Services Marketing:

People, Technology, Strategy

CHAPTER 4
Developing Service Products
and Brands

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Integrated Model of Services
Marketing

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Learning Objectives
By the end of this chapter, the reader should be able to:

• Understand what a service product is.

• Understand the benefits of having well-defined service
products.
• Know the three components of a service product.
• Be familiar with the Flower of Service model.
• Know how facilitating supplementary services relate to the
core product.
• Know how enhancing supplementary services relate to the
core product.
• Understand service branding.
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Learning Objectives
• Know the four brand architecture options at the
corporate level.
• Understand how individual services and experiences
can be branded.
• Understand how branding can be used to tier service
levels.
• Discuss how service firms can build brand equity.
• Understand what is required to deliver branded service
experiences.

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Learning Objectives
• List the categories of new service development,
ranging from simple style changes to major
innovations.
• Know how design thinking applies to new service
design.
• Describe how firms can achieve success in new service
development.

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Chapter Overview

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Understanding Service Products

• Services are often intangible and not well-defined.

• Service performances are experienced rather than owned.
• There are physical elements to which the customer takes a
title of ownership.
• A significant portion of the price paid by customers is for the
value added by the service elements.
• Service product comprises of all the elements of the service
performance.
• These elements are both physical and intangible.
• They create value for customers.

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Benefits of Well-Developed Service
Products
• Designing service products translates abstract
services into concrete exchangeable objects.
• Service products
– are well-developed with specified features,
– have well-articulated descriptions,
– offer a clear value proposition,
– have a brand,
– and have a defined pricing structure and way of buying.

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Benefits of Well-Developed Service
Products
• Well-designed service
– helps better understand the service products,
– can explain them more effectively, and
– know how to consistently and deliver them
system-wide at high quality.

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Creating Service Products

• A product implies
– a defined and consistent “bundle of output”
– as well as the ability to differentiate one bundle of
output from another.
• Service firms differentiate their products using the
various “models” offered by manufacturers.

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I. The Components of a Service Product

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I. The Components of a Service Product
• Creating a service product requires designing and
integrating the following three components:

Delivery
Processes

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I. The Components of a Service Product
• Core Product
– “What” the customer is fundamentally buying.
– The core product is the main component that supplies the
desired experience
• Supplementary Services
– The core product is usually accompanied by a variety of
other service-related activities referred as supplementary
services.
– Supplementary services augment the core product, both
facilitating its use and enhancing its value.
• Delivery Processes
– The processes used to deliver both the core product and
each of the supplementary services.
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I. The Components of a Service Product

Core Product Supplementary Services Delivery Process

The core product is Facilitating Supplementary It is the processes used to
• the main component Services deliver both the core
that supplies the • Information product and each of the
desired experience • Order-taking supplementary
• or the problem-solving • Billing services.
benefit that customers • Payment
are looking for Enhancing Supplementary
Services
• Consultation
• Hospitality
• Safekeeping
• Exceptions

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 The Flower of Service

Figure 4.3 The Flower of Service: Core product surrounded by a cluster of supplementary
services
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Facilitating and Enhancing Supplementary
Services
Facilitating Services Enhancing Services

Information Consultation

Order-taking Hospitality

Billing Safekeeping

Payment Exceptions

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2.Facilitating Supplementary Services:

Information
• To obtain full value from any good or service,
customers need relevant information.
– Information includes the following:
Direction to service site
Schedules/service hours
Price information
Terms and conditions of sale/service

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 Facilitating Supplementary Services:
Information. Example

Figure 4.4 Twitter.com provides conditions of service to users

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Facilitating Supplementary Services:
Information
Advice on how to get the most value from a service
Warnings and advice on how to avoid problems
Confirmation of reservations
Receipts and tickets
Notification of changes
Summaries of account activities

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Facilitating Supplementary Services:
Order-Taking
• Once customers are ready to buy, a key
supplementary element comes into play — order-
taking. Order-taking includes:
• Order entry
– On-site order entry
– Mail/telephone/e-mail/online/mobile app order
• Reservations or check-ins
– Seats/tables/rooms
– Vehicles or equipment rental
– Professional appointment

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 Facilitating Supplementary Services:
Order-Taking
• Applications
– Memberships in club/programs
– Subscription services
– Enrolment-based services

Figure 4.7 OpenTable takes dining reservations to a whole new level by allowing diners
to bypass the traditional call-and-book experience with a mere click
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Facilitating Supplementary Services:
Billing
• Billing is common to almost all services (unless the
service is provided free-of-charge). It can be:

Periodic statements of account activity

Invoices for individual transactions

Verbal statements of amount due

Online or machine display of amount due for self-

payment transactions
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Facilitating Supplementary Services:
Payment
• A variety of payment options exist.
– Self-service:
• Inserting card, cash, or token into machine
• Electronic funds transfer
• Entering credit card information online
• Online payment systems such as PayPal, Google Wallet, or Bitcoins
– Direct to payee or intermediary:
• Cash handling or change giving
• Check handling
• Credit/charge/debit card handling
• Coupon redemption
– Automatic deduction from financial deposits:
• Automated systems
• Pre-arranged automatic deduction for bill payment through direct debit
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3. Enhancing Supplementary Services
Consultation — involves a dialog to probe for customer
requirements and then develop a tailored solution.
• Examples include:
– Customized advice
– Personal counseling
– Tutoring/training in service use
– Management or technical consulting

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Enhancing Supplementary Services
Hospitality — reflect pleasure at meeting new customers
and greeting old ones when they return. It include
• Greeting
• Food and beverages
• Toilets and washrooms
• Waiting facilities and amenities
– Lounges, waiting areas, seating
– Weather protection
– Magazines, entertainment, newspapers
• Transport
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 Enhancing Supplementary Services

Figure 4.10 An auditor provides a human touch during the process of consultation

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Enhancing Supplementary Services

Shoppers at retailers such as Abercrombie & Fitch, a

global clothing retailer, are given a welcoming “hello”
and “thank you” when they enter and leave the store,
even if they did not buy anything.

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Enhancing Supplementary Services

Figure 4.12 Abercrombie & Fitch provides hospitality with a smile

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Enhancing Supplementary Services
Safekeeping — assistance with safekeeping customers’
personal possessions
• Child care, pet care
• Parking for vehicles, valet parking
• Coat rooms
• Baggage handling
• Storage space
• Safe deposit boxes
• Security personnel
• Online security (e.g., Wi-Fi network)
• Personal data

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Enhancing Supplementary Services

Figure 4.13 Pet care services is a form of safekeeping

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Enhancing Supplementary Services
Exceptions — supplementary services that fall outside
the routine of normal service delivery.

Problem-
solving

Special Restitution
requests
Exceptions

Handling of
complaints/
suggestions/
compliments
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Enhancing Supplementary Services
McDonald’s well-established procedures let employees
respond smartly to customers’ requests.

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Managing the Flower of Service
• The eight categories of supplementary services that
form the “Flower of Service” collectively provide
many options for enhancing core products.
• Not every core product is surrounded by
supplementary elements from all eight petals.
• A company’s market positioning strategy helps to
determine which supplementary services should be
included.

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II. Branding Service Firms, Products and
Experiences

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II. Branding Services
• Branding helps marketers
– to establish a mental picture of the service in customers’
minds and
– to clarify the nature of the value proposition.
• Distinctive brand names of individual service products enables
the firm
– to communicate the distinctive experiences and benefits
associated with a specific service concept to the target
market.
• Branding can be employed at both the corporate and product
levels by almost any service business.

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2.1. Service Brand Architecture at the
Corporate Level
• Service organizations offer a line of products rather
than just a single product.
• Four broad branding alternatives:
– Branded House — used to describe a company, that applies its brand
name to multiple offerings in often unrelated fields
– Sub-brands — the corporate or the master brand is the main
reference point, but the product itself has a distinctive name
– Endorsed Brands — the product brand dominates but the corporate
name is still featured
– House of Brands — the corporate brands and its well-known sub-
brands

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2.1. Service Brand Architecture at the
Corporate Level

Figure 4.16 The spectrum of branding alternatives

Source: Adapted from James Devlin.

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 2.2. Branding Service Products and
Experiences
• Even within a particular service brand, most service
organizations offer
– not just a single product
– but a line of service offerings, bundles, and
specific experiences that are part of an overall
service.
• Branding using sub-brands, helps to differentiate one
bundle of output from another.

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 2.2. Branding Service Products and
Experiences
• Having branded service experiences makes it easier
to market and sell them.
• Employees can
– better understand these service experiences,
– can explain them more effectively, and
– know how to deliver them consistently and
system-wide at high quality.

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 2.2. Tiering Service Products With
Branding
• In a number of service industries
– branding is not only used to differentiate core
services,
– but also to clearly differentiate service levels.
• This is known as service tiering.

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2.2. Tiering Service Products With
Branding
• It is common in industries such as:
– hotels,
– airlines,
– car rentals, and
– computer hardware and software support.
• Other examples of tiering include
– healthcare insurance,
– cable television, and
– credit cards.
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Examples of Service Tiering

Industry Tiers Key Service Attributes and

Physical Elements Used in
Tiering
Lodging Star or diamond rating (5 to Architecture; landscaping;
1) room size; furnishings and
décor; restaurant facilities
and menus; room service
hours; array of services and
physical amenities; staffing
levels’ caliber and attitudes
of employees

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Examples of Service Tiering
Industry Tiers
Airline Classes (intercontinental):
first, business, premium
economy, economy
Key Service Attributes and
Physical Elements Used in
Tiering
Seat pitch (distance
between rows), seat width,
and reclining capability;
meal beverage service;
staffing radios; check-in
speed; departure and
arrival lounges; baggage
retrieval speed
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Examples of Service Tiering

Industry Tiers Key Service Attributes and

Physical Elements Used in
Tiering
Car rental Class of vehicle Based on vehicle size (from
subcompact to full size),
degree of luxury, plus
special vehicle types
(minivan, SUV, convertible)

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Examples of Service Tiering

Industry Tiers Key Service Attributes and

Physical Elements Used in
Tiering
Hardware and Support levels Hours and days of service;
software support speed of response; speed of
delivering replacements
parts; technician-delivered
service versus advice on
self-service; availability of
additional services

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 2.3. Building Brand Equity

• Brand equity is the value premium that comes with a

brand — what customers are willing to pay for the
service, beyond what they are willing to pay for a
similar service that has no brand.

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 2.3. Building Brand Equity
• Components of Brand Equity:
– Company’s presented brand — mainly through
advertising, service facilities, and personnel.
– External brand communications — from word of mouth
and publicity. These are outside of the firm’s control.
– Customer experience with the company — what the
customer has gone through when they patronized the
company.
– Brand awareness — the ability to recognize and recall a
brand when provided with a cue.
– Brand meaning — what comes to the customer’s mind
when a brand is mentioned.
– Brand equity — the degree of marketing advantage that a
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brand has over its competitors.
 2.3. Service Brand Architecture at the
Corporate Level

Figure 4.20 A service-branding model

Source: Adapted from Leonard L. Berry (2000), “Cultivating Service Brand Equity,” Journal of the Academy of Marketing Science,
Vol. 28, No. 1, pp. 128–137.

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 2.4. Delivering Branded Service
Experiences
• Delivering branded service experiences starts with
aligning the service product and brand with its
– delivery process,
– servicescape, and
– people with the brand proposition.
• To start off, we need to have great processes in
place.

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 2.4. Delivering Branded Service
Experiences
• Creating the emotional experience can be done
effectively through the servicescape.
• The hardest part of crafting the emotional
experiences is:
– Building of interpersonal relationships,
 where trust is established between the consumers
and the firm’s employees.

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 2.4. Delivering Branded Service
Experiences
• Invest in employees for they will be the ones who
can deliver the brand experience that creates
customer loyalty.
• For firms to be able to deliver branded service
experiences:
– they need to put the service product and its value
proposition at the center and
– align it with the other 6 Ps of services marketing.

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 2.4. Delivering Branded Service
Experiences
• The service product provides
– the guiding light for developing and delivering
the branded service experience and
– all other Ps need to support the desired service
experience for the customer.

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 2.4. Delivering Branded Service
Experiences

Figure 4.21 All Ps of services marketing need to support the service product and deliver
the desired service experience

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3. New Product Development

Self - Study

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Chapter Overview

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