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New Service Development

Thirumal Reddy

Both husband and wife are employees, and they are staying in a nuclear family, they need different services like ?

At night 11pm you suddenly need a medicine and what kind of service you look for?

The distance from home to office are increasing you need difference services to reach there office quicker and safer?

Origin of new services

Human needs stimulus for new services Need for survival and growth in the private sector Social needs not adequately covered by private sector stimulus for public sector

Challenges for Service Innovation

Ability to protect intellectual and property technologies. Incremental nature of innovation. Degree of integration required. Ability to build prototypes or conduct tests in a controlled environment.


Figure 9.1

Risks of Relying on Words Alone to Describe Services

Oversimplification Incompleteness Subjectivity Biased Interpretation

Life cycle of a service

Infancy: many risks; high mortality rate; slow growth of demand Growth: acceptance by customer Pressures for additional capacity More efficient service Adjustments in managerial style Maturity: demand reaches saturation level (long duration for services that meet genuine need) Decline: changes in economy, new improved services, changes in technology When to introduce new services?

Steps in service design

Idea generation Selection: compatibility with organizations goals and resources
Private sector, drop the idea if:
Not much profit Deteriorates company image Incompatible with skills, facilities

Public sector
Goals less easily definable (public welfare) Little attention to operational issues

Steps in service design

Preliminary design: little product testing. Marketing present
Specify key attributes of service package

Final design: specify service level


New Service Development Cycle

Full-scale launch Post-launch review

Full Launch


Formulation of new services objective / strategy Idea generation and screening Concept development and testing

Service design and testing Process and system design and testing Marketing program design and testing Personnel training Service testing and pilot run Test marketing





11 Business analysis Project authorization

Types of New Services

major or radical innovations
start-up businesses

new services for the currently served market

service line extensions

service improvements
style changes

Figure 9.2

New Service Development Process

Business strategy development or review
New service strategy development

Front-end Planning

Idea generation
Screen ideas against new service strategy

Concept development and evaluation

Test concept with customers and employees

Business analysis
Test for profitability and feasibility

Service development and testing

Conduct service prototype test

Sources: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.

Market testing
Test service and other marketing-mix elements

Commercialization Postintroduction evaluation

Figure 9.3

New Service Strategy Matrix for Identifying Growth Opportunities

Markets Offerings
Current Customers New Customers

Existing Services

Share building

Market development

New Services

Service development


Figure 9.5

Service Blueprinting

A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customers point of view.


Service Blueprint

Points of contact Evidence

Service Blueprint Components

Customer Actions line of interaction Onstage Contact Employee Actions line of visibility Backstage Contact Employee Actions line of internal interaction Support Processes

Figure 9.7

Blueprint for Express Mail Delivery Service

PHYSICAL CUSTOMER EVIDENCE Truck Packaging Forms Hand-held Computer Uniform Customer Calls Customer Gives Package Truck Packaging Forms Hand-held Computer Uniform Receive Package

CONTACT PERSON (On Stage) (Back Stage)

Line of interaction
Driver Picks Up Package Deliver Package

Line of visibility
Customer Service Order


Line of internal interaction

Dispatch Driver Airport Receives & Loads Fly to Sort Center Load on Airplane Sort Packages Fly to Destination

Unload & Sort

Load On Truck

Figure 9.8

Blueprint for Overnight Hotel Stay Service

Hotel Exterior Cart for Parking Bags Desk Registration Papers Lobby Key Elevators Hallways Room Cart for Bags Room Amenities Bath Menu Delivery Tray Food Appearance Food Bill Desk Lobby Hotel Exterior Parking Check out and Leave


Arrive at Hotel

Give Bags to Bellperson

Check in

Go to Room

Receive Bags

Sleep Shower

Call Room Service

Receive Food


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

Line of Internal Interaction

Registration System Prepare Food Registration System

Figure 9.9

Building a Service Blueprint

Step 1
Identify the process to be blueprinted

Step 2
Identify the customer or customer segment

Step 3
Map the process from the customers point of view

Step 4
Map contact employee actions, onstage and back-stage, and/or technology actions

Step 5
Link contact activities to needed support functions

Step 6
Add evidence of service at each customer action step

Blueprints Can Be Used By:

Service Marketers

creating realistic customer expectations:

service system design promotion

Human Resources Management

empowering the human element:

Operations Management

rendering the service as promised:

job descriptions selection criteria appraisal systems

managing fail points training systems quality control

System Technology

providing necessary tools:

system specifications personal preference databases