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Chapter4.DevelopingServiceProducts:CoreandSupplementaryElementsEssentialsofServicesMarketing,SecondEdition
Essentials of Services Marketing, Second Edition
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Chapter 4. Developing Service Products: Core and

Supplementary Elements
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Bytheendofthischapter,thereadershouldbeableto:
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LO1DescribethetwocomponentsoftheFlowerofService.
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LO2Knowhowfacilitatingsupplementaryservicesrelatetothecoreproduct.
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LO3Knowhowenhancingsupplementaryservicesrelatetothecoreproduct.
LO4Examinehowservicefirmsusedifferentbrandingstrategies.
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LO5Understandhowbrandingcanbeusedtotierserviceproducts.
LO6Discusshowfirmscanbuildbrandequityandofferabrandedexperience.
LO7Listthecategoriesofnewservicedevelopment,rangingfromsimplestyle
changestomajorinnovations.
LO8Describehowfirmscanachievesuccessinnewservicedevelopment.
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Figure4.1.Starbucksisafamiliarbrandthatevenhastraditionaltea
consumersdrinkingoutofitscups.
OpeningVignette
Whenyouthinkofaspecialtycoffeebrand,thenamethatcomestomindisStarbucks.
Starbuckshasbuiltitssuccessonsellingandservinghighqualitycoffee,providinguplifting
customerserviceandcreatinganinvitingatmospherethatmakesyouwanttostayjusta
littlelonger.
However,didyouknowthatStarbuckshasbeenintroducingmanyretailandservice
innovationscompletelyunrelatedtocoffee?Itwasoneofthefirstcoffeechainstoofferfree
wirelessbroadbandinmanyofitsoutletsaroundtheworld.Sincethen,Starbuckshas
introducedinnovativeservicesthatitscustomersmaywanttousewhileenjoyingtheir
coffee.StarbuckshastiedupwithApplesiTunesWiFiMusicStoretoallowthelast10
songsplayedatselectedStarbuckscafstobebrowsed,purchased,anddownloaded
wirelesslyontocustomersiPhones,iPads,oriPods.Thismusicwillsyncbacktoconsumers
MacorPCthenexttimethemobiledeviceisconnected.Inaddition,Starbucksalsosells
movieDVDsandbooksfromestablishedandnewauthors.Perhaps,oneday,youwillno
longerseeStarbucksasjustaplaceforyourfavoritevanillamochadrinkorchocolate
frapp,butalsoasaplacetorelaxandexplorethelatestinmusic,films,andbooks.
AnotherinnovationfromStarbucksimprovesonasupplementaryservicepayment.
ThroughtheStarbucksCardMobileiPhoneapplication,customerscannowusetheir
iPhonestopayfortheirpurchasesatStarbuckslocationsinsidemorethan1,000Target
retailstoresacrosstheUnitedStates.
Starbucksisacompanythathasdevelopedserviceinnovationswithgreatsuccess.
However,competitioncontinuestobeintenseandStarbuckshastocontinuetoreinvent
itselftomaintainitsedge.
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LO1
DescribethetwocomponentsoftheFlowerofService.
The Flower of Service
TheFlowerofServicehastwocomponents:thecoreproductandsupplementaryservices.
Thecoreproductisbasedonthecoresetofbenefitsandsolutionsdeliveredtocustomers.
Thecoreproductisthemaincomponentthatsuppliesthedesiredexperience(e.g.,a
rejuvenatingspatreatmentoranexhilaratingrollercoasterride)ortheproblemsolving
benefitthatthecustomersarelookingfor(e.g.,amanagementconsultantprovidesadvice
onhowtodevelopagrowthstrategy,orarepairserviceproviderrestoresapieceof
equipmenttoproperworkingcondition).
Surroundingthecoreproductisavarietyofservicerelatedactivitiescalledsupplementary
services.Supplementaryservicesplaytworoles.Facilitatingsupplementaryservicesare
eitherneededforservicedelivery(e.g.,payment),orhelpintheuseofthemainproduct
(e.g.,information).Enhancingsupplementaryservicesaddextravalueandappealfor
customers.Forexample,consultationandinformationcanbeveryimportant
supplementaryservicesinahealthcarecontext(seeTable4.1).Thecoreproductoften
becomescommoditized,andsupplementaryservicesthenplayanimportantrolein
differentiatingandpositioningthecoreproductagainstcompetingservices.
Table4.1.Facilitatingandenhancingservicesprovidevaluetothecore
product
InFigure4.2,theeightclustersaredisplayedaspetalssurroundingthecenterofaflower.
Thepetalsarearrangedinaclockwisesequence,followinghowtheyarelikelytobe
encounteredbycustomers.Thissequencemayvary.Forexample,paymentmayhaveto
bemadebeforeserviceisdeliveredratherthanafterwards.Inawelldesignedandwell
managedserviceproduct,thepetalsandcorearefreshandwellformed.Abadlydesigned
orpoorlydeliveredserviceisalikeaflowerwithmissing,wilted,ordiscoloredpetals.Even
ifthecoreisperfect,theflowerlooksunattractive.Thinkaboutyourownexperiencesasa
customer(orwhenbuyingonbehalfofanorganization).Whenyouweredissatisfiedwitha
particularpurchase,wasitthecorethatwasatfault,orwasitaproblemwithoneormore
ofthepetals?
Figure4.2.TheFlowerofService:Acoreproductsurroundedbyclusterof
supplementaryservices.
LO2
Knowhowfacilitatingsupplementaryservicesrelatetothecoreproduct.
Facilitating Supplementary Services

Information
Toobtainfullvaluefromanygoodsorservices,customersneedrelevantinformation.This
informationincludesthefollowing:
Directionstotheservicesite
Schedules/Servicehours
Price
Reminders
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Warnings
Conditionsofsale/service(Figure4.3)
Figure4.3.Twitter.comprovidesconditionsofservicetousers.
Notificationofchanges
Confirmationofreservations
Summariesofaccountactivities
Receiptsandtickets
Newcustomersareespeciallyinformationhungry.Companiesshouldmakesurethe
informationtheyprovideisbothtimelyandaccurate.Ifnot,itislikelytoirritateorcause
inconveniencetotheircustomers.
Traditionalwaysofprovidinginformationincludeusingfrontlineemployees,printednotices,
andbrochures.Informationcanalsobeprovidedthroughvideosorsoftwaredriven
tutorials,touchscreenvideodisplays,orcompanywebsites.Manybusinesslogistics
companiesoffershipperstheopportunitytotrackthemovementsoftheirpackageseachof
whichhasbeenassignedauniqueidentificationnumber(Figure4.4).Forexample,
Amazon.comprovidesitscustomerswithareferencenumberthatallowstrackingofthe
goodssothatcustomersknowwhentoexpectthem.
Figure4.4.Parcelscanbetrackedaroundtheworldwiththeirunique
identificationnumber.
Order Taking
Oncecustomersarereadytobuy,akeysupplementaryelementcomesintoplayorder
taking.Ordertakingincludesthefollowing:
Applications
Membershipsinclubs/programs
Subscriptionservices(e.g.,utilities)
Enrollmentbasedservices(e.g.,financialcredit,collegeenrollment)
Orderentry
Onsiteorderentry
Mail/Telephone/Email/Onlineorder
Reservationsorcheckins
Seats/Tables/Rooms
Vehiclesorequipmentrental
Professionalappointment(Figure4.5)
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Figure4.5.Theservicesofaprofessionalemceehavetobereservedin
advance.
Banks,insurancecompanies,andutilitiesrequireprospectivecustomerstogothroughan
applicationprocesssothattheycangatherrelevantinformationandscreenoutthosewho
donotmeetbasicenrollmentcriteria(suchashavingabadcreditrecordoraserioushealth
problem).Universitiesalsorequireprospectivestudentstoapplyforadmission.
Reservations(includingappointmentsandcheckins)representaspecialtypeoforder
takingthatentitlescustomerstoaspecifiedunitofservice.Thesecanbeanairlineseat,a
restauranttable,ahotelroom,timewithaqualifiedprofessional,oradmissiontoafacility
suchasatheaterorsportsarenawithdesignatedseating.
Orderentriescanbereceivedthroughavarietyofsourcessuchasthroughsalespersonnel,
phoneandemail,oronline(Figure4.6).Theprocessofordertakingshouldbepolite,fast,
andaccuratesothatcustomersdonotwastetimeandendureunnecessarymentalor
physicaleffort.Technologycanbeusedtomakeordertakingeasierandfasterforboth
customersandsuppliers.Forexample,airlinesnowmakeuseofpaperlesssystems,based
ontelephoneorwebsitereservations.Customersreceiveaconfirmationnumberwhenthey
makethereservationandneedonlytoshowidentificationattheairporttoclaimtheir
seatsandreceiveboardingpasses.
Figure4.6.OpenTabletakesdiningreservationstoawholenewlevelby
allowingdinerstobypassthetraditionalcallandbookexperience,witha
mereclick.
Billing
Billingiscommontoalmostallservices(unlesstheserviceisprovidedfreeofcharge).
Inaccurate,illegible,orincompletebillsriskdisappointingcustomerswhomay,uptothat
point,havebeenquitesatisfiedwiththeirexperience.Ifcustomersarealreadydissatisfied,
thebillingmistakemaymakethemevenangrier.Billingshouldalsobetimelybecauseit
encouragespeopletomakepaymentmorepromptly.Billingcanbe:
Periodicstatementsofaccountactivity
Invoicesforindividualtransactions
Verbalstatementsofamountdue
Machinedisplaysofamountdueforselfpaymenttransactions
Perhapsthesimplestapproachisselfbilling.Thisiswhenthecustomeraddsuptheamount
ofanorderandauthorizesacardpaymentorwritesacheck.Insuchinstances,billingand
paymentarecombinedintoasingleact,althoughthesellermaystillneedtocheckfor
accuracy.
Busycustomershatetobekeptwaitingforabilltobepreparedinahotel,restaurant,or
rentalcarlot.Manyhotelsandcarrentalfirmshavecreatedexpresscheckoutoptions,
takingcustomerscreditcarddetailsinadvanceanddocumentingchargeslaterbymail.
However,accuracyisimportant.Eventhoughcustomersusetheexpresscheckoutstosave
time,theycertainlydontwanttowastetimelaterwithcorrectionsandrefunds.An
alternativeexpresscheckoutprocedureisbeingusedbysomecarrentalcompanies.An
agentmeetscustomersastheyreturntheircars,checksthemileageontheodometerand
thefuelgaugereadings,andthenprintsabillonthespotusingaportablewirelessterminal
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(Figure4.7).Manyhotelspushbillsunderguestroomdoorsonthemorningofdeparture
showingchargestodate.Othersoffercustomerstheoptionofpreviewingtheirbillsbefore
checkoutontheTVmonitorintheirroom.
Figure4.7.Awirelesshandheldterminalallowsbillstobeprintedonthe
spot.
Payment
Inmostcases,abillrequiresthecustomertotakeactiononpayment(andsuchactionmay
beveryslowincoming!).Exceptionsincludebankstatementsandotherdirectdebitpaid
services,whichshowchargesthatwillbedeductedfromacustomersaccount.
Avarietyofpaymentoptionsexist,butallcustomersexpectthemtobeeasytouseand
convenient.Theyinclude:
Selfservice
Insertacard,cashortokenintothemachine(Figure4.8)
Figure4.8.Tokensallowselfservicepayment.
Transferfundselectronically
Mailacheck
Enteracreditcardnumberonline
Directtopayeeorintermediary
Cashhandlingorchangegiving
Checkhandling
Credit/Charge/Debitcardhandling
Couponredemption
Automaticdeductionfromfinancialdeposits
Automatedsystems(e.g.,machinereadableticketsthatoperateentrygates)
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Prearrangedautomaticdeductionforbillpaymentthroughdirectdebit(e.g.,forbank
loansandpostpaidcellphonesubscriptionplans)
Selfservicepaymentsystems,forinstance,requiretheinsertionofcoins,banknotes,tokens,
orcardsinmachines.Anyequipmentbreakdownortechnicalfailurewillunderminethe
wholepurposeofsuchasystem.Therefore,regularmaintenanceandpromptrepairare
important.Mostpaymentsstilltaketheformofcashorcreditcards.Otheralternatives
includevouchers,coupons,orprepaidtickets.ElectronicformsofpaymentlikePayPaloffer
afussfreeandsecurewaytomakepaymentswhenshoppingonline.
LO3
Knowhowenhancingsupplementaryservicesrelatetothecoreproduct.
Enhancing Supplementary Services

Consultation
Atitssimplest,consultationconsistsofadvicefromaknowledgeableservicepersonin
responsetotherequest:Whatdoyousuggest?Forexample,youmightaskyour
hairstylistforadviceondifferenthairstylesandproducts.Effectiveconsultationrequiresan
understandingofeachcustomerscurrentsituationbeforesuggestingasuitablecourseof
action(Figure4.9).
Figure4.9.Anauditorprovidesahumantouchduringtheprocessof
consultation.
Examplesofconsultationinclude:
Customizedadvice
Personalcounseling
Tutoring/Traininginproductuse
Managementortechnicalconsulting
Counselingisalessdirectapproachtoconsultationbecauseitinvolveshelpingcustomers
understandtheirsituationsothattheycancomeupwiththeirownsolutionsandaction
programs.Thisapproachcanbeusefulinserviceslikehealthtreatment,inwhichpartofthe
challengeistogetcustomerstomakesignificantlifestylechangesandlivehealthily.For
example,dietcenterslikeWeightWatchersusecounselingtohelpcustomerschange
behaviorssothatweightlosscanbesustainedaftertheinitialdietiscompleted(Figure
4.10).
Figure4.10.Counselingforweightreductionisaformofconsultation.
Moreformalizedeffortstoprovidemanagementandtechnicalconsultingforcorporate
customersincludesolutionsellingforexpensiveindustrialequipmentandservices.Asales
engineeranalyzesacustomerssituationandthenoffersadviceaboutwhatparticular
packageofequipmentandsystemswillyieldthebestresults.Someconsultingservicesare
offeredfreeofchargeinthehopeofmakingasale.Advicecanalsobeofferedthrough
tutorials,grouptrainingprograms,andpublicdemonstrations.
Hospitality
Hospitalityrelatedservicesshould,ideally,reflectpleasureatmeetingnewcustomersand
greetingoldoneswhentheyreturn.Wellmanagedbusinessestry,atleastinsmallways,to
ensuretheiremployeestreatcustomersasguests.Courtesyandconsiderationfor
customersneedsapplytobothfacetofaceencountersandtelephoneinteractions.
Hospitalityelementsinclude:
Greetings
Foodandbeverages
Toiletsandwashrooms
Waitingfacilitiesandamenities
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Lounges,waitingareas,seating
Weatherprotection
Magazines,entertainment,newspapers
Transport
Hospitalityismoreclearlydisplayedinfacetofaceencounters.Insomecases,itstarts(and
ends)withanofferoftransporttoandfromtheservicesiteoncourtesyshuttlebuses.If
customersmustwaitoutdoorsbeforetheservicecanbedelivered,thenathoughtfulservice
providerwillofferweatherprotection.Ifcustomershavetowaitindoors,awaitingarea
withseatingandevenentertainment(TV,newspapers,ormagazines)maybeprovidedto
passthetime.Havingcustomercontactemployeeswhoarenaturallywarm,welcoming,
andconsideratehelpstocreateahospitableatmosphere.ShoppersatGiordano,an
internationalclothingretailerwithoutletsacrossAsiaPacificandtheMiddleEast,are
greetedwithacheerfulhellowhentheyenterthestoreandthankyouwhentheyleave
thestore,eveniftheydidnotbuyanything(Figure4.11).
Figure4.11.Giordanoprovideshospitalitywithasmile.
Thequalityofthehospitalityservicesofferedbyafirmplaysanimportantrolein
determiningcustomersatisfaction.Thisisespeciallytrueforpeopleprocessingservices
becauseonecannoteasilyleavetheservicefacilityuntildeliveryofthecoreserviceis
completed.Privatehospitalsoftenseektoenhancetheirappealbyprovidingalevelof
roomservicethatmightbeexpectedinagoodhotel(Figure4.12).Thisincludesthe
provisionofqualitymeals.Someairlinesseektodifferentiatethemselvesfromtheir
competitorswithbettermealsandamoreattentivecabincrew.SingaporeAirlinesiswell
recognizedonbothcounts.
Figure4.12.Somehospitalsoffersserviceandroomssimilartothatofa
fivestarhotel.
Safekeeping
Whencustomersarevisitingaservicesite,theyoftenwantassistancewiththeirpersonal
possessions.Infact,unlesscertainsafekeepingservicesareprovided(suchassafeand
convenientparkingfortheircars),somecustomersmaynotvisitatall.Safekeeping
includes:
Childcare,petcare(Figure4.13)
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Figure4.13.Petcareservicesareaformofsafekeeping.
Parkingforvehicles,valetparking
Coatrooms
Baggagehandling
Storagespace
Safedepositboxes
Securitypersonnel
Responsiblebusinessespaycloseattentiontosafetyandsecurityissuesforcustomers
visitingtheirpremises.WhenWellsFargoBankmailsbankstatementstoitscustomers,it
includesabrochurecontaininginformationaboutusingitsATMmachinessafely,educating
itscustomersabouthowtoprotectboththeirATMcardsandthemselvesfromtheftand
personalinjury.ThebankalsomakessurethatitsATMmachinesareinbrightlylitandin
highlyvisiblelocations.
Exceptions
Exceptionsinvolvesupplementaryservicesthatfalloutsidetheroutineofnormalservice
delivery.Theyincludethefollowing:
Specialrequestsinadvanceofservicedelivery
Childrensneeds,dietaryrequirements
Needsarisingfrommedicalorphysicaldisability
Religiousobservances
Handlingspecialcommunications
Complaints
Compliments
Suggestions
Problemsolving
Warrantiesandguarantees
Resolvingdifficultiesthatarisefromusingtheproduct
Resolvingdifficultiescausedbyservicefailuresorevenaccidents
Assistingcustomerswhohavesufferedanaccidentoramedicalemergency
Restitution
Refundsandcompensation
Freerepairofdefectivegoods
Companiesshouldanticipateexceptionsanddevelopbackupplansandguidelinesin
advance.Thatway,employeeswillnotappearhelplessandsurprisedwhencustomersask
forspecialassistance.Welldefinedproceduresmakeiteasierforemployeestorespond
promptlyandeffectively(Figure4.14).
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Figure4.14.McDonaldswellestablishedproceduresletemployees
respondpromptlyandeffectivelytocustomersrequests.
Managersneedtokeepaneyeonthelevelofexceptionrequests.Toomanyrequestsmay
indicatethatstandardproceduresneedtobechanged.Forexample,ifarestaurantoften
receivesrequestsforspecialvegetarianmealsbecausetherearenoneonthemenu,itmay
betimetorevisethemenutoincludeatleastoneortwosuchdishes.Aflexibleapproachto
exceptionsgenerallyisagoodideabecauseitreflectsresponsivenesstocustomerneeds.On
theotherhand,toomanyexceptionsmayhaveanegativeimpactonothercustomers,and
overburdenemployees.
Managerial Implications
TheeightcategoriesofsupplementaryservicesthatformtheFlowerofService
collectivelyprovidemanyoptionsforenhancingcoreproducts.Mostsupplementaryservices
do(orshould)representresponsestocustomerneeds.Somearefacilitatingservicessuchas
informationandreservationsthatenablecustomerstousethecoreproductmore
effectively.Othersareextrasthatenhancethecoreorevenreduceitsnonfinancialcosts
(e.g.,meals,magazines,andentertainmentarehospitalityelementsthathelppassthe
time).Someelements,suchasbillingandpayment,areimposedbytheserviceprovider.
Eveniftheyarenotdesiredbythecustomer,theystillformpartoftheoverallservice
experience.Anybadlyhandledelementmaynegativelyaffectcustomersperceptionsof
servicequality.
Noteverycoreproductissurroundedbysupplementaryelementsfromalleightpetalsof
theFlowerofService.FourcategoriesofprocesseswereintroducedinChapter1people,
possession,mentalstimulus,andinformationprocessing.Theyeachhavedifferent
implicationsforoperationalprocedures,thedegreeofcustomercontactwithservice
personnelandfacilities,andrequirementsforsupplementaryservices.Peopleprocessing
servicestendtobethemostdemandingintermsofsupplementaryelements,especially
hospitality,becausethereiscloseandoftenextendedcustomercontact.Similarly,high
contactservicesusuallyhavemorecustomerinteractionthanlowcontactserviceshave.
Whencustomersdontvisittheservicefactory,theneedforhospitalitymaybelimitedto
simplecourtesiesinlettersandtelecommunications.Possessionprocessingservices
sometimesplaceheavydemandsonsafekeepingelements,buttheremaybenoneedfor
thisparticularpetalwhenprovidinginformationprocessingservicesinwhichcustomers
andsuppliersdealentirelyatarmslength.Financialservicesprovidedelectronicallyarean
exception,however,asthesecompaniesmustensurethattheircustomersintangible
financialassetsandprivacyarecarefullysafeguardedintransactionsthatoccurviaphoneor
theweb(Figure4.15).
Figure4.15.Securityfeaturesensurethatonlinetransactionsaresafe.
Acompanysmarketpositioningstrategyhelpstodeterminewhichsupplementaryservices
shouldbeincluded.Astrategyofaddingbenefitstoincreasecustomersperceptionsof
qualitywillprobablyrequiremoresupplementaryservices(andahigherlevelof
performanceonallsuchelements)thanastrategyofcompetingonlowpriceswill.
Furthermore,offeringprogressivelyhigherlevelsofsupplementaryservicesarounda
commoncoremayallowfirmstodifferentiatetheirofferingsinaproductline,similartothe
variousclassesoftravelofferedbyairlines.
TheFlowerofServiceanditspetalsdiscussedherecanserveasachecklistinthecontinuing
searchfornewwaystoaugmentexistingcoreproductsandtodesignnewofferings.
Regardlessofwhichsupplementaryservicesafirmdecidestooffer,alloftheelementsin
eachpetalshouldreceivethecareandattentionneededtoconsistentlymeetdefined
servicestandards.Thatway,theresultingflowerwillalwayshaveafreshandappealing
appearance.
LO4
Examinehowservicefirmsusedifferentbrandingstrategies.
Branding Service Products and Experiences

Inrecentyears,moreandmoreservicebusinesseshavestartedtalkingabouttheirproducts
atermpreviouslylargelyassociatedwithmanufacturedgoods.Whatisaproduct?A
productisabundleofoutput.Afirmcandifferentiateonebundleofoutputfromanother.
Inamanufacturingcontext,theconceptiseasytounderstand.Manufacturerssimply
differentiatetheirproductsbyusingvariousmodels.Forexample,fastfoodrestaurants
displayamenuoftheirproducts,andthesearethemodelsinservices.Ifyoulikeburgers
verymuch,youcaneasilytellthedifferencebetweenBurgerKingsbundleofoutputa
WhopperandMcDonaldsbundleofoutputaBigMac.
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Providersofmoreintangibleservicesalsooffervariousmodelsofproducts.Buyersof
services,especiallynewbuyers,relyonhowwellknownthebrandis,asanindicatorof
qualityandreliabilityoftheservice,evenmoresothanofgoods.Brandingalsohelpsto
differentiateonebundleofoutputfromanother.OneexampleofthisisBanyanTreeHotels
&Resorts(featuredinCase4),whichcarefullycraftedspecifiedproductsforitsvarious
targetsegmentsandbrandedthemasHeavenlyHoneymoon,SpaIndulgence,or
IntimateMoments.
IntimateMomentsisaproductespeciallycreatedforcouples
celebratingtheirweddinganniversary.Itispresentedasasurprisetothespousewhen
guestsfindtheirvillasdecoratedwithlitcandles,incenseburning,flowerpetalsspread
throughouttheroom,satinsheetsonthedecoratedbed,chilledchampagneorwine,anda
privateoutdoorpooldecoratedwithflowers,candles,andbathoils.Thecoupleispresented
withavarietyofaromaticmassageoilstofurtherinspirethoseintimatemoments.
PackagingandbrandingthisproductallowsBanyanTreetosellitviaitswebsite,
distributors,andreservationscentersandtotrainstaffaboutitattheindividualhotels.
Marketing,selling,anddeliveryoftheproductwouldnotbeaseffectiveifitwasnot
packagedandbranded.Letslooknextatalternativebrandingstrategiesforservices.
Branding Strategies for Services

Servicefirmscanchoosefromamongfourbroadbrandingalternatives:brandedhouse(i.e.,
usingasinglebrandtocoverallproductsandservices),houseofbrands(i.e.,usinga
separatestandalonebrandforeachoffering),orsubbrandsandendorsedbrandswhichare
bothsomecombinationofthesetwoextremes.
Thesealternativesarepresentedasa
spectruminFigure4.16andarediscussedinthefollowingsections.
Figure4.16.Thespectrumofbrandingalternatives.
Branded House
Thetermbrandedhouseisusedtodescribeacompany,suchastheVirginGroup,that
appliesitsbrandnametomultipleofferingsinoftenunrelatedfields.
Thedangerofsuch
abrandingstrategyisthatthebrandgetsoverstretchedandweakened.
Subbrands
Nextonthespectrumaresubbrands,forwhichthecorporateorthemasterbrandisthe
mainreferencepoint,buttheproductitselfalsohasadistinctivenametoo.FedExhasbeen
successfullyusingasubbrandingstrategy.Whenthecompanydecidedtorebrandaground
deliveryserviceithadpurchased,itchosethenameFedExGroundanddevelopedan
alternativecolorforthestandardlogo(purpleandgreenratherthanpurpleandorange).Its
othersubbrandsincludeFedExHomeDelivery(deliverstoUSresidentialaddresses),
FedExFreight(regional,lessthantruckloadtransportationforheavyweightfreight),
FedExCustomCritical(nonstop,doortodoordeliveryoftimecriticalshipments),FedEx
TradeNetworks(customsbrokerage,internationalfreightforwarding,andtrade
facilitation),FedexSupplyChainServices(acomprehensivesuiteofsolutionsthat
synchronizethemovementofgoods),andFedexKinkos(officeandprintingservices,
technologyservices,shippingsupplies,andpackingserviceslocatedinbothcityandsuburban
retailstores).
Endorsed Brands
Forendorsedbrands,theproductbranddominates,butthecorporatenameisstillfeatured.
Manyhotelcompaniesusethisapproach.Theyofferafamilyofendorsedbrands.For
instance,IntercontinentalHotelGroupinitselfiswellknown.However,itsproductbrands
aredominant.TheyareIntercontinentalHotels&Resorts,CrownePlazaHotels&Resorts,
HotelIndigo,HolidayInnHotels&Resorts,HolidayInnExpress,StaybridgeSuites,
CandlewoodSuites,ForumHotels&Resorts,ParkroyalHotels&Resorts,andCentra
Hotels&Resorts.
Foramultibrandstrategytosucceed,eachbrandmusthaveauniquevalueproposition,
targetedatadifferentcustomersegment.Itisimportanttonotethatinsomeinstances,
segmentationissituationbased:Thesameindividualmayhavedifferentneeds(and
willingnesstopay),suchaswhenvacationingwithfamilyortravelingonbusiness.Amulti
brandstrategyisaimedatencouragingcustomerstocontinuebuyingfromwithinthebrand
family.Loyaltyprogramsareoftenusedtoencouragethis.
House of Brands
Atthefarendofthespectrumisthehouseofbrandsstrategy.Agoodserviceexampleis
Yum!BrandsInc.,whichownsmorethan35,000restaurantsacross110countries.While
manymaynothaveheardofYum!Brands,peoplecertainlyarefamiliarwiththeir
restaurantbrandsA&W,KentuckyFriedChicken,PizzaHut,TacoBell,andLongJohn
Silvers.Eachofthesebrandsisactivelypromotedundertheirownname(Figure4.17).
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Figure4.17.KFCandPizzaHutarejustsomeofthefewpopularfastfood
brandsunderYum!Brands.
LO5
Understandhowbrandingcanbeusedtotierserviceproducts.
Tiering Service Products with Branding

Inanumberofserviceindustries,brandingisusednotonlytodifferentiatecoreservicesbut
alsotoclearlydifferentiateservicelevels.Thisisknownasservicetiering.Itiscommonin
industriessuchashotels,airlines,carrentals,andcomputerhardwareandsoftwaresupport.
Table4.2showsexamplesofthekeytierswithineachoftheseindustries.Otherexamples
oftieringincludehealthcareinsurance,cabletelevision,andcreditcards.
Table4.2.ExamplesofServiceTiering
Inthecarrentalindustry,thesizeandtypeofcarsformtheprimarybasisoftiering.Inthe
airlineindustry,individualcarriersdecidewhatlevelsofperformanceshouldbeincluded
witheachclassofservice.Innovativecarriers,suchasBritishAirwaysandVirginAtlantic,
arecontinuallytryingtoaddnewservicefeaturessuchasbusinessclassseatsthatfoldflat
intobedsforovernighttravel.Inotherindustries,tieringoftenreflectsanindividualfirms
strategyofbundlingserviceelementsintoalimitednumberofpackages,eachpriced
separately.Letsexaminetwoexamplesnext.
Avis Car Rental
Avisfocusesontwokindsofcustomers:consumercustomersandbusinesscustomers.For
consumercustomers,theytiertheirservicebasedondifferentcarclasses(subcompact,
compact,intermediate,standard,fullsize,specialty,minicar,premium,luxury,SUV,
convertible,andpassengervan)andalsoservice.Forexample,ifacustomerdoesnotwant
todrive,thentheycanoptforAvisChauffeurDrive.Thechauffeurnotonlydrivesbutalso
actsasamobileconcierge.Businesscustomershavefourprogramstochoosefromthat
catertodifferenttypesofbusinesscustomers(smallandmediumsizedbusinesses,
entertainmentandproduction,meetingandgroupservices,andgovernmentandmilitary).
9
Sun Microsystems Hardware and Software Support
SunMicrosystemsisanexampleofbrandingdifferenttiersinahightech,businessto
businessproductline.Thecompanyoffersafullrangeofhardwareandsoftwaresupportina
10
programbrandedasSunSpectrumSupport(Figure4.18). Fourdifferentlevelsofsupport
aremadeavailabletocustomers,withtheobjectiveofallowingbuyerstochoosealevelof
supportthatmeetstheneedsoftheirownorganization,aswellastheirwillingnesstopay.
Supportrangesfromexpensiveandmissioncriticalsupportattheenterpriselevel
(PlatinumServicePlan)torelativelyinexpensiveassistancewithselfservicemaintenance
support(BronzeServicePlan):
Platinum:Missioncriticalsupportwithonsiteservice24/7andatwohourresponse
time.
Gold:BusinesscriticalsupportwithonsiteservicefromMondaytoFriday,from8a.m.to
8p.m.,24/7telephoneserviceandafourhourresponsetime.
Silver:BasicsupportwithonsiteservicefromMondaytoFriday,from8a.m.to5p.m.,
telephoneservicefromMondaytoFriday,from8a.m.to8p.m.,andafourhourresponse
time.
Bronze:Selfsupportwithtelephoneservicefrom8a.m.to5p.m.
Figure4.18.SunMicrosystemsserviceplansforSolarisclearly
differentiateservicelevels.
LO6
Discusshowfirmscanbuildbrandequityandofferabrandedexperience.
Building Brand Equity and Developing a Branded Experience
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Building Brand Equity and Developing a Branded Experience

Brandingcanbeusedatboththecorporateandproductlevelsbyalmostanyservice
business.Inawellmanagedfirm,thecorporatebrandnotonlyiseasilyrecognizedbutalso
hasmeaningforcustomers,standingforaparticularwayofdoingbusiness.Applying
distinctivebrandnamestoindividualproductsandservicetiersallowsthefirmto
communicatetothetargetmarketthedistinctiveexperiencesandbenefitsassociatedwith
aspecificserviceconcept.Inshort,ithelpsmarketerstoestablishamentalpictureofthe
serviceincustomersmindsandclarifythenatureofthevalueproposition.
Whataresomecommoncharacteristicsofsuccessfulservicebrands?AccordingtoLeonard
L.Berry,DistinguishedProfessorofMarketingatTexasA&MUniversity,therearefour
11
keywaysinwhichservicecompaniescanbuildstrongbrands. Theyare:
Daretobedifferent.Companiesthataredifferentareabletobuildtheirowndistinct
brandpersonality.Forexample,inaworldofemail,instantmessaging,andSMSes,
Twitterintroducedmicrobloggingandtooktheworldbystorm.Peoplecouldsharetheir
thoughtsonlineinshort140charactermessages,almostlikeacrossbetweenFacebookand
SMS!In2010,Twitterhadabout190millionvisitorsmonthly,producingabout65million
12
tweetsdaily.
Determineyourownfame.Companiesthatbecomefamousovertimearetheones
thatserveaneedandprovideaservicethatcustomersreallyvalue,performservicemore
effectivelythancompetitorsdoandhavetheirstoriestoldthroughcustomerexperience
andwordofmouth.Forexample,theBostonConsultingGroupwasrankedeighthon
Fortuneslistofthe100BestCompaniestoWorkForin2010.Itisoneofonlythree
companiesthathavemanagedtoremaininthetop15positionsinthelastfiveyears.The
BostonConsultingGroupisfamousforbeingaleadingadvisorinbusinessstrategy.Ithelps
companiestodevelopnewinsightsintotheirbusinesses,createuniquecompetitive
13
advantages,andachievebetterprofits.
Makeanemotionalconnection.Thisinvolvessparkingfeelingsofcloseness,affection,
andtrust.TheHarlemGlobetrottersmadeanemotionalconnectionwithpeopleby
impressingtheiraudiencewithexcellentballhandling,funnymoves,andsilliness.Watching
themwasafunexperience,andtheymadetheiraudiencelaugh.Theteamalsoworked
hardandrepresentedrespect,decency,andgoodvalues.
Internalizethebrand.Serviceemployeesarethefirmandthebrand.Theyarethe
oneswhohelptobuildbrandequityandcreateexperiencesforthecustomers.Therefore,
theyhavetointernalizetheconceptsandvaluesoftheservicesothattheycanperformit.
Thekeytohelpingemployeestointernalizethebrandisthrougheducationand
communication.FastfoodrestaurantChickfilAinvestsalotofresourcestohelptheir
independentstoreoperatorstobuildthebrandintheirmarkets.Thebrandisinternalized
throughacombinationofeducation,marketresearch,customizedadvice,andtrackingeach
marketsperformance.
Beforewecanbuildastrongbrand,weneedtounderstandwhatcontributestobrand
equity.Whatisbrandequity?Brandequityisthevaluepremiumthatcomeswithabrand.
Itiswhatcustomersarewillingtopayfortheservice,abovewhattheyarewillingtopay
forasimilarservicethathasnobrand.Figure4.19showsthefollowingsixkeycomponents:
Companyspresentedbrandmainlythroughadvertising,servicefacilities,andpersonnel.
Externalbrandcommunicationsfromwordofmouthandpublicity.Theseareoutsideof
thefirmscontrol.
Customerexperiencewiththecompanywhatthecustomerwentthroughwhenthey
patronizedthecompany.
Source:Theboldarrowsrepresentstrongrelationshipsandthedottedarrows
representweakerrelationships.
TakenfromLeonardL.Berry,CultivatingServiceBrandEquity,Journalof
theAcademyofMarketingScience28,no.1:128137.
Figure4.19.Aservicebrandingmodel.
Brandawarenessabilitytorecognizeandrecallabrandwhenprovidedwithacue.
Brandmeaningwhatcomestothecustomersmindwhenabrandismentioned
Brandequitythedegreeofmarketingadvantagethatabrandhasoveritscompetitors.
FromFigure4.19,wecanseethatacompanysmarketingandexternalcommunications
helptobuildbrandawareness.However,itisthecustomersactualexperiencewiththe
brand,orthemomentoftruth,thatismorepowerfulinbuildingbrandequity.Infact,
customerorientedcompaniesarenowmovingmoretowardcustomerequityratherthan
14
brandequity. Firmsneedtofocusoncustomers,delivergreatexperiencesandcreatean
emotionalconnectionwiththeircustomers.Howcantheydothat?
Itstartswithdesigningthebrandexperience,whichinvolvesaligningthecompanys
processes,servicescapes,andpeoplealongsideitsbrandproposition.Tobeginwith,weneed
tohavegreatprocessesinplace(seeChapter8DesigningandManagingService
Processes).Inaddition,creatingtheemotionalexperiencecanoftenbedoneeffectively
throughtheservicescape(whichwewilllearninChapter10CraftingtheService
Environment).Thehardestpartofcraftingtheemotionalexperienceisthebuildingof
interpersonalrelationshipswheretrustisestablishedbetweentheconsumersandthefirms
15
employees. Inorderforthistohappen,weneedtoinvestinouremployeessincetheywill
betheoneswhodeliverthebrandexperiencethatcreatescustomerloyalty(seeChapter11
ManagingPeopleforServiceAdvantage).
New Service Development

Intensecompetitionandrisingconsumerexpectationshaveanimpactonnearlyallservice
industries.Thus,greatbrandsnotonlyprovideexistingserviceswellbutalsocontinuously
improvethroughinnovationandcreatenewapproachestoservice.
LO7
Listthecategoriesofnewservicedevelopment,rangingfromsimplestylechangestomajor
innovations.
A Hierarchy of New Service Categories

Therearemanywaysforaserviceprovidertoinnovate.Below,weidentifyseven
categoriesofnewservices,rangingfromsimplestylechangestomajorinnovations.
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1.Stylechangesarethesimplesttypeofinnovation,typicallyinvolvingnochangesineither
processesorperformance.However,theyoftenarehighlyvisible,createexcitement,and
mayservetomotivateemployees.Examplesincluderepaintingretailbranchesand
vehiclesinnewcolorschemes,designingnewuniformsforserviceemployees,introducinga
newbankcheckdesign,oreffectingminorchangesinservicescriptsforemployees.
2.Serviceimprovementsarethemostcommontypeofinnovation.Theyinvolvesmall
changesintheperformanceofcurrentproducts,includingimprovementstoeitherthecore
productortoexistingsupplementaryservices.Often,itisthelittlethingsthatmatter,and
customersappreciateit.Forexample,theelevatorintheLydmarHotelinStockholmhasa
seriesofbuttonswhereguestscanchoosetheirmusicfromachoiceofgarage,funk,and
rhythmandblues.Thismaybejustasimpleimprovement,butitaddstoacustomers
16
experienceasitisuniqueandsurprising.
3.Supplementaryserviceinnovationstaketheformofaddingnewfacilitatingorenhancing
serviceelementstoanexistingcoreserviceorsignificantlyimprovinganexisting
supplementaryservice.FedExKinkosnowofferscustomershighspeedInternetaccess
roundtheclockatmostofitslocationsintheUS,andinCanada.Lowtechinnovationsfor
anexistingservicecanbeassimpleasaddingparkingataretailsiteoragreeingtoaccept
creditcardsforpayment.ThemerestaurantssuchastheRainforestCafenhancethecore
foodservicewithnewexperiences(Figure4.20).Thecafsaredesignedtokeepcustomers
entertainedwithaquariums,liveparrots,waterfalls,fiberglassmonkeys,talkingtreesthat
spoutenvironmentallyrelatedinformation,andregularlytimedthunderstorms,complete
17
withlightning.
Figure4.20.RainforestCafmakesasupplementaryserviceinnovationby
enhancingthecorefoodservicewiththeexperienceofbeinginajungle.
4.Processlineextensionsoftenrepresentdistinctivenewwaysofdeliveringexisting
products.Theintentioniseithertooffermoreconvenienceandadifferentexperiencefor
existingcustomers,ortoattractnewcustomerswhofindthetraditionalapproach
unappealing.Often,theyinvolveaddingalowercontactdistributionchanneltoanexisting
highcontactchannel,suchashavingselfservicetocomplementdeliverybyservice
employeesorcreatingtelephoneorInternetbasedservicedelivery.Forexample,
websitesusedtojustdisplayanemailaddressoratelephonetocontacttheservice
personnel.Therefore,onewouldstillhavetocallthecompanytotalktotheservice
personnel.Now,manywebsiteshaveincludedchatfunctionswhereonecangetintouch
withanemployeeliveandinrealtime.
5.Productlineextensionsareadditionstoacompanyscurrentproductlines.Thefirst
companyinamarkettooffersuchaproductmaybeseenasaninnovator.Theothersare
merelyfollowers,oftentodefendtheirmarketpositions.Thesenewservicesmaybe
targetedatexistingcustomerstoserveabroadervarietyofneeds,ordesignedtoattract
newcustomerswithdifferentneeds(orboth).Forexample,arestaurantmayextendits
productlinetoofferingamenufordogsaswellsothatboththeownersandtheirdogscan
dineinthesamerestaurant.
6.Majorprocessinnovationsconsistofusingnewprocessestodeliverexistingcoreproducts
innewwayswithadditionalbenefits.Forexample,insteadofgoingtoabookstoretobuya
physicalbookfromthebookstore,consumerswhoownaniPhoneoriPadcanpurchasethe
samebook,asanebookfromApplesiBookstoreviaitsiBookapplication(Figure4.21).
Figure4.21.EbookscanbedownloadedandreadfromtheiPhoneor
iPad.
AmazonsKindleDXWirelessReadingdeviceisanothersuchexample.Itallowsonetoread
newspaperscomfortablywitha9.7inchdisplayarea,andoffersfree3Gaccessglobally
(Figure4.22).UsingtheKindle,NewYorkTimessubscriberscanhavetheirnewspaper
18
autodeliveredwirelesslywhenthephysicalissuehitsthenewsstand.
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Figure4.22.TheKindleDXallowsonetoreadnewspaperscomfortably.
7.Majorserviceinnovationsarenewcoreproductsformarketsthathavenotbeen
previouslydefined.Theyusuallyincludebothnewservicecharacteristicsandradicalnew
processes.SpaceAdventures,aleadingcompanyinthespaceflightindustry,flewthefirst
spacetouristontheRussianSoyuzspacecrafttotheInternationalSpaceStationin2001.
Today,theyprovidedifferentspaceexperiences,includinglunarmissions,orbitalspace
flights,suborbitalspaceflight,andspacewalkprograms(Figure4.23).Theseexperiencesdo
notcomecheap.Suborbitalspaceflights,forexample,startfrom$102,000andalunar
19
missioncosts$100millionperseat.
Figure4.23.SpaceAdventuresofferscustomersachancetobespace
tourists.
Majorserviceinnovationsarerelativelyrare.Morecommonistheuseofnewtechnologies
todeliverexistingservicesinnewways,enhancingorcreatingnewsupplementaryservices
andgreatlyimprovingperformanceonexistingonesthroughprocessredesign.Singapore
Airlinesissuchacompany.Infact,itpursuesserviceexcellenceaswellascosteffectiveness
20
throughsmartserviceinnovation.
Achieving Success in New Service Development

Consumergoodshavehighfailurerates,withmorethan90%ofthe30,000newproducts
21
introducedeachyearendinginfailure. Servicesarenotimmunetothehighfailurerates
either.Forexample,DeltaAirlineswasoneofseveralmajorcarriersattemptingtolaunch
aseparatelowcostcarrierdesignedtocompetewithdiscountairlinessuchasJetBlueand
SouthwestAirlines.However,noneoftheseoperationswassuccessful.Inbanking,many
bankshavetriedtosellinsuranceproductsinthehopeofincreasingthenumberofprofitable
relationshipswithexistingcustomers,butmanyoftheseproductextensionshavealso
failed.
LO8
Describehowfirmscanachievesuccessinnewservicedevelopment.
Therearevariousreasonsforfailure,includingnotmeetingaconsumerneed,inabilityto
covercostsfromrevenues,andpoorexecution.Forexample,astudyintherestaurant
industryfoundafailurerateofabout26%duringthefirstyear,risingtoalmost60%within
threeyears.Interestingly,theratevariedwidelybythetypeoffoodserved,rangingfrom
33%forseafoodandburgerrestaurantsto76%forsandwichshopsandbakeriesand86%for
22
restaurantsservingMexicanfood.
Howthencanwesuccessfullydevelopnewservices?Anumberofstudieshavefoundthat
23
thefollowingthreefactorscontributemosttosuccessandcanbedescribedasfollows :
1.MarketsynergyThenewproductfitswellwiththeexistingimageofthefirm,its
expertise,andresources.Itisbetterthancompetingproductsintermsofmeeting
customersneedsasthefirmhasagoodunderstandingofitscustomerspurchasebehavior
andreceivesstrongsupportduringandafterthelaunchfromthefirmanditsbranches.
2.OrganizationalfactorsThereisstronginterfunctionalcooperationandcoordination.
Developmentpersonnelarefullyawareofwhytheyareinvolvedandoftheimportanceof
newproductstothecompany.Beforethelaunch,thestaffunderstandthenewproductand
itsunderlyingprocesses,aswellasdetailsaboutdirectcompetitors.
3.MarketresearchfactorsDetailedandproperlydesignedmarketresearchstudiesare
conductedearlyinthedevelopmentprocess.Thereisaclearideaofthetypeofinformation
tobeobtained.Agooddefinitionoftheproductconceptisdevelopedbeforeundertaking
fieldsurveys.
Chapter Summary
LO1TheFlowerofServiceconsistsoftwocomponents:
Coreproductdeliversthemainbenefitsandsolutionscustomerslookfor.
Supplementaryservicesfacilitateandenhancethevalueofthecoreproduct.
Thecoreproductoftenbecomescommoditized,andsupplementaryservicescanthenplay
animportantroleindifferentiatingandpositioningthecoreproduct.
LO2TheFlowerofServiceconceptcategorizessupplementaryservicesinto
facilitatingandenhancingsupplementaryservices.
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Facilitatingsupplementaryservicesareneededforservicedeliveryorhelpintheuseof
thecoreproduct.Theyareinformation,ordertaking,billing,andpayment.
LO3Enhancingsupplementaryservicesaddvalueforthecustomer.Theyinclude
consultation,hospitality,safekeeping,anddealingwithexceptions.
LO4Brandingofserviceproductshelpsfirmstodifferentiateonebundleofoutput
fromanother.Firmscanuseavarietyofbrandingstrategies,includingthefollowing:
Brandedhouse:applyingabrandtomultiple,oftenunrelatedservices(e.g.,VirginGroup).
Subbrands:usingamasterbrand(oftenthefirmname)togetherwithaspecificservice
brand(e.g.,FedexGroundservice)ortoidentifyspecificservicelevels(e.g.,Sun
MicrosystemsPlatinumServicePlan).
Endorsedbrands:wheretheproductbranddominatesbutthecorporatebrandisstill
featured(e.g.,StarwoodHotels&Resorts).
Houseofbrands:whereindividualservicesarepromotedundertheirownbrandnames
withoutthecorporatebrand(e.g.,KFCofYum!Brands).
LO5Inmanyindustries,brandingisnotonlyusedtodifferentiatecoreservices.It
alsodifferentiatesservicelevels,calledservicetiering.Therearesomeindustrieswhere
servicetieringiscommonandtheyincludehotels,airlines,carrentals,andcreditcards.
LO6Brandingisnotjustaboutapplyingdistinctivebrandnames.Tobuildstrong
brands,therearefourkeyways:
Daretobedifferent(e.g.,inaworldofemail,instantmessagingandSMSes,Twitter
introducedmicrobloggingandtooktheworldbystorm).
Determineyourownfame(e.g.,theBostonConsultingGroupisfamousforbeinga
leadingadvisorinbusinessstrategies).
Makeanemotionalconnection,(e.g.,theHarlemGlobetrottersmadeanemotional
connectionbyimpressingtheiraudiencewithexcellentballhandling,funnymoves,and
silliness).
Letemployeesinternalizethebrand(e.g.,ChickfilAinvestsalotofresourcesinits
employeesinordertointernalizethebrand).
Ultimately,whilethefirmsexternalbrandcommunicationscreatebrandawareness,itis
thecustomersserviceexperiencethatbuildsbrandequity.Tobuildgreatbrands,firms
needtoalignprocesses,servicescapes,andpeoplewithitsbrandpositioning.
LO7Firmsneedtoimproveanddevelopnewservicestomaintainacompetitive
edge.Thesevenlevelsinthehierarchyofnewservicedevelopmentare
Stylechanges:highlyvisible,createexcitement(e.g.,repaintingretailbranchesand
vehiclesinanewcolorscheme),buttypicallydonotinvolvechangesinserviceperformance
orprocesses.
Serviceimprovements:involvemodestchangesintheperformanceofcurrentproducts.
Supplementaryserviceinnovations:significantlyimprovingoraddingnewfacilitatingor
enhancingserviceelements.
Processlineextensions:newwaysofdeliveringexistingservicesproducts,suchascreating
selfserviceoptions.
Productlineextensions:addingnewservicesthattypicallydeliverthesamecoreservice
butarespecifiedtosatisfydifferentneeds.
Majorprocessinnovations:usingnewprocessestodelivercurrentproducts,suchasadding
onlinecoursestotraditionalclassroomdeliveredlectures.
Majorserviceinnovations:developmentofnewcoreproductsformarketsthathavenot
beenpreviouslydefined.
Majorserviceinnovationsarerelativelyrare.Morecommonistheuseofnewtechnologies
todeliverexistingservicesinnewways,enhancingorcreatingnewsupplementaryservices,
andgreatlyimprovingperformanceonexistingonesthroughprocessredesign.
LO8Keyfactorsthatenhancethechancesofsuccessinnewservicedevelopment
canbedescribedas:
Marketsynergy:Thenewproductfitswellwiththefirmsexistingimage,expertiseand
resourcesisbetteratmeetingcustomersneedsovercompetingservicesandreceives
strongsupportduringandafterthelaunchfromthefirmanditsbranches.
Organizationalfactors:Strongcooperationbetweenthedifferentfunctionalareasinafirm
staffareawareoftheimportanceofthenewproductsinthecompany,andunderstandthe
newproductsandtheirunderlyingprocesses.
Marketresearch:Detailedandproperlydesignedmarketresearchstudiesareconducted
earlyinthedevelopmentprocess.Thereisaclearideaofthetypeofinformationtobe
obtained.Agooddefinitionoftheproductconceptisdevelopedbeforeundertakingfield
surveys.
Unlock Your Learning
ThesekeywordsarefoundwithinthesectionsofeachLearningObjective(LO).Theyare
integraltounderstandingtheservicesmarketingconceptstaughtineachsection.Havinga
firmgraspofthesekeywordsandhowtheyareusedisessentialtohelpingyoudowellon
yourcourse,andintherealandverycompetitivemarketingsceneoutthere.
LO11Coreproduct
2Enhancingsupplementaryservices
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3Facilitatingsupplementaryservices
4FlowerofService
5Supplementaryservices
LO26Billing
7Information
8Ordertaking
9Payment
10Reservations
11Selfservice
LO312Consultation
13Counseling
14Exceptions
15Hospitality
16Safekeeping
17Specialrequests
18Supplementaryservices
LO419Brandedhouse
20Brandingstrategies
21Bundleofoutput
22Endorsedbrands
23Houseofbrands
24Multibrandstrategy
25Subbrands
LO526Servicetiering
LO627Momentsoftruth
28Brandawareness
29Brandcommunications
30Brandequity
31Brandmeaning
32Brandedexperience
33Branding
34Buildingyourownfame
35Daretobedifferent
36Emotionalconnection
37Internalizethebrand
38Presentedbrand
39ServiceBrandingModel
LO740Majorprocessinnovations
41Majorserviceinnovations
42Newservicedevelopment
43Processlineextensions
44Productlineextensions
45Serviceimprovements
46Stylechanges
47Supplementaryserviceinnovations
LO848Marketresearchfactors
49Marketsynergy
50Organizationalfactors
51Successinnewservicedevelopment
Howwelldoyouknowthelanguageofservicesmarketing?Quizyourself!
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Notfortheacademicallyfaintofheart
Foreachkeywordyouareabletorecallwithoutreferringtoearlierpages,give
yourselfapoint(andapatontheback).Tallyyourscoreattheendandseeifyou
earnedtherighttobecalledaservicesmarketeer.
Score
010ServicesMarketingisdoneagreatdisservice.
1120Themidnightoilneedstobelit,pronto.
2130Iknowwhatyoudidntdoallsemester.
3140Acloseshavewithsuccess.
4147Now,goforthandmarket.
4851Thereshouldbeamarketingconceptnamedafteryou.
KnowYourESM
ReviewQuestions
1.Explainwhatismeantbycoreproductandsupplementaryservices.
2.ExplaintheFlowerofServiceconceptandidentifyeachofitspetals.What
insightsdoesthisconceptprovideforservicemarketers?
3.Whatisthedifferencebetweenenhancingandfacilitatingsupplementary
services?Giveseveralexamplesofeachrelativetoservicesyouhaveused
recently.
4.Howisbrandingusedinservicesmarketing?Whatisthedistinction
betweenacorporatebrandsuchasMarriottandthenamesofitsvariousinn
andhotelchains?
5.Howcanservicefirmsbuildbrandequity?
6.Whataretheapproachesfirmscantaketocreatenewservices?
7.Whydonewservicesoftenfail?Whatfactorsareassociatedwithsuccessful
developmentofnewservices?
WorkYourESM
ApplicationExercises
1.Selectaspecificserviceproductyouarefamiliarwithandidentifyitscore
productandsupplementaryservices.Thenselectacompetingserviceand
analyzethedifferencesintermsofcoreproductandsupplementaryservices
betweenthetwoservices.
2.Identifytwoexamplesofbrandinginfinancialservices(e.g.,specifictypes
ofretailbankaccountsorinsurancepolicies),anddefinetheircharacteristics.
Howmeaningfularethesebrandslikelytobetocustomers?
3.Usingafirmyouarefamiliarwith,analyzewhatopportunitiesitmight
havetocreateproductlineextensionsforitscurrentand/ornewmarkets.
Whatimpactmighttheseextensionshaveonitspresentservices?
4.Selectaservicefirmthatyoubelieveishighlysuccessfulandhasstrong
brandequity.Conductafewinterviewstofindouthowconsumersexperience
itsservice.Fromthefindings,identifythefactorsthathelpedthatservicefirm
tobuildstrongbrandequity.
5.Identifytwofailednewservicedevelopments.Analyzethecausesoftheir
failure.
6.Selectaservicebrandyouconsidertobeoutstanding.Explainwhyyou
thinkitisoutstanding.Alsoexploreanyweaknessesofthisbrand.(You
shouldselectanorganizationyouareveryfamiliarwith.)
Endnotes
1 .BruceHorovitzStarbucksAimsBeyondLattestoExtendBrand,USAToday,May
18,2006YoungmeMoonandJohnQuelch,Starbucks:DeliveringCustomerService,
HarvardBusinessSchool,CaseSeries,2003JosephA.Michelli,TheStarbucksExperience:
5PrinciplesforTurningOrdinaryintoExtraordinary.NewYork:McGrawHill,2007.
www.starbucks.com (http://www.starbucks.com)andwww.hearmusic.com (http://www.hearmusic.com),
accessedMarch12,2012.
2 .TheFlowerofServiceconceptwasfirstintroducedinChristopherH.Lovelock,
CultivatingtheFlowerofService:NewWaysofLookingatCoreandSupplementary
Services,inP.EiglierandE.Langeard,eds.Marketing,Operations,andHuman
Resources:InsightsintoServices(AixenProvence,France:IAE,UniversitdAixMarseille
III,1992,296316).
3 .LoizosHeracleousandJochenWirtz(2010),SingaporeAirlinesBalancingAct
AsiasPremierCarrierSuccessfullyExecutesaDualStrategy:ItOffersWorldclassService
andIsaCostLeader,HarvardBusinessReview88,no.7/8:145149.
4 .See/www.banyantree.com (http://www.banyantree.com),accessedMarch12,2012.
5 .JamesDevlin,BrandArchitectureinServices:TheExampleofRetailFinancial
Services,JournalofMarketingManagement19,(2003):10431065.
6 .DavidAakerandErichJoachimsthaler,TheBrandRelationshipSpectrum:TheKey
18/19
09/09/2015
totheBrandChallenge,CaliforniaManagementReview42,no.4(2000):823.
7 .http://images.fedex.com/us/services/pdf/Our_Services_Index.pdf
(http://images.fedex.com/us/services/pdf/Our_Services_Index.pdf),accessedMarch12,2012.
8 .http://www.ichotelsgroup.com/ (http://www.ichotelsgroup.com/),accessedMarch12,2012.
9 .http://www.avis.com/carrental/avisHome/home (http://www.avis.com/car
rental/avisHome/home).ac,accessedMarch12,2012.
10.http://www.sun.com/service/serviceplans/sunspectrum/index.jsp
(http://www.sun.com/service/serviceplans/sunspectrum/index.jsp),accessedMarch12,2012.
11.LeonardL.Berry,CultivatingServiceBrandEquity,JournaloftheAcademyof
MarketingScience28,no.1(2000):128137.
12.ErickSchonfeld,CostoloTwitterNowHas190MillionUsersTweeting65Million
TimesaDay,http://techcrunch.com/2010/06/08/twitter190millionusers/
(http://techcrunch.com/2010/06/08/twitter190millionusers/),accessedMarch12,2012.
13.http://www.bcg.com/about_bcg/default.aspx(http://www.bcg.com/about_bcg/default.aspx),
accessedDecember2011.
14.RolandT.Rust,ChristineMoormanandGauravBhalia,RethinkingMarketing,
HarvardBusinessReview88.no.1(2010):94101.
15.SharonMorrisonandFrederickG.Crane,BuildingtheServiceBrandbyCreatingand
ManaginganEmotionalBrandExperience,BrandManagement14,no.5(2007):410421.
16.TalkbyRorySutherland:SweattheSmallStuff,
http://www.ted.com/talks/lang/eng/rory_sutherland_sweat_the_small_stuff.html
(http://www.ted.com/talks/lang/eng/rory_sutherland_sweat_the_small_stuff.html),accessedMarch12,2012.
17.ChadRubel,NewMenuforRestaurants:TalkingTreesandBlackjack,Marketing
News30,(July29,1996):1.www.rainforestcafe.com (http://www.rainforestcafe.com),accessed
March12,2012.
18.SeeBradStone,LookingtoBigScreenEReaderstoHelpSavetheDailyPress,The
NewYorkTimes,May3,2009andJaneWalls,AmazonsNewKindleDXWireless
ReadingDevice,TheFirstReporter(July8,2010).
http://www.thefirstreporter.com/technology/reviewamazonskindledxwireless/
(http://www.thefirstreporter.com/technology/reviewamazonskindledxwireless/),accessedJuly8,2010.
19.http://www.spaceadventures.com/ (http://www.spaceadventures.com/),accessed,March12,
2012.
20.LoizosHeracleousandJochenWirtz,SingaporeAirlinesBalancingAct,Harvard
BusinessReview(JulyAugust2010):17.
21.ClaytonM.Christenson,ScottCook,andTaddyHall,MarketingMalpractice:The
CauseandtheCure,HarvardBusinessReview(December2005):412.
22.H.G.Parsa,JohnT.Self,DavidNjite,andTiffanyKing,WhyRestaurantsFail,
CornellHotelandRestaurantAdministrationQuarterly46,(August2005):304322.
23.ScottEdgettandStevenParkinson,TheDevelopmentofNewFinancialServices:
IdentifyingDeterminantsofSuccessandFailure,InternationalJournalofServiceIndustry
Management5,no.4(1994):2438ChristopherD.StoreyandChristopherJ.Easingwood,
TheImpactoftheNewProductDevelopmentProjectontheSuccessofFinancial
Services,ServiceIndustriesJournal13,no.3(July1993):4054MichaelOttenbacher,
JuergenGnoth,andPeterJones,IdentifyingDeterminantsofSuccessinDevelopmentof
NewHighContactServices,InternationalJournalofServiceIndustryManagement17,no.
4(2006):344363.
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Chapter 4 PDF

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09/09/2015

Essentials of Services Marketing, Second Edition

Part II: Applying th...

Chapter 4. Developing Service Products: Core and

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The Flower of Service

Facilitating Supplementary Services

Enhancing Supplementary Services

Branding Service Products and Experiences

Branding Strategies for Services

Tiering Service Products with Branding

Sun Microsystems Hardware and Software Support

Building Brand Equity and Developing a Branded Experience

Building Brand Equity and Developing a Branded Experience

New Service Development

A Hierarchy of New Service Categories

Achieving Success in New Service Development

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