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Learning Objectives
Formulate
a strategic service vision. Describe how a service has addressed each element in the strategic service concept. Discuss the competitive environment of services. Describe how a service competes using the three generic service strategies. Discuss the service purchase decision. Discuss the competitive role of information Explain the role of the virtual value chain in service innovation. Discuss the limits in the use of information
What are common characteristics of important market segments? What dimensions can be used to segment the market, demographic, psychographic? How important are various segments? What needs does each have? How well are these needs being served, in what manner, by whom?
What are important elements of the strategy: operations, financing, marketing, organization, human resources, control? On which will the most effort be concentrated? Where will investments be made? How will quality and cost be controlled: measures, incentives, rewards? What results will be expected versus competition in terms of, quality of service, cost profile, productivity, morale/loyalty of servers?
are important features of the service delivery system including: role of people, technology, equipment, layout, procedures? What capacity does it provide, normally, at peak levels? To what extent does it, help insure quality standards, differentiate the service from competition, provide barriers to entry by competitors?
Delivery system (front & back office) Facility design (aesthetics, layout) Location (competition, site characteristics) Capacity planning (number of servers)
Managerial:
Service encounter (culture, empowerment) Quality (measurement, guarantee) Managing capacity and demand (queues) Information (data collection, resource)
Staying Focused
Crotts, Dickson and Ford, Aligning Organizational Processes with Mission: The case of service Excellence, Academy of Management Executive, 2005 19:3.
Communications:
Top Management Walks the Service Mission Talk Departmental and Unit Goals are Aligned with Service Mission Performance Standards are Aligned with Service Mission Environmental Setting and Physical Design Communicate Service Mission Service Excellence Stories are Told and Successes Celebrated Job Descriptions Include Service Mission Job Ads Include Service Mission Interviews Include Questions about Service Mission Orientation Programs Stress Mission Performance Appraisals Include and Reward Service Mission Annual Training in Service Mission
HR:
Low Overall Entry Barriers Economies of Scale Limited High Transportation Costs Erratic Sales Fluctuations No Power Dealing with Buyers or Suppliers Product Substitutions for Service High Customer Loyalty Exit Barriers
Out Low-cost Customers Standardizing a Custom Service Reducing the Personal Element in Service Delivery (promote self-service) Reducing Network Costs (hub and spoke) Taking Service Operations Off-line
the Intangible Tangible (memorable) Customizing the Standard Product Reducing Perceived Risk Giving Attention to Personnel Training Controlling Quality
Note: Differentiation in service means being unique in brand image, technology use, features, or reputation for customer service.
Group: (e.g. USAA insurance and military officers) Offered: (e.g. Shouldice Hospital and hernia patients)
Service
Geographic
Convenience
Dependability Personalization
Price
Quality Reputation
Safety
Speed
(24 hour ATM) (Site location) (On-time performance) (Know customers name) (Quality surrogate) (Perceptions important) (Word-of-mouth) (Customer well-being) (Avoid excessive waiting)
certain level must be attained on the competitive dimension, as defined by other market players.
Examples are cleanliness for a fast food restaurant or safe aircraft for an airline.
Service
Examples are failure to repair auto (dependability), rude treatment (personalization) or late delivery of package (speed).
Offline (Analysis)
Database asset:
Selling information Development of services Micromarketing
External (Customer)
Revenue generation:
Productivity enhancement:
Inventory Status Data envelopment analysis (DEA)
Internal (Operations)
vs Marketspace Creating New Markets Using Information (Gather, Organize, Select, Synthesize, and Distribute) Three Stage Evolution
1st Stage (Visibility): See physical operations more effectively with information Ex. USAA paperless operation 2nd Stage (Mirroring Capability): Substitute virtual activities for physical Ex. USAA automate underwriting 3rd Stage (New Customer Relationships): Draw on information to deliver value to customer in new ways Ex. USAA event oriented service
(Barrier to entry)
Data
Reliability
Focus
Qualifiers
Service
Winners
Service
Losers
Operating Service
delivery system
PREFLIGHT SERVICE
Inconvenient
Convenient
No Amenities
Good
MOVIE SELECTION
Few
Many
Poor
Operating Service
delivery system
winners losers
Discussion Topics
Give examples of service firms that use both the strategy of focus and differentiation and the strategy of focus and overall cost leadership. Use the service design elements for a service of your choice to illustrate how all eight elements support the service strategy. What ethical issues are associated with micro-marketing? For each of the three generic strategies (i.e., cost leadership, differentiation, and focus) which of the four competitive uses of information is most powerful?