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Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 1 CHAPTER 8 Designing and Managing S ervice Processes.

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Presentation on theme: "Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 1 CHAPTER 8 Designing and Managing S ervice Processes."— Presentation transcript:

1 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 1 CHAPTER 8 Designing and Managing S ervice Processes

2 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 2 Overview of Chapter 8  Flowcharting Service Delivery  Blueprinting Services to Create Valued Experiences and Productive Operations  Service Process Redesign  The Customer as Co-Producer  Self-Service Technologies

3 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 3 Flowcharting Service Delivery

4 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 4 Flowcharting Service Delivery Helps to Clarify Product Elements  Technique for displaying the nature and sequence of the different steps in delivery service to customers  Offers way to understand total customer service experience  Shows how nature of customer involvement with service organizations varies by type of service:  People processing  Possession processing  Mental Stimulus processing  Information processing

5 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 5 Simple Flowchart for Delivery of a People-Processing Service (Fig. 8.2a)

6 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 6 Simple Flowchart for Delivery of a Possession-Processing Service (Fig. 8.2b)

7 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 7 Simple Flowchart for Delivery of a Mental Stimulus Processing Service (Fig. 8.2c)

8 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 8 Simple Flowchart for Delivery of an Information-Processing Service (Fig. 8.2d)

9 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 9 Blueprinting Services to Create Valued Experiences and Productive Operations

10 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 10 Developing a Blueprint  Identify key activities in creating and delivering service  Define “big picture” before “drilling down” to obtain a higher level of detail Advantages of Blueprinting  Distinguish between “frontstage” and “backstage”  Clarify interactions between customers and staff, and support by backstage activities and systems  Identify potential fail points; take preventive measures; prepare contingency  Pinpoint stages in the process where customer commonly have to wait Blueprinting

11 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 11 Key Components of a Service Blueprint 1. Define standards for front-stage activities 2. Specify physical evidence 3. Identify main customer actions 4. Line of interaction (customers and front-stage personnel) 5. Frontstage actions by customer-contact personnel 6. Line of visibility (between front stage and backstage) 7. Backstage actions by customer contact personnel 8. Support processes involving other service personnel 9. Support processes involving IT - Identify fail points and risks of excessive waits - Set service standards and do failure-proofing

12 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 12 Blueprinting the Restaurant Experience: Act 1 (Fig. 8.8)

13 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 13 Blueprinting The Restaurant Experience: A Three-Act Performance  Act 1: Introductory Scenes  Act 2: Delivery of Core Product  Cocktails, seating, order food and wine, wine service  Potential fail points: Menu information complete? Menu intelligible? Everything on the menu actually available?  Mistakes in transmitting information a common cause of quality failure – e.g. bad handwriting; poor verbal communication  Customers may not only evaluate quality of food and drink, but how promptly it is served, serving staff attitudes, or style of service  Act 3: The Drama Concludes  Remaining actions should move quickly and smoothly, with no surprises at the end  Customer expectations: accurate, intelligible and prompt bill, payment handled politely, guests are thanked for their patronage

14 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 14 Improving Reliability of Processes by Failure Proofing  Identify fail points  Analysis of reasons for failure often reveals opportunities for failure proofing to reduce/eliminate future risk of errors  Need fail-safe methods for both employees and customers  Have poka-yokes to ensure service staff do things correctly, as requested, or at the right speed  Customer poka-yokes focus on preparing the customer for:  The encounter  Understanding and anticipating their roles  Selecting the correct service or transaction  See Service Insights 8.1 – Framework to prevent customer failures

15 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 15 Service Process Redesign

16 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 16 Mitchell T. Rabkin MD, formerly president of Boston’s Beth Israel Hospital Why Redesign? (1) “ Institutions are like steel beams — they tend to rust. What was once smooth and shiny and nice tends to become rusty. ”

17 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 17 Why Redesign? (2)  Revitalizes process that has become outdated  Changes in external environment make existing practices obsolete and require redesign of underlying processes  Creation of brand-new processes to stay relevant  Rusting occurs internally  Natural deterioration of internal processes; creeping bureaucracy; evolution of spurious, unofficial standards  Symptoms: - Extensive information exchange - Data that is not useful - High ratio of checking or control activities to value-adding activities - Increased exception processing - Customer complaints about inconvenient and unnecessary procedures

18 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 18 Process Redesign: Approaches and Potential Benefits (1)  Eliminating non-value-adding steps  Simplify front-end and back-end processes with goal of focusing on benefit-producing part of service encounter  Get rid of non-value adding steps  Improve productivity and customer satisfaction  Shifting to self-service  Increase in productivity and service quality  Lower costs  Enhance technology reputation  Differentiates company

19 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 19 Process Redesign: Approaches and Potential Benefits (2)  Delivering direct service  Bring service to customers instead of bringing customers to service firm  Improve convenience for customers  Productivity can be improved if companies can eliminate expensive retail locations  Increase customer base  Bundling services  Involves grouping multiple services into one offer, focusing on a well- defined customer group  Often has a better fit to the needs of target segment  Increase productivity  Add value for customers through lower transaction costs  Customize service  Increase per capita service use

20 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 20 Process Redesign: Approaches and Potential Benefits (3)  Redesigning physical aspects of service processes  Focus on tangible elements of service process; include changes to facilities and equipment to improve service experience  Increase convenience  Enhance the satisfaction and productivity of frontline staff  Cultivate interest in customers  Differentiate company

21 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 21 The Customer as Co-producer

22 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 22  Customer Participation  Actions and resources supplied by customers during service production and/or delivery  Includes mental, physical, and even emotional inputs Levels of Customer Participation (1)

23 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 23 Levels of Customer Participation (2)  3 levels  Low – Employees and systems do all the work - Often involves standardized service - Medium – Customer helps firm create and deliver service - Provide needed information and instructions - Make some personal effort; share physical possessions  High – Customer works actively with provider to co-produce the service - Service cannot be created without customer’s active participation - Customer can jeopardize quality of service outcome (e.g. weight loss, marriage counseling)

24 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 24  Customers can influence productivity and quality of service processes and outputs  Customers not only bring expectations and needs, they also need to have relevant service production competencies  Customers also need to be recruited as they are “partial employees”. Firms need to get those with the skills to do the tasks  For the relationship to last, both parties need to cooperate with each other Customers as Partial Employees

25 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 25 Self-Service Technologies

26 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 26 Self-Service Technologies (SSTs)  Ultimate form of customer involvement  Customers undertake specific activities using facilities or systems provided by service supplier  Customer’s time and effort replace those of employees -e.g. Internet-based services, ATMs, self-service gasoline pumps  Information-based services can easily be offered using SSTs  Used in both supplementary services and delivery of core product -e.g. eBay – no human auctioneer needed between sellers and buyers  Many companies seek to encourage customers to serve themselves using Internet-based self-service  Challenge: getting customers to try this technology

27 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 27  SSTs advantages  Time savings  Cost savings  Flexibility  Convenience of location  Greater control over service delivery  High perceived level of customization  SSTs disadvantages  Anxiety and stress experienced by customers who are uncomfortable with using them  Some see service encounters as social experiences and prefer to deal with people Psychological Factors Related to the use of SSTs

28 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 28  People love SSTs when…  SST machines are conveniently located and accessible 24/7—often as close as nearest computer!  Obtaining detailed information and completing transactions can be done faster than through face-to-face or telephone contact  People in awe of what technology can do for them when it works well  People hate SSTs when…  SSTs fail – system is down, PIN numbers not accepted, etc  Poorly designed technologies that make service processes difficult to understand and use  they mess up - forgetting passwords; failing to provide information as requested; simply hitting wrong buttons What Aspects Of SSTs Please Or Annoy Customers? (1)

29 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 29 What Aspects Of SSTs Please Or Annoy Customers? (2)  Key weakness of SSTs: Too few incorporate service recovery systems  Customers still forced to make telephone calls or personal visits

30 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 30  Does the SST work reliably?  Firms must ensure that SSTs are dependable and user- friendly  Is the SST better than interpersonal alternatives?  Customers will stick to conventional methods if SST doesn ’ t create benefits for them  If it fails, what systems are in place to recover?  Always provide systems, structures, and technologies that will enable prompt service recovery when things go wrong Putting SSTs to Test by Asking a Few Simple Questions

31 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 31  Flowcharting helps clarify delivery elements. It also shows how nature of customer involvement with service organizations varies by type of service  Service blueprinting can be used to design a service and create a satisfying experience for customers. Key components of the blueprint include  Definition of standards for each front-stage activity  Physical and other evidence for front-stage activities  Principal customer actions  Line of interaction  Front-stage actions by customer-contact personnel  Line of visibility  Backstage actions by customer-contact personnel  Support processes involving other service personnel  Support processes involving information technology Summary for Chapter 8 – Designing and Managing Service Processes (1)

32 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 32  Blueprinting a restaurant (or other service) can be a three-act performance  Prologue and introductory scenes  Delivery of the core product  Conclusion of the drama  Failure proofing can be designed into service processes to improve reliability  Service process redesign can be categorized into five kinds  Eliminating non-value-adding steps  Shifting to self-service  Delivering direct service  Bundling services  Redesigning the physical aspect of service processes Summary for Chapter 8 – Designing and Managing Service Processes (2)

33 Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services MarketingChapter 1 - Page 33 Summary for Chapter 8 – Designing and Managing Service Processes (3)  When the customer is a co-producer, issues to consider are  Levels of customer participation  Customers as partial employees  When deciding to use Self-service Technologies (SSTs), firms should consider  Psychological factors related to the use of SSTs  Aspects of SSTs that please or annoy customers


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