chapter 4 Flashcards
A ________ implies a defined and consistent “bundle of output” as well as the ability to
differentiate one bundle of output from another.
product
In a manufacturing context, the concept is easy to understand and visualize.
Service firms
can also differentiate their products in a similar fashion using the various “models” offered by manufacturers.
For example, fast-food restaurants display a menu of their products, which are, of course,
highly tangible. If you are a burger connoisseur, you can easily distinguish Burger King’s
Whopper from its Whopper with Cheese, or from McDonald’s Big Mac
product
Providers of more intangible services, also offer various
“models” of products, representing an assembly of
carefully prescribed value-added supplementary
services built around a core product.
CREATING SERVICE PRODUCTS
For instance,
credit card companies develop different cards that each
comes with a distinct bundle of benefits and fees
insurance companies offer different types of policies
universities offer different degree programs, each
composed of a mix of required and elective courses.
CREATING SERVICE PRODUCTS
The objective of product development is to design
bundles of output that are distinct and can be easily
differentiated from another.
CREATING SERVICE PRODUCTS
All service organizations face choices concerning the types of products to offer and how to deliver them to customers. To better understand the nature of services, it’s useful to distinguish between the core product and the supplementary elements that
facilitate its use and enhance its value for customers.
CREATING SERVICE PRODUCTS
Designing a service product is a complex task that requires an understanding of how the core and supplementary services should be combined, sequenced, and delivered
to create a value proposition that meets the needs of target segments.
CREATING SERVICE PRODUCTS
Service performances are experienced rather than owned. Even when there are
physical elements to which the customer takes a title of ownership — such as a meal (which is promptly consumed), a surgically implanted pacemaker, or a replacement part for a car — a significant portion of the price paid by customers is for the value added by the service elements, including expert labor and the use of specialized
equipment.
service product
A _________________ comprises of all the elements of the service performance, both physical and intangible, that create value for customers.
service product
A _____________ comprises all the elements of the service performance, both physical and intangible, that create value for customers.
service product 1
The service concept is represented by: (3)
- Core Product
- Supplementary Services
- Delivery Process
The ____________ is “what” the customer is fundamentally buying.
Core product
product is the central component supplying the principal benefits and solutions that customers seek
core product
Examples:
When buying a one-night stay in a hotel, the core service is accommodation and security.
When paying to have a package delivered, the core service is for the package to
arrive at the correct address, on time, and undamaged.
core product
- Delivery of the core product is usually accompanied by a variety of other service-related activities we refer to collectively as ______________, which augment the core product, both facilitating its use and enhancing its value.
Supplementary Services
Note: Core products tend to become commoditized as an industry matures and competition increases. So the search for competitive advantage often emphasizes supplementary services, which can play an important role in differentiating and positioning the core product against competing services.
Supplementary Services
- The processes used to deliver both the core product and each of the supplementary services.
Delivery Processes.
The design of the service offering must address the following issues:
How the different service components are delivered to the customer.
The nature of the customers’ role in those processes.
How long delivery lasts. ?
The prescribed level and style of service to be offered.
Delivery Process
The _____________ consists of the core service and a range of supplementary
services.
Flower of Service
There are potentially dozens of different supplementary services, but almost all of them can be classified into one of the following eight clusters which are identified as either facilitating or enhancing that provide value to the core product.
Flower of service model
The petals are arranged in a clockwise sequence starting with “information”,
following the order they are likely to be encountered by customers.
BE FAMILIAR WITH THE FLOWER OF SERVICE MODEL
In a well-designed and well-managed service product, the petals and core are fresh and well-formed.
BE FAMILIAR WITH THE FLOWER OF SERVICE MODEL
A badly designed or poorly delivered service is a like a flower with missing, wilted, or discolored petals. Even if the core is perfect, the flower looks unattractive.
BE FAMILIAR WITH THE FLOWER OF SERVICE MODEL
Customers need relevant ———– to obtain full value from any good or service.
Direction to service site
Schedules/service hours
Price information
Terms and conditions of sale/service
Advice on how to get the most value from a service
Warnings and advice on how to avoid problems
Confirmation of reservations
Receipts and tickets
Notification of changes
Summaries of account activities
FACILITATING SUPPLEMENTARY SERVICES:
INFORMATION
Once customers are ready to buy, a key supplementary element comes into play —________________.
Order entry
On-site order entry
Mail/telephone/email/online/mobile app order
Reservations or check-ins
Seats/tables/rooms
Vehicles or equipment rental
Professional appointment
Applications
Memberships in clubs/programs
Subscription services (e.g., utilities)
Enrolment-based services (e.g., financial credit, college enrolment)
FACILITATING SUPPLEMENTARY SERVICES:
ORDER TAKING
_________ is the process of issuing invoices and collecting payments from customers. ________ can be:
- Periodic statements of account activity
- Invoices for individual transactions.
- Verbal statements of the amount due.
- Online or machine display of the amount due for self-payment transactions
- Portable wireless terminal.
- Self-billing, by which the customer tallies up the amount of an order and authorizes a card payment
FACILITATING SUPPLEMENTARY SERVICES:
BILLING
Note:
Customers usually expect bills to be clear and informative, and itemized in ways that make it clear how the
total was computed. Inaccurate, illegible, or incomplete bills risk disappointing customers who may, up to
that point, have been quite satisfied with their experience.
If customers are already dissatisfied, the billing mistake may make them even angrier.
Billing should also be timely, because it encourages people to make faster payments.
FACILITATING SUPPLEMENTARY SERVICES:
BILLING
is the voluntary transfer of money, equivalent, or other valuable items from one person to another in exchange for goods or services received or to meet a legal obligation. It includes:
FACILITATING SUPPLEMENTARY SERVICES:
PAYMENT
Inserting card, cash, or token into a machine, electronic funds transfer,
mailing a check, entering credit card information online, online payment systems such as PayPal, Google Wallet, or Bitcoins.
Self service
- Cash handling or change giving, check handling,
credit/charge/debit card handling, coupon redemption.
Direct to payee or intermediary-
