New Service Development

Maria Saeed Khattak

 New Service Development:
A Hierarchy of New Service
Categories
▪ Major service innovations--new core products for previously
undefined markets

▪ Major process innovations--using new processes to

deliver existing products and offer extra benefits

▪ Product line extensions--additions to current product lines

▪ Process line extensions--alternative delivery procedures

▪ Supplementary service innovations--adding new or

improved facilitating or enhancing elements

▪ Style changes--visible changes in service design or scripts

New Service Development
Achieving Success in Developing New Services

• In developing new services,

 Core product is of secondary importance
 Ability to maintain quality of the total service offering is key
 Accompanying marketing support activities are vital
 Market knowledge is of utmost importance
 New Service Development:
Physical Goods as Source of Service
Ideas
▪ Customers can rent goods—use and return for a fee—
instead of purchasing them
▪ Customers can hire personnel to operate their own or
rented equipment
▪ Any new durable product may create need for after-sales
services (possession processing)
➢ Shipping
➢ Installation
➢ Problem-solving and consulting advice
➢ Cleaning
➢ Maintenance
➢ Repair
➢ Upgrading
➢ Disposal
Creating Services as Substitutes for Owning and/or Using
Goods

Own a Physical Good Rent the Use

of a Physical Good

• Drive own car • Rent car and drive it

Perform the
• Type on own word processor • Rent word processor and type
Work Oneself

Hire Someone • Hire chauffeur to drive car •• Hire a taxi or limousine

to Do the Work • Hire typist to use word processor
•• Send work to secretarial service
Service Development through Delivery Options:
Alternative Meal Service Formats

Fast-Food
Restaurant See sign Park and Order meal, Pick up Find table Clear table
enter and pay meal and eat and leave
(Eat In)

Drive-In See sign Stop car at Order via Get meal at Drive away,
Restaurant order microphone pickup, eat later
(Take Out) point pay

Home Telephone Order food, Driver rings Pay

Delivery give doorbell driver, Eat
Restaurant address take food

Home Arrange to Plan meal, Meal Staff cleans

meet pay deposit Food is Eat up; pay
Catering staff arrive
caterer and prepared
and
served
Elements of a Hotel Offering:
Trading off Room Price vs.
Features/Services
▪ External building design
and features
▪ Room features
▪ Food-related services
▪ Lounge facilities
▪ Services (e.g.., reception)
▪ Leisure facilities
▪ Security—people/systems
 Success Factors in New Service
Development
▪ Market synergy
➢ Good fit between new product and firm’s image/resources
➢ Advantage vs. competition in meeting customers’ needs
➢ Strong support from firm during/after launch
➢ Firm understands customer purchase decision behavior

▪ Organizational factors
➢ Strong interfunctional cooperation and coordination
➢ Internal marketing to educate staff on new product and its
competition
➢ Employees understand importance of new services to firm

▪ Market research factors

➢ Scientific studies conducted early in development process
➢ Product concept well defined before undertaking field studies
 Designing the
Communications Mix
for
Services

1 - 9 Services Marketing 5/E

COMMUNITCATION PLAYS A KEY ROLE IN
MARKETING

 Communication helps in creating powerful image and a sense of credibility,

confidence and reassurance.
ADDING VALUE THROUGH COMMUNICATION
CONTENT

Information
1. What service
are available
2. Where and
when services is
available
3. Cost of service
Advice
INTERNAL COMMUNICATIONS

 Communications from senior managers to their employees

plays a vital role in maintaining and nurturing a corporate
culture founded on specific values.
Internal communication helps :

 Ensure efficiency
 Satisfactory service delivery
 Achieve productive and harmonious working relationship
 Build employee trust
 Respect and loyalty
 COMMUNICATION SERVICES
PRESENTS BOTH CHALLENGES
AND OPPORTUNITIES
OVERCOME THE PROBLEM OF
INTANGIBILITY

Abstractness Generality

Mental
Non-
impalpabilit
searchability
y
ABSTRACTNESS

 Services which do not have one to one correspondence with physical objects.
 Ex. : financial securities, expert advice

 Challenge for marketers is to connect services to concepts.

GENERALITY

 Refers to items that comprise a class of objects, persons or events.

 Ex: Flight attendants, cabin service

 Customers of service know what they are.

 Marketers have to communicate what makes a specific offering distinctly

different from competing offerings.
NONSEARCHABILITY

 Refers to the fact that intangibles cannot be searched or inspected

before they are purchased.

 Ex: appearance of health club

MENTAL IMPALPABILITY

Documentary of step-by-step process, Case history of what

firm did for customer
Narration of customer’s subjective experience

 Refers to fact that many services are sufficiently complex,

multidimensional
FACILITATE CUSTOMER INVOLVEMENT IN
PRODUCTION

 When customers are involved in service production, they need training to

perform well.
➢ prepare customers for service experience and demonstrate roles
➢ teach customers about new technologies, new features
 Ex : adventurous activities(rock climbing, skiing)
 One approach is to show service delivery in action.
HELP CUSTOMERS TO EVALUATE SERVICE
OFFERINGS

 It is difficult for customers to distinct services of different firms

 Providing tangible cues related to :

 Service performance (provide tangible or statistical
clues to service performance)
 Highlighting the quality of equipment and facilities
➢Emphasizing employee characteristics like employee
qualifications, experience, professionalism
SIMULATION OR DAMPEN DEMAND TO
MATCH CAPACITY
 provide information about timing of peak, off-peak periods
 Some services are time specific and cant be stored for resale at later date.
 Ex: - movie ticket

 Strategy:
➢ offer promotions to stimulate off-peak demand
 Reduce use during peak demand periods and stimulate it during off-peak periods
PROMOTE THE CONTRIBUTION OF
SERVICE PERSONNEL
 help customers understand service encounter
 In high contact services, front-line personnel are central to service delivery.

 highlight expertise and commitment of backstage personnel

 An ad that shows employees at work helps prospective customers understand
the nature of the service encounter.
Setting Clear Objectives: Checklist
for Marketing Communications
Planning (“5 Ws”)

▪ Who is our target audience?

▪ What do we need to communicate and achieve?

▪ How should we communicate this?

▪ Where should we communicate this?

▪ When do communications need to take

place?

Services Marketing 5/E

Common Educational and Promotional Objectives in
Service Settings
▪ Create memorable images of specific companies and
their brands

▪ Build awareness/interest for unfamiliar service/brand

▪ Build preference by communicating brand strengths and

benefits

▪ Compare service with competitors’ offerings and counter

their claims

▪ Reposition service relative to competition

▪ Stimulate demand in off-peak and discourage during

peak
 Educational and Promotional
Objectives (cont.)
▪ Encourage trial by offering promotional incentives

▪ Reduce uncertainty/perceived risk by providing useful info

and advice

▪ Provide reassurance (e.g.., promote service guarantees)

▪ Familiarize customers with service processes before use

▪ Teach customers how to use a service to best advantage

▪ Recognize and reward valued customers and employees

TARGET AUDIENCE

 Divided as:
 Prospects
 Users
 Employees
SPECIFYING COMMUNICATION
OBJECTIVES

 Marketers need to be clear about their goals to formulate specific

communication objectives and select most appropriate messages and
communication tool to achieve them.
KEY PLANNING CONSIDERATIONS

 Marketing communication campaign should reflect a good

understanding of the service product and how well prospective buyers
can evaluate its characteristics in advance of purchase.
Marketing Communications Mix for
Services
Personal Advertising Sales Promotio n Publicity & Instructional Corporate
Communications Public Relations Materials Design

Selling Broadcast Sampling Press Web sites Signage

releases/kits

Customer Press Interior decor

Print Manuals
service Coupons conferences

Sign-up Special
Training Internet Brochures Vehicles
events
rebates
Video-
Telemarketing Outdoor Gifts Sponsorship Equipment
audiocassettes

Word-of-mouth Prize Trade Software

Word Direct mail
(other of promotions Shows, CD- Stationery
mouth
customers) Exhibitions ROM

* Media- Voice mail Uniforms

initiated
coverage

Key: * Denotes communications originating from outside the

organization

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MESSAGES TRANSMITTED THROUGH
PRODUCTION CHANNELS
Front line staff
Customer Service
training outlet

• Serve • Companies selling

• Both planned and
customer complex B2B
unintended
services, offer
either face formal training messages reach
to face or courses to customers
familiarize through the
by customers with medium of
telephone the service service delivery
product environment
itself.

• Banners, posters,
brochures etc.
MESSAGES ORIGINATING FROM OUTSIDE
THE ORGANIZATION

• Recommendations from
Word of other customers are
viewed as more
mouth credible.

Editorial • Media coverage firms

and their services is
coverag stimulated by PR
activities, broadcasters
e and publishers
MESSAGES TRANSMITTED THROUGH
MARKETING CHANNELS

Personal Trade
Advertising
selling shows

Direct Sales Public

marketing promotion relations
ETHICAL ISSUES IN COMMUNICATION

 Unrealistic service promises result from poor internal communications

between operations and marketing personnel.
What is Brand Equity and Why Does It Matter?

Definition: A set of assets and liabilities linked to a brand’s

name and symbol that adds to (or subtracts from) the
perceived value of the product

Insights
▪ Brand equity can be positive or negative
▪ Positive brand equity creates marketing advantage for
firm plus value for customer
▪ Perceived value generates preference and loyalty
▪ Management of brand equity involves investment to
create and enhance assets, remove liabilities
A Service Branding Model:
How Communications + Experience Create Brand Equity

Marketer-controlled communications

Firm’s Presented Brand Awareness of

(Sales, Advertising, Firm’s
PR) Brand
Uncontrolled brand communications
Firm’s
What Media, Intermediaries,
Brand Equity
Word-of-Mouth Say re:
Firm

Customer’s Experience Meaning Attached

with Firm To Firm’s Brand
 Marketing Communication and the
Internet (1)
▪ International in Scope
➢ Accessible from almost anywhere in the world
➢ Simplest form of international market entry

▪ Internet Applications
➢ Promote consumer awareness and interest
➢ Provide information and consultation
➢ Facilitate 2-way communications through e-mail and chat rooms
➢ Stimulate product trial
➢ Enable customers to place orders
➢ Measure effectiveness of specific advertising/promotional
campaigns

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 Marketing Communications and the
Internet (2)
▪ Web Site design considerations
➢ Memorable address that is actively promoted
➢ Relevant, up-to-date content (text, graphics, photos)
➢ Contain information that target users will perceive as
useful/interesting
➢ Easy navigation
➢ Fast download

▪ Internet advertising
➢ Banners and buttons on portals and other websites seek to draw
online traffic to own site
➢ Limits to effectiveness—exposure (“eyeballs”) may not lead to
increases in awareness/preference/sales
➢ Hence, advertising contracts may tie fees to marketing relevant
behavior (e.g.., giving personal info or making purchase)

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