Services Business

Product Lifecycle
New Product Development
Priyanka Suresh
The Nature of Services
• Service
• Any act or performance one party can offer to another that
is essentially intangible and does not result in the
ownership of anything
The Service Aspect of an Offering
• A pure tangible good
• A tangible good with accompanying services
• A hybrid offering
• A major service with accompanying minor goods/services
• A pure service
• Types of benefits from services based on difficulty of evaluation
• Search Benefits
• Experience Benefits
• Credence Benefits
Characteristics of Services
• Intangibility
• Services cant be seen, heard, felt, tasted or smelled before they are bought.
• Manage the evidence or Tangibilize the Intangible by
• Place
• People
• Equipment
• Communication material
• Symbols
• Price
• Inseparability
• Services are typically produced and consumed simultaneously
• Variability
• Service quality depends on: Who? When? Where? Whom?
• Service Guarantees to reduce risk perceptions
• Investing in good hiring & training procedures, standardizing the service performance process through out the
organization, & monitoring customer satisfaction help in increased quality control.
• Perishability
• Can’t store services so perishability is high
Perishability (contd…)
Demand side Supply side
• Differential pricing • Part-time employees
• Nonpeak demand • Peak-time efficiency routines
• Complementary services • Increased consumer participation
• Reservation services • Shared services
• Facilities for future expansion
New Services Realities
• Increasing role of technology
• Fundamentally changing how value is delivered to customers
• Power to make service workers more productive
• Importance of the increasingly empowered customer
• Unbundled service choices
• Social media to spread the word
• Customer coproduction
• Redesign services to simplify customer roles
• Incorporate the right technology to aid employees and customers
• Create high performance customers by enhancing the clarity of their role, motivation, and ability to perform their
role
• Encourage “customer citizenship” so customers will help one another
• Need to engage employees as well as customers
• Employees should have internal drive to pamper customers, accurately read their needs, develop a personal
relationship and deliver high quality services in problem resolution.
Best Practices of Top Service Companies
• Customer-centricity
• seeing the world in general, and a company’s services in particular, from the customer’s point of view
• Service quality
• The best service providers set superior quality standards through
• Voice of the customer measurements
• Importance–performance analysis
• Cater to high-value customers
• Special discounts
• Promotional offers
• Special service
• Manage customer complaints
• Extra role behaviors
• Call centers
• Customer service representatives
Differentiating Services
• Ease of ordering
• Speed and timing of delivery
• Installation, training, and
consulting
• Maintenance and repair
• Returns
Innovation with Services
• Online travel
• Retail health clinics
• Private aviation
Managing Service Quality
• Managing customer expectations
• Incorporating self-service technologies
Service-Quality Model- to manage customer
expectations
Managing Product-Service Bundles
• Key service differentiators
• Ordering
• Delivery
• Installation
• Customer training
• Customer consulting
• Maintenance
• Repair
Product Lifecycle/ Sales and Profit Life Cycles
Table 17.1 Summary of Product Life Cycle Characteristics, Objectives, and
Strategies (1 of 2)

Characteristics

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Introduction Growth Maturity Decline

Sales Low sales Rapidly rising sales Peak sales Declining sales
High cost per Average cost per Low cost per unit/ Low cost per unit/
Costs
unit/ customer unit/ customer customer customer
Profits Negative Rising profits High profits Declining profits

Customers Innovators Early adopters Mainstream Laggards

Competitors Few Growing number Large number Declining number

Marketing Objectives

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Introduction Growth Maturity Decline

Create product Maximize Maximize profit while Reduce expenditure and
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awareness and trial market share defending market share harvest the market
Summary of Product Life Cycle Characteristics, Objectives, and Strategies
(2 of 2)

Strategies

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Introduction Growth Maturity Decline

Improve the product
Product Offer a basic product and develop product- Diversify product Phase out
offerings weak products
line extensions
Price to penetrate Price to match or beat
Price Charge cost-plus market competitors’ Price Cut price

Reduce to
Build product Build awareness and Stress brand differences minimal level
Communications awareness and trial interest in the mass and benefits and needed to
among early adopters encourage brand
and dealers market switching retain
customers
Phase out
Build selective Build intensive Build more intensive
Distribution unprofitable
distribution distribution distribution
outlets
New Product Development
• New Products
• Original products/New to the world items
• Product improvements
• Product modifications, and
• New brands that the firm develops through its own product development.
• Strategy:
• Acquisition
• Buy other companies
• Buy patents from other companies
• Buy a license or franchise from another company
• R&D efforts
• New-to-the-world items
• Improve existing products
 CONJOINT 3 stages: 1)
ANALYSIS Target Market,
COST, PROTOTYPING NAME, LOGO
Internal R_W_W Product Idea-> Value WHEN &
SALES, PROFIT (ALPHA/BETA) PACKAGING
External Is there a Product Concept Proposition, WHERE TO
ESTIMATION CONTROLLED
Short term LAUNCH
Crowdsourcing
real need? numbers; 2)
TEST MARKET;
SIMULATED
Can we win? Price, Place,
TEST MARKET
Promotion, 3)
Worth Doing? Long term
numbers
MM Strateggy
Challenges in New-Product Development
• The innovation imperative
Continuous innovation is a necessity
• New-product success
Incremental innovation (Established Companies) vs.
disruptive technologies (Newer Companies)
• Type 1 error (False Positive)
• Type 2 error (False Negative)
Organizational Arrangements
• Budgeting for New-Product Development
• Organizing New-Product Development: New Product
Managers/New Product Department/Cross-functional
Teams/Crowd Sourcing/ Stage Gate Systems etc.