Kindstrom, Daniel and Kowalkowski, Christian (2009),

“Development of Industrial Service Offerings: A Process

Framework,” Journal of Service Management, 20(2), 156-172.

Brett Carter

MKTG 463: Service Innovation

Fall of 2014

Agenda

• Article Overview

• Key Learning Points

• Follow-up Research

• Application to Team Topic

• References

• Questions

Article Overview

• Business is clearly moving from a goods dominant logic to service dominant logic. This means that if traditional product companies do not understand and conform, their marketing activities will become outdated and obsolete.

• Product companies can apply Kindstrom and Kowalkowski’s four stage framework for service development in order to continue to stay viable.

• These stages include:

▫ Market Sensing

▫ Development

▫ Sales

▫ Delivery

Article Overview - Continued

• Notice that the framework is not linear. Rather, it is a continuous process that a product company must be constantly using in order to innovate their new service offerings.

• Kindstrom and Kowalkowski took 10 different Swedish based companies and put them through personal interviews and focus groups and tried to apply the four stage framework to potential new service offerings.

Key Learning Point 1

• Market Sensing▫ Product dominant firms have to be aware of any agents that are

acting on the company, regardless of if they are threatening, friendly, helpful, etc. in order to gain more insight as to what may or may not work as a service offering.

▫ This step is mostly about finding out what the best way to structure the service would be and how to leverage current knowledge to make the service offering possible.

Key Learning Point 2

• Development▫ Developing a service instead of a product is going to be tough for

traditional product firms who know nothing else.

▫ This stage is about the co-creation of the service with the customer, not simply using complex blueprints that are traditionally used in new product development strategies.

▫ Services are customer-centric, so using a typical NPD framework for a new service is not only a bad strategy but ultimately will not work.

Key Learning Point 3 & 4• Sales

▫ The sale of a service is obviously much different than the sale of a product.

▫ Thus, sales forces that typically sell products are going to have to be trained a very different way so they can sell services.

• Delivery▫ Ultimately, the delivery of the service is the most people, and

relationship, intensive part of the whole process.

▫ This is where the customer decides whether or not they made a good decision for themselves.

▫ In this stage, service providers will receive feedback and thus can innovate their service offerings so they are better.

▫ Which means the company can then start from the beginning at market sensing, and continue the constant innovation process.

Key Learning Point 5 & 6

• The Four-Stage framework as a whole.▫ The framework, in-and-of itself, is a key learning point.

▫ It gives the audience a starting point for developing services for companies that have traditionally focused on the production and the sale of goods.

• Managerial Implications▫ This last key learning point has to do with managers being able to

keep the new service development process focused, but at the same time, creative.

▫ By keeping the process too structured, creativity may be lost.

▫ By keeping the process too creative, the process loses focus.

▫ Good and bad ideas become indistinguishable.

Follow-up Research• Kindstrom, Daniel and Kowalkowski, Christian (2014),

“Service Innovation in Product-Centric Firms: A Multi-Dimensional Business Model Perspective,” Journal of Business and Industrial Marketing, 29(2), 96-111

• Five years later, the same authors apply their knowledge of new service development to business models as a whole.

• 10 more Swedish based, international firms were studied using the same process as four years earlier.▫ Interviews

▫ Focus groups

Follow-up Research - Continued • The overall model, although containing elements from the

previous study, is slightly different.

• The relationship between all the elements is that embedded in a company’s strategy and structure is the offering, revenue model, development process, sales process, delivery process, customer relationships, value network, and culture.

• The elements are thus dependent on a company’s resources and capabilities.

Application• Group project: Service innovation as a driver for

competitive advantage in product companies.

• For product companies, Kindstrom and Kowalkowskiprovide a simple framework product companies can use to develop new service offerings.

▫ Although developing new service offerings may be a source of competitive advantage, it is not sustainable.

▫ There needs to be something more to further differentiate the business from competitors.

References• Kindstrom, Daniel and Kowalkowski, Christian (2009),

“Development of Industrial Service Offerings: A Process Framework,” Journal of Service Management, 20(2), 156-172.

• Kindstrom, Daniel and Kowalkowski, Christian (2014), “Service Innovation in Product-Centric Firms: A Multi-Dimensional Business Model Perspective,” Journal of Business and Industrial Marketing, 29(2), 96-111.

Questions?