CREATING AND DELIVERING SERVICES
Understanding service products (once more ;)
Services are performance, rather a thing, and they are experienced rather than owned…
Customers participate in service delivery.
Service delivery occurs in real time.
Services have front end and backstage.
Services have a core and supplementary elements.
…
(What else?)
Designing and delivering services.
Figure 1. Planning, creating, and delivering services.
Service delivery process is configured additionally.
Figure 2. Service delivery and evaluation.
Technological revolution in Services.
Fast trains, weather forecasts, satellite communications and broadcast, Internet…
ATM machines (and supplementary infrastructure) are the core advances in banking.
Marketspase vs. marketplace.
Moving from high-contact to low-contact encounter changes the approaches to service delivery.
E.g., buying in face-to-face contact, telephone contact, or “anonymous” Internet.
Planning and branding service products
A product defines a consistent “bundle of output” and also the ability to differentiate one bundle of output from another. (The statement, developed for tangible products, is applicable for services).
Product lines and brands.
Mostly, companies operate several lines, changing the list given the changes in market environment.
(Marriott Corporation initially had: full-service business and resort hotels, family and fast-food restaurant chains, contract food services (including both institutional catering and in-flight kitchens and airlines), theme parks, and cruise ships. Later, it sold most of the latter, expanding the first group.
British Airways had 8 brands under operation: Concorde, First Class, Club World (business class), World Traveller (economy class); Club Europe and Euro-Traveler (European business and economy); SuperShuttle brand (guaranteed economy seat at high-frequency service); 6 commuter airlines (partnerships with BA), operating British Airways Express brand.
Figure. The tiering of lodging services.
Creating new services.
Degree of service innovation:
1. Major innovations (new products, yet undefined and undimensioned). E.g., first broadcast TV.
2. Start-up businesses (new products for a market already served by products that meet the same generic need).
3. New products (for currently served market, as an attempt to offer existing customers a product that the firm didn’t previously offer, although it was available elsewhere).
4. Product line extension (e.g., new items in menu).
5. Product improvements (e.g., extending work hours).
6. Style changes (e.g., service uniforms).
The process of new service development is similar to that in manufacturing (see intro to marketing course, product development chapters).
Searching for new ideas: turning goods into services.
- Technology.
- Tangible products.
- Substitute of owning (see services classification).
- Adding services to the core products (from installation to disposal).
- …
Transforming services into goods.
Going from intangible to tangible (lecture à books, banking à self-service, live performances à records, layers and legal advisors à specialized software (sometimes)).
Customers continue to change the way in which they obtain the valued benefits they seek.
The telephone created the need for answering services among busy people, many of whom solved this need first from services (secretary), then from manufactured goods (automatic teller), and most recently from services again (virtual office).
Role of research.
E.g. Marriott Corporation and the new product Courtyard by Marriott.
The research had to determine what benefits customers are looking for and what they are prepared to pay for.
Respondents were asked to trade off different hotel service features in an effort to determine which ones they valued most (see conjoint analysis).
Marriott was looking for a niche between full-service hotels and inexpensive motels, especially in places where full-service demand is not high enough to justify a large full-scale hotel.
50 attributes were evaluated, measured at 2 to 8 point scales.
Groups of features analyzed:
1. External factors – building shape, landscape design, pool type and location, hotel size.
2. Room features – room size and décor, climate control, location and type of bathroom, entertainment systems, other amenities.
3. Food-related services – type and location of restaurants, menus, room service, vending machines, shop, in-room kitchen.
4. Lounge facilities – location, atmosphere, type of clientele (policy on non-resident customers).
5. Services – reservations, registration, check-out, airport limo, bell desk, message center, secretarial services, car rental and maintenance, laundry/valet.
6. Leisure facilities – sauna, whirlpool, exercise room, racquetball and tennis courts, game room, children’s playroom and yard.
7. Security – guards, smoke detectors, 24-hour video camera.
For each of these seven factors, respondents were presented with a series of stimulus cards, displaying different levels of performance on each constituent attribute. For instance, the “Rooms” stimulus card displayed nine attributes, each of which was portrayed at three to five different levels. Thus amenities ranged from
- “small bar of soap”
- “large soap, shampoo packet, shoeshine mitt”
- “large soap, bath gel, shower cap, sewing kit, shampoo, special soap”
- “large soap, bath gel, shower cap, sewing kit, special soap, toothpaste, etc.”
In the second phase, the respondents were shown a number of different hotel profiles, each featuring different levels of performance on the various attributes contained in the seven factors; in some instances, certain premium service elements were omitted. Respondents were asked to indicate on a 5-point scale how likely they would be to stay at a hotel with these features, given a specific room price per night.
Figure. Sample Hotel Offering.
ROOM PRICE PER NIGHT IS $44.85.
BUILDING SIZE, BAR/LOUNGE
Large (600 rooms) 12 story hotel with:
- quiet bar/lounge
- enclosed central corridors and elevators
- all rooms have very large windows
LANDSCAPING/COURT
Building forms a spacious outdoor courtyard
View from rooms of moderately landscaped courtyard with:
- many trees and shrubs
- the swimming pool plus fountain
- terraced areas for sunning, sitting, eating
FOOD
Small moderately priced lounge and restaurant for hotel guests/friends
- Limited breakfast with juices, fruit, Danish, cereal, bacon and eggs
- Lunch – soup and sandwiches only
- Evening meal – salad, soup, sandwiches, six hot entrees including steak
HOTEL/MOTEL ROOM QUALITY
Quality of room furnishings, carpet, etc. is similar to:
- Hyatt Regencies
- Westin “Plaza” Hotels
ROOM SIZE AND FUNCTION
Room 1 foot longer than typical hotel/motel room
- Space for comfortable sofa-bed and 2 chairs
- Large desk
- Coffee table
- Coffee maker and small refrigerator
SERVICE STANDARDS
Full service including:
- Rapid check in / check out systems
- Reliable message service
- Valet (laundry pick up/deliver)
- Bellman
- Someone (concierge) arranges reservations, tickets, and generally at no cost
- Cleanliness, upkeep, management similar to:
- Hyatts
- Marriotts
LEISURE
- Combination indoor-outdoor pool
- Enclosed whirlpool (Jacuzzi)
- Well-equipped playroom/playground for kids
SECURITY
- Night guard on duty 7 p.m. to 7 a.m.
- Fire/water sprinklers throughout hotel
“X” the one box below which best describes how likely you are to stay in this hotel/motel at this price:
Would stay there almost all the time___ / Would stay there on a regular basis
___ / Would stay there now and then
___ / Would rarely stay there
___ / Would not stay there
___
(This full profile description of a hotel offering is one of the 50 cards developed by a fractional factorial design on the seven facets each at the five levels (developed by the Marriott’s development team). Each respondent received five cards following a blocking design).
Research yielded detailed guidelines for the selection of almost 200 features and services, representing those attributes that provided the highest utility for the target segments at prices they were willing to pay in a competitive environment. An important aspect of the study was that it focused not only on what travelers wanted, but also identified what they liked but weren’t prepared to pay for (there is a difference, after all, between wanting something and being willing to pay for it!).
Marriott was encouraged by research results to build 3 hotel prototypes “Courtyard by Marriott”. After testing the concept under real world conditions and making some refinements, the company subsequently developed a large chain whose advertising slogan became “Courtyard by Marriott – the hotel designed by business travelers”.
Using the same research methodology, Marriott, later, developed 2 more products – Fairfield Inn and Marriott Suites.
Note, the success is in part due to successful locations – distribution strategy. Retail site location is a science in itself and choices are often based on extensive research.
Another example: Citicorp’s Retail Banking Laboratory. The company developed retailed banking equipment and was testing it real environment with video-capturing the interaction (encounters).
Middle-aged woman responded about dealing with touch-screen ATM: “sort of like dealing with a real person”.
The role of blueprinting in service design.
“Ingredients of the recipe is not enough”. Mixing and cooking instructions are needed.
In services, it is about service staff knowing what is expected of them and customers understanding their own role in service delivery. Finally, time frames involved in each activity are to be specified.
Recent fashion in service industry is “fast-cycle operations” – essentially, speeding up servicing, what becomes a competitive edge of a company.
Flowcharting vs. blueprinting.
Customer experience can be depicted by a flowchart, service design requires a more sophisticated technique called blueprinting, which considers all activities necessary to create and deliver a service, as well as linkages between these activities.
Requirements that must be met for a service blueprint to be effective.
1. Because processes take place in time, the blueprint must show time dimensions in a diagrammatic form.
2. Like methods engineering, the blueprint must identify and handle errors, bottlenecks, reiterations, and so forth.
3. Based on research and experience, the blueprint must precisely define the degree of variation from standards that can be allowed in execution without affecting the customer’s evaluation of quality and timeliness.
A blueprint of an existing service may also suggest new product development opportunities, resulting from reconfiguring delivery system, adding or deleting specific elements, and repositioning the resulting service product to appeal to other segments.
Figure. Flowchart of a discount brokerage service.
The search for quality, consistency, and cost effectiveness (some abstracts).
- Word-of-mouth: “if you liked the servicing – tell your friends; if you didn’t like – tell us!”
- Maintaining good media relationships and being honest ensures the circulation of positive (and error-free) information about a company.
- Dramatizing servicing elements for customers to feel the work being done (sealing newly cleaned hotel bathroom fixtures with protective wrapping).
Insights from franchising.
Worked out bugs in advance through extensive testing and refinement of service prototypes to ensure coherent service marketing, operations, and delivery.
Use of intermediaries for selected tasks.
FedEx – totally closed system in US, but uses contractors abroad.
Airlines delegate ticket selling, reservations, receiving cash, etc.
Logistics companies employ drivers with own trucks.
(Pros and cons of using intermediaries?)
Internal marketing
Workers are sort of intermediaries b/w the company’s policy and customers; also they can be treated as “customers” of an organization (from a long-term perspective, at least, the relationship is a voluntary one.
The cost, associated with work is counterbalanced by three approaches:
- employee demands more compensation;
- quits;
- or seeks to reduce the “costs” – perhaps by not complying with all the prescribed standards.
Internal marketing uses motivation tools oriented onto employees and intermediaries to adhere to desired standards. (Name the practices).
MR can be used to study the internal public and its preferences, perceptions, motivation and other characteristics to study and enhance the working process and to develop, implement, and monitor internal marketing program.
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Services marketing. Overview.