Chapter 4: Developing Service Products; Core and Supplementary Elements

Service Product

Comprises of all elements of service performance, both tangible and intangible, that create value for customers. 

Core Product

Central component that supplies the principal, problem-solving benefits customers seek

Supplementary Services

Augments 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

Designing a Service Concept

Service concept design must address the following issues:

• How the different service components are delivered to the customer

• The nature of the customer’s role in those processes

• How long delivery lasts

• The recommended level and style of service to be offered

Documenting Delivery Sequence Over Time

Must address sequence in which customers will use each core and supplementary service. Determine approximate length of time required for each step.

Needs, Habits,

Information should reflect good understanding of customers, especially their.

Facilitating, Enhancing

There are two types of supplementary services

Facilitating

Either needed for service delivery, or help in the use of the core product.

Enhancing

Add extra value for the customer.

Marketing positioning strategy

Helps to determine which supplementary services should be included.

Enhancing Elements

Consultation
Exceptions
Safekeeping
Hospitality

Facilitating Elements

Information
Payment
Billing
Order-taking

Information

• Directions to service site

• Schedules/service hours

• Prices

• Reminders

• Warnings

• Conditions of sale/service

• Notification of changes

• Documentation

• Confirmation of reservations

• Summaries of account activities

• Receipts and tickets

Order Taking

Applications

Order Entry

Reservations and Check-in

Billing

• Periodic statements of account activity

• Invoices for individual transactions

• Verbal statements of amount due

• Self-billing (computed by customer)

• Machine display of amount due

Payment

Self-Service
Direct to Payee or Intermediary
Automatic Deduction from Financial Deposits

Consultation

Customized advice, personal counseling, Tutoring/training in product use, Management or technical consulting.

Hospitality

Greeting Food and beverages, Toilets and washrooms, Waiting facilities and amenities. Transport Security.

Safekeeping

Caring for Possessions Customer Bring  with Them

• Child care, pet care

• Parking for vehicles, valet parking

• Coat rooms

• Baggage handling

• Storage space

• Safe deposit boxes

• Security personnel

Exceptions

Special Requests in Advance of Service Delivery

• Children’s needs

• Dietary requirements

• Medical or disability needs

• Religious observances

Handling Special Communications

• Complaints

• Compliments

• Suggestions

Core Products

Do not have to have supplementary elements.

Nature of product

Helps determine supplementary services offered to enhance value.

People-processing and high contact services

Have more supplementary services.

Different levels of service

Can add extra supplementary services for each upgrade in service level.

Low-cost, no-frills basis firms

Needs fewer supplementary elements.

Service Product

 A defined and consistent “bundle of output”
Supported by supplementary services (assembly of elements that are built around the core product)

• Differentiated by bundle of output

Product Line

• Most service organizations offer a line of products rather than just a single product. 

Three broad alternatives for product lines:

• Single brand to cover all products and services

• A separate, stand-alone brand for each offering

• Some combination of these two extremes

Spectrum of Branding Alternatives

Refers to the different ways a company can choose to brand its products, ranging from using one brand name for everything to giving each product its own separate brand name.

Example of Spectrum Branding

1. Branded House

2. Subbrands

3. Endorsed Brands

4. House of Brands

Corporate brand:

• Easily recognized,

• Holds meaning to customers,

• Stands for a particular way of doing business

Product brand:

Helps firm communicate distinctive experiences and benefits associated with a specific service concept

Create Brand promise

Shape truly differentiated customer experience

Measure and Monitor

Give employees skills, tools, and supporting processes to deliver promise

Don Schultz

“The brand promise or value proposition is not a tag line, an icon, or a color or a graphic element, although all of these may contribute.  

It is, instead, the heart and soul of the brand.”

Goods and services

May become competitive substitutes if they offer the same key benefits Provides an alternative to owning the physical good that can attain the desired outcome

Any new good

May create need for after-sales services now and be a source of future revenue stream

Service processes

Affect customers and also cost, speed, and productivity

Reengineering

Analyzing and redesigning processes to achieve faster and better performance

Examination of processes can lead to creation of alternative delivery methods:

• Add or eliminate supplementary services

• Re-sequence delivery of service elements

• Offer self-service options

Services

Are not immune to high failure rates that plague new manufactured products

Market knowledge

Is of utmost importance

Accompanying marketing support activities

are vital

Ability to maintain quality of the total service offering

is key

Core product

Is often of secondary importance, many innovations are in supplementary services or service delivery

Success Factors in New ervice Development

Market Synergy, Organizational Factors, Market research factors.

Creating services involve:

Designing the core product, supplementary services, and their delivery processes