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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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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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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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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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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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