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8-1

ADDING VALUE WITH

SUPPLEMENTARY PRODUCT

ELEMENTS

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8-2

LEARNING OBJECTIVES AFTER FINISHING THIS CHAPTER, YOU SHOULD BE ABLE TO:

DISCUSS SEVERAL APPROACHES TO DESCRIBING SERVICE

PRODUCTS - core, facilitating, supplementary etc..

DISTINGUISH BETWEEN FACILITATING AND ENHANCING

SUPPLEMENTARY SERVICES

DEFINE THE EIGHT DIMENSIONS OF SERVICE

SHOW HOW A COMPANY COULD USE EACH OF THESE

DIMENSIONS TO ENHANCE ITS CORE SERVICE

ILLUSTRATE HOW TECHNOLOGY OFFERS NEW

OPPORTUNITIES TO PROVIDE VALUE-ADDED

SUPPLEMENTARY SERVICES.

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The Augmented Product

We live in an age in which our thinking about whata product or a service is must be quite different

from what it ever was before. It is not so much the

basic, generic central thing we are selling that

counts, but the whole cluster of satisfactions withwhich we surround it. 1

1. Source: Theodore Levitt, Marketing Success through Differentiation -

of Anything,Harvard Business Review, Jan-Feb 1980.

Generic Product, Expected Product, Augmented

Product, Potential Product

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The augmented service offering

The service concept

Consumer

participation

Facilitating

services (and

goods)

Supporting

services

(and goods)

The core service

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8-5

CORE PRODUCTS AND

SUPPLEMENTARY SERVICES

Most manufacturing and service businesses offer customers a

package of benefits,made up of the core product and a variety of

service related activities.

The core product.

product packages or extended products

which are the core product plus supplementary elements that ad value to

the good or service.

Lynn Shoestack developed a model to help marketers visualizeand manage the Total Market Entry. This model used a

chemical analogy(see figure 8.1)

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Clusters of Supplementary Services

Facilitating Information

Order Taking

Billing

Payment

Supporting Consultation

Hospitality

Safekeeping

Exception

Supplementary services

Supplementary services add value to the core (and help

differentiate it from competitors).

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The Flower of Service: core product

surrounded by clusters of

supplementary services

CORE

Information

Safekeeping

Consultation

Order-taking

Hospitality

Billing

Payment

Exceptions

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8-8

EXAMPLES OF INFORMATION ELEMENTS

Directions to service site

schedules/service hours

Prices

Instructions on using core product/supplementary services

Warnings Conditions of sale/service

Notification of changes

Documentation

Confirmation of reservations

Summaries of account activity

Receipts and tickets

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8-9

EXAMPLES OF ORDER-TAKING ELEMENTS

Applications Membership in clubs or programs

Subscriptions Services (e.g. utilities)

Prerequisite-based services(e.g. credit college enrollment)

Order entry

on-site fulfillment mail/telephone order for subsequent fulfillment

Reservations and Check-in Seats

Tables

Rooms

Rentals of vehicles or other equipment

professional appointments

admissions to restricted facilities (e.g.exhibitions)

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8-10

EXAMPLES OF BILLING ELEMENTS

Periodic Statements of account activity

Invoices for individual transactions

Verbal statements of amounts due

Machine display of amount due

Self-billing (computed by customer)

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EXAMPLES OF PAYMENT ELEMENTS

Self-service Exact change in machine

Cash in machine with change returned

Insert prepayment card

Insert credit/charge/debit card

Insert token

Electronic funds transfer

Mail a check

Direct to Payee or Intermediary cash handling and change giving

check handling

credit/charge/debit card handling

Coupon redemption

Tokens, vouchers etc

Automatic deduction from financial deposits (e.g. bank charges Control and verification

Automated systems (e.g. machine readable tickets operate entry gate)

Personal systems (e.g. gate controllers, ticket inspectors)

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8-12

EXAMPLES OF CONSULTATION ELEMENTS

Advice

Auditing

Personal counseling

Tutoring/training in product usage

Management or technical consultancy

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8-13

EXAMPLES OF HOSPITALITY ELEMENTS

Greeting

Food and beverages

Toilets and washrooms

Bathroom kits

Waiting facilities and amenities lounges, waiting areas, seating

Weather protection

Magazines

Transportation

Security

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8-14

EXAMPLES OF SAFEKEEPING ELEMENTS

Caring for possessions customers bring in

Child Care

Pet Care

Parking facilities for vehicles

Valet parking

Coat rooms

Baggage handling

Storage Space Safety deposit/security

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8-15

EXAMPLES OF SAFEKEEPING ELEMENTS

Continued

Caring for goods purchased (or rented) by

customers

Packaging

Pick-up

Transportation Delivery

Installation

Inspection

Cleaning

Refueling

Preventive maintenance

Repairs and Renovation

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8-16

EXAMPLES OF EXCEPTIONS ELEMENTS

Special requests in advance of service delivery

Childrens needs - Dietary requirements - Medical or disability needs

Religious observance - Deviations from standard operating procedures

Handling special communications

Complaints - Compliments - Suggestions

Problem solving

warranties and guarantees against product malfunctions resolving difficulties that arise from using the product

resolving difficulties caused by accidents, service failures and problems with customers

assisting customers who have suffered an accident or medical emergency

Restitution

refunds

compensation in kind for unsatisfactory service

free repair of defective goods

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Use of Information Technology to Enhance

Delivery of Supplementary Services

How IT Enhances Delivery of Supplementary

Services

Managerial Implications:

Product Policy Issues

Outsourcing Supplementary Services

Transforming Supplementary Services into Core

Products

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How IT Enhances Delivery of

Supplementary Services

Information - CD-ROM catalogs

Consultation - use technology to allow employeesfaster access to the information for better service.

Order-taking - minimize time and effort required.

Billing and payment - EFT-POS, prevent cheating,various cards etc.

Exception - meal preference for regular customers,data base etc.

What about other areas?

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IT- Managerial Implications

Product Policy Issues - new ways to augmentproduct/service, positioning and other marketing mix

issues.

Outsourcing Supplementary Services - Jack of alltrades, selective outsourcing, outsource all but core

competencies.

Transforming Supplementary Services into CoreProducts - create core out of supplementary expertise.

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