5 New Service Development
5 New Service Development
5 New Service Development
Learning Outcomes
Understand the new service
development process
New service
Offering not previously available to
customers.
Result of additional offerings: radical changes in service delivery process or incremental improvements to existing service packs or Delivery process that the customer perceives as new
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Systems
Develop -ment
Analysis
Business analysis Project authorization
from design through launch. Design and Analysis are planning activities while Development and Launch are execution activities. Design stage covers the formulation of a new service objective and strategy, idea generation and screening, and concept development and testing. The analysis stage includes business analysis and project authorization. The development stage addresses the complete service design and testing, personal
delivery system: the people, technology and systems that go into designing and delivering the new service.
Organizations that continuously develop
successful new services tend to organize their people into cross functional teams, provide them with appropriate tools and resources for planning and execution, and develop an organizational context that facilitates the entire process so that products can be developed quickly and effectively.
Service Innovation
Radical Service Innovation
Requires a different process and design approach
( cross functional teams) to facilitate the process Radical Innovation Major innovation E.g. new service that customers did not know they needed. Innovations usually driven by information and computer based technologies. Eg Online auctions Start up business new services in a market that is already served by existing services. Eg Internet travel planning allows automated travel agency service. New service for the market presently Served-
Incremental Innovations
Usually involve some minor adjustments to
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the existing service delivery system components( people, system & technology) Hence, fewer resources and less effort are devoted to the planning side and more devoted to the execution side of the process cycle. imply increased risk and resource investments. Large amount of planning is needed to flesh out the idea along with committing substantial resources to the new service development process.
Incremental Innovations
Service Line Extensions: augmentation of
existing service line (e.g. new menu items). McDonalds offers a new sandwich Service Improvements: changes in service delivery process (self-service boarding kiosk). Style Changes: modest visible changes in appearances Nature of change will dictate where resources are allocated (I/Innovation - fewer resources to planning than what is devoted to execution phase. R/ Innovation imply increased risk and 11 resource investment, requires lot of planning.
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- based upon proximity to customers. Facility Layout - depends on the presence of the customer at the location. -servicescape (refers to the services physical surroundings and how they affect people in the a retail setting. Product and Process Design - covers both the intangible and tangible aspects of the service offering or package. Scheduling - addresses how the workers are assigned to the service.
- should focus on the needs of the customers and how well the service addresses those needs. Demand/Capacity Planning -depends on the type of service and the immediacy of matching supply to demand Customer Contact Level - physical presence and length of time that a customer spends with a service provider. Indirect contact- customer is not physically present or interacting in real time such as emailing Direct contact- customer is physically present and interacts with a service provider and interacts with a service provider No contact- no interaction with the service 14 provider such as ATM machines
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- refers to the substitution of technology for people. The goal is to reduce the use of service employees and direct customer contact, the mostly costly and fallible side of a service encounter. Front Line Personnel Discretion -denotes the flexibility of the service employee while interacting with a customer. Formalized dialog sequences and scripting limit the employees discretion Worker Skills -depend on service strategy and concept, customer contact level and industrialization level. High customer contact with high quality expectation require strong people skills
-coincide with high customer contact and employee discretion. Direct contact with customers gives the employee a high level of discretion, the opportunity to close the sale or up sell increases
Standardization of Service Offering
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-substitution of consumer labor for provider labor. By shifting some of the activities to the customer, the service provider can save money,
process technology enables delivery of many new services both incremental and radical innovations.
The interaction of design factors of customer
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contact, industrialization and standardization play an important role in new service innovations.
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develop and analyze their concepts. All these tools recognize the importance of the customer in the system . Tools : 1. Service Blue print maps the customers processes and examines interactions in different steps in the service. 2. Customer Utility Models generates the attributes that are important to a customer and then analyses the potential customer satisfaction level, revenues and profits from a 20 new service design in a competitive market.
Service Blueprinting
Design tool based on the process flow diagram Delineate front office or high contact areas from back office operations or low customer contact areas. A line of visibility divides the these 2 functional areas and the process occurring in each.
Designers can determine standard or
maximum execution times, materials and the exact details for each step. (refer to the figure)
Identify potential failure points and generate
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strategies for preventing or recovering from failure. The mistake-proofing strategy or poka
Step 22 Step
Identify the Identify the customer or customer or customer customer segment segment
Step 33 Step
Map the Map the process from process from the the customers customers point of view point of view
Step 44 Step
Map contact Map contact employee employee actions, actions, onstage and onstage and back-stage, back-stage, and/or and/or technology technology actions actions
Step 55 Step
Link contact Link contact activities to activities to needed needed support support functions functions
Step 66 Step
Add evidence Add evidence of service at of service at each each customer customer action step action step
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Fail Point
Line of Visibility
Prepare Mixes Order Supplies
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Line of interaction
Driver Picks Up Package Deliver Package
Line of visibility
Customer Service Order
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Arrive at Hotel
Check in
Go to Room
Receive Bags
Sleep Shower
Receive Food
Eat
Line of Interaction
Greet and Take Bags Process Registration Deliver Bags Deliver Food Process Check Out
Line of Visibility
Take Bags to Room Take Food Order
SUPPORT PROCESS
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to a new service configuration and that response depends on the customers perceived utility or benefit provided by the services price or nonprice attributes and that of competing brands.
Promise of customer utility measurement is the
ability to optimize the design of a service i.e. specify a level for each price and non price attribute.
Satisfaction with the quality of service affects
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customer loyalty and repurchase intent and thus the utility of the service for customers.
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dimensions. Reliability, responsiveness, assurance and empathy, and the tangible aspect of the service Improving reliability can result in increased labor and training costs Responsiveness may be enhanced by reducing queue times Empathy and assurance can be influenced by the ability of service providers to convey knowledge, courtesy and impressions of caring and approachability during each service encounter. Enhancing the tangible attributes of a service
Conjoint analysis (CJA) and discrete choice analysis (DCA) are used to model customer utility in response to experimentally designed profiles of service attributes. Discrete choice experiments involve careful design of service profile choice sets
Design of a new airport restaurant requires the following
Identification
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of important attributes Specification of attribute levels Experimental design Presentation of alternatives of respondents Estimation of choice model
Determine all variables and costs related to Service Attributes & demand -capacity matching strategies
Solve for Customer Segments and Utility Weights (s) using multinomial Logit or regression analysis Profile N with attributes, price, and cost
Feasibility
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Summary
Challenges to service design
Intangible nature of service encounters Inability to prototype and test new concepts Propensity to use ad-hoc methods
new services
The two approaches address the same factors (i.e.
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