Creating Service Product Love Lock 04
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Transcript of Creating Service Product Love Lock 04
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 1
Creating the
Service Product
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 2
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)
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
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 3
Operating Assets
(Facilities/Equipment, IT Systems,People, Op. Skills, Cost Structure)
Service Design Involves Matching MarketingConcept with Operations Concept (Fig. 4.1)
Corporate Objectivesand Resources
Service DeliveryProcess
Marketing Assets(Customer Base, Mkt. Knowledge,
Implementation Skills, Brand Reput.)
Service Marketing Concept
Benefits to customer from core/supplementary elements, style,service level, accessibility
User costs/outlays incurredPrice/other monetary costsTimeMental and physical effortNeg. sensory experiences
Service Operations Concept
Nature of processesGeographic scope of opsSchedulingFacilities design/layoutHR(numbers, skills)Leverage (partners, self-service)Task allocation: front/backstagestaff; customers as co-producers
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 4
Understanding theComponents of the
Augmented Service Product
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 5
Shostacks Molecular Model of a Total MarketEntity - Passenger Airline Service (Fig. 4-2)
DistributionPrice
MarketingPositioning(Weightedtowardevidence) Source: Shostack
KEY
TangibleelementsIntangibleelements
Servicefrequency
Vehicle
Transport
Pre- andpost-flight
service
Food
anddrink
In-flightservice
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 6
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
In mature industries, core products often becomecommodities
Supplementary services help to differentiate core products
and create competitive advantage by:facilitatinguse of the core serviceenhancingthe value and appeal of the core
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 7
Core and Supplementary Product Design:What Do We Offer and How Do We Create and Deliver It?
Core
Scheduling Process
Service
Level
Customer
Role
Supplementaryservices offeredand how createdand delivered
Delivery ConceptFor Core Product
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 8
What Should Be the Core and SupplementaryElements of Our Service Product?
How is our core product defined and what supplementaryelements currently augment this core?
What product benefits create the most value for customers?
Is our service package differentiated from the competition inways that are meaningful to target customers?
What are current levels of service on the core product andeach of the supplementary elements?
Can we charge more for higher service levels on keyattributes (e.g., faster response, better physical amenities,easier access, more staff, superior caliber personnel)?
Alternatively, should we cut service levels and charge less?
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 9
Core and Supplementary Services in a Luxury Hotel(Offering Guests Much More than a Cheap Motel!)
Reservation
ValetParking
Reception
Baggage
Service
CocktailBar
RestaurantEntertainment/
Sports / Exercise
Telephone
Wake-upCall
Room
Service
BusinessCenter
Cashier
A Bed for the
Night in anElegant Private
Room with a
Bathroom
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 11
The Flower of Service:Categorizing Supplementary Services (Fig. 4-5)
Core
Information
Consultation
Order-Taking
Hospitality
Payment
Billing
Exceptions
SafekeepingFacilitating elements
Enhancing elements
KEY:
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 12
Facilitating Services - Information(Table 4.1)
Core
Customers often require
information about how toobtain and use a product orservice. They may alsoneed reminders anddocumentation
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 13
Facilitating Services - Order-Taking(Table 4.2)
Many goods and servicesmustbe ordered or reservedin advance. Customers needto know what is available andmay want to secure
commitment to delivery
Core
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 14
Facilitating Services - Billing(Table 4.3)
How much do I owe you?Customers deserve clear,accurate and intelligiblebills and statements
Core
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 15
Facilitating Services - Payment(Table 4.4)
Customers may pay fasterand more cheerfully if youmake transactions simpleand convenient for them
Core
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 16
Enhancing Services - Consultation(Table 4.5)
Value can be added togoods and services byoffering advice andconsultation tailored toeach customers
needs and situation
Core
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 17
Enhancing Services - Hospitality(Table 4.6)
Customers who invest timeand effort in visiting abusiness and using itsservices deserve to betreated as welcome guests(after all, marketing invited
them there!)
Core
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 18
Enhancing Services - Safekeeping(Table 4.7)
Customers prefer not to
worry about looking afterthe personal possessionsthat theybring with themto a service site.
They may also want delivery
and after-sales services forgoods that they purchaseor rent
Core
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 19
Enhancing Services - Exceptions(Table 4.8)
Customers appreciate someflexibility in a businesswhen they make specialrequests. They expect itwhen not everything goesaccording to plan
Core
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 20
BrandingService Products
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 21
Service Branding:Clarifying Distinctive Service Offerings
Marriott Hotel Brands
Marriott Hotels
Marriott ResortsCourtyard by Marriott
Fairfield Inns
Residence Inns
SpringHill SuitesTownePlace Suites
Marriott Vacation ClubsInternational
British Airways Brands
Intercontinental
FirstClub WorldWorld Traveller PlusWorld Traveller
European
Club EuropeEuro-Traveller
UK Domestic
Shuttle
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 22
Branding a High-Tech, B2B Product Line:A Family of Brands at Sun Microsystems
Corporate umbrella brand Sun Microsystems
Product line brand (system support services) Sun Spectrum Support
Sub-brands (4 levels of support service programs) Platinum
Gold
Silver
Bronze
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 23
Sun Spectrum Support:Sub-branding Highlights Four Service Levels
Sub-branding clarifies service levels offered at different fees
Platinum: Mission Critical
On-site service 24/7, two-hour response;telephone support 24/7, onsite parts replacement;
additional services available
Gold: Business Critical
Onsite service Mon-Fri 8am-8pm, four-hour response;
telephone support 24/7; onsite parts replacement
Silver:Basic Support
Onsite service Mon-Fri 8am-5pm, four-hour response;telephone support Mon-Fri 8am-8pm; onsite parts replacement
Bronze: Self Support
Phone support Mon-Fri 8am-5pm; parts replacement by courier
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 24
New ServiceDevelopment
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 25
New Service Development:A Hierarchy of New Service Categories
Major service innovations--new core products for previouslyundefined markets
Major process innovations--using new processes todeliver 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
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 26
New Service Development:Physical Goods as Source of Service Ideas
Customers can rent goodsuse and return for a feeinstead of purchasing them
Customers can hire personnel to operate their own or
rented equipmentAny new durable product may create need for after-sales
services (possession processing)
Shipping Installation
Problem-solving and consulting advice Cleaning MaintenanceRepair Upgrading Disposal
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 27
Creating Services as Substitutes forOwning and/or Using Goods (Fig. 4-7)
Perform the
Work Oneself
Hire Someone
to Do the Work
Own a Physical Good Rent the Use
of a Physical Good
Hire a taxi or limousine
Send work to secretarial service
Rent car and drive it
Rent word processor and type
Hire chauffeur to drive car
Hire typist to use word processor
Drive own car
Type on own word processor
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 28
Service Development through Delivery Options:Alternative Meal Service Formats (Fig. 4-8)
Home
DeliveryOrder food,
give address
Driver rings
doorbell
Pay driver,
take food EatTelephone
Restaurant
Drive-InRestaurant(Take Out)
See sign Order via
microphone
Get meal at
pickup, pay
Drive away,
eat later
Stop car at
order point
Fast-FoodRestaurant
(EatIn)
See sign Park and
enter
Order meal,
and pay
Pick up
meal
Find table
and eat
Clear table
and leave
Home
Catering
Arrange tomeet caterer
Plan meal,
pay depositFood and
staff arrive
Meal ispreparedand served
EatStaff cleans
up; pay
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 29
Elements of a Hotel Offering:Trading off Room Price vs. Features/Services
External building designand features
Room features
Food-related services
Lounge facilities
Services (e.g., reception)
Leisure facilities
Securitypeople/systems
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 30
Success Factors in New Service Development
Market synergyGood 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
Organizational factors Strong interfunctional cooperation and coordination
Internal marketing to educate staff on new product and itscompetition
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