Transcript The Satisfaction

Chapter 4
Creating the
Service Product
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4- 1
Key Steps in Service Planning:
Matching Opportunities to Resources
 Must relate marketing opportunities to firm’s resources
(physical, financial, technological, human)
 Identify, evaluate firm’s marketing assets
 Customer portfolio/lifetime value (customer equity)
 Market knowledge
 Marketing implementation skill
 Product line
 Competitive positioning strategies
 Brand reputation (brand equity)
 Identify, evaluate firm’s 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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4- 2
Service Design Involves Matching Marketing
Concept with Operations Concept (Fig. 4.1)
Corporate Objectives
and Resources
Marketing Assets
Operating Assets
(Customer Base, Mkt. Knowledge,
Implementation Skills, Brand Reput.)
(Facilities/Equipment, IT Systems,
People, Op. Skills, Cost Structure)
Service Marketing Concept
Service Operations Concept
•Benefits to customer from core/
supplementary elements, style,
service level, accessibility
•Nature of processes
•Geographic scope of ops
•Scheduling
•Facilities design/layout
•HR (numbers, skills)
•Leverage (partners, self-service)
•Task allocation: front/backstage
staff; customers as co-producers
•User costs/outlays incurred
•Price/other monetary costs
•Time
•Mental and physical effort
•Neg. sensory experiences
Service Delivery
Process
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4- 3
Understanding the
Components of the
Augmented Service Product
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4- 4
Shostack’s Molecular Model of a Total Market
Entity - Passenger Airline Service (Fig. 4-2)
Distribution
Price
Vehicle
Service
frequency
Transport
Pre- and
post-flight
service
In-flight
service
Food
and
drink
KEY
Tangible elements
Intangible elements
Marketing Positioning
(Weighted toward evidence)
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
Source: Shostack
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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 become
commodities
 Supplementary services help to differentiate core products
and create competitive advantage by:
 facilitating use of the core service
 enhancing the value and appeal of the core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4- 6
Core and Supplementary Product Design:
What Do We Offer and How Do We Create and Deliver It?
Supplementary
services offered
and how created
and delivered
Delivery Concept
For Core Product
Scheduling
Process
Core
Service
Level
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Customer
Role
Services Marketing 5/E
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What Should Be the Core and Supplementary
Elements of Our Service Product?
 How is our core product defined and what supplementary
elements currently augment this core?
 What product benefits create the most value for customers?
 Is our service package differentiated from the competition in
ways that are meaningful to target customers?
 What are current levels of service on the core product and
each of the supplementary elements?
 Can we charge more for higher service levels on key
attributes (e.g., faster response, better physical amenities,
easier access, more staff, superior caliber personnel)?
 Alternatively, should we cut service levels and charge less?
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4- 8
Core and Supplementary Services in a Luxury Hotel
(Offering Guests Much More than a Cheap Motel!)
Reservation
Cashier
Valet
Parking
Business
Center
Reception
A Bed for the
Night in an
Elegant Private
Room with a
Bathroom
Room
Service
Wake-up
Call
Telephone
Baggage
Service
Cocktail
Bar
Entertainment/
Sports / Exercise
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Restaurant
Services Marketing 5/E
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What Happens, When, and in What Sequence?
The Time Dimension in the Augmented Service Product
Reservation
Parking
Get car
Check in
USE ROOM
Check out
Phone
USE GUESTROOM OVERNIGHT
Porter
Meal
Pre
Visit
Pay TV
Room service
Time Frame of an Overnight Hotel Stay
(real-time service use)
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 10
The Flower of Service:
Categorizing Supplementary Services (Fig. 4-5)
Information
Payment
Billing
Consultation
Core
Exceptions
KEY:
Facilitating elements
Enhancing elements
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Order-Taking
Hospitality
Safekeeping
Services Marketing 5/E
4 - 11
Facilitating Services - Information
(Table 4.1)
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Customers often require
information about how to
obtain and use a product or
service. They may also
need reminders and
documentation
Services Marketing 5/E
4 - 12
Facilitating Services - Order-Taking
(Table 4.2)
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Many goods and services
must be ordered or reserved
in advance. Customers need
to know what is available and
may want to secure
commitment to delivery
Services Marketing 5/E
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Facilitating Services - Billing
(Table 4.3)
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
“How much do I owe you?”
Customers deserve clear,
accurate and intelligible
bills and statements
Services Marketing 5/E
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Facilitating Services - Payment
(Table 4.4)
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Customers may pay faster
and more cheerfully if you
make transactions simple
and convenient for them
Services Marketing 5/E
4 - 15
Enhancing Services - Consultation
(Table 4.5)
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Value can be added to
goods and services by
offering advice and
consultation tailored to
each customer’s
needs and situation
Services Marketing 5/E
4 - 16
Enhancing Services - Hospitality
(Table 4.6)
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
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 there!)
Services Marketing 5/E
4 - 17
Enhancing Services - Safekeeping
(Table 4.7)
Core
Customers prefer not to
worry about looking after
the personal possessions
that they bring with them
to a service site.
They may also want delivery
and after-sales services for
goods that they purchase
or rent
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 18
Enhancing Services - Exceptions
(Table 4.8)
Core
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Customers appreciate some
flexibility in a business
when they make special
requests. They expect it
when not everything goes
according to plan
Services Marketing 5/E
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Branding
Service Products
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 20
Service Branding:
Clarifying Distinctive Service Offerings
 Marriott Hotel Brands
 British Airways Brands
 Marriott Hotels
Intercontinental
 First
 Club World
 World Traveller Plus
 World Traveller
 Marriott Resorts
 Courtyard by Marriott
 Fairfield Inns
 Residence Inns
European
 Club Europe
 Euro-Traveller
 SpringHill Suites
 TownePlace Suites
 Marriott Vacation Clubs
International
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
UK Domestic
 Shuttle
Services Marketing 5/E
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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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 22
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 23
New Service
Development
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 24
New Service Development:
A Hierarchy of New Service Categories
 Major service innovations--new core products for previously
undefined markets
 Major process innovations--using new processes to
deliver 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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 25
New Service Development:
Physical Goods as Source of Service Ideas
 Customers can rent goods—use and return for a fee—
instead of purchasing them
 Customers can hire personnel to operate their own or
rented equipment
 Any new durable product may create need for after-sales
services (possession processing)
 Shipping
 Installation
 Problem-solving and consulting advice
 Cleaning
 Maintenance
 Repair
 Upgrading
 Disposal
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 26
Creating Services as Substitutes for
Owning and/or Using Goods (Fig. 4-7)
Own a Physical Good
Perform the
Work Oneself
Hire Someone
to Do the Work
Rent the Use
of a Physical Good
• Drive own car
• Rent car and drive it
• Type on own word processor
• Rent word processor and type
• Hire chauffeur to drive car
•• Hire a taxi or limousine
• Hire typist to use word processor
•• Send work to secretarial service
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 27
Service Development through Delivery Options:
Alternative Meal Service Formats (Fig. 4-8)
Fast-Food
Restaurant
(Eat In)
See sign
Park and
enter
Order meal,
and pay
Pick up
meal
Find table
and eat
Drive away,
eat later
Drive-In
Restaurant
(Take Out)
See sign
Stop car at
order point
Order via
microphone
Get meal at
pickup, pay
Home
Delivery
Telephone
Restaurant
Order food,
give address
Driver rings
doorbell
Pay driver,
take food
Eat
Home
Catering
Arrange to
meet caterer
Plan meal,
pay deposit
Food and
staff arrive
Meal is
prepared
and served
Eat
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
Clear table
and leave
Staff cleans
up; pay
4 - 28
Elements of a Hotel Offering:
Trading off Room Price vs. Features/Services
 External building design
and features
 Room features
 Food-related services
 Lounge facilities
 Services (e.g., reception)
 Leisure facilities
 Security—people/systems
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 29
Success Factors in New Service Development
 Market synergy
 Good fit between new product and firm’s 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 its
competition
 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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
4 - 30