Product - the first P

Product the First P

Decisions related to a product may include the followingfollowingThe Concept or core benefit Product featuresfeatures- part of the Augmented Product Brand namename- constituting the Differentiated Product

Research Can remove blind spots

..regarding what consumers will value in their service. For example, Harvard professor Schlesinger mentions in one of his articles that a bank thought customers would like humans to deliver cash, until research proved that they preferred ATMs! They found ATMs easier to use and were happier with their service compared with human tellers at the bank.

Key Steps in Service Planning: Matching Opportunities to Resources

Must relate marketing opportunities to firms resources (physical, financial, technological, human) Identify, evaluate firms marketing assets
Customer portfolio/lifetime value (customer equity) Market knowledge Marketing implementation skill Product line Competitive positioning strategies Brand reputation (brand equity)

Service Design Involves Matching Marketing Concept with Operations Concept Identify, evaluate firms 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
Marketing Assets
(Customer Base, Mkt. Knowledge, Implementation Skills, Brand Reput.)

Corporate Objectives and Resources

Operating Assets
(Facilities/Equipment, IT Systems, People, Op. Skills, Cost Structure)

Service Marketing Concept

Benefits to customer from core/ supplementary elements, style, service level, accessibility User costs/outlays incurred Price/other monetary costs Time Mental and physical effort Neg. sensory experiences

Service Operations Concept

Nature of processes Geographic scope of ops Scheduling Facilities design/layout HR (numbers, skills) Leverage (partners, self-service) Task allocation: front/backstage staff; customers as co-producers

Service Delivery Process

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

Core and Supplementary Product Design: What Do We Offer and How Do We Create and Deliver It?

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

Supplementary services offered and how created and delivered

Delivery Concept For Core Product

Scheduling

Process

Core Service Level Customer Role

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 Should Be the Core and Supplementary Elements of Our Service Product? 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 less?

Core and Supplementary Services in a Luxury Hotel (Offering Guests Much More than a Cheap Motel!)

What Happens, When, and in What Sequence? The Time Dimension in the Augmented Service Product
Reservation

Reservation Cashier Business Center A Bed for the Night in an Elegant Private Room with a Bathroom Valet P arking R eception Baggage Service

Parking Check in USE ROOM

Get car Check out Phone USE GUESTROOM OVERNIGHT Porter Meal Pay TV Room service

Room Service Wake-up Call T elephone

Cocktail Bar
Entertainment/ Sports / Exercise

Restaurant

Pre Visit

Time Frame of an Overnight Hotel Stay (real-time service use)

The Flower of Service: Categorizing Supplementary Services

Information Payment
Core

Facilitating Services - Information

Consultation
Core

Billing

Order-Taking

Customers often require information about how to obtain and use a product or service. They may also need reminders and documentation

Exceptions
KEY:

Hospitality Safekeeping

Facilitating elements Enhancing elements

Facilitating Services - OrderOrder-Taking

Facilitating Services Billing

Core

Many goods and services must be ordered or reserved in advance. Customers need to know what is available and may want to secure commitment to delivery

Core

How much do I owe you? Customers deserve clear, accurate and intelligible bills and statements

Facilitating Services Payment

Enhancing Services Consultation

Core

Customers may pay faster and more cheerfully if you make transactions simple and convenient for them

Core

Value can be added to goods and services by offering advice and consultation tailored to each customers needs and situation

Enhancing Services Hospitality

Enhancing Services Safekeeping

Core

Customers who invest time and effort in visiting a business and using its services deserve to be treated as welcome guests (after all, marketing invited them there!)

Core

Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site. They may also want delivery and afterafter-sales services for goods that they purchase or rent

Enhancing Services Exceptions

Core

Customers appreciate some flexibility in a business when they make special requests. They expect it when not everything goes according to plan

Branding Service Products

Branding a HighHigh-Tech, B2B Product Line: A Family of Brands at Sun Microsystems Corporate umbrella brand
Sun Microsystems

Sun Spectrum Support: SubSub-branding Highlights Four Service Levels

Sub Sub-branding clarifies service levels offered at different fees
Platinum: Platin um: Mission Critical OnOn-site service 24/7, two two-hour response; telephone support 24/7, onsite parts replacement; additional services available Gold: Business Critical Onsite service MonMon-Fri 8am8am-8pm, fourfour-hour response; telephone support 24/7; onsite parts replacement

Product line brand (system support services)

Sun Spectrum Support

Sub Sub-brands (4 levels of support service programs)

Platinum Gold Silver Bronze

Silver: Basic Support Silver: Onsite service MonMon-Fri 8am8am-5pm, four-hour response; telephone support MonMon-Fri 8am 8am-8pm; onsite parts replacement Bronze: Self Support Phone support MonMon-Fri 8am8am-5pm; parts replacement by courier

New Service Development

New Service Development: A Hierarchy of New Service Categories

Major service innovations--new --new core products for previously undefined markets Major process innovations--using --using new processes to deliver existing products and offer extra benefits Product line extensions--additions --additions to current product lines Process line extensions---alternative alternative delivery procedures Supplementary service innovations---adding adding new or improved facilitating or enhancing elements Style changes---visible visible changes in service design or scripts

New Service Development: Physical Goods as Source of Service Ideas

Customers can rent goods goodsuse and return for a fee fee instead of purchasing them Customers can hire personnel to operate their own or rented equipment

Any new durable product may create need for afterafter-sales services (possession processing)
Shipping Installation ProblemProblem -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
Rent car and drive it
Rent word

Service Development through Delivery Options: Alternative Meal Service Formats

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

Perform the Work Oneself Hire Someone to Do the Work

Drive own Type on

car

See sign

own word processor

processor and type

Stop car at order point

Order via microphone

Get meal at pickup, pay

Drive away, eat later

Hire Hire

chauffeur to drive car typist to use word processor

Hire

a taxi or limousine work to secretarial service

Telephone Restaurant

Order food, give address

Driver rings doorbell

Pay driver, take food

Eat

Send

Home Catering

Arrange to meet caterer

Plan meal, pay deposit

Food and staff arrive

Meal is prepared and served

Eat

Staff cleans up; pay

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 Securitypeople/systems

Success Factors in New Service Development

Market synergy
Good fit between new product and firms image/resources Advantage vs. competition in meeting customers needs Strong support from firm during/after launch Firm understands customer purchase decision behavior

Services, technologyand Govt.

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

The design of a service product sometimes depends on infrastructure and technology availability. For example, Star TV had a plan to launch Direct to home (DTH) channels in India. But it needed government permission to bring the technology and hardware to India, which was denied.

Technology in services
Call centres are technology intensive, and require power and telecom infrastructure of a very high quality. So until a few years ago, service companies would not have thought about them for any kinds of services, prepre-launch inquiries or post postsale services. But today every company of any significance has call centres for various activities.

A Major New Service that failed

A new service that failed due to wrong product design and pricing, was the Dhirubhai Ambani Pioneer offer from Reliance. This offer was confusing to consumers, and had a very high initial price, which became an entry barrier. The technology was also new (Wireless in Local Loop or WLL), and required an expensive CDMA technolgy handset compared to normal GSM technology phone instruments. The first few customers who bought into the new instruments complained of quick battery drainage and overheating of handsets.

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