Service StrategyLearning ObjectivesThe Strategic Service ConceptCompetitive Environment of ServicesCompetitive Service Strategies (Overall Cost Leadership)Competitive Service Strategies (Differentiation)Competitive Service Strategies (Focus)Customer Criteria for Selecting a Service ProviderService Purchase DecisionService Purchase Decision (cont.)Competitive Role of Information in ServicesLimits in the Use of InformationDiscussion TopicsAmerica West Airlines Generic Competitive StrategyAmerica West Airlines Competitive FeaturesAmerica West Airlines Strategic Service ConceptAmerica West Airlines Strategic Service Concept (cont.)America West Airlines PositioningService Strategy Service StrategyLearning ObjectivesLearning ObjectivesIdentify strategic opportunities available in the design of the service concept.Understand the competitive environment of services.Explore the dimensions of service competition.Identify methods of winning customers in the marketplaceDiscuss the limits in the use of information Discuss the competitive role of information in services.The Strategic Service ConceptThe Strategic Service ConceptStructural:Structural:Delivery systemDelivery system (front & back office)Facility designFacility design (aesthetics, layout)LocationLocation (competition, site characteristics)Capacity planningCapacity planning (number of (number of servers))ManagerialManagerialService encounterService encounter (culture, empowerment)QualityQuality (measurement, guarantee)Managing capacity and demandManaging capacity and demand (queues)Information Information (data collection, resource)Competitive Environment of ServicesCompetitive Environment of ServicesRelatively Low Overall Entry BarriersRelatively Low Overall Entry BarriersEconomies of Scale LimitedEconomies of Scale LimitedHigh Transportation CostsHigh Transportation CostsErratic Sales FluctuationsErratic Sales FluctuationsNo Power Dealing with Buyers or SuppliersNo Power Dealing with Buyers or SuppliersProduct Substitutions for ServiceProduct Substitutions for ServiceHigh Customer LoyaltyHigh Customer LoyaltyExit Barriers Exit BarriersCompetitive Service Strategies (Overall Cost Leadership)Competitive Service Strategies (Overall Cost Leadership)Seeking Out Low-cost CustomersSeeking Out Low-cost CustomersStandardizing a Custom Service Standardizing a Custom Service Reducing the Personal Element in Service Reducing the Personal Element in Service DeliveryDeliveryReducing Network CostsReducing Network CostsTaking Service Operations Off-lineTaking Service Operations Off-lineCompetitive Service Strategies (Differentiation)Competitive Service Strategies (Differentiation)Making the Intangible TangibleMaking the Intangible TangibleCustomizing the Standard ProductCustomizing the Standard ProductReducing Perceived RiskReducing Perceived RiskGiving Attention to Personnel TrainingGiving Attention to Personnel TrainingControlling QualityControlling QualityNote: Differentiation in service means being unique in brand image, technology use, features, or reputation for customer service.Competitive Service Strategies (Focus)Competitive Service Strategies (Focus)Buyer Group: (e.g. USAA insurance and Buyer Group: (e.g. USAA insurance and military officers)military officers)Service Offered: (e.g. Shouldice Hospital and Service Offered: (e.g. Shouldice Hospital and hernia patients)hernia patients) Geographic Region: (e.g. Austin Cable Geographic Region: (e.g. Austin Cable Vision and TV watchers)Vision and TV watchers)Customer Criteria for Selecting a Service ProviderCustomer Criteria for Selecting a Service ProviderAvailability (24 hour ATM)Convenience (Site location)Dependability (On-time performance)Personalization (Know customer’s name)Price (Quality surrogate) Quality (Perceptions important)Reputation (Word-of-mouth)Safety (Doing things to people)Speed (Avoid excessive waiting)Service Purchase DecisionService Purchase DecisionService QualifierService Qualifier: To be taken seriously a : To be taken seriously a certain level must be attained on the competitive certain level must be attained on the competitive dimension, as defined by other market players. dimension, as defined by other market players. ExamplesExamples are cleanliness for a fast food are cleanliness for a fast food restaurant or safe aircraft for an airline.restaurant or safe aircraft for an airline.Service WinnerService Winner: The competitive dimension : The competitive dimension used to make the final choice among used to make the final choice among competitors. competitors. ExampleExample is price. is price.Service Purchase Decision (cont.)Service Purchase Decision (cont.)Service LoserService Loser: Failure to deliver at or : Failure to deliver at or above the expected level for a competitive above the expected level for a competitive dimension. dimension. ExamplesExamples are failure to repair are failure to repair auto (dependability), rude treatment auto (dependability), rude treatment (personalization) or late delivery of package (personalization) or late delivery of package (speed). (speed).Competitive Role of Information in ServicesCompetitive Role of Information in ServicesStrategic Focus Competitive Use of Information Strategic Focus Competitive Use of Information On-line Off-lineOn-line Off-line (Real time) (Analysis)(Real time) (Analysis) Creation of barriers to entry: Data base asset:Creation of barriers to entry: Data base asset: External Reservation system Selling informationExternal Reservation system Selling information (Customer) Frequent user club Development of services(Customer) Frequent user club Development of services Switching costs Micro-marketingSwitching costs Micro-marketing Revenue generation: Productivity enhancement:Revenue generation: Productivity enhancement: Internal Yield management Inventory statusInternal Yield management Inventory status (Operations) Point of sale
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