session iv services strategy - copy - copy

8/3/2019 Session IV Services Strategy - Copy - Copy

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Service Strategy

What is service value? What is a

Strategy? Service competitiveness?Service Strategy?


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What is Service Strategy?

Service strategy is the set of plans and

policies by which a service organization

aims to meet its service objectives Service strategy is a deliberate search for

a plan of action that will develop a

businesss competitive advantage and

compound it.


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Why an organization needs

service strategy To draw a route to desired outcomes on

service to defend itself against competitors

and to remain competitive To focus its activities and energies

To help to define service it offers

To provide consistency in service and helpreduce uncertainty


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Service Strategy Concerns

Refining of mission, long term goals etc. to

operational goals

It translates strategic positioning into a clear

operational plan

Decision making on aspects of capacity, facility

size. Facility location, skills, service quality,service delivery, service recovery


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Steps in Service Strategy

Setting of order winners and order

qualifiers

Target Market segment Setting of service concept

Setting of operating system

Setting of service delivery system Taking decisions on locations, facilities,

execution activities


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Order Qualifiers

Those competitive priorities ,that respond to

What characteristics must my service

have just to be able to compete? Fast food--- speed

Package delivery---- packaging

design(safe at destination) Air travel------- time

Gourmet restaurant-------- environment


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Quality Winners

What characteristics should I emphasize to

convince the customer to buy my service

instead of my customers Oberoi hotels, Hiltons, ----- Luxury

Jet Airways--- price

Shatabdi travel----- time


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Target market segment

Determine common characteristics

Identify dimensions to segment market

Develop demographic, geographic or

psychographic basis

Determine importance and needs of

segmentation as perceived by the organization Monitor how well the needs are being served?

Identify who is responsible to serving the needs


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Example:

1.Who could be the customers for

Macdonald?2. Who could be the customers for a

gourmet lunch at a luxury hotel.

3.Who could be the customers for a linervoyage


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Service Concept

Service concept is set of competitive priorities that targetmarket values

Focus is on results that must be produced

It describes how the target market, employees andmarket as a whole perceive the service elements

Elements of service to be provided, in terms of results forthe customers

Alignment of service concept with business of the

organization What efforts are implied to design, deliver and market

the concept?

NEEDS DETAILED DISCUSSION


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Operating Strategy

What are important elements of strategy in

operations,

Which of these require concentration of efforts?

Where will investments be made?

How will quality and cost be controlled?

What results will be expected against

competition in areas of cost, service, quality,productivity, morale of servers


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Competitive priorities

The set of operationally oriented

dimensions that companies can compete

on ------ Competitive priorities

Cost, quality, delivery(time),service,

flexibility, environment (Ambiance)


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Services as Competitive

Advantage:Services stand out in areas of:

Nature of output

Degree of customer contactCA is built around these two imperatives


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Service as CA

Service organizations can compete on:

1. Outcome ( nature of)

2. Experience ( customer contact plays a vital role)

Five positions are: Failing: below industry expectations

Arrogant/Complacent: outcome is excellent butcustomer treatment is poor

Retaining customers in the short run: possible to

retain customers for short time even if outcome is poor

Average: Little to choose from several players

World Class:As the best in all that is done


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Service Growth Planning

Mfg. companies grow by:

Adding machines, building new plant,expanding existing facility

High volumes on principles of economy ofsize.

Standardization

Centralization of controls

Going nearer to site of availability of rawmaterials, cheaper labour, availability of skills,state subsidies. Infrastructure, tax concessions


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Service organization ,

Services have different characteristics:

Rely on extensive customer contact

Location has to be near to customers Decentralization is desired

Economy of size is detrimental in manyareas


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Strategy for Growth of Services

1. Multisite service firms

2. Industry Roll-up

3. Franchising


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Multi-site service firms

Customer contact varies from place to

place and hence same rate of success is

not obtained.

The model cannot be replicated from place

to place

Multi-site firms have to move away from

the owners personality quirks,


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Multi-site service life cycle Stages

1.Entrepreneurial stage

Firms work under the owners personality quirks

Skills of local marketing and PR matter most

Motivation of employees matters

Innovation is the key

Service delivery system, operating strategy are

developed for replicating elsewhere


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2. Multi-site rationalization

Development of procedures, training, accountingsystems vital for multi-site

Individual personality of entrepreneur is lost ordiluted

3 Growth

Operations and design are already established

Sales publicity becomes feasible against localpublic relations

Wider consumer audience becomes a criticalskill


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4. Maturity

Challenges to maintain market position

Maintaining standards and operationalcontrol over dispersed employees is

difficult

Low level employees start leaving asthese are not at the hub of an exciting new

idea.


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5Decline/ Regeneration

Service concept becomes stale

Decline sets in revenues Regeneration is the necessity through

revision of service concept


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Roll ups

Use of traded stock to buy up small firms.

Increases market coverage

Roll-ups succeed as single unit service setup is retained.

Local culture and customer contact is

retained

Once single units, now can share facilities

and bring down costs


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Franchising: sale of rights to operate to

someone else in return for a portion of sales as

royalties

Rapid growth

In absence of patenting , it provides easy way

to access the specifications, practices,

controls. There is thus danger of leakage of

secrets.

franchise can lead to a situation of better

profits


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Franchising

Area Advantage Disadvantage

Facilities

Finance

Franchisee bears

Franchisee incurs

Limits control

Franchiser saves

Operations

Time

Franchisee

entrepreneurial spirit

Fast

Controls are difficult

Customer contact Depends on franchisee customers can shift

loyalty to franchisee

Quality Franchisee has a lot to

decide

Extremely difficult for

franchiser

Profits

Marketing

Franchisee profits get

limited

Franchiser gains

Brand gets established

session iv services strategy - copy - copy

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