2Customer Benefit Package Customer Benefit PackageHierarchy LevelElementCore Good ExampleCore Service ExampleCategoryBusinessCustom clothierBusiness hotelFirstCoreBusiness suitsRoom forthe nightSecondPeripheralGoodGarment bagBath robePeripheral ServiceDeferred payment plansIn house restaurantThirdVariantCoffee loungeAirport shuttle
3Learning Objectives Discuss the new service development process. Prepare a blueprint for a service operation.Describe a service process using the dimensions of divergence and complexity.Use the taxonomy of service processes to classify a service operation.Compare and contrast the generic approaches to service system design.Place an example of service automation in it proper category.Discuss the managerial issues associated with the adoption of new technology.
4Levels of Service Innovation Radical InnovationsMajor Innovation: new service driven by information and computer based technologyStart-up Business: new service for existing marketNew Services for the Market Presently Served: new services to customers of an organizationIncremental InnovationsService Line Extensions: augmentation of existing service line (e.g. new menu items)Service Improvements: changes in features of currently offered serviceStyle Changes: modest visible changes in appearances
5New Service Development Cycle Full-scale launchPost-launch reviewFull LaunchDevelopmentEnablersFormulationof new servicesobjective / strategyIdea generationand screeningConceptdevelopment andtestingOrganizationalContextPeopleService designand testingProcess and systemdesign and testingMarketing programPersonnel trainingService testing andpilot runTest marketingTeamsProductTechnologySystemsToolsAnalysisDesignBusiness analysisProject authorization
6Technology Driven Service Innovation Power/energy - International flights with jet aircraftPhysical design - Enclosed sports stadiumsMaterials - AstroturfMethods - JIT and TQMInformation - E-commerce using the Internet
7Classification of Service Automation Fixed-sequence (F) - parking lot gateVariable-sequence (V) - ATMPlayback (P) - answering machineNumerical controlled (N) - animationIntelligent (I) - autopilotExpert system (E) - medical diagnosisTotally automated system (T) - EFT
8Adoption of New Technology in Services Challenges of Adopting New Technology The Process is the Product Back Office vs Front Office Changes Need for StandardizationManaging the New Technology Adoption Process Ten step process with concern for employees and customers
12Strategic Positioning Through Process Structure Degree of Complexity: Measured by the number of steps in the service blueprint. For example a clinic is less complex than a general hospital.Degree of Divergence: Amount of discretion permitted the server to customize the service. For example the activities of an attorney contrasted with those of a paralegal.
13Structural Alternatives for a Restaurant LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCETAKE RESERVATIONSEAT GUESTS, GIVE MENUSSERVE WATER AND BREADTAKE ORDERSPREPARE ORDERSSalad (4 choices)Entree (15 choices)Dessert (6 choices)Beverage (6 choices)SERVE ORDERSCOLLECT PAYMENTNo ReservationsSelf-seating. Menu on BlackboardEliminateCustomer Fills Out FormPre-prepared: No ChoiceLimit to Four ChoicesSundae Bar: Self-serviceCoffee, Tea, Milk onlyServe Salad & Entree Together:Bill and Beverage TogetherCash only: Pay when LeavingSpecific Table SelectionRecite Menu: Describe Entrees & SpecialsAssortment of Hot Breads and Hors D’oeuvresAt table. Taken Personally by Maltre d’Individually Prepared at tableExpand to 20 Choices: Add Flaming Dishes;Bone Fish at Table; Prepare Sauces at TableExpand to 12 ChoicesAdd Exotic Coffees; Sherbet betweenCourses; Hand Grind PepperChoice of Payment. Including House Accounts:Serve Mints
14Structural Positioning of Healthcare Services HIGH COMPLEXITY* Hospitals Services* General Practitioner:* Forensic-Testing Lab Diagnosis & Treatment* Diagnostic services onlySpecialist:* Treatment onlyLOW DIVERGENCE HIGH DIVERGENCEOutpatient Clinic: Limited* Treatment: e.g. BrokenBones/Minor Burns only* Retailer ofOrthopedic Supplies* X-Ray Lab * MedicalCounselingLOW COMPLEXITY
15Taxonomy of Service Processes Low divergence High divergence(standardized service) (customized service)Processing Processing Processing Processing Processing Processingof goods Information of people of goods Information of peopleDry Check Auto repair ComputerNo Cleaning processing Tailoring a programmingCustomer Restocking Billing for a suit Designing aContact a vending credit card buildingmachineOrdering SupervisionIndirect groceries of a landingcustomer from a home by an aircontact computer controllerNo Operating Withdrawing Operating Sampling Documenting Driving acustomer a vending cash from an elevator food at a medical rental carservice machine an ATM Riding an buffet dinner history Using aworker Assembling escalator Bagging of health clubinteraction premade groceries Searching for facility(self furniture informationDirect service) in a libraryCustomer Customer Food Giving a Providing Home Portrait HaircuttingContact service service in a lecture public carpet painting Performingworker restaurant Handling transport cleaning Counseling a surgicalinteraction Hand car routine bank a tion Landscaping operationwashing transactions Providing servicemassvaccination
16Generic Approaches to Service Design Production-line• Limit Discretion of Personnel• Division of Labor• Substitute Technology for People• Standardize the ServiceCustomer as Coproducer • Substitution of Customer Labor for Provider • Smoothing Service DemandCustomer Contact • Degree of Customer Contact • Separation of High and Low Contact OperationsInformation Empowerment • Employee and Customer
17Production-line Approach to Service Design Limit Discretion of PersonnelDivision of LaborSubstitute Technology for PeopleStandardize the Service
18Customer Participation Encourage Co-production by Customer Free air miles for Internet ticketingPromote Demand Smoothing Half-price drinks before 6:00pm
19Customer Contact View of Services Degree of Customer Contact Influences Potential Efficiency of ServiceSeparate High- and Low-Contact OperationsConsider Sales Opportunity and Production Efficiency Tradeoff
21Information Empowerment Employees Relational DatabasesCustomers Internet Web Site
22Discussion QuestionsWhat ethical issues are raised in the promotion of sales during a service transaction?What are some drawbacks of customer participation in the service delivery process?What are the limits in the production-line approach to service?Give an example of a service in which isolation of the technical core would be inappropriate.
23100 Yen Sushi House Questions Prepare a service blueprint for the 100 Yen Sushi HouseWhat features differentiate 100 Yen Sushi House and how do they create a competitive advantage?How has the 100 Yen Sushi House incorporated the just-in-time system into its operations?Suggest other services that could adopt the 100 Yen Sushi House service delivery concept.
24Dishwashing Counter in Back 100 Yen Sushi House LayoutDishwashing Counter in BackCONVERSATION AREAMiso and Tea StationCONVEYOR BELTCONVERSATION AREATAKE-OUT POSITIONENTRANCE= CHEF
25100 Yen Sushi House Service Package Supporting FacilityFacilitating GoodsInformationExplicit ServiceImplicit Service
26INTERACTIVE CLASS EXERCISE The class breaks into small groups and prepares a service blueprint for Village Volvo.