To better understand the nature of services, it’s useful todistinguish between the core product and the supplementary elements that facilitate its useand enhance its value for customers.
PLANNING AND CREATING SERVICE PRODUCTS
Service Product
What do we mean by a service “product”?
Unlike physical products, services are experienced, not possessed For example, when a customer receives a tangible element like a cooked meal (meant to be eaten immediately), a pacemaker implant, or a car part, a large part of the cost goes towards the service aspects that add value
A service product comprises all of the elements of the service performance, both physical and intangible, that create value for customers.
For example: Restaurants - Customers not only buy meals but also buy experiences.
This experience includes (tangible) food, but also (intangible) services such as cooking,serving, and dining space.
Designing the Service Concept
Designing a service concept is a crucial aspect of service marketing How should you go about designing a service concept?
Experienced service marketers recognize the need to take a holistic view of the entire performance they want customers to experience The value proposition must address and integrate three components: (1) core product, (2) supplementary services, and (3) delivery processes.
The core product is the central component that supplies the principal, problem-solving benefits customers seek
Transport services solve the need to move a person or a physical object from one location to another, management consulting should yield expert advice on what actions a client should take, and repair services restore a damaged or malfunctioning machine to good working order.
When going to a restaurant to dine, the core product is the food, or when renting a hotel room, customers buy shelter.
Delivery of the core product is usually accompanied by a variety of other service- related activities referred to collectively as supplementary services.
These services augment the core product, facilitating its use and enhancing its value and appeal to the customer’s overall experience Core products tend to become commodified as an industry matures and competition increases, so the search for competitive advantage often emphasizes supplementary services Adding supplementary elements or increasing their level of performance should be done in ways that enhance the perceived value of the core product and enable the service provider to charge a higher price.
Example, it could be a parking assistance service, gym storage, or a business lounge service for customers buying business-class airline tickets.
The third component of designing a service concept focuses on the delivery processes.
These are the methods and procedures used to deliver both the core product and all the supplementary services to the customer
For example, diners coming to a restaurant not only buy and enjoy the food, they "buy" the staff's service from parking, and reception, to payment.
The design of the service offering must address the following issues:
How the different service components are delivered to the customer.
The nature of the customers’ role in those processes.
The prescribed level and style of service to be offered.
Example, the integration of the core product, supplementary services, and delivery processes is captured in Figure 1, which illustrates the components of the service offering an overnight stay at a luxury hotel.
Figure 1 Depicting the Service Offering for an Overnight Hotel Stay
The core product—overnight rental of a bedroom—dimensioned by service level, scheduling (how long the room may be used before another payment becomes due), the nature of the process (in this instance, people processing), and the role of the customers in terms of what they are expected to do for themselves and what the hotel will do for them, such as making the bed, supplying bathroom towels, and cleaning the room.
Surrounding the core product is a variety of supplementary services These range from reservations to meals, to in-room service elements Delivery processes must be specified for each of these elements The more expensive the hotel is, the higher the level of service required of each element For example, very important guests might be received at the airport and transported to the hotel in a limousine Check-in arrangements can be made on the way to the hotel By the time the guests arrive at the hotel, they are ready to be escorted to their rooms, where a butler is on hand to serve them.
Documenting the delivery sequence over time
A crucially important part of the process design is the sequence in which customers will use each of the core and supplementary services and the approximate length of time required in each instance This information, which should reflect a good understanding of customer needs, habits, and expectations, is necessary not only for marketing purposes but also for facilities planning, operations management, and allocation of personnel
In some instances, as in the dentist's script for teeth cleaning services (see Figure 2),certain service elements must be delivered in a prescribed sequence In other instances, there may be some flexibility.
Figure 2 Script for Teeth Cleaning and Simple Dental Examination
Time plays a key role in services, not only from an operational standpoint as it relates to allocating and scheduling purposes but also from the perspective of customers
In the hotel industry, neither the core service nor its supplementary elements are delivered continuously throughout the service performance Certain services must necessarily be used before others Figure 3 adds a temporal dimension to the different elements of the luxury hotel service concept, identifying when and for how long they are likely to be consumed by a typical guest from a given segment Not every guest uses every service, of course, and schedules may vary.
Figure 3 Temporal Dimension to Augmented Hotel Product
An important aspect of service planning is determining the amount of time customers may spend on different service elements In some instances, research may show that customers from a given segment expect to budget a specific amount of time for a given activity that has value for them and would not wish to be rushed (for instance, eight hours for sleeping, an hour and a half for a business dinner, 20 minutes for breakfast).
In other instances, such as making a reservation, checking in and out, or waiting for a car to be retrieved from valet parking, customers may wish to minimize or even eliminate time spent on what they perceive as non-value adding activities
Describe the Flower of Service and know how facilitating and enhancing supplementary services relate to the core product.
THE FLOWER OF SERVICE
A Framework for Understanding Supplementary Services
The Flower of Service is a visual framework developed by Christopher Lovelock to categorize and understand the various supplementary services that surround and enhance a core product It is a useful tool for businesses that want to improve their customer service and provide a more comprehensive and valuable experience to their customers.
The Eight Petals of the Flower of Service
The Flower of Service consists of eight petals, each representing a different cluster of supplementary services These petals are arranged in a clockwise sequence, following the typical customer journey The eight petals are: Information, Consultation, Order- taking, Hospitality, Safekeeping, Exceptions, Billing, Payment.
Figure 4 The Flower of Service Core Product Surrounded by Cluster of Supplementary Services
Benefits of Using the Flower of Service
The Flower of Service can be a valuable tool for businesses that want to improve their customer service and provide a more comprehensive and valuable experience to their customers By understanding the different types of supplementary services that are available, businesses can develop a strategy for providing the right mix of services to meet the needs of their customers.
The supplementary services that are represented by the petals of the Flower of Service can be further divided into two categories: Facilitating supplementary services and Enhancing supplementary services.
Facilitating supplementary services are those that are required for either service delivery or to aid in the use of the core product These services are essential for ensuring that the customer can use the product or service as intended Examples of facilitating supplementary services include information, order taking, billing and payment.
Enhancing supplementary services are those that add extra value for customers These services are not essential for the use of the core product, but they can make the customer experience more enjoyable and satisfying Examples of enhancing supplementary services include customer consultation, hospitality, safekeeping and exceptions.
Facilitating supplementary services
Facilitating supplementary services are those that are required for either service delivery or to aid in the use of the core product These services are essential for ensuring that the customer can use the product or service as intended
At the heart of effective customer service lies comprehensive and accurate information.
Customers need readily available details to make informed decisions, navigate the service landscape, and maximize their experience This information can encompass a wide range of aspects, including:
Product or Service Usage: Clear instructions, tutorials, and guides empower customers to effectively utilize the product or service, ensuring optimal functionality and satisfaction.
Pricing and Billing: Transparent pricing structures, billing details, and payment options enable customers to make informed financial decisions and avoid unexpected charges.
Policies and Procedures: Clearly defined policies, terms of service, and warranty information provide customers with a framework for understanding their rights and responsibilities.
Contact Information and Support: Easily accessible contact details and customer support channels allow customers to reach out for assistance when needed, fostering a sense of reassurance and responsiveness.
Figure 5 Example of information Elements
Companies can employ various methods to deliver information effectively to their customers:
Printed Materials: Brochures, pamphlets, and instruction manuals offer a tangible source of information that customers can refer to at their convenience.
Digital Platforms: Websites, mobile apps, and online knowledge bases provide readily accessible and up-to-date information.
After customers decide to make a purchase, the next crucial step is taking their order.
This process encompasses applications, order entry, and reservations.
Figure 6 Examples of Order Taking Elements
Applications: Similar to an interview process, some businesses like banks, insurance companies, and universities require potential customers to apply This application gathers necessary information and screens applicants based on specific criteria (example, credit history, health conditions).
Reservations: A unique type of order-taking, reservations secure customers a specific service unit For example, airline seats, restaurant tables, hotel rooms, professional appointments, or entry to designated seating areas in theaters or sports arenas.
Accuracy is paramount: reserving seats for the wrong date can lead to customer dissatisfaction.
Order Entry: Orders can be placed through various channels: Sales personnel, Phone calls, Emails, and Online platforms (websites) The process of order-taking should be polite, fast, and accurate so that customers do not waste time and endure unnecessary mental or physical effort Technology plays a vital role in making order-taking faster and easier for both businesses and customers The goal is to minimize effort and time spent on the process while maintaining accuracy and completeness.
Example: Airlines and Ticketless Systems:
At the airport, they simply need to show ID to claim their seats and obtain a boarding pass, eliminating the need for physical tickets.
Billing is common to almost all services Inaccurate, illegible, or incomplete bills risk disappointing customers who may, up to that point, have been quite satisfied with their experience, or worse, such failures add insult to injury if the customer is already dissatisfied.
Procedures range from verbal statements to a machine-displayed price, and from handwritten invoices to elaborate monthly statements of account activity and fees (Jochen Wirtz, 2011).
Perhaps the simplest approach is self-billing, by which the customer tallies up the amount of an order and authorizes a card payment into a single act, although the seller may still need to check for accuracy: In such instances, billing and payment are combined or writes a check.
Customers usually expect bills to be clear and informative, and itemized in ways that make it clear how the total was computed Nor do fuzzy printing or illegible handwriting.
Laser printers, with their ability to switch fonts and typefaces, to the box and to highlight, can produce statements that are not only more legible but also organize information in useful ways.
Payment is a facilitating supplementary service that is needed by customers for service delivery Customers want to know what they pay for, how to pay and when they need to pay.
Customers can pay more cheerfully and faster if a company makes transactions more convenient and simpler for them.
A variety of payment options exist, but all customers expect ease and convenience.
Self-service payment systems: for instance, require insertion of coins, ban- knotes, tokens, or cards in machines Most payment still takes the form of cash or credit cards
Other alternatives include vouchers, coupons, or prepaid tickets and other electronic means such as PayPal, which offers a fuss-free and secure way to make payments especially since increasingly more shopping is done online Firms benefit from prompt payment, because it reduces the amount of accounts receivable.
To ensure that people actually pay what is due, some service businesses have instituted control systems, such as ticket checks before entering a movie theater or on board a train However, inspectors and security officers must be trained to combine politeness with firmness in performing their jobs, so that honest customers do not feel harassed.
Enhancing supplementary services
Enhancing supplementary services: are those that add extra value for customers.
These services are not essential for the use of the core product, but they can make the customer experience more enjoyable and satisfying.
Consultation, unlike mere information dissemination, involves a two-way dialogue between the service provider and the customer This interactive approach allows for a deeper understanding of the customer's needs, enabling the development of personalized solutions that address their specific challenges and aspirations.
Customized Advice: Offering personalized recommendations based on the customer's individual situation and preferences.
Personal Counseling: Providing emotional support and guidance to help customers navigate personal or professional challenges.
Tutoring/Training in Product Use: Equipping customers with the knowledge and skills to effectively utilize products or services.
Management or Technical Consulting: Assisting businesses in optimizing their operations, enhancing efficiency, and resolving technical issues.
Figure 7 Examples of Consultation Elements
Consultation allows service providers to delve deeper into a customer's situation This can be as simple as a hairstylist offering personalized advice on hairstyles and products, or a healthcare provider drawing on customer records to recommend a suitable course of action.
Good customer data readily available at a remote terminal can greatly assist in this process.
Counseling takes consultation a step further by helping customers understand their situation and develop their own solutions This is particularly valuable for services like health treatment, where long-term behavioral changes are crucial For example, diet programs use counseling to empower participants to adopt healthy habits for long-term
Consultation comes in various forms In "solution selling" sales engineers provide companies with customized equipment and service packages after analyzing their specific needs This service may be free in hopes of securing a sale, or "unbundled" with a separate cost (example, pre-surgery diagnostic tests or feasibility studies).
Hospitality in Service creates delighted Customers, it’s a crucial element for any business that wants to build strong customer relationships and drive loyalty Here's how businesses can achieve that:
Greeting: Customers are more than just transactions Greeting them with genuine pleasure, both new and returning, sets a positive tone for the entire interaction Imagine them as guests in your home.
Courtesy and Consideration: This extends to all touchpoints, whether it's a face-to- face chat, a phone call, or online interactions.
Hospitality finds its fullest expression in face-to-face encounters Businesses can elevate the customer experience through:
Convenient Transportation: Offering courtesy shuttles for pick-up and drop-off demonstrates a commitment to customer convenience.
Comfortable Waiting Areas: When wait times are unavoidable, provide comfortable seating and distractions like TVs, newspapers, or magazines.
Friendly and Considerate Staff: Recruiting employees who are naturally warm, welcoming, and attentive goes a long way in creating a hospitable atmosphere.
Figure 8 Examples of Hospitality Elements
Giordano is an international clothing retailer with markets in Asia-Pacific and theMiddle East This clothing retailer sets a high standard They greet customers with a cheerful
The quality of the hospitality services offered by a firm plays an important role in determining customer satisfaction This is especially true for people-processing services, because one cannot easily leave the service facility until delivery of the core service is completed:
British Airways Arrivals Lounge: British Airways offers a unique service for premium passengers arriving on long flights They can access a special lounge with showers, spa services, and breakfast before continuing their journey, feeling refreshed.
When customers are visiting a service site, they often want assistance with their personal possessions
For example, supermarkets, gyms, and swimming pools often provide parking and storage services This allows customers to shop with peace of mind and benefit from the best possible service.
Additional safekeeping services may involve physical products that customers buy or rent They may include packaging, pick-up and delivery, assembly, installation, cleaning, and inspection These services may be offered free or for an additional fee.
For example, when buying an air conditioner, the seller will provide transportation and installation support, as well as free usage instructions Additionally, some brands also offer a 1-for-1 exchange within 730 days if the product is defective Repair is completely free when you purchase a warranty package.
Exceptions are non-routine supplementary services that are not part of the normal service delivery Astute businesses anticipate exceptions and develop contingency plans and guidelines in advance That way, employees will not appear helpless and surprised when customers ask for special assistance Well-defined procedures make it easier for employees to respond promptly and effectively There are several types of exceptions:
Special Requests in Advance of Services Delivery
Customers expect responsiveness whenever things seem not to work according to the plan and appreciate flexibility in cases where they want to be allowed to make special requests They can make advance requests relating to personal needs such as dietary requirements, personal disabilities, childcare, or religious observances Vegetarian customers can check the menu for vegetarian options or notify the restaurant for any special requests.
Problem-solving situations arise due to the failure of normal product performance or service delivery to run smoothly This may be caused by equipment failure, delays, accidents or clients experiencing challenges with the use of the service or product
Handling of suggestions, compliments or complaints requires well-defined procedures.
The company should make it easy for customers to offer suggestions for improvement, express dissatisfaction, and come up with the most suitable solution for both parties.
Restitution is compensation to customers for serious performance failures These may take the form of legal settlements, respires under warranty, or offers for free service.
Managerial Implications
Core products do not have to have supplementary elements However, the eight categories of supplementary services that form the “Flower of Service” collectively provide many options for enhancing core products Most supplementary services do represent responses to customer needs.
Some are facilitating services such as information and reservations that enable customers to use the core product more effectively.
For example, booking a hotel in advance guarantees a restful stay Research information, costs, and available services for a smoother travel experience This not only benefits you with convenience but also supports the hotel's core offerings of accommodation and guest safety.
In contrast, any badly handled element may negatively affect customers’ perceptions of service quality
For example, a coffee shop without parking security or parking fees will easily lead to customer dissatisfaction When they do not feel safe for their property, drinking water is not delicious, and that makes them uncomfortable and affects product quality.
People - processing and high contact services have more supplementary services
People-processing services tend to be the most demanding in terms of supplementary elements-especially hospitality-since they involve close (and often extended) customer contact; similarly, high-contact services usually have more customer interaction than low- contact services.
High-Contact Service: Fine-dining restaurant: Here, the wait staff interacts closely with customers throughout the dining experience They take orders, answer questions about preferences This high level of interaction allows for a more customized and memorable dining experience but requires well-trained and attentive staff (require more supplementary elements like well-trained staff to manage the frequent interactions and deliver a quality experience)
Low-Contact Service: Movie ticket vending machine: There's minimal customer interaction here Customers choose their movie, seats, and payment method at the machine with little to no assistance needed This is a low-cost and efficient way to purchase tickets but lacks the personalized touch a staff member could offer (prioritize efficiency and cost- effectiveness over personalization).
A company’s market positioning strategy helps to determine which supplementary services should be included A strategy of adding benefits to increase customers’ perceptions of quality will probably require more supplementary services than a strategy of competing on low prices
Hotel A positions itself as a budget hotel They provide basic accommodations with limited complimentary services, such as free Wi-Fi and parking.
Hotel B positions itself as a luxury resort They offer luxurious accommodations with extensive supplementary services, including a spa, swimming pool, concierge service, and fine dining experiences.
Companies competing on a low-cost, no-frills basis require fewer supplementary elements to remain competitive and cater to their target market.
Industry: Education Company: Coursera, edX Supplementary elements minimized: On-campus classes, one-on-one tutoring, physical textbooks.
Focus: Affordable online courses, self-paced learning, a wide range of subjects.
BRANDING SERVICES PRODUCTS AND EXPERIENCES
Service Products, Product Lines and Brands
In recent years, more and more service businesses have started talking about their products - a term previously associated with manufactured goods
A defined and consistent "bundle of output" as well as the ability to differentiate one bundle of output from another.
In the service industry, a "bundle of output" is a concept used to describe the set of benefits or values that customers receive when using a particular service It encompasses all the products, outcomes, or experiences that customers expect and receive from that service.
In other words, a "bundle of output" is the combination of various factors that contribute to the overall value of a service to the customer It may include:
Core Benefit: This is the fundamental product or service that customers purchase It forms the foundation of the entire service experience.
Intangible Benefits: There are non-physical benefits that customers derive from the service, such as convenience, peace of mind, or improved well-being
Customer Experience: This encompasses the overall experience customers have with the service, including every interaction they have with the service provider.
Perceived Value: This is the value that customers believe they receive from the service.
Perceived value is influenced by various factors, including service quality, price, customer service, and the service provider's brand reputation.
Providers of more intangible services also offer a “menu” of products, representing an assembly of carefully prescribed value-added supplementary services built around the core product.
Hairdressing services are a typical example of a "bundle of output" It meets the criteria of a defined and consistent product, as well as the ability to distinguish one product from another.
Defined products: Hairdressing services include many different services such as hair cutting, shampooing, hair drying, and hair styling, … These services are accepted are identified and can be ordered individually or in combination.
Differentiation: Hairdressing services can be differentiated from other services by comparing factors such as price, quality, reputation of the hairdresser, For example, a high- end hair salon may offer more expensive and higher quality services than a budget hair
Figure 9 Hairdressing services are a typical example of a "bundle of output"
Most service organizations offer a line of products rather than just a single product As a result, they must choose among 4 broad branding alternatives:
Figure 10 The Example of Retail Financial Services
There are 3 broad alternatives for product lines:
Single brand to cover all products and services A separate, stand-alone brand for each offering Some combination of these two extremes
David Aaker and E Joachimsthaler use the term branded house to describe a company.
Under the Branded House brand architecture, brands within the same portfolio share a strong connection This connection is evident in their shared brand identity, which is consistently presented to customers, fostering a sense of coherence, and belonging.
Example: A typical example of Branded House is VingGroup, that applies its brand name to multiple offerings in often unrelated fields such as: Vinhome (Mid- to high-end integrated residential real estate industry), VinUni (Non-profit private university), Vinpearl (Leisure travel) , Vinmec, and VinFast
Vingroup share a common logo and branding elements, which helps to create a sense of unity and consistency across the company However, each brand also has its own unique identity and target audience.
Figure 11 VingGroup applies its brand name to multiple offerings in unrelated fields
Next on the spectrum are Subbrands, for which the corporate or the master brand is the primary frame of reference but the product itself also has a distinctive name.
A sub-brand that uses a unique name for a product or service can develop its own brand Sub-brands have their own customer expectations and personalities that are different from the parent brand.
For example, the Big Mac sub-brand is always shown in a McDonald’s restaurant or advertisement, and never alone When its executives decided to create a sub-brand product instead of the traditional meat-only hamburger Big Mac is expected to develop and become a signature product line of McDonald's (Finkle, 2019).
Parent Company McDonald’s CorporationParent Brand McDonald’s
Sub-brand Big Mac Product/ Service Double Decker Hamburger, 4 Patty Double Decker Hamburger Other Sub-brands McChicken, McCafe, Egg McMuffin, Mighty Angus
For endorsed brands the product brand dominates, but the corporate name is still featured
This type of architecture features multiple brands that are endorsed by a parent brand
The parent brand provides credibility and support to the endorsed brands, but the endorsed brands still have their own identities In essence, endorsed brand architecture, as its name suggests, is how a smaller brand is endorsed by a larger brand and introduced to a larger consumer base.
For example, Marriott effectively maintains a degree of independence and generates a different character for each of its offers by generating separate logos for each brand.
Consider Marriott’s brand portfolio, which includes Marriott Hotels & Resorts, Sheraton, Westin, and Courtyard Each of these brands has its own logo that is prominently displayed to show its own personality and brand traits Nonetheless, the master brand
“Marriott” is incorporated into the brand logos, which are often positioned below, confirming the link and endorsement to the overall Marriott brand.
Figure 12 Marriott's Endorsed Brands Architecture
House of Brands strategy involves managing a portfolio of distinct and independent brands under a single corporate umbrella These brands may have no common elements
(design, imagery, product category) or share some similarities in terms of target audience (BURR, 2024).
Figure 13 House of Brands in Brand Architecture Strategy
At the far end of the spectrum is the house of brands strategy Yum! Brands Inc adopts the house of brands strategy with more than 35,000 restaurants in 110 countries.
While many may not have heard of Yum! Brands, people certainly are familiar with their restaurant brands— A&W, Kentucky Fried Chicken, Pizza Hut, Taco Bell, and Long John’s Silver Each of these brands is actively promoted under their own name.
Figure 14 The house of brands model is Yum! Brands
Tiering Service Products with Branding
In a number of service industries, branding is not only used for core services, but also to clearly differentiate different service levels Often based on offering several price-based classes of service concept, each is based on packaging a distinctive level of service performance across many attributes This phenomenon, known as service tiering.
Table 2 Examples of Services Tiering
Y ELEMENTS USED IN TIERING Lodging Star or diamond ratings (5 to 1)
Architecture; landscaping room size, furnishings, and décor, restalitimensus, room service hours, array of services and physical amenities, staffing levels caliber and attitudes of employees
(intercontinental): first, business, premium economy.
Seat pitch (distance between rows), seat width, and reclining capability, meal and beverage service, staffing ratios check-in speed; departure and arrival lounges; baggage retrieval speed
Car rental Class of vehicle Based on vehicle size (from subcompact to full size), degree of luxury, plus special vehicle types (minivan, SUV, convertible)
Support levels Hours and days of service, speed of response: speed of delivering replacement parts: technician-delivered service versus advice on self-service, availability of additional services
In the airline industry, individual carriers decide what levels of performance should be included with each class of service Let’s examine a few examples next:
British Airways offers seven service tiers: First (luxury), Club World (business), World Traveller Plus (premium economy), World Traveller (economy), Club Europe (business class), Euro-Traveller (economy class), and Shuttle (frequent economy service between London and major British cities).
Each service tier has a distinct set of service standards for pre-flight, in-flight, and arrival experiences.
Dedicated teams manage each service tier to ensure consistent service quality.
Passengers are fully informed about the features of each service tier through internal training and external communication.
Passengers in higher service tiers receive better amenities, personalized service, and faster ground handling.
Higher ticket prices correspond to higher levels of service.
Passengers on the same flight experience the same core journey (example, flight duration), but the amenities and services provided vary greatly depending on the ticket class.
Higher ticket classes offer more perks, including both tangible benefits (more comfortable seats, better meals) and intangible benefits (more personalized service, and faster ground handling such as priority check-in, customs clearance, and baggage claim) Naturally, the higher the ticket class, the higher the price.
Sun Microsystems Hardware and Software Support
For an example of branding different tiers in a high-tech, business-to-business product line, consider Sun Microsystems The company offers a comprehensive hardware and software support program branded as “SunSpectrum Support.”
4 different levels of support are available, subbranded from platinum to bronze.
Figure 15 Sun System Service Plans for Solaris
The objective is to give buyers the flexibility to choose a level of support consistent with their own organization’s needs (and willingness to pay).
Offering a Branded Experience
In a well-managed firm, the corporate brand is not only easily recognized but also has meaning for customers, standing for a particular way of doing business.
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 In short, it helps marketers to establish a mental picture of the service in customers’ minds and to clarify the nature of the value proposition.
Branding can be employed at corporate and product levels
Easily recognizedHolds meaning to customers
Product brand: Helps firm communicate distinctive experiences and benefits associated with a specific service concept.
The Forum Corporation, a consulting firm, differentiates between (1) a random customer experience with high variability; (2) a generic branded experience by suppliers who offer a consistently similar experience, differentiated only by the presence of the brand name (ATMs are a good example); and (3) a “branded customer experience” in which the customer’s experience is shaped in specific and meaningful ways.
Forum Corporation identified the following basic steps to develop and deliver the Branded Customer Experience:
Target profitable customers, employing behavior rather than demographic segmentation as behavior is a more accurate indicator of tastes and preferences.
Achieve a superior understanding of what your targeted customers value.
Create a brand promise an articulation of what target customers can expect from their perience with your organization-that is of value to customers, addresses a need, and is ac- tionable and can be incorporated into standards, and provides focus for the organization and its employees.
Apply that understanding to shape a truly differentiated customer experience.
Give employees the skills, tools, and supporting processes needed to deliver the defined customer experience.
Make everyone a brand manager who is behind the brand and supports the brand.
Make promises that your processes can exceed.
Measure and monitor: Consistency of delivery is paramount.
Around the world, many financial service firms continue to create and register brand names to distinguish the different accounts and service packages they offer Their objective is to transform a series of service elements and processes into a consistent and recognizable service experience, offering a definable and predictable output at a specified price.
An important role for service marketers is to become brand champions, familiar with and responsible for shaping every aspect of the customer’s experience.
Unfortunately, there often is little discernible difference-other than name-between one bank’s branded offering and another’s, and their value proposition may be unclear.
NEW SERVICE DEVELOPMENT
What is a New Service Product?
A service can be termed as a new service when it is innovative, created and offered by the company to the world for the first time Some new services are adaptive replacements.
They are the improved versions of the existing service product either in technology, style,status or performance (K.Rama MohanaRao) (KAUR, New Service Development, 2018).
A Hierarchy of New Service Categories
There are 7 different ways for service providers to innovate which are explained as follows:
Style changes: It represents the simplest type of innovation, involving no changes in either processes or performance However, they often are highly visible, create excitement, and may serve to motivate employees (Christopher Lovelock).
For example, changing the color scheme of a restaurant, revising the logo for an organization, redesigning a website, or painting aircraft a different color (Valarie A.
Zeithaml) Or include repainting retail branches and vehicles in new color schemes, outfitting service employees in new uniforms, introducing a new bank check design, or minor changes in service scripts for employees.
Table 3 Examples about style change
Changing the color scheme of a cafe:
Changing from warm colors to cool colors for the cafe.
Repaint the plane another color Redesigning a website
Service improvements: It is the most common type of innovation It involves modest changes in the performance of current products, including improvements to either the core product or to existing supplementary services.
For example, updating the app's software or making improvements to hotel rooms can enhance the user experience in order to improve the efficiency of the service.
Supplementary service innovations: It takes the form of adding new facilitating or enhancing service elements to an existing core service or of significantly improving an existing supplementary service Multiple improvements may have the effect of creating what customers perceive as an entirely new experience, even though it is built around the same core.
For example, Cafes are designed to entertain customers with fish tanks and waterfalls.
This additional service will help customers feel more comfortable and relaxed In another example, hotels will expand their shuttle service for their customers with additional trips from the airport to the hotel.
Process line extensions are less innovative than process innovations but often represent distinctive new ways of delivering existing products, either with the intent of offering more convenience and a different experience for existing customers or of attracting new customers who find the traditional approach unappealing Most commonly, they involve adding a lower-contact distribution channel to an existing high-contact channel.
For example, In the past, you had to go to the conference in person to attend Now, conferences are held both in person and live-streamed, making it more flexible and convenient for participants to attend.
Product line extensions are additions to a company’s current product lines The first company in a market to offer such a product may be seen as an innovator; the others are merely followers, often acting defensively These new services may be targeted at existing customers to serve a broader array of needs or designed to attract new customers with different needs (or both)
For example, in addition to facial care, spa businesses have also expanded their services to include body care to cater to individual customer needs Body care services offered at spas often include Massages, Body wraps, Body scrubs, Facials, …
Major process innovations: It consists of using new processes to deliver existing core products in new ways with additional benefits.
Before COVID-19, UFM University used to teach face-to-face But after COVID-19, the school changed to 70% face-to-face and 30% online classes This allows students to be flexible in their learning.
Major service innovations: These are new core products for markets that have not been previously defined (Christopher Lovelock)
For example, retailers adding a coffee bar or children’s play area; FedEx’s introduction of overnight, nationwide, express package delivery in 1971 and eBay’s launch of online auction services
In short, service innovation can occur at many different levels; not every type of innovation has an impact on the characteristics of the service product or is experienced by the Customer.
Reengineering Service Processes
Reengineering involves analyzing and redesigning processes to achieve faster and better performance To reduce overall process time, analysts must identify each step,measure how long it takes, look for opportunities to speed it up (or even eliminate it altogether), and cut out dead time Running tasks in parallel rather than in sequence is a well-established approach to speeding up processes.
Some ways to restructure service processes:
Add or eliminate supplementary services Re-sequence delivery of service elements Offer self-service options
The primary goal of this process is to enhance their quality, performance, and maintainability.
Figure 19 Alternative Service Concepts for Meal Delivery
Physical Goods as a Source of New Service Ideas
Goods and services may become competitive substitutes if they offer the same key benefits
For example, if your lawn needs mowing, you could buy a lawn mower and do it yourself, or you could contract with a lawn maintenance service to take care of the chore, effectively avoiding ownership and renting both labor and machines Such decisions may be shaped by the customer’s skills, physical capabilities, and time budget as well as such factors as cost comparisons between purchase price (plus operating costs) and service fees, storage space for purchased products, and anticipated frequency of need.
Provides an alternative to owning the physical good that can attain the desired outcome
Figure 21 shows four possible delivery alternatives each for car travel and word processing, respectively Three of these alternatives present service opportunities Each alternative is based on choosing between ownership and rental of the necessary physical goods and between performing self-service and hiring another person to perform the necessary tasks Additional services can be added to enhance the value proposition.
Figure 20 Services as Substitutes for Goods Ownership and Task Performance
Any new good may create need for after-sales services now and be a source of future revenue stream Industrial equipment may require servicing throughout its lifespan, beginning with financing and insurance, then shipping (and possibly installation), and continuing with maintenance, cleaning, repair, consulting advice and problem solving, upgrading, and ultimate disposal Historically, such after-sales services have generated important revenue streams for many years after the initial sale for products like trucks, factory machinery, locomotives, computers, and jet engines.
Using Research to Design New Services
If a company is designing a new service from scratch, how can it figure out what features and price will create the best value for target customers? It’s hard to know without asking customers—hence the need for research.
Why is it necessary to research and develop new products?
Customer demands are constantly changing: Consumers increasingly need and want new things They will consider and choose brands that truly listen to their diverse needs.
Products are at the end of their life cycle: When a product reaches saturation or decline, businesses must switch to introducing new and improved versions.
The market is changing: Sometimes, there will be new developments from the market that you can take advantage of to make a breakthrough.
Competitors: The increasing number of competitors in the market makes customers compare the value of services.
No product is perfect: Don't cling to outdated products, as they will no longer generate revenue for you and create value for users.
Achieving Success in New Service Development
Services are not immune to high failure rates that plague new manufactured products.
To what extent can rigorously conducted and controlled development processes for new services enhance their success rate?
Core product is often of secondary importance, many innovations are in supplementary services or service delivery.
Ability to maintain quality of the total service offering is key Accompanying marketing support activities are vital
Market knowledge is of utmost importance
Success Factors in new service development
Good fit between new product and firm’s image Advantage in meeting customers’ needs
Strong support from firm during and after launch Understands customer purchase decision behavior
Strong inter-functional cooperation and coordination Internal marketing to educate staff on new product and its importance
Scientific studies conducted early in development processProduct concept well defined before undertaking field studies
Designing a service involves crafting three key elements: the core product, supplementary services, and the delivery process for both The "Flower of Service" model is a helpful tool that breaks down services into these components The core product sits at the center, representing the fundamental benefit the service provides Surrounding it are two types of supplementary services: facilitating and enhancing Facilitating services, like information provision, order taking, billing, and payment, make it easier for customers to acquire the core product Enhancing services, on the other hand, elevates the overall experience Examples include consultation, hospitality, safekeeping, and handling exceptions.
Furthermore, there's a spectrum of branding options for services Businesses can choose a branded house approach, where all services fall under a single brand identity Sub- brands and endorsed brands offer variations where sub-brands focus on specific service segments, while endorsed brands leverage an established brand to launch new services.
Alternatively, the house of brands strategy involves creating independent brands for each service offered.
Developing new services requires a multifaceted approach One strategy is to re- engineer existing service processes to optimize efficiency and potentially uncover new service ideas Physical goods can also spark innovation, inspiring new services based on existing products Additionally, market research plays a crucial role in identifying customer needs and informing the design of novel services
Finally, understanding the key factors that contribute to success in new service development is essential for bringing these innovative offerings to market effectively.