Week 3

Developing Service
Products and
Brands
MKT 424E: Services Marketing Course
College of Management and Technology (Heliopolis Campus)
Instructor: Dr. Omayma Ouf
Semester: Spring 2024
Watch and Reflect
 Overview
• Planning and Creating Services
• Planning and Branding Service Products
• Development of New Services

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 Planning and
Creating Services
 What is a Service Product?
• Services are experienced rather than owned.
• Even for services that have physical elements like
restaurants, services are still a major part of the experience.
• A product implies a specified “bundle of output” and is
usually associated with manufactured products.
• Service providers distinguish the “products” as well by
adding supplementary services built around a core product
(eg universities – credit cards).
• The idea is to design a service product with distinct bundles
of output that can be differentiated. 5
 What is a Service Product? (cont’d)
• A service product: A defined and consistent “bundle of
output”
• Providers of more intangible services also offer a “menu”
of products:
• Represent an assembly of elements that are built
around the core product.
• May include certain value-added supplementary
services .

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 Planning and Creating Services
This requires the following three major steps:
• Design a Service Concept
• Document Delivery Sequence over Time
• Flowchart Service Delivery

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Planning and Creating Services (cont’d)
• 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

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Planning and Creating Services (cont’d)
• 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)
includes information – order taking – billing – payment.
• Enhancing the value and appeal of the core product
includes consultation – hospitality – safekeeping –
exceptions.
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 Defining Core and Supplementary
Elements of Service Product
• How is our core product defined and what
supplementary elements augment it?
• What product benefits create most value for customers?
• What are current levels of service on core product and
each supplementary element?
• Can we charge more for higher service levels? For
example: first class tickets.
• Alternatively, should we cut service levels and charge
less? Eg One bag per person in flights. 10
 The Flower of Service

Information

Payment Consultation

Billing Core Order Taking

Exceptions Hospitality

Safekeeping
KEY:
Facilitating elements
Enhancing elements
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 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 options.
• Firms that compete on a low-cost, no-frills basis needs
fewer supplementary elements.
• Each flower petal must receive consistent care and
concern to remain fresh and appealing.

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How to Determine What Supplementary
Services to offer?
• Nature of product helps to determine:
• Which supplementary services must be offered.
• Which might usefully be added to enhance value.
• People-processing and high-contact services tend to have
more supplementary services.
• Market positioning strategy helps to determine which
supplementary services should be included.

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Branding Service
Products
 Product Lines and Brands
• Strong brands enable customers to better visualize and
understand intangible products.
• Branding reduces risk for consumers.
• Helps create a mental image in consumers minds and clarify
nature of the value proposition.
• Most service organizations offer a line of products rather than
just a single product.
• They may choose among three broad alternatives:
• Single brand to cover all products and services.
• A separate, stand-alone brand for each offering.
• Some combination of these two extremes. 15
Spectrum of Branding Alternatives
(Branding Architecture)
Corporate Individual Product
Branding Branding

“Branded House”
“House of Brands”
e.g., Virgin Group
e.g., P&G

Sub-brands Endorsed Brands

e.g., FedEx Express, FedEx e.g., Intercontinental,
Office, FedEx Home Crown Plaza, Holiday Inn
Delivery

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Spectrum of Branding Alternatives (cont’d)

• Branded House: describes a strategy where a firm uses

a single brand to cover all products. The benefit of this
strategy is enhancing overall brand awareness and
reduced marketing expenses. The danger is that the
brand becomes overstretched and is exposed to risk of
one product spilling over the overall brand eg Virgin
Group offers a range of unrelated businesses.
• Sub-brands: The corporate or the master brand is the
main reference point to support sub-brands eg FedEx
Express, FedEx Home Delivery, FedEx Office.
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Spectrum of Branding Alternatives (cont’d)
• Endorsed Brands: the product brand dominates but the
corporate name is still featured eg. Intercontinental
Hotel, Crown Plaza and Holiday Inn. Consumers can
share loyalty programs points across. Same customer
may use different brands at different times (a hotel for
vacations and the other for business trips)
• House of Brands: This strategy uses separate stand
alone brands for its offerings. This strategy allows for
targeting different segments with different positions
eg Proctor and Gamble.
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 Offering a Branded Experience
• Branding can be employed at both corporate and
product levels.
• Corporate brand:
• Easily recognized
• Holds meaning to customers
• Stands for a particular way of doing business
• Product brand:
• Helps firm communicate distinctive experiences and
benefits associated with a specific service concept

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 Branding Strategies

• Branding Service Products and experiences Service

providers offer not a single product but a line of several
offerings eg credit cards (CIB offers Gold – Titanium – Platinum
– Platinum Mileseverywhere – Heya Cards) each with different
bundle supplementary services to serve different segments.

• Branding Levels of Service - Service tiering is using

branding to differentiate service levels usually based on
supplementary services eg hotels range from 5 stars to 1 star
– airlines have business and economy classes. 20
 Building Brand Equity

• Brand Equity is the value premium that comes with a brand.

• It represents what the customer would pay for buying this
brand compared to the same service that comes with no
brand or a different brand.

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 Building Brand Equity

• The Six Key components of brand equity:

1. Company’s presented brand comes from advertising – personnel and
service facilities.
2. External brand communication comes from word of mouth and
publicity. This can not be controlled directly by the company except with
good performance.
3. Customer experience with the company: “moment of truth” most
powerful
4. Brand awareness: the ability to recall the brand and recognize it with
any cue.
5. Brand meaning: what comes to mind when we mention the brand.
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6. Brand equity: the degree to which customer is willing to pay for this
 Delivery Branded Service Experiences

• The 7Ps need to be aligned.

• We need to design amazing service products.
• But we need to align it with an excellent delivery process,
servicescape, service employees, pricing and all other aspects.
• Services are all about an integrated overall emotional
experience.
• We need to place the service in the center and align all other Ps
to revolve around it to be able to give the right experience.

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New Service
Development
A Hierarchy of New Service Categories
1. Major service innovations
• New core products for previously undefined markets eg
Metaverse – social media networks – mobile itself
2. Major process innovations
• Using new processes to deliver existing products with
added benefits eg online education during COVID required
major process changes and platforms.
3. Product-line extensions
• Additions to current product lines eg Sushi Menus in
Steak Houses – Strawberry Lovers’ Menu – Valentine Menu 25
A Hierarchy of New Service Categories
(cont’d)
4. Process-line extensions
• Alternative delivery procedures eg Palma opening a physical shop
– Zara launching online shop.
5. Supplementary service innovations
• Addition of new or improved facilitating or enhancing elements
(eg payment by Instapay)
6. Service improvements
• Modest changes in the performance of current products
7. Style changes:
• Simple visible changes in service design or scripts (eg change
uniform of personnel – remodel shops)
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 Design Thinking in New Service
Development
Companies need to align various internal and external
stakeholders around the creation of holistic service experiences
adopting the following 5 principles:
1. User-centered: everything revolves around the customer.
2. Co-creative: all stakeholders involved in creating the experience
including the customer.
3. Sequential: a service is visualized as a sequence of interrelated
steps and activities (a customer’s journey)
4. Evident: intangible aspects should be made tangible through
physical evidence eg experience advertising
5. Holistic: the entire experience along the five senses need to be
considered (eg using scents in hotels and restaurants) 27
 Achieving Success in New Service
Development
90% of new products fail because companies do not focus on
the following success factors:
1. Market synergy
• Good fit between new product and firm’s image/resources
• Advantage versus competition in meeting customers’ needs
• Strong support from firm during/after launch
• Firm understands customer purchase decision behavior

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 Achieving Success in New Service
Development (cont’d)
2. Organizational factors
• Strong inter-functional cooperation and coordination
• Internal marketing to educate staff on new product and its
competition
• Employees understand importance of new services to firm
3. Market research factors
• Scientific studies conducted early in development process.
• Product concept well defined before undertaking field
studies.
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 Achieving Success in New Service
Development (cont’d)
- Customers’ ideas are innovative and important but
sometimes are not very practical.
- Some of the best ideas come from customers suggestions
and feedback.
- Customer feedback is important, but needs finetuning to be
applicable.

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 Read and Reflect
"Marketing is no longer about the stuff that you make, but about
the stories you tell." – Seth Godin

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Next Week
Distributing
Services
Through
Physical and
Electronic
Channels