New Service Development

Assumptions
It

must be objective, not

subjective
It must be precise, not vague
It must be fact-driven, not
opinion driven
It must be methodological, not
philosophical.

Types of New Services

Major

or Radical Innovations
Start-up Businesses
New services for the currently
served market
Service line extensions
Service Improvements
Style Changes

Radical Innovation
New

services for markets as yet

undefined.
Eg., eBay, Federal Express

Start-up Businesses
Consist

of new services for a

market that is already served by
existing products that meet the
same generic needs.
Eg., Door to Door airport
shuttle services that compete
with traditional taxi and
limousine services.

Limousine Services

New services for the

currently served markets
Attempts

to offer existing
customers of the organization a
service not previously available
from the company
Eg., Barnes and Noble offering
coffee service

Service line extensions

Represent

augmentations of the
existing services line.

Eg.,

Airlines offering new routes

Service Improvements
Changes

in features of services
that are already offered might
involve faster execution of an
existing service process.
At the moment only six airlines
offerfree inflight WiFi:
JetBlue, Norwegian, Turkish Airlines,
Air China, Philippine Airlines and
Hong Kong Airlines.

Style Changes
Changing

the colour scheme of a

restaurant, revising the logo for
an organization, redesigning a
website or painting aircraft a
different colour

Apple

Coca-Cola

Ford

Reebok

NIKE

Microsoft

PEPSI

Walmart

Xerox

New Service Development

Process

Front-End Planning
Business

Strategy Development or Review

Review mission and vision

New service strategy and specific new service
ideas must fit within the larger strategic
mission and vision of the organization
Firms may pursue cost-leadership strategy, a
differentiation strategy or a focused strategy
Primary strategic orientations

Prospectors
Defenders
Analyzers
Reactors

New Service Strategy

Development
A

product portfolio strategy and a

defined organizational structure
for new product or service
development are critical and are
the foundations for success.
The organization will be in a
better position to begin
generating specific ideas.
Initial idea screen

New Service Strategy Matrix for

identifying Growth Opportunities
Offerings

Markets
Current
Customers

New Customers

Existing Services

Share building

Market
development

New Services

Service
development

Diversification

Idea Generation
Formal

solicitation of new ideas

Common Approaches: Formal
brainstorming, solicitation of ideas from
employees and customers, Lead user
research, Learning about competitors
offerings, collaborating with outsiders,
licensing agreements and joint ventures.
Observing customers and how they use
the firms products and services can also
generate creative ideas for new
innovations

Contact

Personnel
Mechanisms: A formal new service
development department or
function with responsibility for
generating new ideas, suggestion
boxes for employees and
customers, new service
development teams that meet
regularly, surveys and focus groups
with customers and employees or
formal competitive analysis to
identify new services.

Service Concept Development

and Evaluation
Drawing

pictures and describing

an intangible service in concrete
terms are difficult.
Description of the service that
represents its service features
and characteristics and then to
determine initial customer and
employee responses to the
concept
Service Design Document

Business Analysis
To

estimate economic feasibility

and potential profit implications
Demand analysis, revenue
projections, cost analyses and
operational feasibility are
assessed at this stage.
Involves preliminary assumptions
New service idea should meet
the minimum requirements

Implementation
Service

Development and Testing

Involves construction of product
prototypes and testing for consumer
acceptance
Should involve customers, contact
employees as well as functional
representatives
Service Blueprint
Translate the final blueprint into
specific implementation plans