Services Marketing:
CHAPTER 4
Creating The Service Product
Lecturer: Dr. Vu Hoang Linh, Ph.D.
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Creating Service Products
• A product implies a defined and
consistent “bundle of output” as well as
the ability to differentiate one bundle of
output from another.
• Service firms differentiate their
products using the various “models”
offered by manufacturers.
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The Components of a Service Product
Core Product
• ‘What’ the customer is fundamentally buying
• The core product is the main component that supplies the
desired experience
Supplementary Services
• The core product is usually accompanied by a variety of other
service-related activities referred as supplementary services
• Supplementary services augment the core product, both
facilitating its use and enhancing its value
Delivery Processes
• The processes used to deliver both the core product and
each of the supplementary services
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The Flower Of Service
The Flower of Service: Core Product Surrounded by Clusters of
Supplementary Services
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Facilitating Supplementary Services:
Information
To obtain full value from any good or service, customers
need relevant information.
Information includes the following:
• Direction to service site
• Schedules/service hours
• Price information
• Terms and conditions of sale/service
• Advice on how to get the most value from a service
• Warnings and advice on how to avoid problems
• Confirmation of reservations
• Receipts and tickets
• Notification of changes
• Summaries of account activities
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Facilitating Supplementary
Services: Order-taking
Once customers are ready to buy, a key supplementary
element comes into play — order-taking.
• Order-taking includes:
• Order entry
• On-site order entry
• Mail/telephone/e-mail/online/mobile app order
• Reservations or check-ins
• Seats/tables/rooms
• Vehicles or equipment rental
• Professional appointment
• Applications
• Memberships in club/programs
• Subscription services
• Enrolment-based services
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Facilitating Supplementary
Services: Billing
Billing is common to almost all services (unless
the service is provided free-of-charge).
• Billing can be:
• Periodic statements of account activity.
• Invoices for individual transactions.
• Verbal statements of amount due.
• Online or machine display of amount due for self-payment
transactions.
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Facilitating Supplementary
Services: Payment
A variety of payment options exist
• Self-service
• Inserting card, cash or token into machine
• Electronic funds transfer
• Mailing a check
• Entering credit card information online
• Online payment systems such as PayPal, Google Wallet or Bitcoins
• Direct to payee or intermediary
• Cash handling or change giving
• Check handling
• Credit/charge/debit card handling
• Coupon redemption
• Automatic deduction from financial deposits
• Automated systems
• Pre-arranged automatic deduction for bill payment through direct debit
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Enhancing Supplementary Services
Consultation - involves a dialog to probe for customer requirements
and then develop a tailored solution
o Customized advice
o Personal counseling
o Tutoring/training in service use
o Management or technical consulting
Hospitality - reflect pleasure at meeting new customers and greeting
old ones when they return
• Greeting
• Food and beverages
• Toilets and washrooms
• Waiting facilities and amenities
o Lounges, waiting areas, seating
o Weather protection
o Magazines, entertainment, newspapers
• Transport
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Enhancing Supplementary Services
Safekeeping - assistance with safekeeping customers’
personal possessions
• Child care, pet care
• Parking for vehicles, valet parking
• Coat rooms
• Baggage handling
• Storage space
• Safe deposit boxes
• Security personnel
Exceptions - supplementary services that fall outside the
routine of normal service delivery
• Special requests
• Problem-solving
• Handling of complaints/suggestions/compliments
• Restitution
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Branding Service Firms, Products and Experiences
• Branding helps marketers to establish a mental
picture of the service in customers’ minds and to
clarify the nature of the value proposition.
• Distinctive brand names of individual service
products enables the firm to communicate the
distinctive experiences and benefits associated with a
specific service concept to the target market
• Branding can be employed at both the corporate and
product levels by almost any service business.
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Branding Strategies For Services
• Service organizations offer a line of products
rather than just a single product.
• Four broad branding alternatives:
• Branded House – used to describe a company, that applies
its brand name to multiple offerings in often unrelated
fields
• Sub-brands – the corporate or the master brand is the
main reference point, but the product itself has a
distinctive name
• Endorsed Brands – the product brand dominates but the
corporate name is still featured
• House of Brands – the corporate brands and its well-
known sub brands
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Branding Alternatives
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Tiering Service Products With
Branding
• In a number of service industries, branding is not
only used to differentiate core services, but also to
clearly differentiate service levels. This is known as
service tiering.
• It is common in industries such as hotels, airlines, car
rentals, and computer hardware and software
support.
• Other examples of tiering include
healthcare insurance, cable television, and
credit cards.
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Building Brand Equity
• Brand equity is the value premium that comes with a brand - what
customers are willing to pay for the service, beyond what they are
willing to pay for a similar service that has no brand.
• Components of Brand Equity
• Company’s presented brand — mainly through advertising, service
facilities and personnel.
• External brand communications — from word of mouth and publicity.
These are outside of the firm’s control.
• Customer experience with the company —what the customer has gone
through when they patronized the company.
• Brand awareness — the ability to recognize and recall a brand when
provided with a cue.
• Brand meaning — what comes to the customer’s mind when a brand is
mentioned.
• Brand equity — the degree of marketing advantage that a brand has over its
competitors.
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A Service-branding Model
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Delivering Branded Service Experiences
• Aligning the service product and brand with its
delivery process, servicescape and people with the
brand proposition.
• Having processes in place.
• Creating the emotional experience can be
done effectively through the servicescape.
• Building of interpersonal relationships, where trust
is established between the consumers and the
firm’s employees.
• Investing in employees: they will be the ones who
can deliver the brand experience that creates
customer loyalty.
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New Service Development
A Hierarchy of New Service Categories
• Style changes represent the simplest type of
innovation, typically involving no changes in either
processes or performance.
• Service improvements involve small changes in the
performance of current products, including
improvements to either the core product or to
existing supplementary services.
• Supplementary service innovations take the form of
adding new facilitating or enhancing service elements
to an existing core service or significantly improving an
existing supplementary service.
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New Service Development
• Process line extensions offer more convenience and
a different experience for existing customers, or
attract new customers who find the traditional
approach unappealing.
• Product line extensions are additions to a
company’s current product lines.
• Major process innovations consist of using new
processes to deliver existing core products in
new ways with additional benefits.
• Major service innovations are new core products
for markets that have not been previously defined.
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Achieving Success In New Service
Development
• Services like products are not immune to
the high failure rates.
• Reasons for failure include not meeting a
consumer need, inability to cover costs
from revenues, and poor execution.
• Three factors contribute most to success:
o Market synergy
o Organizational factors
o Market research factors
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