Learning Objectives
➤ Formulate a strategic service vision.
➤ Discuss the competitive environment of services.
➤ Describe how a service competes using the three generic
service strategies.
➤ Discuss the service purchase decision.
➤ Discuss the competitive role of information in services.
➤ Explain the role of the virtual value chain in service
innovation.
➤ Discuss the limits in the use of information.
➤ Categorize a service firm according to its stage of
competitiveness.
➤ Conduct a data envelopment analysis (DEA).
Strategic Service Vision
Target Market Segments
➤ What are common characteristics of important market
segments?
➤ What dimensions can be used to segment the market,
demographic, psychographic?
➤ How important are various segments?
➤ What needs does each have?
➤ How well are these needs being served, in what manner,
by whom?
Strategic Service Vision
Service Concept
➤ What are important elements of the service to be provided,
stated in terms of results produced for customers?
➤ How are these elements supposed to be perceived by the
target market segment, by the market in general, by
employees, by others?
➤ How do customers perceive the service concept?
➤ What efforts does this suggest in terms of the manner in
which the service is designed, delivered, marketed?
Strategic Service Vision
Operating Strategy
➤ What are important elements of the strategy: operations,
financing, marketing, organization, human resources,
control?
➤ On which will the most effort be concentrated?
➤ Where will investments be made?
➤ How will quality and cost be controlled: measures,
incentives, rewards?
➤ What results will be expected versus competition in terms
of, quality of service, cost profile, productivity,
morale/loyalty of servers?
Strategic Service Vision
Service Delivery System
➤ What are important features of the service delivery system
including: role of people, technology, equipment, layout,
procedures?
➤ What capacity does it provide, normally, at peak levels?
➤ To what extent does it, help insure quality standards,
differentiate the service from competition, provide barriers
to entry by competitors?
Competitive Environment of Services
Customers patronize service Customers neither seek Customers seek out the firm The company’s name is synonymous
firm for reasons other than out nor avoid the firm. on the basis of its sustained with service excellence. Its service
performance. reputation for meeting doesn’t just satisfy customers; it
customer expectations delights them and thereby expands
customer expectations to levels its
competitors are unable to fulfill.
Operations is reactive, Operations functions in a Operations continually excels, Operations is a quick learner and fast
at best. mediocre, uninspired reinforced by personnel innovator; it masters every step of the
fashion. management and systems service delivery process and provides
that support an intense capabilities that are superior to
customer focus. competitors.
SERVICE QUALITY
Is subsidiary to cost, Meets some customer Exceeds customer Raises customer expectations and
highly variable. expectations; consistent expectations; consistent seeks challenge; improves
on one or two key on multiple dimensions. continuously.
dimensions.
Stages in Service Firm Competitiveness
BACK OFFICE
Counting room. Contributes to service, plays Is equally valued with front Is proactive, develops its own
an important role in the total office; plays integral role. capabilities, and generates
service, is given attention, opportunities.
but is still a separate role.
CUSTOMER
Unspecified, to be A market segment whose A collection of individuals A source of stimulation, ideas,
satisfied at minimum cost. basic needs are understood. whose variation in needs is and opportunity.
understood.
INTRODUCTION OF NEW TECHNOLOGY
When necessary for When justified by cost When promises to enhance Source of first-mover advantages,
survival, under duress. savings. service. creating ability to do things your
competitors can’t do.
WORKFORCE
Negative constraint.
Efficient resource; disciplined; Permitted to select among Innovative; creates procedures.
follows procedures. alternative procedures.
FRONT-LINE MANAGEMENT
Controls workers. Controls the process. Listens to customers; coaches Is listened to by top management
and facilitates workers. as a source of new ideas. Mentors
Market Focus
Segment
America West Winning Customers
➤ Service Qualifiers:
➤ Service Winners:
➤ Service Losers:
America West Strategic Service Vision
➤ Service concept
➤ Operating strategy
CABIN SERVICE
Full Service
PREFLIGHT SERVICE
Inconvenient Convenient
No Amenities
Mrs. Fields Strategic Use of Information
FOOD QUALITY
Good
MOVIE SELECTION
Few Many
Poor
Alamo Drafthouse Strategic Service Vision
➤ Service concept
➤ Operating strategy
➤ Qualifiers
➤ Service winners
➤ Service losers
Alamo Drafthouse Profitability Recommendations
➤
Discussion Topics