service marketing unit 3

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UNIT III

SERVICE DESIGN


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What is a Product? A product is anything that can be offered to

a market for attention, acquisition, use or

consumption that might satisfy a want orneed

Includes physical objects, services, places,organizations, and ideas


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Levels of service product

Five ProductLevels


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The Flower of Service

Core

Information

Consultation

Order-Taking

Hospitality

Payment

Billing

Exceptions

SafekeepingFacilitating elements

Enhancing elements

KEY:


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Sales andProfit Life

Cycles

Service Life Cycle


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Introductory Stage

Few or no

competitors Low profit

margins

Negative cash

flows Market segments

not well defined

Involve users in service design

Identify early adopters

Develop prototypes

Obtain feedback from early

adopters

Build industry demand

Use introductory offers

Stimulate positive word-of-

mouth communications

Characteristics Strategies


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Growth Stage

Rapid industry growth

Positive cash flows

Higher profits Influx of new firms

Increased competition

Development of

distinct marketsegments

Develop a

competitive

advantage

Develop brand

preference

Develop firm loyalty

or repeat purchase

behavior



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Maturity Stage

Industry sales

stagnant

Intense competition

Shaking out of

weaker firms

Distinct market

segments

Brand parity within

industry

Reduce operating costs

Enhance technical and

functional service quality Concentrate on specific market

segments

Add complementary services

Use persuasive advertising Match competitors sales

promotions

Develop competitiveadvantage



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Decline Stage

Declining industry

sales

Less competition

Lower cash flows Declining profit

Divestment

Harvest

Pruning

Retrenchment

Rejuvenation



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New Product Development

What is a New Product?

( Booz, Allen and Hamilton )

New-to-the-world productsNew product lines

Additions to existing product lines

Improvements and revisions of existing products

Repositioned products

Cost reduction products


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New Product Development Process

IdeaGeneration

ConceptDevelopment

and Testing

MarketingStrategy

Development

IdeaScreening

BusinessAnalysis

ProductDevelopment

MarketTesting

Commercialization


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1. Develop New Product Ideasinto Alternative Detailed

Product Concepts

2. Concept Testing - Test theNew Product Concepts withGroups of Target Customers

3. Choose the One That Has theStrongest Appeal to Target

Customers

New Product Development ProcessStep 3. Concept Development


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Part Three Describes Long-Term:

Sales & Profit GoalsMarketing Mix Strategy

Part Two Describes First-Year:Products Planned Price

DistributionMarketing Budget

Part One Describes Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share

New Product DevelopmentProcessStep 4. Marketing Strategy


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If No, Eliminate

Product Concept

Business AnalysisReview of Product Sales, Costs,and Profits Projections to See ifThey Meet Company Objectives

Step 5. Business AnalysisStep 6. Product Development

If Yes, Move toProduct Development


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When is theRight Time to

IntroduceProduct?

Where toLaunch a

NewProduct?

Commercialization is the Introduction ofthe New Product into the Marketplace.

New Product Development Process

Step 8. Commercialization


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Service Blueprints

A service blueprint is a picture or map that portrays the

service accurately. It is intended to provide a clear

picture of the service process to different peopleinvolved in the service production and consumption

process.

It helps the people involved to understand various

processes of service without any confusion or

ambiguity and enables them to act accordingly with

confidence.


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Service Blueprints

The blueprint visually depicts the roles ofcustomers and employees.

It also depicts a systematic arrangement of

different service points and the means bywhich services are performed.

A service blueprint also provides evidence

to the customers on the basis of which theydevelop service expectations.


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How to Develop a Blueprint

Identify key activities in creating and delivering theservice

Distinguish between front stage (what customersexperience) and back stage

Chart activities in sequence

Show how interactions between customers andemployees are supported by backstage activitiesand systems

Establish service standards for each step

Identify potential fail points

Focus initially on big picture (later, can drilldown for more detail in specific areas)


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Elements of Service Blueprinting

Customers Role

On Stage And Backstage Employee Actions

Support Processes

Reading A Service Blue Print

Line Of Interaction

Line Of Visibility

Line Of Internal Interaction


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Simplified Example: Blueprinting a Hotel Visit(extract only)

PhysicalEvidence

CustomerActions

Employee

ActionsFace-to-faceF

ron

t

Stage

PhoneContact

Backstage

Makereservation

Rep.

records,

confirms

Arrive,valet park

Check-inat reception

Doorman

greets, valet

takes car

Enter

data

Valet

Parks Car

Make up

Room

Register

guest data

Receptionist

verifies, gives

key to room

Go to

room

Hotel exterior, lobby,employees, key

Elevator, corridor,room, bellhop

Line ofInteraction

Line ofVisibility


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Physical EvidencePhysical evidence is everything that a

company physically exhibits to the

customer.

It includes the physical environment

of the service outlet,

The exterior,The interior,

All tangibles like machinery,

furniture, vehicles, stationery,

signboards, communicationmaterials, certificates, receipts,

service personnel, and so on.


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Dimensions of the ServiceEnvironment

Ambient Conditions

Music (e.g, fast tempo and high volume increase arousal levels)

Scent (strong impact on mood, affect and evaluative responses,

purchase intention and in-store behavior)

Color (e.g, warm colors associated with elated mood states andarousal but also increase anxiety, cool colors reduce arousal but

can elicit peacefulness and calm)

Temperature ( below normal )


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Dimensions of the Service

Environment Spatial Layout and Functionality

Layout refers to size and shape of furnishings and the ways it isarranged

Functionality is the ability of those items to facilitate performance

Signs, Symbols and Artifact

Explicit or implicit signals to communicate the firms image, help

consumers find their way and to convey the rules of behavior.


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Servicescape Dimensions For A

Restaurant

FoodTaste ,Smell ,Presentation , Temperature.

Package Style , Color , Convenience ,

Environment Friendly. SeatingComfort , Layout , Availability.

Overall Appearance Hygiene , Cleanliness

,Lighting , Dcor , Attractiveness ,WellMaintained

Accessibility car parking , location ,entrance ,

exit , wheel chair, access , geographical location.


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Servicescape Dimensions For A

Restaurant

FacilitiesToilets , Children's Amusement,

Customer Information , Pay Phones .

StaffPersonal Appearance , Dress Code ,

Manner , Efficiency.

Corporate Imagelogo , advertising , brand

loyalty .

Service DeliveryPrompt , Slow , Efficient.

AtmosphereWelcoming , Friendly

,Temperature


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Competitive Differentiation of

Services

Major Service Differentiators


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Service Recovery Time

Empathy

Service Channel Choice

Coverage

Expertise Performance

Service Image Corporate Image

Local Image

Service Personnel Competence

Courtesy

Credibility Reliability

Responsiveness

Communication

Empathy

Tools

Equipment

Furniture

etc.

Tangibles Interior

Exterior

Customer Participation Customer

knowledge

Ability Willingness

Information support

Interaction Physical and

technical resources

Systems

Employees

Other customers

Accessibility The number of contact

personnel

Officehours Time taken to perform

tasks

Location of the outlet

Exterior and interior of

service outlet

Tools, equipment and

documents Co-customers

Basic Service Package(BSP)

Quality and

composition of

facilitating services

Quality and

composition of

supporting services

Major Service Differentiators


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Positioning of Services

Positioning is definedas, the process of

establishing andmaintaining adistinctive place in themarket for an

organization and/or itsindividual productofferings


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Service Positioning Strategies

Attribute Positioning - A service provider

positions itself based on an attribute or a

Feature.

Ex :Malayala Manorama positions itself as the

No.1 daily in India with the most number of

readers

Allahabad Bank positions itself as the oldest

bank in India


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Benefit positioning: Most service providers

resort to benefit positioning as the general

psyche of the customer is to analyze thebenefit that he derives by using a particular

service.

Example : banks like ICICI and Citibank

offer facilities like ATMs and internet

banking to their customers.


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Use/application positioning: The service is

positioned as the best for a certain

application . Example, SBI positions itself as the best in

the business where educational loans are

concerned.


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User positioning: The service is positioned

for a specific target group of users.

Example: India positions itself as thedestination for tourists seeking inner peace.


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Competitor Positioning: The service is

positioned by the provider against a

competitors service offering.Example : IIPM positions itself against the

IIMs. Its ad says, Dare to think beyond the

IIMs.


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Category positioning: The service provider

positions itself as the category leader and

becomes synonymous with the service.Example. Essel World became synonymous

with an entertainment park in India till more

such parks were started across the country.


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Quality/price positioning: A service is

positioned in the market as possessing a

certain quality standard or at a particularprice.

Example, some of the OberoiHilton hotels

are positioned as high quality, high-pricehotels. The Taj group is trying to position

some of its hotels in the value for money

category


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Four Principles of PositioningStrategy

1.Must establish position for firm or product in minds of

customers

2.Position should be distinctive, providing one simple,consistent message

3.Position must set firm/product apart from competitors

4.Firm cannot be all things to all people--must focus

Jack Trout


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Uses of Positioning inServices Marketing

Understand relationships between products and markets

compare to competition on specific attributes evaluate products ability to meet consumer

needs/expectations

predict demand at specific prices/performance levels Identify market opportunities

introduce new products redesign existing products eliminate non-performing products

Make marketing mix decisions, respond to competition distribution/service delivery pricing communication

P ibl Di i f


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Possible Dimensions forDeveloping Positioning Strategies

Product attributes

Price/quality

relationships

Reference tocompetitors (usuallyshortcomings)

Usage occasions

User characteristics

Product class


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Positioning of Hotels in Chennai: Price vs.

Service LevelExpensive

CHigh

ServiceModerateService

A

B

D

I

FG

G

E

Less Expensive


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Positioning Maps Help Managers toVisualize Strategy

Positioning maps display relative performance of competing firms onkey attributes

Research provides inputs to development of positioning maps

Challenge is to ensure that

attributes employed in maps are important to target segments

performance of individual firms on each attribute accuratelyreflects perceptions of customers in target segments

Predictions can be made of how positions may change in the light of

new developments in the future Simple graphic representations are often easier for managers to grasp

than tables of data or paragraphs of prose

Charts and maps can facilitate a visual awakening to threats andopportunities and suggest alternative strategic directions


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PRICING OF

SERVICE


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Characteristics of Pricing in Services

No ownership of services--hard for firms to calculatefinancial costs of creating an intangible performance

Variability of inputs and outputs--how can firmsdefine a unit of service and establish basis for

pricing? Many services hard for customers to evaluate--what

are they getting in return for their money?

Importance of time factor--same service may have

more value to customers when delivered faster Delivery through physical or electronic channels--

may create differences in perceived value


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Price skimming

Penetration pricing

Mixed pricingCost-plus pricing

Variable pricing

Marginal pricingPromotional pricing

Differential pricing

Key Pricing Concepts of Services


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Value Strategies in Pricing of Services

Satisfaction-based

pricing

Relationship pricingEfficiency pricing

Convenience pricing


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Total Customer Value of the Services Delivered

Customer ValueVariables

Core servicevalueSupportiveservices valuePersonal valueImage valueOther values

Customer CostVariablesMonetary priceSearch costTime costEnergy costPsychic costOther costs

TCVTotal Customer

Value

TCCTotal customer

cost

CDV

Customer Delivered Value


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SERVICES PRICING: FINALTHOUGHTS

The price should:Be easy for customers to

understand

Represent value to the customer

Encourage customer retention andfacilitate the customersrelationship with the providing firm

Reinforce customer trust

Reduce customer uncertainty

Documents

service marketing unit 3