Challenges of Service Design • Because of their unique characteristics, services are difficult to describe and communicate • People generally resort to words to describe as the services can not be touched. • Four risks if you describe service designs with words only:- • Over-simplification • Incompleteness • Subjectivity • Biased interpretation
New Service Development • Services being intangibles, Four Basic characteristics are very imperative for new service development • It must be objective and not subjective • It must be precise not Vague • It must be fact driven not opinion driven • It must be methodological not philosophical • New service development must involve both customers and employees e.g. Marriot involves customers in room designing and features
Types of New services • Major innovations are yet undefined for markets e.g. distance education, overnight delivery • Startup businesses consist of new services for a market that is already served by existing product e.g. ATM; door to door shuttle service • New service by your company for the segment which is being served by other companies • Service Line extensions e.g. new menus, new routes • Service improvements represent the most common types of service innovations e.g. extension of banking hours, adding amenities to hotel room. • Style changes represent the most modest service innovations, highly visible and have significant effect e.g. changing color scheme of restaurant, painting Ac
Stages in new Service Development • New service requires unique and complex adaptations. • Basic principles and steps may be similar to goods, the implementation is significantly different. • New product ideas can be dropped at any stage of the process if they don’t meet the criteria of success. • Flexible and not linear. If desired a step can be skipped. Changes can be accommodated in the final stage also if needed. • Simultaneously; the planning for fast moving tech industries services is carried out. Important checks points are needed to maximize chances of success. • Front end planning determines what service concepts will be developed while the back end executes or implements the service concept.
Business Strategy Development or review • New-service Strategy Development New-service development process • Idea Generation stop Front end planning Screen ideas against new service strategy • Concept Development and Evaluation stop Test concept with customers and employees • Business Analysis stop Test for profitability and feasibility • Service Development and Testing stop Conduct service prototype test • Market Testing Implementation stop Test service and other marketing-mix elements • Commercialization • Post-introduction Evaluation
Service Development And Design Offerings Markets Current Customers New Customers Existing Services SHARE BUILDING MARKET DEVELOPMENT New Services SERVICE DEVELOPMENT DIVERSIFICATION Quiz-4 Briefly explain types of new services..
MARKETING OBJECTIVES AND MARKETING STRATEGIES Marketing Objectives Services/Products Current New Current Market penetration Service development Market development Diversification New Determining revenue, profit and market share Targets in four categories above Marketing Strategies Product Price Promotion Customer service Place People Processes
Types of Strategies Types of Strategies MarketPenetration MarketPenetration MarketPenetration IntensiveStrategies IntensiveStrategies IntensiveStrategies MarketDevelopment MarketDevelopment ProductDevelopment ServiceDevelopment
Intensive Strategies Intensive Efforts -- • Improve competitive position with existing products
Market Penetration Strategies Market Penetration Strategies Increased Market Share -- Increased Market Share -- • Present products/services • Present markets • Greater marketing efforts
Market Penetration Strategies Guidelines -- • Current markets not saturated • Usage rate of present customers can be increased significantly • Shares of competitors declining; industry sales increasing • Increased economies of scale provide major competitive advantage
Market Development Strategies Market Development Strategies New Markets -- New Markets -- • Present products/services to new geographic areas • Present products/services to new geographic areas
Market Development Strategies Market Development Strategies Market Development Strategies Guidelines -- Guidelines -- Guidelines -- • New channels of distribution – reliable, inexpensive, good quality • Firm is successful at what it does • Untapped/unsaturated markets • Excess production capacity • Basic industry rapidly becoming global • New channels of distribution – reliable, inexpensive, good quality • Firm is successful at what it does • Untapped/unsaturated markets • Excess production capacity • Basic industry rapidly becoming global
Service Development Strategies Increased Sales -- Increased Sales -- • Improving present products/services • Developing new products/services
Service Development Strategies Guidelines -- • Products in maturity stage of life cycle • Industry characterized by rapid technological development • Competitors offer better-quality products @ comparable prices • Compete in high-growth industry • Strong R&D capabilities
Types of Strategies Types of Strategies Related Diversification DiversificationStrategies DiversificationStrategies UnrelatedDiversification
Diversification • Related – When their value chains posses competitively valuable cross-business strategic fits • Unrelated – When their value chains are so dissimilar that no competitively valuable cross-business relationships exist
Related Diversification Preferred To Capitalize on: Related Diversification Preferred To Capitalize on: • Transferring competitively valuable expertise • Combining the related activities of separate businesses into a single operation to lower costs • Exploiting common use of a well-known brand name • Cross-business collaboration to create competitively valuable resource strengths and capabilities • Transferring competitively valuable expertise • Combining the related activities of separate businesses into a single operation to lower costs • Exploiting common use of a well-known brand name • Cross-business collaboration to create competitively valuable resource strengths and capabilities
Diversification Strategies Less Popular -- • More difficult to manage diverse business activities However -- • The greatest risk of being in a single industry is having all your eggs in one basket
Related Diversification May be Effective When: • An organization competes in a no-growth or a slow growth industry • Adding new, but related, products would significantly enhance the sales of current products • New, but related products could be offered at highly competitive prices
Related Diversification May be Effective When: • New, but related, products have seasonal sales levels that counterbalance an organization’s existing peaks and valleys • An organization’s products are currently in the declining stage of the product’s life cycle • An organization has a strong management team
Conglomerate Diversification Strategies Guidelines -- Declining annual sales & profits Capital & managerial ability to compete in new industry Financial synergy between acquired and acquiring firms Current markets for present products - saturated
Unrelated Diversification • Favors capitalizing on a portfolio of businesses that are capable of delivering excellent financial performance • Entails hunting to acquire companies: • Whose assets are undervalued • That are financially distressed • With high growth potential but are short on investment capital
Unrelated Diversification May be Effective When: • Revenues derived from an organization’s current products or services would increase by adding new unrelated products • An organization competes in a highly competitive or a no growth industry • An organization’s current distribution channels can be used to market new products to existing customers
A service blueprint is a picture or map that accurately portrays the service system so that the different people involved in providing it can understand and deal with it objectively regardless of their roles or their individual points of view. Service Blueprint SERVICE BLUEPRINTING Process Point of contact Evidence A tool for simultaneously depicting the service process, the points of customer contact and the evidence of service from the customer’s point of view.
PhysicalEvidence CustomersActions Line of Interaction Service Blueprint Components Onstage Contact Employee Actions Line of Visibility Backstage Contact Employee Actions Line of Internal Interaction Support Processes
Example • Legal Service • Customers contact • Decision to contact an attorney, a phone call, face to face meetings, addl calls, receipt of document, bills etc. • Onstage contact employees actions • Initial interview, meetings and final delivery of legal documents • Back stage contact employees actions • Prepare the meetings, to prepare the final documents, answering calls and arranging meetings • Support process • Legal research by the staff, preparation of documents and other secretarial supports • Evidences • ???????
Truck Packaging Forms Handheld Computer Uniform Truck Packaging Forms Handheld Computer uniform Blueprint For Express Mail Delivery Service Customer calls Customer Gives Package Customer Receives Package Driver Picks up Package Driver Delivers Package Customer Service Order Dispatch Driver Airport Receives And Loads Fly to Sort Center Fly to Destination Unload And Sort Load On Truck Load on Airplane Sort packages
Cart for Bags Cart for Bags Menu Delivery Tray Food Appearance Bill Desk Lobby Hotel Exterior parking Desk Registration Papers Lobby key Food Hotel Exterior Parking Elevators Hallways Room Room Amenities Bath Blueprint For Overnight Hotel Stay Service Arrive at Hotel Give Bags to Bell person Check in Go to Room Receive Bags Sleep Shower Call Room Service Receive Food Eat Check out and Leave Greet and Take Bags Process Registration Deliver Bags Deliver Food Process Checkout Take Food Order Take Bags to Room Registration System Registration System Prepare Food
Reading and Using Service Blueprints • A service blue print can be read in variety of ways depending on your purpose • Customer's view of process, the blue print can be read horizontally but this time the focus is on activities above and below the visibility line. • Contact employees roles, read horizontally • If the purpose is to understand the integration of various elements of service, or to see the fitment of an employee in bigger picture, then vertical interactions • If purpose is to redesign, then the blueprint is looked as a whole to assess the complexity of the process. • Blue print can also be used to isolate failure points or bottlenecks in the service process. When such points are discovered, the blueprint can be exploded.
Benefits Of Service Blueprinting • Provide an overview so employees can relate their roles in the integrated whole • Identifies fail points • Line of interactions between external customers and employees • Line of visibility promotes a conscious decision on what customers should see and which employee will be in contact • Line of internal interactions • Stimulates strategic discussions • Provides a basis for identifying and assessing cost, revenue and capital invested in each element of the service. • Constitutes a rational basis for internal and external marketing. • Facilitates top down and bottom up approach for quality improvement.
Building a Blueprint • Step-1: identify the service process to be blueprinted • Step-2: identify customer and customer segment experiencing the service • Step-3: map the service process from the customers point of view • Step-4: map contact employees actions, both on stage and back stage • Step-5: link customer and contact person activities to needed support functions • Step-6: add evidence of service at each counter action step
Group Assignment • Select a health service of your choice preferably which has been recently launched by any prominent Hospital or any other health related service organization. Draw a blue print chart covering all areas by indicating the complete details of design, development and implementation. Indicate and focus the critical areas if any which were not given due attentions in the initial launch of that service. • Submission Date:- 11th Dec 2011
Quality Functions Development • QFD is defined as “ a system for translating customer’s requirements in to appropriate company requirements at every stage, from research through production design and development to manufacture, distribution; installations and marketing, sales and services.” • It has more applications in manufacturing than services, being used as a means of integrating marketing and engineering personnel in the development process. • House of quality is a diagrammatic representation of the service, its attributes, the customers’ requirements and the company’s capabilities.
Final Report • In this project each group consisting of 4-6 students is allocated Rs.100 million to start a new or invest to grow in the established business. Think of a new service you would like to develop if you were an Entrepreneur. For introducing a new service, 50 % of the total budget has been allocated to marketing department for the purpose of launching this new Service which will be at your disposal. Document the service process via a service blue print after getting the necessary information and analyzing all the relevant factors that we have discussed while going through your services marketing class. You may like to interview couple of your present customers about this new service. Considering the marketing budget, various groups will make marketing plans for launching of new service. If the group wants to use more financial resources that can be discussed with the class teacher. • At the end of the semester as specified in the course outline, all groups will submit their reports to CR and that shall be a week before the day of final examination. Feel free to ask if you feel any difficulty in your assignment. Ghulam Abbas • Office; 34541542 • Mobile:0333.2141599
REPORT CONTENTS Executive summary Company overview Market situation analysis Environments both external and internal SWOT and Market opportunity analysis The Marketing Planning Process Corporate Goals market Analysis competitive comparison internal Analysis SWOT Analysis Key Factors for Success Grand Strategy Objectives and sub-strategies Action plan Tactics and Marketing Mix 7Ps positioning Value proposition Budgets & Financial analysis Sales forecasts Measurements and Control