Presentation on theme: "Service Strategy, New Service Development, and Technology in Services"— Presentation transcript:
1 Service Strategy, New Service Development, and Technology in Services MD254Service OperationsProfessor Joy Field
2 Strategic Service Vision Target Market Segments What are common characteristics of important market segments?What dimensions can be used to segment the market (e.g. demographic, psychographic)?How important are various segments?What needs does each have?How well are these needs being served, in what manner, by whom?
3 Strategic Service Vision Service Concept What are important elements of the service to be provided, stated in terms of results produced for customers (i.e., how is value created for the customer)?How are these elements supposed to be perceived by the target market segment, by the market in general, by employees, by others?How do customers perceive the service concept?What efforts does this suggest in terms of the manner in which the service is designed, delivered, marketed?
4 Strategic Service Vision Operating Strategy What are important elements of the strategy: structural and managerial decisions and interfaces with other functional areas?On which will the most effort be concentrated?Where will investments be made?How will quality and cost be controlled: measures, incentives, rewards?What results will be expected versus competition in terms of, quality of service, cost profile, productivity, etc.?
5 Strategic Service Vision Service Delivery System How is the service delivery system implemented, including: role of people, technology, equipment, layout, procedures?What capacity does it provide, normally, at peak levels?To what extent does the service delivery system help insure quality standards, differentiate the service from competition, provide barriers to entry by competitors?
6 Competitive Environment of Services How do each of these factors affect the competitiveness of service firms?Entry BarriersEconomies of ScaleSales FluctuationsPower Dealing with Buyers or SuppliersProduct Substitutions for ServiceCustomer LoyaltyExit Barriers
8 Winning Customers in the Marketplace Service QualifierTo be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline.Service WinnerThe competitive dimension used to make the final choice among competitors. Example is price.Service LoserFailure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization), or late delivery of package (speed).
9 Competitive Role of Information in Services Creation of barriers to entryReservation systemsFrequent use clubSwitching costsRevenue generationYield managementPoint of saleExpert systemsDatabase assetSelling informationDeveloping servicesMicromarketingProductivity enhancementInventory statusDetermining relative efficiency and productivity improvement levers
10 Limits in the Use of Information Anti-competitive (e.g. barrier to entry)Fairness (e.g. yield management)Invasion of Privacy (e.g. micro-marketing)Data Security (e.g. medical records)Reliability (e.g. credit report)
11 Service Design Elements StructuralDelivery system: Process structure, service blueprint, strategic positioningFacility design: Servicescapes, architecture, process flows, layoutLocation: Geographic demand, site selection, location strategyCapacity planning: Strategic role, queuing models, planning criteriaManagerialInformation: Technology, scalability, use of InternetQuality: Measurement, design quality, recovery, tools, Six SigmaService encounter: Encounter triad, culture, supply relationships, outsourcingManaging capacity and demand: Strategies, yield management, queue management
12 Customer Value Equation Results produced for the customerProcess qualityPrice to the customerCost of acquiring the service
14 Strategic Positioning through Process Structure Degree of ComplexityMeasured by the number of steps in the service blueprint. For example, a medical clinic is less complex than a general hospital.Degree of DivergenceAmount of discretion permitted the server to customize the service. For example, a high-end vs. low-end hotel has more personalized services.
15 Generic Approaches to Service Design Production LineLimit Discretion of PersonnelDivision of LaborSubstitute Technology for PeopleStandardize the Service (low divergence)Customer as Co-ProducerSelf-Service (matching capacity with demand)Smoothing Service Demand (appointments, reservations, waiting)Customer-Generated ContentCustomer ContactDegree of Customer ContactSeparation of High and Low Contact OperationsSales Opportunity and Service Delivery Options (channels)Information EmpowermentEmployee empowermentCustomer empowerment
16 Role of Technology in the Service Encounter CustomerServerCustomerServerCustomerServerA. Technology-FreeService EncounterB. Technology-AssistedService EncounterC. Technology-FacilitatedService EncounterTechnologyTechnologyCustomerServerCustomerServerD. Technology-MediatedService EncounterE. Technology-GeneratedService Encounter
17 Technology Convergence Enabling E-Business InternetGlobal telephone systemCommunications standard TCP/IPAddressing system of URLsPersonal computers and cable TVCustomer databasesSound and graphicsUser-friendly free browser
18 Uses for Websites Retail channel (amazon.com) Supplemental channel (Barnes & Noble)Technical support (Dell Computer)Embellish existing service (HBS Press)Process orders (Delta Airline)Convey information (Kelly Blue Book)Communicate with membership (POMS.org)Play games (addictinggames.com)
19 E-Business Models Content Provider: Reuters Direct-to-Customer: Dell Full-Service Provider: GE Supply Co.Intermediary: eBayShared Infrastructure: SABREValue Net Integrator: 7-Eleven JapanVirtual Community: Monster.comWhole-of-Enterprise: Government
20 Economics of E-Business Sources of RevenueTransaction feesInformation and adviceFees for services and commissionsAdvertising and listing feesOwnership of customer dataSources of Cost ReductionEfficiencies (self-service)ScalabilityNetwork effects
21 Challenges of Adopting New Technologies in Services Loss of personal attentionCustomer acceptanceCustomer skillsTradeoffs (e.g. convenience vs. cost or time)Standardization (e.g. RFID)Lack of patent protection impedes innovation