Prepared by Management Department | | New Service Innovation

Within the EU services now account for 60% of GDP (Eurostat, 2006). Growth in knowledge intensive business services (KIBS) Growth in services – but what does this mean? huge growth in coffee bars, smoothie bars and hair salons? Since 2003, shares in oil companies have doubled. Halliburton and Schlumberger, the world market leader for oil services, have more than tripled.

Outsourcing and service growth Expected gains that companies can derive from outsourcing include: the reduction of operational costs; the ability to transform fixed costs into variable costs; the ability to focus on core competencies; access to the industry-leading external competencies and expertise.

Business-to- business services (traditional) Business-to- business services (KIBS) Consumer services Internal firm services Public services Not-for-profit services DescriptionServices provided for businesses Specialist services provided to businesses Services provided to individuals Services provided by internal functions Services provided by local and national government Services provided by charities ExamplesAccountancy Legal advice Training Management consultancy IT consultancy Shops Hotels Banking Health and beauty Finance Personnel IT Health Education Leisure Prisons Hospices Counselling Aid agencies CustomersFrequently purchased by professionals, who may not be end users Purchased by consumer of the service Consumers of the service have no choice of provider Funded through taxation and little choice for consumer Funded through charities maybe government grants consumers chosen or choose. ChallengesProviding high- quality tailored and personal service Providing high quality services to businesses who have high purchasing power Providing a consistent service to a wide variety of customers Delivering customised, personal service. And demonstrating value for money. Delivering acceptable public services against a backcloth of political pressures. Balancing needs of volunteers, donors and overwhelming needs of customers. Typology of services

Technology and new service development Technology has become the most significant enabler of innovation in services. Transforming the roles of both employees and customers. Easing the connectivity between service developers and customers. E.g. ebay...

CompanyIndustry sectorNew service/new business model eBayOn-line auctionA new way of buying and selling through a community of individual users RyanairAirlineA new way of consuming air-travel with no frills service and emphasis on economy AmazonRetailerNew way to buy goods – on-line retailer Napster; iTunes Music retailerNew way to buy and download music GoogleInternet search engine A fast way to search for information on the internet PartygamingOn-line gamblingGambling and gaming from the comfort of your own home MyspaceSocial networkingA community of users on-line who can chat and share music, images, news from their own home You-TubeOn-line video and film archive A community of users sharing home made video clips plus recorded favourite clips from movies A range of new services that also create new business models, where technology plays a key role

Services are processes Services are co-produced by the customer Services are intangible Services are perishable Services cannot be transported Services are produced and consumed simultaneously Services are heterogeneous Characteristics of Services

New service innovation As with products service, innovations can be classified in many ways: eBay was new to the market; Google’s on-line auction is new to Google; Internal process innovations, e.g. Amazon: delivering books to consumer is not new, but using internet; Line extensions to services, e.g. banks offering insurance; Service modifications, e.g internet access to airline passengers.

The service innovation process Different from NPD: customer is part of the process Blueprinting the service Identify every activity and every possible outcome in the process Intensive market research Direct contact facilitates dialogue Service prototypes Difficult because customer is part of process Level of integration determines ability to prototype

Perceived service quality... Perceived service value... Customer expectations... How do customers evaluate services? Reliability Responsiveness Assurance Empathy Tangibles

Reliability –Providing service as promised –Dependability in handling customers’ problems –Performing services right first time –Performing services at the promised time –Maintaining error free records Responsiveness –Keeping customer informed when service will be performed –Prompt service to customers –Willingness to help customers –Readiness to respond to customers’ requests Assurance –Employees who instil confidence in customers –Making customers feel safe in their transactions –Employees who are consistently courteous –Employees who have knowledge to answer questions

Empathy –Giving customers individual attention –Employees who deal with customers in a caring manner –Having the customers best interests at heart –Employees who understand the needs of their customers –Convenient business hours Tangibles –Modern equipment –Visually appealing facilities –Employees who have neat, professional appearance –Visually appealing materials associated with service

Final Project  Buatlah sebuah ide inovasi di industri tertentu.  Berikan alasan mengapa Anda tertarik memasuki industri tersebut. (gunakan analisis five forces porter)  Buatlah nama perusahaan Anda, dan jelaskan visi dan misinya.  Jelaskan business model perusahaan Anda (jelaskan inovasi yang dilakukan).  Uraikan strategi marketing : target customer, customer value, 4P  Uraikan strategi operasional : proses produksi, apakah inovasi akan dilakukan secara internal / akuisisi  Uraikan strategi HRM : kebutuhan karyawan, pembagian departemen  Paper dikumpulkan tanggal 15 Desember

End of Chapter 7