CREATING AND DELIVERING SERVICES

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7-1

Service Delivery Issues

Service is a performance versus a thing. Importance of Servicescape (place where service is manufactured) Degree of customer involvement

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Physical Evidence of the Servicescape

Firms are paying more attention to the design of the Servicescapes that they offer their customers. Examples include:
Airlines. The restaurant design industry . Modern hotels and resort hotels that invest enormous sums to create exotic gardens and surroundings

The role of physical environment

Shape feelings and reactions Create positive first impressions

Impact of Physical evidence and accompanying atmosphere

As attention-creating medium to standout from competition As message-creating medium to communicate with intended audience As an effect-creating medium (using colors, smells, sounds,and scents to enhance services and experiences

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7-4

A framework for understanding the impact of the physical environment

Customers, employees

Environmenta l stimuli

Thoughts and feelings

Behavioural responses Customers Approach Avoid Employees Productivity Job Satisfaction Service quality Staff turnover

Ambience

Cognitive Emotional Physiological

Space
Signs, symbols

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7-5

Process of Service Delivery

Planning, creating and delivering service Evaluating alternatives Place and time decision

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7-6

The Process of Service Delivery

Design of a new service delivery system is more than:
physical facilities equipment

a specification of the service personnel required.

Planning and configuring service delivery system should address the following questions:
What should the sequencing of the various steps in the service be? (where/location and when/scheduling) Should service elements be bundled or unbundled for delivery purposes? What should the nature of the contact between the service provider and it customers be? What should be the nature of the service process at each step? What should be the serving protocol? What imagery and atmosphere should the service delivery environment strive to create? (servicescape)
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7-7

Planning Service Delivery Processes

Corporate Objectives and Resources

Market Opportunity Analysis MARKET POSITIONING STATEMENT What product/s

Resource Allocation Analysis OPERATING ASSETS STATEMENT What physical facility

What distinguishing characteristics

What target market segment.

What equipement
What information & communication technology What human resources (#s and skills)

SERVIVE MARKETING CONCEPT

SERVICE OPERATING CONCEPT

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7-8

Planning Service Delivery Processes

SERVICE MARKETING CONCEPT What Customer Benefits Core product Supplementary service Reliability levels Accessibility (where & when) At what cost Money Time Effort (mental and physical) SERVICE OPERATIONS CONCEPT Geographic scope of operation Areas served; Single versus multiple sites; Facilities location; Telecommunication Linkages Scheduling Hrs/days/seasons of service Continuous versus intermittent If intermittent, what frequency

Facility Design and layout

Operating assets deployed (What task, where, when) Leverage through intermediaries operating assets, customers assets (partnership & self service). Specific tast assigned to front and back stage operations.

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7-9

Classifying Service Concepts

Service factory (McDonalds, fitness centres, public transport) Mass service (retailing, higher education, retail banking) Service shops (some restaurants, hospitals, personal fitness trainer) Professional services (management consulting, engineering, legal)
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7-10

Planning Service Delivery Processes

Service Marketing Concept Service Operations Concept

Service Delivery Process - Sequencing of service delivery steps (what steps, in what order, where, when and how quickly)
- Extent of Delegation (Should the firm take responsibility for all steps or delegate some to intermediaries?) - Nature of contact between customers and provider (Customer come to provider, Provider goes to customer, Arms length transactions) - Nature of the process (Customers served in batches, customers served individually, Customers serve themselves/self-service) Protocol for allocating limited capacity (reservations procedures, Queuing procedures)

Imagery and Atmosphere (Employees scripts and protocols, Variations in dcor, lighting and music)

Performance Evaluation (By customer, by managers, and By Employees)

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7-11

Evaluating Alternative Delivery Channels

Factors to Consider:
Nature of service Customer preferences Firms positioning Costs Operational requirements
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Prentice-Hall, 1999

EVALUATING ALTERNATIVE DELIVERY CHANNELS CONTINUED

Distribution Strategy
Depends on the nature of the service A variety of options exist
should be selected based on needs of target segment price and other costs (time and effort) must be acceptable

Delivery Channels Options include:

firms own retail site delegation to an intermediary or franchisee coming into the customers home or business serving customers at a distance through physical or electronic channels

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7-13

EVALUATING ALTERNATIVE DELIVERY CHANNELS CONTINUED

Key Question is:
Does the nature of the service or the firms positioning strategy require customers to be in direct contact with its personnel, equipment, and facilities/ If so do customers have to visit the facilities or will the firm send personnel and equipment to the customers own site

Multiple options are available

Customers visit the service site
Retail gravity models are sometimes used to decide where to locate

Providers come to customers Arms Length Transactions

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7-14

Methods of Service Delivery

Availability of Service Outlets

Nature of Interaction Between

Customer and Service Organization

Single Site

Multiple Sites

Customer goes to service organization

Theater

Bus Service Fast-food chain Mail delivery auto club road service Broadcast company Telephone company

Barbershop
Service organization comes to customer Lawn care service Taxi Customer and service organization transact at arms length (mail or electronic communications) Credit card company Local TV station

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7-15

EVALUATING ALTERNATIVE DELIVERY CHANNELS

Speed of Delivery is an important competitive factor
customers are demanding more convenience expecting services to be delivered where and when they want them. Customers no longer need to visit service facilities physical processes have become faster

Services marketing strategy must address place and time

The service product and its means of delivery are often closely linked High-contact Services
physical environment and way tasks are performed by customer-contact personnel shape the customers experience and enhance productivity and quality Low-contact services Are expanding in number due to advance in electronic technology. Designed with improved productivity in mind are often being delivered via self-service

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7-16

Place and Time Decisions

Should reflect:
customer needs customer expectations competitive offerings and activity the nature of the service operation core and supplementary services

Services delivery considerations:

noise and environmental factors (i.e. airports, rail stations) definitional constraints (i.e. beach resorts) economies of scale (i.e. large multi-service hospitals) co-location near customers (i.e. ATMs, restaurants)

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7-17

Place and Time Decisions Continued

Delivery timing considerations:
Traditional retail schedules (i.e. 40 - 50 hours per week) 7 X 24 service (service that is available 7 days per week 24 hours per day)

Factors driving the move for extended operating hours:

Economic pressure from consumers Changes in legislation Economic incentives to improve asset utilization Availability of employees to work during unsocial hours Automated self-service facilities

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7-18

Process of Service Delivery

Branding service - product lines & brands Creating New service/product Serching for new ideas, Role of research,
Role of blueprinting

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7-19

New Service Development

Major Innovations

Product Line Extensions

Startup Business

Product Improvements

New Products

Style Changes

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7-20

Designing a New Hotel Chain The Marriott Experience

Research amongst 601 respondents evaluated 50 possible attributes Results from a conjoint analysis approach Conjoint analysis determines an optimal mix and level of attributes

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Illustrative service product lines in the hotel industry

Economy Accor Sheraton Hyatt Ramada Inn Southern Pacific Ramada Inn Travelodge Centra Formula 1 4 points Mid-priced Ibis Mercure Sheraton Hyatt Regency Upscale Novotel Mirage Luxury Sofitel

Luxury Collection Grand Hyatt Park Hyatt Renaissance Parkroyal

$8 $12 0 0 Prentice-Hall, 1999

$16 0

$200

$22 0

$24 0

$280 +

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Quality, Consistency, and Cost Effectiveness

Key determinants of quality Lessons from Franchising

Use of intermediaries for selected tasks

Internal marketing - steps for developing, implementing and monitoring Role of technology.

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The Role of Intermediaries

Firms frequently delegate supplementary service elements to intermediaries. These elements include: Providing information Providing advice order-taking delivery installation billing and payment repairs and upgrades problem-solving

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Role of Intermediaries
Allows supplementary services to be outsourced Enhances core service Makes service more readily available to target markets Avoids investments in fixed costs

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7-25

Service concept development

Splitting responsibilities in the distribution channel

As created by originating firm

As enhanced by distributor

As experienced by distributor

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7-25(b)

Technology in Service Delivery

Technology is revolutionizing Service Delivery

Market place versus Market Space

Four Innovations are:
Development of Smart Telephones (Keypad responses to voice commands) Creation of Free-standing Automated Kiosks (Bank ATMs) Development of Websites Development of smart cards using microchips to store detailed information about the customer.
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7-26

Improving Productivity in Service Settings

Backstage changes affect customers Frontstage efforts to improve productivity Customer driven approaches

Alter timing of demand Involve customers in production Ask customers to use 3rd party 7-28

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Getting Customers to Accept Changed Procedures

Develop trust Understand customer habits Pre-test new procedures Publicise benefits Educate customers

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 THANK YOU

Prentice-Hall, 1999