Service Marketing

Chapter 3
Developing Service Concepts: Core and Supplementary Elements
Copyright 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 3- 1
Learning Objectives Chapter 3

In depth understanding of service products
Determine the value of flowcharting service usage

Explore the use of supplementary services and how they add customer value The use of branding in services An approach for new service design
Chapter 3- 2
Planning and Creating Services
Chapter 3- 3
Planning and Creating Services

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 facilitate and enhance use of the core product and add value and differentiation
Chapter 3- 4
Core Products and Supplementary Services

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) Enhancing the value and appeal of the core product
Chapter 3- 5
Designing a Service Concept

Core Product
Central component that supplies the principal, problem-solving benefits customers seek
Supplementary Services
Augment the core product, facilitating its use and enhancing its value and appeal
Delivery Processes
Used to deliver both the core product and each of the supplementary services
Chapter 3- 6
Core and Supplementary Services at Luxury Hotel (Offering Much More than Cheap Motel!)
Reservation Cashier Business Centre Room Service A Bed for the Night in an Elegant Private Room with a Bathroom Valet Parking Reception
Baggage Service Cocktail Bar
Wake-up Call Internet
Entertainment/ Restaurant Sports/ Exercise
Chapter 3- 7
Flowcharting Service Delivery Helps to Clarify Product Elements

Helps management visualize the customers total service experience Useful for distinguishing between core product itself and service elements that supplement core
Restaurants: Food and beverage (core) Reservations (supplementary services)
Nature of customer involvement with service organizations varies by type of service:

People processing Possession processing
Mental Stimulus processing Information processing
Chapter 3- 8
Simple Flowchart for Delivery of a People-Processing Service (Fig 3.4)
People Processing Stay at Motel

Park Car Check In Spend Night in Room Breakfast Check Out
Maid Makes up Room
Breakfast Prepared
Chapter 3- 9
The Flower of Service
(Fig 3.6)
Information Payment Billing

Core
Consultation Order Taking
Exceptions Safekeeping
KEY:
Hospitality
Facilitating elements Enhancing elements

Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 3- 10
How to Determine What Supplementary Services Should Be Offered

Not every core product is surrounded by all eight supplementary elements Nature of product helps to determine:
Which supplementary services must be offered Which might usefully be added to enhance value and ease of use
People-processing and high-contact services have more supplementary services Market positioning strategy determines which supplementary services should be included Firms with different levels of service often add extra supplementary services for each upgrade in service level
Chapter 3- 11
The Flower of Service: Facilitating ServicesInformation
Customers often require information about how to obtain and use a product or service. Core Examples of elements:
Directions to service site Schedule/service hours Prices Conditions of sale Usage instructions
Chapter 3- 12
The Flower of Service: Facilitating ServicesOrder Taking
Core
Customers need to know what is available and may want to secure commitment to delivery. The process should be fast and smooth. Examples of elements:
Applications Order entry Reservations and check-in
Chapter 3- 13
The Flower of Service: Facilitating ServicesBilling
How much do I owe you? Bills should be clear, Accurate, and intelligible. Core
Examples of elements:
Periodic statements of
account activity Machine display of amount due
Chapter 3- 14
The Flower of Service: Facilitating ServicesPayment
Customers may pay faster and more cheerfully if you make transactions simple and convenient for them.
Core Examples of elements:
Self service payment Direct to payee or intermediary Automatic deduction
Chapter 3- 15
The Flower of Service: Enhancing ServicesConsultation
Core
Value can be added to goods and services by offering advice and consultation tailored to each customers needs and situation. Examples of elements:
Customized advice Personal counseling Management consulting
Chapter 3- 16
The Flower of Service: Enhancing ServicesHospitality

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!
Core
Examples of elements:
Greeting Waiting facilities and amenities Food and beverages Toilets and washrooms Security
Chapter 3- 17
The Flower of Service: Enhancing ServicesSafekeeping
Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site. Core Examples of elements:
Looking after possessions

(or rented) by customers
customers bring with them
Caring for goods purchased
Chapter 3- 18
The Flower of Service: Enhancing ServicesExceptions
Customers appreciate some flexibility when they make special requests and expect responsiveness when things dont go according to plan.
Core
Examples of elements: Special requests in advance Complaints or compliments Problem solving Restitution
Chapter 3- 19
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 fee based options
Firms that compete on a low-cost, no-frills basis needs fewer supplementary elements than those marketing expensive, high-value-added services Each flower petal must receive consistent care and concern to remain fresh and appealing
Chapter 3- 20
Planning and Branding Service Products
Chapter 3- 21
Branding Alternatives
Purpose of branding is to establish a mental picture of the service and clarify the value proposition Service marketers need to be their brand champions Branding alternatives are:
Branded House brand name to multiple offerings in unrelated fields e.g. Virgin Group Sub Brands master brand is primary frame of reference but product has a distinctive name e.g. Singapore Airlines Raffles Class Endorsed Brands Product brand dominates the corporate name e.g. hotels House of Brands corporation with a number of products, each promoted under its own brand name e.g. Proctor & Gamble
Developing New Services
Chapter 3- 23
A Hierarchy of New Service Categories (1)

Range from major innovations to simple style changes: 1. Major service innovations
New core products for previously undefined markets
2. Major process innovations

Using new processes to deliver existing products with added benefits
3. Product-line extensions
Additions to current product lines
4. Process-line extensions
Alternative delivery procedures
A Hierarchy of New Service Categories (2)

5. Supplementary service innovations
Addition of new or improved facilitating or enhancing elements
6. Service improvements
Modest changes in the performance of current products
7. Style changes
Visible changes in service design or scripts
Chapter 3- 25
Reengineering Service Processes

Reengineering involves analyzing and redesigning processes to achieve faster and better performance
Running tasks in parallel instead of sequence can reduce/eliminate dead time
Examination of processes can lead to creation of alternative delivery methods that constitute new service concepts
Add/eliminate supplementary services Resequence delivery of service elements Offer self-service options
Chapter 3- 26
Services as Substitutes for Goods Ownership and Task Performance (Fig 3.12)
Chapter 3- 27
Summary Chapter 3
The service concept consists of the core product, the supplementary services and the delivery processes Flowcharting differentiates the core and supplementary services providing a total view of the customers experience
The 8 petals of the Flower of Service shows how supplementary services can enhance and facilitate
Branding provides a mental picture of the value proposition There are 7 different categories of new service design ranging from major innovations to style changes
Chapter 3- 28

Service Marketing

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Chapter 3

Developing Service Concepts: Core and Supplementary Elements

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Learning Objectives Chapter 3

Determine the value of flowcharting service usage

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Planning and Creating Services

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Planning and Creating Services

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Core Products and Supplementary Services

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Designing a Service Concept

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Baggage Service Cocktail Bar

Wake-up Call Internet

Entertainment/ Restaurant Sports/ Exercise

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Flowcharting Service Delivery Helps to Clarify Product Elements

Nature of customer involvement with service organizations varies by type of service:

Mental Stimulus processing Information processing

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Simple Flowchart for Delivery of a People-Processing Service (Fig 3.4)

People Processing Stay at Motel

Maid Makes up Room

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service

Information Payment Billing

Consultation Order Taking

Facilitating elements Enhancing elements

How to Determine What Supplementary Services Should Be Offered

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service: Facilitating ServicesInformation

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service: Facilitating ServicesOrder Taking

Applications Order entry Reservations and check-in

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service: Facilitating ServicesBilling

account activity Machine display of amount due

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service: Facilitating ServicesPayment

Self service payment Direct to payee or intermediary Automatic deduction

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service: Enhancing ServicesConsultation

Customized advice Personal counseling Management consulting

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service: Enhancing ServicesHospitality

Copyright 2008 Pearson Education Canada