SERVICE MANAGEMENT

MMS Semester: IV

Topics MARKET POSITIONINGBLUEPRINT OF SERVICES

George Day observes: 

“The diversity of ways a business can achieve a competitive advantage quickly defeats any generalization or facile prescriptions....First and foremost, a business must set itself apart from its competition. To be successful, it must identify and promote itself as the best provider of attributes that are important to target customers.”

MARKET POSITIONING

To position itself in the market any organization, company or

firm needs to have focus. In marketing terms, focus means providing a relatively

narrow product mix for a particular market segment –a group of buyers who share common characteristics, needs, purchasing behaviour, or consumption patterns.

MARKET POSITIONING

The extent of service company’s focus can be described

along two dimensions: Market Focus : A market focus company concentrate on a

narrow market segment but offer a wide range of services.

Service Focus: Service focused firms offer a narrow range of services to a fairly broad market.

MARKET POSITIONING

MARKET POSITIONING

BREADTH OF SERVICE OFFERINGS

Narrow Wide

Many

Few

NUMBER OF MARKETS SERVED

Benefits from the Fully Focused

  In this few customers are served by the narrow service

segment.  Provide protection to the firm against would be competitors and

allow firm to charge premium. Example Small courier service firm sever only one or two big clients,

provide services based on their requirements. 

MARKET POSITIONING

Benefits from Service Focused   In this segment narrow product line is served to many

customers. Example Reliance CDMA services launched in year 2002  

MARKET POSITIONING

Benefits from Market Focused

  It offers the potential of selling multiple services to a single

purchase. Example: Tour organizing firms like SOTC. They take care of their

clients travelling ,lodging and food during the entire trip. 

MARKET POSITIONING

A HIERARCHY OF NEW SERVICE CATEGORIES

Major Service Innovations: New core products for previously undefined markets for example Fedex’s introduction to overnight express service in 1971.

Major Process Innovations: Using new processes to deliver existing products with added benefits. Example University of Phoenix give lectures either online or in rented facility.

Product Line Extensions: Addition to current product lines. Example Selling of Insurance Product by banks.

Process-line Extensions: Alternative delivery procedures

Supplementary Service Innovations: Additions of new or improved facilitating or enhancing elements

Service Improvements: Modest changes in the performance of current products

Style Changes: Visible changes in service design or scripts

REENGINEERING SERVICE PROCESSES

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

PHYSICAL GOODS AS A SOURCE OF NEW SERVICE IDEAS

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

CREATING SERVICES AS SUBSTITUTES FOR PHYSICAL GOOD

Drive Own Car

Use Own Computer

Rent a Car and Drive it

Rent Use of Computer

Hire a Chauffeur to Drive

Hire a Typist to Type

Hire a Taxi or Limousine

Send Work out to a

Secretarial Service

Own a Physical Good Rent Use of Physical Good

Perform Work

Oneself

Hire Someone

to Do Work

ACHIEVING SUCCESS IN DEVELOPING NEW SERVICES

Services are not immune to high failure rates that plague new manufactured products

In developing new services:◦ core product is often of secondary importance, many

innovations are in supplementary services or service delivery◦ ability to maintain quality of the total service offering is key◦ accompanying marketing support activities are vital◦ market knowledge is of utmost importance

SUCCESS FACTORS IN NEW SERVICE DEVELOPMENT

Market synergy◦ Good fit between new product and firm’s image◦ Advantage in meeting customers’ needs◦ Strong support from firm during and after launch◦ Understands customer purchase decision behavior

Organizational factors◦ Strong inter-functional cooperation and coordination◦ Internal marketing to educate staff on new product and its

importance

SUCCESS FACTORS IN NEW SERVICE DEVELOPMENT

Market research factors◦ Scientific studies

conducted early in development process

◦ Product concept well defined before undertaking field studies

Blueprinting Services to Create Valued Experiences and Productive Operations

ServiceBlueprint

Process

Points of contact

Evidence

A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer’s point of view.

SERVICE BLUEPRINT

DEVELOPING A BLUEPRINT

Developing a Blueprint

• Identify key activities in creating and delivering service

• Define “big picture” before “drilling down” to obtain a higher level of detail

A key characteristic of service blueprinting is that it distinguishes between

what customers experience “front-stage” the activities of employees and support processes “back-stage”,

Between these two lies the line of visibility.

SERVICE BLUEPRINT

KEY COMPONENTS OF A SERVICE BLUEPRINT

Define standards for front stage activities

Specify physical evidence

Identify principal customer actions

Line of interaction Front stage actions

by frontline personnel

Line of visibility

Backstage actions by customer contact

personnel

Support processes involving other

personnel

Support processes involving IT

Objectives:

Identify fail points & risks of excessive waits

Set service standards

Fail-proof process

Blueprinting the Restaurant Experience: Act 1

BLUEPRINTING THE RESTAURANT EXPERIENCE: A THREE-ACT PERFORMANCE

•Act 1: Prologue and Introductory Scenes

•Act 2: Delivery of Core Product Cocktails, seating, order food and wine, wine service Potential fail points: Menu information complete? Menu intelligible? Everything

on the menu actually available? Mistakes in transmitting information a common cause of quality failure Customers may not only evaluate quality of food and drink, but how promptly it

is served or serving staff attitudes

•Act 3: The Drama Concludes Remaining actions should move quickly and smoothly, with no surprises at the

end Customer expectations: accurate, intelligible and prompt bill, payment handled

politely, guest are thanked for their patronage

BLUEPRINT FOR EXPRESS MAIL DELIVERY SERVICEP

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Sta

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SU

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CESS

CustomerCalls

CustomerGives Package

ReceivePackage

TruckPackagingFormsHand-held ComputerUniform

TruckPackagingFormsHand-held ComputerUniform

DriverPicks UpPackage

DeliverPackage

CustomerServiceOrder

Line of interaction

Line of visibility

Line of internal interactionDispatchDriver

AirportReceives& Loads

Fly toSort Center

Unload &Sort

Load On Truck

Load onAirplane

SortPackages

Fly toDestination

ADVANTAGES OF BLUEPRINTING

Advantages of Blueprinting

• Distinguish between “front stage” and “backstage”

• Clarify interactions and support by backstage activities and systems

• Identify potential fail points; take preventive measures; prepare contingency

• Pinpoint stages where customers commonly have to wait

• Identify fail points

• Analysis of reasons for failure reveals opportunities for failure-proofing to reduce/eliminate future errors

• Need fail-safe methods for both employees and customers

REDESIGNING SERVICE PROCESSES

“Institutions are like steel beams—they tend to rust. What was once smooth and

shiny and nice tends to become rusty.”

Mitchell T. Rabkin, MD, Former President of Boston’s Beth Israel

Hospital

WHY REDESIGN?

Revitalizes process that has become outdated

•Changes in external environment make existing practices obsolete and require redesign of underlying processes

Rusting occurs internally•Natural deterioration of internal processes; creeping bureaucracy; evolution of spurious, unofficial standards

Symptoms: Extensive information exchange Data that is not useful

High ratio of checking control activities to value-adding activities

WHY REDESIGN?

Redesign aims to achieve these performance measures:

Reduced number of service failures Reduced cycle time from customer initiation of a

service process to its completion Enhanced productivity Increased customer satisfaction

PROCESS REDESIGN: APPROACHES AND POTENTIAL BENEFITS

• Streamline front-end and back-end processes of services • Improve productivity and customer satisfactionEliminating Non-

value-adding Steps

• Increase in productivity and service quality • Lower costs and perhaps prices• Enhance technology reputation• Differentiates company

Shifting To Self-service

• Improve convenience for customers• Productivity can be improved by eliminating expensive

retail locations• Increase customer base

Delivering Direct Service

PROCESS REDESIGN: APPROACHES AND POTENTIAL BENEFITS

• Involves grouping multiple services into one offer, focusing on a well-defined customer group

• A better fit to the needs of target segment • Increase productivity with customized service• Increase per capita service use

Bundling

Services

• Focus on tangible elements of service process (facilities and equipment)

• Increase convenience• Enhance satisfaction and productivity of frontline staff • Cultivate interest in customers

Redesigning Physical Aspects Of

Service Process

Q1.Identify some real-world examples of branding in financial services, such as specific type of retail bank account or insurance policies, and define their characteristics. How meaningful are these brands likely to be to customers?

Q2.Prepare a blueprint of the service with which you are familiar. Upon completion consider

(a) what are the indicators of quality from the customer perspective considering the line of visibility

(b) whether all steps in the process are necessary(c) the location of the potential fail points and how could they be designed our of

the process or what service recovery procedure could be used.(d) what are the potential measures of process performance(e) the extent to standardization is possible and advisable throughout the process

ASSIGNMENT