity.
 She utilizes a scientific analogy to justify that, as in
chemical formulations, a change in a single element may
completely change the whole market entity.
 The model can be applied for either products or services.
 According to Shostack (1982) a market entity has always a
core benefit, which is a good or a service, connected with
some supplementary services.
 These services add value to the core entity and help to
differentiate the core product.
 Besides they create competitive advantage by facilitating the use
of the core service and by enhancing the value and appeal of the
core entity.
 She proposed a molecular model of an enterprise as being made up
of a tangible and intangible nucleus surrounded by additional
tangible or intangible elements (Jones and Lockwood, 2004).
 Shostack suggested the service blueprinting technique for
describing the service process and noted that when one element in
a molecule changes, it would effect the whole molecule (Chan and
Swatman, 2005).
Shostack’s Molecular Model of a Total Market Entity - Passenger
Airline Service

Distribution
Price

Vehicle
Service
frequency

Transport In-flight
service
Pre- and
post-flight Food
service and
drink
KEY
Tangible elements
Intangible elements
Marketing Positioning
(Weighted toward evidence)
EXAMPLE

Implementation of Shostack's Molecular

Model on Singapore Airlines (SIA)
Implementation of Shostack's Molecular Model on SIA

 Implementation of Shostack's Molecular Model on SIA

 Singapore Airlines is an example of airline transportation. The core benefit of this
entity is intangible-dominant this means that there exist no physical ownership of a
tangible good. In other words an airline travel can only be experienced, not
physically possessed.
 By breaking down the core entity into more elements, we can conclude that nearly
all of the other important elements are intangible as well. Examples of intangible
elements according to Singapore Airlines are the onboard entertainment system
and the punctual pre- and post flight service. But for the market positioning
Singapore Airlines marketers are also trying to reinforce the intangible core by
developing some tangible items, like for instance the onboard gourmet cuisine, the
uniform of the Singapore Girl designed by Pierre Balmain etc. Both tangible and
intangible enhancing factors have an influence on the ‘reality' of the service in the
mind of the customer and add value to the customer. They help to differentiate
the core product and create a competitive advantage.
A Proposed Model for the New Educational Service Product
Offerings  
 SERVICE CONCEPT DESIGN
 Marketers recognize the need to take a holistic view of
the overall performance that they want the customers to
experience, highlighting the specific dimensions on which
the firm plans to compete
 Value proposition- must address and integrate the 3
components:
 core product + supplementary service and delivery process
 Supplementary
Core product Delivery process
services
• Central component • Augment the core • Concerns the
that supplies the product ,both process used to
principal problem facilitating its use deliver core product
solving need that the and enhancing its and ss
customers need value and appeal • Service design
• Eg transport,repair • These help- usually addresses:
services etc extent and value how differently
in differentiating service components
and positioning are delivered to the
core product customer,nature of
against competing customers role in
services process,length of
• Adding more delivery,and Rxed
ss- enhances the level and style of
perceived value of service offered
the core product for
prospects and
enables the service
providers to
charge a higher
price
Core Products and Supplementary Services

▪ Most firms offer customers a package of benefits:

➢core product (a good or a service)
➢supplementary services that add value to the core

▪ In mature industries, core products often become

commodities

▪ Supplementary services help to differentiate core products

and create competitive advantage by:
➢facilitating use of the core service
➢enhancing the value and appeal of the core
Core and Supplementary Product Design:
What Do We Offer and How Do We Create and Deliver
It?

Supplementary Delivery Concept

services offered For Core
and how created Product
Scheduling Process
and delivered

Core

Service Customer
Level Role
SERVICE OFFERING FOR OVERNIGHT HOTEL
STAY

Reservatio
n

Phone Parking
Core
Delivery

process
Room
Service Cor
e Checkin/o
ut

Supplement
ary Porter
Cable tv services

Meal
CORE AND SUPPLEMENTARY SERVICES AT LUXURY HOTEL
(OFFERING MUCH MORE THAN CHEAP MOTEL!)

Reservation
Cashier Valet
Parking

Business
Reception
Centre
A
Room Night in an
Service B
Elegant Private Baggage
eRoom with a Service
d
Bathroom
Wake-up Cocktail
Call f Bar
oEntertainment/
Internet r Restaurant
Sports/
Exercise
t
h
e
 What Should Be the Core and Supplementary Elements of Our Service
Product?

▪ How is our core product defined and what supplementary

elements currently augment this core?

▪ What product benefits create the most value for

customers?

▪ Is our service package differentiated from the competition in

ways that are meaningful to target customers?

▪ What are current levels of service on the core product and

each of the supplementary elements?

▪ Can we charge more for higher service levels on key

attributes (e.g.., faster response, better physical amenities,
easier access, more staff, superior caliber personnel)?

▪ Alternatively, should we cut service levels and charge

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 72
Core and Supplementary Services in a Luxury Hotel
(Offering Guests Much More than a Cheap Motel!)

Reserv
C ash ation Val
ie r etPa
Busin rkin
e s sC g Recep
ente t io n
r A B e d f o r
Roo t h eN i g h Bagg
m t in an a g eS
Serv Elegant P ervic
ic e r i v a t eR o e
Wa k e om w ith C ock
- u pC a tail
all Bathroo Bar
Telep m
hone Entertain Resta
m e n t /S p o r u r a n t
ts / Exerci
se
 What Happens, When, and in What Sequence?
The Time Dimension in the Augmented Service Product

Reservation
Parking Get car

Check in Check out

USE ROOM Phone

USE GUESTROOM OVERNIGHT

Porter

Pay TV Room service

Meal

Pre Time Frame of an Overnight Hotel Stay

Visit (real-time service use)
 Components of
Augmented Services
Just a reminder.....
Augmented Product includes
accessibility, atmosphere, customer
participation, interaction with the service
organization & with each other.
OK, Let’s see
the explaination
of those
elements
Augmented Product

Accessibility

If a product is not accessible it has no value.

• Two barriers to accessibility are hours of
operation & lack of knowledge
• Products must be accessible when the guest
wants to use them

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Augmented Product

Accessibility

The front desk clerk and bell person should

make the guest aware of the hotel’s services, and
providing information about attractions in the city
makes the attributes of the city accessible to the
guest.

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Augmented Product

Atmosphere

• Atmosphere is appreciated via the senses and can be a

customer’s reason for choosing an establishment.
• The main visual dimensions of atmosphere are color,
brightness, size, and shape.
• The main aural dimensions of atmosphere are volume and
pitch.
• The main olfactory dimensions of atmosphere are scent
and freshness.
• The main tactile dimensions of atmosphere are softness,
smoothness, and temperature.
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Augmented Product

Atmosphere

• Atmosphere can affect purchase behavior in at

least four ways.
 atmosphere may serve as an attention-creating
medium
 as a message-creating medium to potential
customers
 atmosphere may serve as an effect-creating
medium
 environment can be a mood-creating
medium 8-29
Augmented Product

Atmosphere

• An environmental psychologist has described

environments as high & low load, referring to the
information one receives from the environment.
– bright colors & lights, loud noises, crowds & movement
are typical elements of a high-load environment

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Augmented Product

Customer Interaction (Delivery)

• The customer participates in the delivery of

most hospitality & travel products, in three
phases:
• joining, consumption, and detachment

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 Augmented Product

Customer Interaction (Delivery)

• In the joining stage, the customer makes the initial

inquiry contact.
• information must be delivered in a professional way
• the joining phase is often enhanced through sampling

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Augmented Product

Customer Interaction (Delivery)

• The consumption phase takes place when the

service is consumed.
• in a restaurant, when the customer is dining
• in a hotel when an individual is a guest

8-33
 Augmented Product

Customer Interaction (Delivery)

• The detachment phase is when the customer is

through using a product and departs.
• hotel guests will need to settle accounts, may need a
bell person to help with the bags & transportation to the
airport

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 Augmented Product

Customer Interaction (Delivery)

• Managers should think through & then experience

the joining, consumption & detachment phases of
their guests.
• Thinking through these stages helps management
understand how the customer will interact with the
service delivery system.
• resulting in a product designed to fit customer needs

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Augmented Product

Customer Interaction (Others)

• An area drawing interest of hospitality researchers

is the interaction of customers with each other.
• the issue is a serious problem for hotels & resorts
• Hospitality organizations must manage interaction
of customers to ensure that some do not negatively
affect the experience of others.

8-36
Augmented Product

Customer as Employees

• Involving the guest as an employee can increase

capacity, improve guest satisfaction & reduce costs.
• wait staff are not needed when guests help themselves

8-37
Augmented Product

Customer as Employees

• Processes given to the customer to perform

can be a win-win situation for the customer and
the business.
• Self-service technologies (SSTs) are a rapidly
growing means for increasing customer
coproduction in food-service experiences.
8-38