Planning and Creating Services
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 1
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 2
Planning and Creating Services
▪ A service product comprises all elements of service
performance, both tangible and intangible, that create
value for customers
▪ The service concept is represented by:
➢ A core product
➢ Accompanied by supplementary services – facilitate and enhance
use of the core product and add value and differentiation
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 3
Core Products and
Supplementary Services
▪ In mature industries, core products often become
commodities
▪ Supplementary services help to differentiate core products
and create competitive advantage by:
➢ Facilitating use of core product (a service or a good)
➢ Enhancing the value and appeal of the core product
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 4
Designing a Service Concept
▪ Core Product
➢ Central component that supplies the principal, problem-solving
benefits customers seek
▪ Supplementary Services
➢ Augment the core product, facilitating its use and enhancing its
value and appeal
▪ Delivery Processes
➢ Used to deliver both the core product and each of the
supplementary services
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 5
Core and Supplementary Services at Luxury Hotel
(Offering Much More than Cheap Motel!)
Reservation
Cashier Valet
Parking
Business
Reception
Centre
A Bed for the
Room Night in an
Service Elegant Private
Baggage
Room with a
Service
Bathroom
Wake-up Cocktail
Call Bar
Internet Entertainment/
Sports/ Exercise Restaurant
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 6
Flowcharting Service Delivery
Helps to Clarify Product Elements
▪ Helps management visualize the customer’s total
service experience
▪ Useful for distinguishing between core product itself
and service elements that supplement core
➢ Restaurants: Food and beverage (core)
➢ Reservations (supplementary services)
▪ Nature of customer involvement with service
organizations varies by type of service:
➢ People processing
➢ Possession processing
➢ Mental Stimulus processing
➢ Information processing
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 7
Simple Flowchart for Delivery of a
People-Processing Service
People Processing – Stay at Motel
Spend
Park Car Check In Night in Breakfast Check
Room Out
Maid
Breakfast
Makes up
Prepared
Room
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 8
The Flower of Service
Information
Payment Consultation
Billing Core Order Taking
Exceptions Hospitality
Safekeeping
KEY:
Facilitating elements
Enhancing elements
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 9
How to Determine What Supplementary
Services Should Be Offered
▪ Not every core product is surrounded by all eight supplementary
elements
▪ Nature of product helps to determine:
➢ Which supplementary services must be offered
➢ Which might usefully be added to enhance value and ease of use
▪ People-processing and high-contact services have more supplementary
services
▪ Market positioning strategy determines which supplementary services
should be included
▪ Firms with different levels of service often add extra supplementary
services for each upgrade in service level
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 10
The Flower of Service:
Facilitating Services—Information
Customers often require
information about how to obtain
and use a product or service.
Examples of elements:
Core
▪ Directions to service site
▪ Schedule/service hours
▪ Prices
▪ Conditions of sale
▪ Usage instructions
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 11
The Flower of Service:
Facilitating Services—Order Taking
Customers need to know what
is available and may want to
secure commitment to
delivery. The process should
be fast and smooth.
Core
Examples of elements:
▪ Applications
▪ Order entry
▪ Reservations and check-in
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 12
The Flower of Service:
Facilitating Services—Billing
“How much do I owe you?”
Bills should be clear,
Accurate, and intelligible.
Core Examples of elements:
▪ Periodic statements of
account activity
▪ Machine display of amount
due
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 13
The Flower of Service:
Facilitating Services—Payment
Customers may pay faster
and more cheerfully if you
make transactions simple
and convenient for them.
Core
Examples of elements:
▪ Self service payment
▪ Direct to payee or intermediary
▪ Automatic deduction
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 14
The Flower of Service:
Enhancing Services—Consultation
Value can be added to goods
and services by offering advice
and consultation tailored to
each customer’s needs and
situation.
Core
Examples of elements:
▪ Customized advice
▪ Personal counseling
▪ Management consulting
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 15
The Flower of Service:
Enhancing Services—Hospitality
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!
Core Examples of elements:
▪ Greeting
▪ Waiting facilities and amenities
▪ Food and beverages
▪ Toilets and washrooms
▪ Security
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 16
The Flower of Service:
Enhancing Services—Safekeeping
Customers prefer not to worry
about looking after the personal
possessions that they bring
with them to a service site.
Core Examples of elements:
▪ Looking after possessions
customers bring with them
▪ Caring for goods purchased
(or rented) by customers
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 17
The Flower of Service:
Enhancing Services—Exceptions
Customers appreciate some
flexibility when they make
special requests and expect
responsiveness when things
don’t go according to plan.
Core
Examples of elements:
▪ Special requests in advance
▪ Complaints or compliments
▪ Problem solving
▪ Restitution
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 18
Managerial Implications
▪ To develop product policy and pricing strategy, managers
need to determine:
➢ Which supplementary services should be offered as a standard
package or as fee based options
▪ Firms that compete on a low-cost, no-frills basis needs
fewer supplementary elements than those marketing
expensive, high-value-added services
▪ Each flower petal must receive consistent care and concern
to remain fresh and appealing
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 19
Planning and Branding Service
Products
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 20
Branding Alternatives
▪ Purpose of branding is to establish a mental picture of the
service and clarify the value proposition
▪ Service marketers need to be their brand champions
▪ Branding alternatives are:
➢ Branded House – brand name to multiple offerings in unrelated
fields e.g. Virgin Group
➢ Sub Brands – master brand is primary frame of reference but
product has a distinctive name e.g. Singapore Airlines Raffles Class
➢ Endorsed Brands – Product brand dominates the corporate name
➢ e.g. hotels
➢ House of Brands – corporation with a number of products, each
promoted under its own brand name e.g. Proctor & Gamble
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 21
Developing New Services
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 22
A Hierarchy of
New Service Categories (1)
Range from major innovations to simple style changes:
1. Major service innovations
➢ New core products for previously undefined markets
2. Major process innovations
➢ Using new processes to deliver existing products with added
benefits
3. Product-line extensions
➢ Additions to current product lines
4. Process-line extensions
➢ Alternative delivery procedures
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 23
A Hierarchy of
New Service Categories (2)
5. Supplementary service innovations
➢ Addition of new or improved facilitating or enhancing elements
6. Service improvements
➢ Modest changes in the performance of current products
7. Style changes
➢ Visible changes in service design or scripts
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 24
Reengineering Service Processes
▪ Reengineering involves analyzing and redesigning
processes to achieve faster and better performance
➢ Running tasks in parallel instead of sequence can
reduce/eliminate dead time
▪ Examination of processes can lead to creation of
alternative delivery methods that constitute new service
concepts
➢ Add/eliminate supplementary services
➢ Resequence delivery of service elements
➢ Offer self-service options
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 25
Services as Substitutes for Goods
Ownership and Task Performance
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 26