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Module 1: Understanding Consumers and Market

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Developing Service Products - Part 1

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MODULE OVERVIEW

Understand what constitutes a service product.
Be familiar with the Flower of Service model.
Know how facilitating supplementary services relate to the core product.
Know how enhancing supplementary services relate to the core product.

CREATING SERVICE PRODUCTS

In recent years, more and more service firms have started talking about their products - a term previously largely associated with manufactured goods.
What is the distinction?
A product implies a defined and consistent “bundle of output” as well as the ability to differentiate one bundle of output from another.
In a manufacturing context, the concept is easy to understand and visualize.
Providers of more intangible services, also offer various “models” of products, representing an assembly of carefully prescribed value- added supplementary services built around a core product.
For instance, — credit card companies develop different cards that each comes with a distinct bundle of benefits and fees;

insurance companies offer different types of policies
universities offer different degree programs, each composed of a mix of required and | elective courses.


The objective of product development is to design bundles of output that are distinct and can be easily differentiated from another.
All service organisations have to take decisions regarding:

Types of products to offer and
How to deliver them to customers.


To better understand the nature of services, it’s useful to distinguish between the core product and the supplementary elements that facilitate its use and enhance its value for customers.

What do we mean by a service “product”?

A service product comprises of all the elements of the service performance, both physical and intangible, that create value for customers.

How should we go about designing a service product?

Experienced service marketers recognize the need to take a holistic view of the entire performance that they want customers to experience.
The value proposition must address and integrate three components: Core Product, Supplementary Services and Delivery Processes

THE COMPONENTS OF A SERVICE PRODUCT
Core Product

What’ the customer is fundamentally buying
The core product is the main component that supplies the desired experience

Supplementary Services

The core product is usually accompanied by a variety of other service-related activities referred as supplementary services
Supplementary services augment the core product, both facilitating its use and enhancing its value

Delivery Processes

The processes used to deliver both the core product and each of the supplementary services
The design of the service offering must address the following issues:

How the different service components are delivered to the customer.
The nature of the customers’ role in those processes.
How long delivery lasts.
The prescribed level and style of service to be offered.



FLOWER OF SERVICE MODEL

The Flower of Service consists of the core service and a range of supplementary services.
Almost all of the supplementary services can be classified into one of the following eight clusters, which are identified as either
facilitating or enhancing.

Facilitating Services: Information, order taking, billing and payment
Enhancing Services: Consultation, hospitality, safekeeping and exceptions.


The petals are arranged in a clockwise sequence starting with “information”, following the order they are likely to be encountered by customers.
In a well-designed and well-managed service product, the petals and core are fresh and well-formed.
A badly designed or poorly delivered service is like a flower with missing, wilted, or discoloured petals. Even if the core is perfect, the flower looks unattractive.

FACILITATING SUPPLEMENTARY SERVICES: INFORMATION

To obtain full value from any good or service, customers need relevant information.
Information includes the following:

Direction to service site
Schedules/service hours
Price information
Terms and conditions of sale/service
Advice on how to get the most value from a service
Warnings and advice on how to avoid problems
Confirmation of reservations
Receipts and tickets
Notification of changes :
Summaries of account activities



FACILITATING SUPPLEMENTARY SERVICES: ORDER-TAKING

Once customers are ready to buy, a key supplementary element comes into play — order-taking.
Order-taking includes:

Order entry .

On-site order entry
Mail/telephone/e-mail/online/mobile app ers


Reservations or check-ins

Seats/tables/rooms e
Vehicles or equipment rental
Professional appointment


Applications

Memberships in club/programs
Subscription services
Enrolment-based services





FACILITATING SUPPEPNTENTART SERVICES: BILLING

Billing is common to almost all services (unless the service is provided free-of-charge).
Billing can be:

Periodic statements of account activity.
Invoices for individual transactions.
Verbal statements of amount due.
Online or machine display of amount due for self-payment transactions.


Inaccurate, illegible, or incomplete bills risk disappointing customers.
If customers are already dissatisfied, the billing mistake may make them even angrier.
Billing should also be timely, because it encourages people to make faster payment.
Self-billing (e.g., e-tailers)

It can be the simplest approach.
Customer tallies up the amount and authorizes a card payment.


Electronic funds transfer
Mailing a check
Entering credit card information online A
Online payment systems such as PayPal,
Google Wallet

Automatic deduction from financial deposits

Automated systems (e.g., machine-readable tickets that operate entry gate)
Pre-arranged automatic deduction for bill payment through direct debit (e.g., for bank loans and post-paid cell phone
subscription plans)

FACILITATING SUPPLEMENTARY SERVICES: PAYMENT

A variety of payment options exist TF
Self-service a

Inserting card, cash or token into machine



ENHANCING SUPPLEMENTARY SERVICES: CONSULTATION

It involves a dialog to probe for customer requirements and then develop a tailored solution.
At its simplest, consultation consists of advice from a knowledgeable service person in response to the request: “What do you suggest?”
For example, you might ask your hairstylist for advice on different hairstyles and products.

Counselling

Represents a more subtle approach to consultation because it involves helping customers to better understand their situations so they can come up with their “own” solutions and action programs.
This approach can be a particularly valuable supplement to services such as health treatments, in which part of the challenge is to get customers to make significant lifestyle changes and live healthily.


More formalized efforts to provide management and technical consulting for corporate customers include “solution selling” for expensive industrial equipment and services.
The sales engineer researches a customer's situation and then offers advice about what particular package of equipment and systems will yield the best results.
Advice can be free-of-charge and sometimes paid.
Different forms: Tutorials, group training programs, and public demonstrations.

ENHANCING SUPPLEMENTARY SERVICES: HOSPITALITY

Reflect pleasure at meeting new customers and greeting old ones when they return.
Well-managed businesses try to ensure that their employees treat customers as guests.
Courtesy and consideration for customers’ needs apply to both face-to-face encounters and telephone interactions.
Hospitality elements include:

Greeting
Food and beverages
Toilets and washrooms
Waiting facilities and amenities

Lounges, waiting areas, seating,
Weather protection, bar)
Magazines, entertainment, newspapers


Transport

For example, shoppers at retailers such as Abercrombie & Fitch, a global clothing retailer, are given a welcoming “hello” and “thank you” when they enter and leave the store, even if they did not buy anything.


The quality of hospitality determine customer satisfaction.
Especially true for people-processing services, because one cannot easily leave the service facility until the delivery of the core service is completed.
Private hospitals offer room service that might be expected to a good hotel. This includes provision of quality meals.



ENHANCING SUPPLEMENTARY SERVICES: SAFEKEEPING

Safekeeping
Assistance with safekeeping customers’ personal possessions.
Some customers may not visit at all unless certain safekeeping services are provided (such as safe and convenient parking for their Cars).

Parking for vehicles, valet parking


Additional safekeeping services may involve physical products that customers buy or rent.
They may include packaging, pick-up and delivery, assembly, installation, cleaning, and inspection.
These services may be offered free or for an additional fee.

ENHANCING SUPPLEMENTARY SERVICES: EXCEPTIONS
Exceptions

Supplementary services that fall outside the routine of normal service delivery.
Astute businesses anticipate such exceptions and develop contingency plans and guidelines in advance.
Several types of exceptions are:

Special requests
Problem-solving
Handling of complaints/suggestions/compliments ”
Restitution


Problem-solving

Sometimes normal service delivery (or product performance) fails to run smoothly as a result of accident, delay, equipment failure, or a customer having difficulty in using a product.
Handling of complaints/suggestions/compliments
It requires well-defined procedures.
It should be easier for customers to express dissatisfaction, offer suggestions for improvement, or pass on compliments.
Service providers should be able to make an appropriate response quickly.


Restitution

Many customers expect to be compensated for serious performance failures.
Compensation may take the form of:

repairs under warranty,
legal settlements,
refunds,
An offer of free service, or another form of payment-in-kind.





CONCLUSION

Product as a term was defined in the manufacturing as well as service context.
Components of a typical service product were discussed i.e. core product, supplementary services and delivery processes.
Finally, we discussed the “Flower of Service” model comprising facilitating services (information, order-taking, billing, payment) and enhancing services (consultation, hospitality, safekeeping,exceptions).