Lovelock SRVCMKTG Ce PPT 03

Chapter 3
Developing
Service
Concepts: Core
and
Supplementary
Elements
Copyright 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 3- 1
Planning and Creating Services
Chapter 3- 2
Planning and Creating Services

A service product comprises all elements of service
performance, both tangible and intangible, that create
value for customers
The service concept is represented by:
A core product
Accompanied by supplementary services facilitate and enhance
use of the core product and add value and differentiation
Chapter 3- 3
Core Products and

Supplementary Services
In mature industries, core products often become
commodities
Supplementary services help to differentiate core products
and create competitive advantage by:
Facilitating use of core product (a service or a good)
Enhancing the value and appeal of the core product
Chapter 3- 4
Designing a Service Concept

Core Product
Central component that supplies the principal, problem-solving
benefits customers seek
Supplementary Services
Augment 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
Chapter 3- 5
Core and Supplementary Services at Luxury Hotel

(Offering Much More than Cheap Motel!)
Reservation
Valet
Parking
Cashier
Business
Centre
Reception
A Room
Room
Service
Wake-up
Call
Baggage
Service
Cocktail
Bar
Internet Entertainme Restaura

nt/ Sports/
nt
Exercise
Chapter 3- 6
Flowcharting Service Delivery

Helps to Clarify Product Elements
Helps management visualize the customers total
service experience
Useful for distinguishing between core product itself
and service elements that supplement core
Restaurants: Food and beverage (core)
Reservations (supplementary services)
Nature of customer involvement with service

organizations varies by type of service:
People processing
Possession processing
Mental Stimulus processing
Information processing
Chapter 3- 7
Simple Flowchart for Delivery of a

People-Processing Service (Fig 3.4)
People Processing Stay at Motel

Room
Park Car
Check In
Maid Makes
up Room
Breakfast
Check
Out
Breakfast
Prepared
Chapter 3- 8
The Flower of Service
(Fig 3.6)
Information
Payment
Billing
Consultation
Core
Exceptions
KEY:
Order Taking
Hospitality
Safekeeping
Facilitating elements
Enhancing elements
Chapter 3- 9
How to Determine What Supplementary

Services Should Be Offered
Not every core product is surrounded by all eight supplementary
elements
Nature of product helps to determine:
Which supplementary services must be offered
Which might usefully be added to enhance value and ease of use
People-processing and high-contact services have more supplementary

services
Market positioning strategy determines which supplementary services
should be included
Firms with different levels of service often add extra supplementary
services for each upgrade in service level
Chapter 3- 10
The Flower of Service:

Facilitating ServicesInformation
Customers often require

information about how to obtain
and use a product or service.
Core
Examples of elements:
Directions to service site

Schedule/service hours
Prices
Conditions of sale
Usage instructions
Chapter 3- 11

Facilitating ServicesOrder Taking
Core
Customers need to know what

is available and may want to
secure commitment to
delivery. The process should
be fast and smooth.
Applications
Order entry
Reservations and check-in
Chapter 3- 12

Facilitating ServicesBilling
How much do I owe you?

Bills should be clear,
Accurate, and intelligible.
Core
Periodic statements of
account activity
Machine display of amount

due
Chapter 3- 13

Facilitating ServicesPayment
Customers may pay faster

and more cheerfully if you
make transactions simple
and convenient for them.
Core
Self service payment

Direct to payee or intermediary
Automatic deduction
Chapter 3- 14

Enhancing ServicesConsultation
Core
Value can be added to goods

and services by offering advice
and consultation tailored to
each customers needs and
situation.
Customized advice
Personal counseling
Management consulting
Chapter 3- 15

Enhancing ServicesHospitality
Customers who invest time and
effort in visiting a business and
using its services deserve to be
treated as welcome guests
after all, marketing invited them!
Core
Greeting
Waiting facilities and amenities
Food and beverages
Toilets and washrooms
Security
Chapter 3- 16

Enhancing ServicesSafekeeping
Customers prefer not to worry

about looking after the personal
possessions that they bring
with them to a service site.
Core
Looking after possessions
customers bring with them
Caring for goods purchased

(or rented) by customers
Chapter 3- 17

Enhancing ServicesExceptions
Customers appreciate some

flexibility when they make
special requests and expect
responsiveness when things
dont go according to plan.
Core
Special requests in advance

Complaints or compliments
Problem solving
Restitution
Chapter 3- 18
Managerial Implications
To develop product policy and pricing strategy, managers
need to determine:
Which supplementary services should be offered as a standard
package or as fee based options
Firms that compete on a low-cost, no-frills basis needs

fewer supplementary elements than those marketing
expensive, high-value-added services
Each flower petal must receive consistent care and concern
to remain fresh and appealing
Chapter 3- 19
Planning and Branding Service

Products
Chapter 3- 20
Branding Alternatives
Purpose of branding is to establish a mental picture of the
service and clarify the value proposition
Service marketers need to be their brand champions
Branding alternatives are:
Branded House brand name to multiple offerings in unrelated
fields e.g. Virgin Group
Sub Brands master brand is primary frame of reference but
product has a distinctive name e.g. Singapore Airlines Raffles Class
Endorsed Brands Product brand dominates the corporate name
e.g. hotels
House of Brands corporation with a number of products, each
promoted under its own brand name e.g. Proctor & Gamble
Chapter 3- 21
Developing New Services
Chapter 3- 22
A Hierarchy of
New Service Categories (1)
Range from major innovations to simple style changes:
1. Major service innovations
New core products for previously undefined markets
2. Major process innovations

Using new processes to deliver existing products with added
benefits
3. Product-line extensions
Additions to current product lines
4. Process-line extensions
Alternative delivery procedures
Chapter 3- 23
A Hierarchy of
New Service Categories (2)
5. Supplementary service innovations
Addition of new or improved facilitating or enhancing elements
6. Service improvements
Modest changes in the performance of current products
7. Style changes
Visible changes in service design or scripts
Chapter 3- 24
Reengineering Service Processes

Reengineering involves analyzing and redesigning
processes to achieve faster and better performance
Running tasks in parallel instead of sequence can
reduce/eliminate dead time
Examination of processes can lead to creation of

alternative delivery methods that constitute new service
concepts
Add/eliminate supplementary services
Resequence delivery of service elements
Offer self-service options
Chapter 3- 25
Services as Substitutes for Goods Ownership

and Task Performance (Fig 3.12)
Chapter 3- 26
Summary Chapter 3
The service concept consists of the core product, the
supplementary services and the delivery processes
Flowcharting differentiates the core and supplementary
services providing a total view of the customers
experience
The 8 petals of the Flower of Service shows how
supplementary services can enhance and facilitate
Branding provides a mental picture of the value proposition
There are 7 different categories of new service design
ranging from major innovations to style changes
Chapter 3- 27

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Chapter 3

Services Marketing, Canadian Edition

Planning and Creating Services

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Planning and Creating Services

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Core Products and

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Designing a Service Concept

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Core and Supplementary Services at Luxury Hotel

Internet Entertainme Restaura

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Flowcharting Service Delivery

Nature of customer involvement with service

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

Simple Flowchart for Delivery of a

People Processing Stay at Motel

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service

Services Marketing, Canadian Edition

How to Determine What Supplementary

People-processing and high-contact services have more supplementary

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service:

Customers often require

Directions to service site

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service:

Customers need to know what

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service:

How much do I owe you?

Machine display of amount

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service:

Customers may pay faster

Self service payment

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service:

Value can be added to goods

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service:

Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition

The Flower of Service:

Customers prefer not to worry

Looking after possessions

customers bring with them

Caring for goods purchased