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New Service Development. Learning Objectives. Discuss the new service development process. Prepare a blueprint for a service operation. Describe a service process using the dimensions of divergence and complexity. Use the taxonomy of service processes to classify a service operation.

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learning objectives
Learning Objectives
  • Discuss the new service development process.
  • Prepare a blueprint for a service operation.
  • Describe a service process using the dimensions of divergence and complexity.
  • Use the taxonomy of service processes to classify a service operation.
  • Compare and contrast the generic approaches to service system design.
levels of service innovation
Levels of Service Innovation

Radical Innovations

  • Major Innovation: new service driven by information and computer based technology
  • Start-up Business: new service for existing market
  • New Services for the Market Presently Served: new services to customers of an organization

Incremental Innovations

  • Service Line Extensions: augmentation of existing service line (e.g. new menu items)
  • Service Improvements: changes in features of currently offered service
  • Style Changes: modest visible changes in appearances
technology driven service innovation
Technology Driven Service Innovation
  • Power/energy - International flights with jet aircraft
  • Physical design - Enclosed sports stadiums
  • Materials - Astroturf
  • Methods - JIT and TQM
  • Information - E-commerce using the Internet
service design elements
Service Design Elements
  • Structural- Delivery system- Facility design- Location- Capacity planning
  • Managerial- Service encounter- Quality- Managing capacity and demand- Information
new service development cycle
New Service Development Cycle
  • Full-scale launch
  • Post-launch review

Full Launch

Development

Enablers

  • Formulation
  • of new services
  • objective / strategy
  • Idea generation
  • and screening
  • Concept
  • development and
  • testing

People

Organizational

Context

Teams

  • Service design
  • and testing
  • Process and system
  • design and testing
  • Marketing program
  • design and testing
  • Personnel training
  • Service testing and
  • pilot run
  • Test marketing

Product

Technology

Systems

Tools

Analysis

Design

  • Business analysis
  • Project authorization
strategic positioning through process structure
Strategic Positioning Through Process Structure
  • Degree of Complexity: Measured by the number of steps in the service blueprint. For example a clinic is less complex than a general hospital.
  • Degree of Divergence: Amount of discretion permitted the server to customize the service. For example the activities of an attorney contrasted with those of a paralegal.
structural alternatives for a restaurant
Structural Alternatives for a Restaurant

LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE

TAKE RESERVATION

SEAT GUESTS, GIVE MENUS

SERVE WATER AND BREAD

TAKE ORDERS

PREPARE ORDERS

Salad (4 choices)

Entree (15 choices)

Dessert (6 choices)

Beverage (6 choices)

SERVE ORDERS

COLLECT PAYMENT

No Reservations

Self-seating. Menu on Blackboard

Eliminate

Customer Fills Out Form

Pre-prepared: No Choice

Limit to Four Choices

Sundae Bar: Self-service

Coffee, Tea, Milk only

Serve Salad & Entree Together:

Bill and Beverage Together

Cash only: Pay when Leaving

Specific Table Selection

Recite Menu: Describe Entrees & Specials

Assortment of Hot Breads and Hors D’oeuvres

At table. Taken Personally by Maltre d’

Individually Prepared at table

Expand to 20 Choices: Add Flaming Dishes;

Bone Fish at Table; Prepare Sauces at Table

Expand to 12 Choices

Add Exotic Coffees; Sherbet between

Courses; Hand Grind Pepper

Choice of Payment. Including House Accounts:

Serve Mints

taxonomy of service processes
Taxonomy of Service Processes

Low divergence High divergence

(standardized service) (customized service)

Processing Processing Processing Processing Processing Processing

of goods Information of people of goods Information of people

Dry Check Auto repair Computer

No Cleaning processing Tailoring a programming

Customer Restocking Billing for a suit Designing a

Contact a vending credit card building

machine

Ordering Supervision

Indirect groceries of a landing

customer from a home by an air

contact computer controller

No Operating Withdrawing Operating Sampling Documenting Driving a

customer- a vending cash from an elevator food at a medical rental car

service machine an ATM Riding an buffet dinner history Using a

worker Assembling escalator Bagging of health club

interaction premade groceries Searching for facility

(self- furniture information

Direct service) in a library

Customer Customer Food Giving a Providing Home Portrait Haircutting

Contact service service in a lecture public carpet painting Performing

worker restaurant Handling transport- cleaning Counseling a surgical

interaction Hand car routine bank a tion Landscaping operation

washing transactions Providing service

mass

vaccination

generic approaches to service design
Generic Approaches to Service Design
  • Production-line

• Limit Discretion of Personnel

• Division of Labor

• Substitute Technology for People

• Standardize the Service

  • Customer as Coproducer• Self Service • Smoothing Service Demand
  • Customer Contact • Degree of Customer Contact • Separation of High and Low Contact Operations
  • Information Empowerment • Employee

• Customer

discussion questions
Discussion Questions
  • What are the limits in the production-line approach to service?
  • Give an example of a service in which isolation of the technical core would be inappropriate.
  • What are some drawbacks of customer participation in the service delivery process?
  • What ethical issues are raised in the promotion of sales during a service transaction?
100 yen sushi house
100 Yen Sushi House
  • Prepare a service blueprint for the 100 Yen Sushi House.
  • What features differentiate 100 Yen Sushi House and how do they create a competitive advantage?
  • How has the 100 Yen Sushi House incorporated the just-in-time system into its operations?
  • Suggest other services that could adopt the 100 Yen Sushi House service delivery concept.
100 yen sushi house layout
100 Yen Sushi House Layout

Dishwashing Counter in Back

CONVERSATION AREA

Miso and Tea Station

CONVEYOR BELT

CONVERSATION AREA

TAKE-OUT POSITION

ENTRANCE

= CHEF

commuter cleaning new venture proposal
Commuter Cleaning - New Venture Proposal
  • Prepare a service blueprint for Commuter Cleaning.
  • What generic approach to service design is illustrated by Commuter Cleaning, and what competitive advantage does this offer?
  • Using the data in Table 4.6 calculate a break-even price per shirt if monthly demand is expected to be 20,000 shirts and the contract with a cleaning plant stipulates a charge of $0.50 per shirt.
  • Critique the business concept, and make recommendations for improvement.
golfsmith
Golfsmith
  • Prepare a service blueprint for Golfsmith.
  • What generic approach to service design does Golfsmith illustrate and what competitive advantages does this design offer?
  • Why is Golfsmith a good candidate for Internet sales?
interactive class exercise
INTERACTIVE CLASS EXERCISE

The class breaks into small groups and prepares a service blueprint for Village Volvo.