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ADDING VALUE WITH SUPPLEMENTARY PRODUCT ELEMENTS

ADDING VALUE WITH SUPPLEMENTARY PRODUCT ELEMENTS 8-1 LEARNING OBJECTIVES AFTER FINISHING THIS CHAPTER, YOU SHOULD BE ABLE TO: DISCUSS SEVERAL APPROACHES TO DESCRIBING SERVICE PRODUCTS - core, facilitating, supplementary etc ..

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ADDING VALUE WITH SUPPLEMENTARY PRODUCT ELEMENTS

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  1. ADDING VALUE WITH SUPPLEMENTARY PRODUCT ELEMENTS 8-1

  2. LEARNING OBJECTIVES • AFTER FINISHING THIS CHAPTER, YOU SHOULD BE ABLE TO: • DISCUSS SEVERAL APPROACHES TO DESCRIBING SERVICE PRODUCTS - core, facilitating, supplementary etc.. • DISTINGUISH BETWEEN FACILITATING AND ENHANCING SUPPLEMENTARY SERVICES • DEFINE THE EIGHT DIMENSIONS OF SERVICE • SHOW HOW A COMPANY COULD USE EACH OF THESE DIMENSIONS TO ENHANCE ITS CORE SERVICE • ILLUSTRATE HOW TECHNOLOGY OFFERS NEW OPPORTUNITIES TO PROVIDE VALUE-ADDED SUPPLEMENTARY SERVICES. 8-2

  3. The Augmented Product “ We live in an age in which our thinking about what a product or a service is must be quite different from what it ever was before. It is not so much the basic, generic central thing we are selling that counts, but the whole cluster of satisfactions with which we surround it.” 1 1. Source: Theodore Levitt, ‘Marketing Success through Differentiation - of Anything’, Harvard Business Review, Jan-Feb 1980. • Generic Product, Expected Product, Augmented Product, Potential Product 8-3

  4. The service concept The core service Facilitating services (and goods) Supporting services (and goods) Consumer participation The augmented service offering 8-4

  5. CORE PRODUCTS AND SUPPLEMENTARY SERVICES • Most manufacturing and service businesses offer customers a package of benefits,made up of the core product and a variety of service related activities. • The core product. • “product packages” or “extended products” • which are the core product plus supplementary elements that ad value to the good or service. • Lynn Shoestack developed a model to help marketer’s visualize and manage the “Total Market Entry.” This model used a chemical analogy(see figure 8.1) 8-5

  6. Facilitating Information Order Taking Billing Payment Supporting Consultation Hospitality Safekeeping Exception Clusters of Supplementary Services Supplementary services • Supplementary services add value to the core (and help differentiate it from competitors). 8-6

  7. Information Consultation Payment CORE Billing Order-taking Exceptions Hospitality Safekeeping The Flower of Service: core product surrounded by clusters of supplementary services 8-7

  8. EXAMPLES OF INFORMATION ELEMENTS • Directions to service site • schedules/service hours • Prices • Instructions on using core product/supplementary services • Warnings • Conditions of sale/service • Notification of changes • Documentation • Confirmation of reservations • Summaries of account activity • Receipts and tickets 8-8

  9. EXAMPLES OF ORDER-TAKING ELEMENTS • Applications • Membership in clubs or programs • Subscriptions Services (e.g. utilities) • Prerequisite-based services(e.g. credit college enrollment) • Order entry • on-site fulfillment • mail/telephone order for subsequent fulfillment • Reservations and Check-in • Seats • Tables • Rooms • Rentals of vehicles or other equipment • professional appointments • admissions to restricted facilities (e.g.exhibitions) 8-9

  10. EXAMPLES OF BILLING ELEMENTS • Periodic Statements of account activity • Invoices for individual transactions • Verbal statements of amounts due • Machine display of amount due • Self-billing (computed by customer) 8-10

  11. EXAMPLES OF PAYMENT ELEMENTS • Self-service • Exact change in machine • Cash in machine with change returned • Insert prepayment card • Insert credit/charge/debit card • Insert token • Electronic funds transfer • Mail a check • Direct to Payee or Intermediary • cash handling and change giving • check handling • credit/charge/debit card handling • Coupon redemption • Tokens, vouchers etc • Automatic deduction from financial deposits (e.g. bank charges • Control and verification • Automated systems (e.g. machine readable tickets operate entry gate) • Personal systems (e.g. gate controllers, ticket inspectors) 8-11

  12. EXAMPLES OF CONSULTATION ELEMENTS • Advice • Auditing • Personal counseling • Tutoring/training in product usage • Management or technical consultancy 8-12

  13. EXAMPLES OF HOSPITALITY ELEMENTS • Greeting • Food and beverages • Toilets and washrooms • Bathroom kits • Waiting facilities and amenities • lounges, waiting areas, seating • Weather protection • Magazines • Transportation • Security 8-13

  14. EXAMPLES OF SAFEKEEPING ELEMENTS • Caring for possessions customers bring in • Child Care • Pet Care • Parking facilities for vehicles • Valet parking • Coat rooms • Baggage handling • Storage Space • Safety deposit/security 8-14

  15. EXAMPLES OF SAFEKEEPING ELEMENTSContinued • Caring for goods purchased (or rented) by customers • Packaging • Pick-up • Transportation • Delivery • Installation • Inspection • Cleaning • Refueling • Preventive maintenance • Repairs and Renovation 8-15

  16. EXAMPLES OF EXCEPTIONS ELEMENTS • Special requests in advance of service delivery • Children’s needs - Dietary requirements - Medical or disability needs • Religious observance - Deviations from standard operating procedures • Handling special communications • Complaints - Compliments - Suggestions • Problem solving • warranties and guarantees against product malfunctions • resolving difficulties that arise from using the product • resolving difficulties caused by accidents, service failures and problems with customers • assisting customers who have suffered an accident or medical emergency • Restitution • refunds • compensation in kind for unsatisfactory service • free repair of defective goods 8-16

  17. Use of Information Technology to Enhance Delivery of Supplementary Services • How IT Enhances Delivery of Supplementary Services • Managerial Implications: • Product Policy Issues • Outsourcing Supplementary Services • Transforming Supplementary Services into Core Products 8-17

  18. How IT Enhances Delivery of Supplementary Services • Information - CD-ROM catalogs • Consultation - use technology to allow employees faster access to the information for better service. • Order-taking - minimize time and effort required. • Billing and payment - EFT-POS, prevent cheating, various cards etc. • Exception - meal preference for regular customers, data base etc. • What about other areas? 8-18

  19. IT- Managerial Implications • Product Policy Issues - new ways to augment product/service, positioning and other marketing mix issues. • Outsourcing Supplementary Services - Jack of all trades, selective outsourcing, outsource all but core competencies. • Transforming Supplementary Services into Core Products - create core out of supplementary expertise. 8-19

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