new service development people and proces

8/2/2019 New Service Development People and Proces

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Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 1

New ServiceDevelopment


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New Service Development:A Hierarchy of New Service Categories

Major service innovations--new core products for

previously undefined markets

Major process innovations--using new processes todeliver existing products and offer extra benefits

Product line extensions--additions to current productlines

Process line extensions--alternative delivery

proceduresSupplementary service innovations--adding new or

improved facilitating or enhancing elements

Style changes--visible changes in service design orscri ts


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New Service Development:Physical Goods as Source of Service Ideas

Customers can rent goodsuse and return fora fee instead of purchasing them

Customers can hire personnel to operate their

own or rented equipmentAny new durable product may create need for

after-sales services (possession processing)a -

Industrial EquipmentShippingInstallationProblem-solving and consulting advice

Cleaning


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Creating Services as Substitutes forOwning and/or Using Goods(Fig. 4-7)(

Perform the

Work Oneself

Hire Someone

to Do the Work

Own a Physical GoodRent the Use

of a Physical Good

Hire a taxi or limousine

Send work tosecretarial service

Rent car and drive it

Rent word processorand type

Hire chauffeur todrive car

Hire typist to useword processor

Drive own car

Type on own wordprocessor


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Success Factors in New Service Development

Market synergyGood fit between new product and firms image/resourcesAdvantage vs. competition in meeting customers needs Strong support from firm during/after launch Firm understands customer purchase decision behavior

Organizational factors Strong interfunctional cooperation and coordination Internal marketing to educate staff on new product and its

competition Employees understand importance of new services to firm

Market research factors Scientific studies conducted early in development process Product concept well defined before undertaking field studies


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Origin of new services

Human needs stimulus for new services

Need for survival and growth in the privatesector

Social needs not adequately covered byprivate sector stimulus for public sector


7/52Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 4 - 7

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Life cycle of a service

Infancy: many risks; high mortality rate; slow growthof demand

Growth: acceptance by customer Pressures for additional capacityMore efficient serviceAdjustments in managerial style

Maturity: demand reaches saturation level (longduration for services that meet genuine need)

Decline: changes in economy, new improvedservices, changes in technology



Steps in service design

Idea generation

Selection: compatibility with organizations goals andresources

Private sector, drop the idea if:

Not much profit

Deteriorates company image

Incompatible with skills, facilities Public sector

Goals less easily definable (public welfare)



Levels of Service Innovation

Major Innovation: new service driven byinformation and computer based technology

Start-up Business: new service for existing

market

New Services for the Market PresentlyServed: new services to customers of an

organization (some courses on-line)

Service Line Extensions: augmentation ofexisting service line (e.g. new electivecourses)



Service ProcessesManaging Service Encounter



Process- The SeventhP



What are Processes........?

Architecture of Services

Method & Sequence

That Describe

Service Operating Systems Work

In Which

In Order

To

Create Service Experiences & Outcomes

That customerwill value



Professional Consulting Service

Learning about each other

Developing a service agreement

A series of meetings

Project Deadlines

Deliverables



Service Blueprinting

Diagrammatic representation

Helps in identification of redundant, overlapping,unnecessary or just right processes

Customer Focused Service Processes Points of Customer Contact Physical Evidence

Timing each task

Connect the underlying support processes



Components of Service Blueprints

Customer Actions

Onstage / Visible Contact

Employees Actions

Line of Interaction

Backstage / In Visible Contact

Employees Actions

Line of Visibility

Support Processes

Internal Line ofInteraction

PhysicalEvidence



Developing a Blueprint

Indentify all the key activities

Define the Big Picture

Drill down

Boards Aircraft

Waits for announcement of Boarding

Gives agent boarding pass for Varification

Walks down the jetway / boards a bus

Enter Aircraft

Let flight attendent varify boarding pass

Find Seat, Stow carry on bag

Sit down



Developing a Blueprint

Distinguish Front-Stage and the Back-Stage activities

Line of Visibility

Helps inintegration of Marketing. Operations &

HRM

Helps in identifying potential processFail Points

Wait Pointscan also be pin pointed



Creating a Script

Scriptsare

Sequence of Behaviour that bothemployees and customersare expected to

learn and follow during service delivery



Creating Scripts

Highly Structured

Reduces Variability Ensures uniform qualityMay lead to mindless

delivery, ignoring customerneeds

Lightly Structured

Flexible Varies by Situation andCustomer



Fail Points

Reservation

Gettingthrough phoneTable

availabilityReservationrecordSeating

F

Valet Parking Order Taking

Food Service

Bill Presentation Retrieval of Car

Identifying

Wait Points W



Setting Service Standards

Personal Needs

Believes aboutWhat is Possible

Perceived Service

Alterations

Personal Needs

Desired Service

Adequate Service

Zone of

Tolerance

Service Promises

Word of Mouth

Past Experiences

Predicted Service

Factors Influencing Customer Expectations of

Service



Improving Reliability of ServiceProcesses

Fail Safe methodes for Service

PersonnelStrategically placed microphonesColour codingChange trays

Separate countersStandards for cleanliness & UniformsPaper strips around towels



Improving Reliability of ServiceProcesses

Marketing communications

Flow chart for placing a service call

Posted Instructions

Recorded Announcements

Chains to configure waiting lines

Beepers at the ATM machine


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Service Process Redesign

Objectives

Reduce the number of service failures

Reduce the cycle time from customer initiationof a service process to it's completion

Enhanced productivity

Increased customer satisfaction


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Service Process Redesign

Eliminating non-value-adding steps

Shifting to self service-

Delivering Direct Service

Bundling services

Redesign the physical aspects of service processes


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Customer as a coproducer

Levels of customer participation - LOW

Customer Presence

required during

service delivery

StandardisedProducts

Payment may be theonly required customerinput

E.gBus Travel, Motel Stay, Movie

Theatre, Uniform Cleaning Services,

Pest Control, Possession Processing


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Levels of customer participation - Moderate

Customer inputs

required for anadequate service

outcome

Information, personal

effort or physical

possessions

E.gHaircut, Full-service restaurant,

Agency created advertising

campaign, Accounting services


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Levels of customer participation - High

Customer co-

produces theservice product

Customers inputs are

mandatory

E.gMarriage counselling, Personal

Training, Management consulting,

rehabilitation, Weight loss


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SST Self Service Technologies

Automated banking terminals

Automated telephone systems (phone banking)A

Web Check in

Internet based services


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SST Self Service Technologies

Psychological Factors in Customer coproduction

AdvantagesTime & Cost SavingFlexibility

Convenience of locationHigher perceived

cutomisationFun, enjoyment

Dis AdvantagesAnxiety & Strees

Preferences to deal withpeople or avoid them


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Addressing the challange of Problemcustomers

The Thief

The Rule Breaker

The Family Feuders

The Vandal


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Managing People

for Service Advantage


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Frontline Service Personnel: Source ofCustomer Loyalty and Competitive Advantage

Frontline is an important source of differentiationandcompetitive advantage. It is:

a core part of the product

the service firmthe brand

Frontline also drives customer loyalty, with

employeesplaying key role in anticipating customer needs,

customizing service delivery and buildingpersonalized

relationships


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Boundary Spanning Roles

Boundary spanners link the inside of theorganization to the outside world

Multiplicity of roles often results in servicestaff having to pursue both operational andmarketing goals


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Role Stress in the Frontline

Person vs. Role:Conflicts between whatjobs require and employees own personality

and beliefs

Organization vs. Customer:Dilemmawhether to follow company rules or to satisfy

customer demands

Customer vs. Customer: Conflicts betweencustomers that demand service staff

intervention

3 main causes of role stress:


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Emotional Labor

The act of expressing socially desired emotions duringservice transactions (Hochschild, The Managed Heart)

Three approaches used by employees

surface acting deep acting spontaneous response

Performing emotional labor in response to societys or

managements display rules can be stressful

Good HR practice emphasizes selective recruitment, training,counseling, strategies to alleviate stress


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The Cycles of Failure, Mediocrity and Success

Too many managers make short-sighted assumptions aboutfinancial implications of:

Low pay Low investment (recruitment, training)

High turnover human resource strategies

Often costs of short-sighted policies are ignored:

Costs of constant recruiting, hiring & training Lower productivity & lower sales of new workers

Costs of disruptions to a service while a job remains unfilled Loss of departing persons knowledge of business and customersCost of dissatisfied customers


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How to Manage People for Service Advantage?

1. Hire the right people

2. Enable your people

3. Motivate and energize your people

Staff performance is a function of both ability and motivation. Howcan we get able service employees who are motivated to productively

deliver service excellence?


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Hire the Right People

The old saying People are your most

important asset is wrong.

The RIGHT people are your most

most important asset.

The old saying People are your most

important asset is wrong.

The RIGHT people are your most

most important asset.

Jim Collins


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Recruitment

The rightpeople are a firms most important asset: take afocused, marketing-like approach to recruitment

Clarify what must be hiredversus what can be taught

Clarify nature of the working environment, corporate valuesand style, in addition to job specs

Ensure candidates have/can obtain needed qualifications

Evaluate candidates fit with firms culture and values

Fit personalities, styles, energies to the appropriate jobs

S l t A d Hi th Ri ht P l


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Select And Hire the Right People:(1) Be the Preferred Employer

Create a large pool: Compete for Talent Market Share

What determines a firms applicant pool?

Positive image in the community as place to work

Quality of its services

The firms perceived status

There is no perfect employee

Different jobs are best filled by people with different skills, styles orpersonalities

Hire candidates that fit firms core values and culture

Focus on recruiting naturally warm personalities

S l t d Hi th Ri ht P l


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Observe Behavior Hire based on observed behavior, not words you hear

Best predictor of future behavior is past behavior

Consider group hiring sessions where candidates given group tasks

Personality Testing

Willingness to treat co-workers and customers with courtesy,

consideration and tact

Perceptiveness regarding customer needsAbility to communicate accurately and pleasantly

Select and Hire the Right People:(2) How to Identify the Best Candidates

S l t d Hi th Ri ht P l


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Select and Hire the Right People:(3) How to Identify the Best Candidates

Employ Multiple, Structured Interviews

Use structured interviews built around job requirements

Use more than one interviewer to reduce similar to me effects

Give Applicants a Realistic Preview of the Job Chance to have hands-on with the job

Assess how the candidates respond to job realities

Allow candidates to self select themselves out of the job


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The Organizational Culture, Purpose and Strategy Promote core values, get emotional commitment to strategyGet managers to teach why, what and how of job.

Interpersonal and Technical Skills Both are necessary but neither is sufficient for optimal job

performance

Product/Service Knowledge

Staffs product knowledge is a key aspect of service quality Staff need to be able to explain product features and to position

products correctly

Train Service Employees


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Factors Favoring Employee Empowerment

Firms strategy is based on competitive differentiation and onpersonalized, customized service

Emphasis on long-term relationships vs. one-time transactions

Use of complex and non-routine technologies

Environment is unpredictable, contains surprises

Managers are comfortable letting employees work independentlyfor benefit of firm and customers

Employees seek to deepen skills, like working with others, and aregood at group processes


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Control vs. Involvement Model of Management

Information about operating results and measures ofcompetitive performance

Rewards based on organizational performance (e.g. profitsharing, stock ownership)

Knowledge/skills enabling employees to understand and

contribute to organizational performance

Power to influence work procedures and organizationaldirection (e.g. quality circles, self-managing teams)

Source: Bowen and Lawler

Control concentrates 4 key features at top of organization;Involvement pushes them down:


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Suggestion involvement Employee recommendation

Job involvement

Jobs redesigned Employees retrained Supervisors facilitate

High involvement Information is shared

Employees skilled in teamwork,problem solving etc.

Participate in decisions Profit sharing and stock ownership

Levels of Employee Involvement


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Motivate and Energize the Frontline

Job content

Feedback and recognition

Goal accomplishment

Use the full range of available rewards effectively, including:


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The Inverted Organizational Pyramid (Fig. 11.5)

FrontlineStaff

TopMgmt

MiddleMgmt

Legend: = Service encounters, or Moments of Truth.

Traditional

Organizational PyramidInverted Pyramid with a

Customer & Frontline Focus

Customer Base

Frontline Staff

Middle Mgmt& Top Mgmt

Support Frontline

Th Wh l f S f l HR i S i Fi


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The Wheel of Successful HR in Service Firms(Fig. 11.6)

Leadership that:Focuses the entire organization

on supporting the frontline

Fosters a strong

service culture with

passion for service

and productivity

Drives values that

inspire, energize

and guide service

providers

1. Hire the

Right People

3.Motivate &Energize Your People

2. Enable Your People

Be the preferred

employer & compete

for talent market shareIntensify the

selection

process

Empower Frontline

Build high performance service

delivery teams

Extensive Training

Utilize the full

range of rewards

Service Excellence

& Productivity

new service development people and proces

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