The Service Product

Prof. Komal Suryavanshi

The Service Package
• A service package is a bundle of services that are sold together as a
unit by a company. Customization service involves adding one-time
effects to a product at the customer's request.

Why is service package important?

SERVICE PACKAGES MAKE THE INTANGIBLE, TANGIBLE

Unlike products, services are intangible. This intangibility makes

buying services riskier than purchasing products because prospects
don't know what they're getting until they've tried your service. As a
result, many prospects remain on the fence about buying services.
Four risks while attempting to describe
service

• Oversimplification
• Incompleteness
• Subjectivity (based on personal experience and exposure)
• Biased interpretation
Elements of Basic Service Package (BSP)
Core Service- Reason for service firm’s existence in the market
• Hospital for Healthcare, Hotel for Lodging, Airline for
Supporting transportation
Services and
Goods
Facilitating Service- Without which core service cannot be
Facilitating performed
Services • Hotel requires rooms, cots, toilets, etc to provide lodging
and Goods services; Hospital requires medical equipment, medicines,
doctors to provide healthcare services

Supporting Service- Do not facilitate the consumption or use of

core services but increase the value of the service offering
Core • Hotel can run a restaurant, operate transport services for local
Service
visits, offer reservation, shopping facilities, which enhances
value of the total offering

In case of Core and facilitating services there is not much scope for a competitive edge.
In case of supporting services, a high level of differentiation is possible which provide higher competition
Practical Assignment -2
1. Analyse the basic service package of a tourism/Hospital/or any of
your choice product.
• Define and Mention its- Core Service, Facilitating Service, Supporting Service
{as applicable}
• Write short description of the services offered.

2. Consider any product of your choice and prepare a customer value

hierarchy for product (Define Core, generic, expected, augmented
and potential product as well).
 Service Product Classification: The consumer’s perspective
(based on perception of risk, purchase efforts, customer involvement)

Convenience Shopping
Services Services Preference
Services Speciality Services
Low-risk High-Risk Low-compromise levels
Low effort Low-risk
Medium-effort High-perceived risk
Low-involvement Medium effort
High involvement High Purchase efforts
Low involvement High involvement

Example- Tourism,
Example- Postal service, Example- Fast-food Entertainment,
Example-Beauty Shops, restaurant, local
mom-and-pop stores, concerts, financial
Hospital, Tailors, etc. transport, etc.
etc. products
The customer Value Hierarchy
Service Information

• Customer needs information

about service for evaluation and
decision making Service Consulting Safekeeping

• Legal authorities require Service Order

information related to conditions
Tracking Exceptions
of sale, warnings, reminders, and
notification of changes

Service Hospitality Billing and Payment

• Examples- signboards to the
service site, service performance
hours, charges for services,
direction on using core and
supplementary services, alerting
people, notices, conditions of
sale/service, documentation,
reservation, information, activity
summaries and bills and receipts.
Development of a New Service
• New Service can lead to a better understanding of a market’s
particular requirement – to spot future opportunities
• Increased level of competition
• Rapid change in technology and innovations
• Growing customer awareness and expectations
• New Product requires New Services (including people and other
supportive elements)
 New Service Product
• New Service is innovative, created and offered to the market for the first time Or Adaptive
Replacements

According to
Booz Allen
New-to-the-world Products
Hamilton, there
can be 6 New Product Lines
categories of
new products Additions to the existing product line
Improvements and Revisions of Existing Products
Re-positionings
Cost Reductions
Steps in the Development of a New Service
• Service- Production and consumption happens simultaneously
• Production happens where service provider encounters the servie
customers
• Customers are the co-producers
• Customer’s ability, attitude and involvement of the customer play
important role in service production and quality
Different forms of Service Package
• Generalised Fixed Service Package
• Fixed service package
• No authority for the customers to choose a part of the service or few items of service
• Take complete package or reject complete package

• Generalised Flexible Service Package

• Limited choice to the customers
• Partially customized service product
• Maximum service firms follow this

• Customized Service Package

• Most desirable package form customer’s point of view
• Customer’s have choice in designing a service which suits their needs and wants
• Complex proposition for the company
• More time to design and produce the service
• High level of support mechanism
• Quality may get compromised and the companies may fear loosing the customers
Whatever be the service form firms choose to offer, they need to follow a process for the development of new service.
Steps in the Development of a New Service
Steps
• Idea Generation
• Screening Ideas
• Concept Development Testing
• Marketing Strategy Development
• Business Analysis
• Service Development
• Market Testing
• Commercialization
 1. Idea Generation
• Frontline people, in direct contact with customers and involved in service
production are a critical factor to the development of new ideas
• Physical as well as psychological proximity to the customers
• Customers occupy chief position as sources of ideas
• Customers purchasing services are more expressive than those buying manufactured
goods because they interact directly with the service provider and are involved in
service production
• Relationship marketing has huge contribution in this
• Other source of ideas include- support personnel, competitors, professional
organisations, researchers and social organisations.
• Provide rewards or incentives for the ideas
2. Screening
• Evaluation of new ideas
• Selection of those ideas that need extensive analysis
• Why screening?
• Allocate resources to those projects that have the most likelihood of helping
the firm meet its objectives
• Experts decide upon the criteria's for screening
• Criterias- suitability of ideas to the existing production system,
requirement, availability, and financial affordability, human resources,
technological resources, distribution system, etc.
• Go error and Drop Error
• Conceptualise the screened ideas
3. Concept Development and Testing
• Translation of ideas into descriptive form in accurate terms
• Difficult stage as service is intangible as well as produced and
consumed at same time
• Service concept includes- elements of BSP, customer-employee
interaction and the service design document

• Service Design Document describes-

• Problem to which the solution is offered in the form of service
• Reasons for offering a new service
• List of sequential service processes and its benefits
• A rationale for the customer as to why he/she should have the service
Service Blueprint

• Service Blueprint technique is used to develop a service concept

• A service blueprint is a picture or map that portrays the service
accurately
• Picture of service process for the people involved in understanding ,
production and consumption of service
• Avoids confusion and ambiguity for the people involved
• Provides systematic arrangements of different touch points and means
for provision of service
Steps for building service blueprint

Map the process

Identify the
Identify the process from the
customer or
to be blueprinted customer’s point of
customer segment
view

Add evidence of Map the employee

Link contact
service at each actions, onstage,
activities to needed
customer action backstage and/or
support functions
step technology actions
Concept Testing
• Prototype of new service / new service concept is tested by presenting the
concept to the customers and seeking feedback
• Testing concept with the employees of the organisation to assess their
understanding, ability and willingness in performing the service
• Helps management to find out the
• need-gap level,
• purchase-intention level,
• the broad and strong consumer appeals,
• the shortcomings in the concept,
• the preferential order of influence of various processes

• Helps in developing service package that is close to the target customer

expectations
4. Marketing Strategy Development
• Strategic plan would include identifying-
• Target consumers
• Market size
• Competitors
• Outline-
• Positioning
• Pricing
• Distribution strategies
• Set Target for –
• Long-term sales
• Expected market share
• Profit- long term and short term
5. Business Analysis
• Estimation of-
• First Time Sales
• Repeat Sales
• Incremental Sales for the first five years
• Product Life-Cycle Analysis
• Cost estimation
• Profit estimation
• Projected profit- loss account for the first five years
• Payback Period
• Risk Analysis

• Ability of company to respond to variations in demand for the new service

6. Service Development
• Transformation of Theoretical Design to Practical
Reality
• If service is people based, then company should-
• Employ highly skilled or professional personnel to produce and
deliver service to the clients
• If service is equipment based, then company should-
• Significant investment in capital facilities
7. Market Testing
8. Commercialisation
• Company has invested huge in service development
• Task is to –
• Create awareness in the market
• Persuade Target Market to use service

• Provide consumer education, guidance, and training, if necessary

• Decisions to be taken-
• When should the service be offered?
• Where should the service be offered?
• TO whom the service be offered?
• How should the service be offered?
Case Study Title: "GreenGrocer: Revolutionizing Online Grocery Shopping“

Introduction: GreenGrocer is a fictional company that embarked on a journey to develop a

cutting-edge online grocery shopping service. This case study examines the various stages of
GreenGrocer's new service development, highlighting key decisions, challenges, and
outcomes throughout the process.
Background: GreenGrocer, founded in 2018, started as a small local organic grocery store
in the suburbs of a major city. Recognizing the increasing demand for online grocery
shopping, the company decided to expand its business by developing a digital platform that
would offer customers a convenient and eco-friendly way to purchase groceries.

Stage 1: Opportunity Identification and Idea Generation (2019): In this initial stage,
GreenGrocer conducted market research and identified the following opportunities and
challenges:
•Opportunity: Increasing consumer interest in organic and sustainable food options.
•Challenge: Fierce competition from established online grocery giants.
•Idea: Develop a unique online grocery service that focuses on sourcing and delivering
locally grown, organic, and sustainable products.
Stage 2: Concept Development (2020): GreenGrocer refined its concept, outlining the core features of the
service:
•Product Selection: A curated selection of locally sourced organic products.
•Sustainability: Emphasizing eco-friendly packaging and delivery options.
•User Experience: A user-friendly mobile app and website for ordering.
•Delivery Service: Efficient and sustainable last-mile delivery options.

Stage 3: Business Model Development (2020): GreenGrocer worked on its business model:
•Pricing Strategy: Competitive pricing with incentives for eco-friendly packaging.
•Revenue Streams: Revenue would primarily come from product sales, subscription models, and
partnerships with local farmers.
•Customer Segmentation: Targeting environmentally conscious consumers and urban dwellers.

Stage 4: Prototyping and Testing (2021): GreenGrocer developed a prototype of its platform and
conducted beta testing with a select group of customers. Key findings included:
•Positive Feedback: Customers appreciated the sustainable product selection and user-friendly app.
•Challenges: Delivery logistics needed refinement for scaling.
•Adjustments: GreenGrocer fine-tuned its delivery operations and improved the app based on user
feedback.
Stage 5: Launch (2022): GreenGrocer officially launched its service in a limited service area within the city. Key
launch strategies included:
•Marketing Campaign: A multi-channel marketing campaign emphasizing sustainability, local sourcing, and
convenience.
•Partnerships: Collaborations with local farmers and producers.
•Scaling Plan: Gradual expansion to cover more neighborhoods.

Stage 6: Growth and Scaling (2023): GreenGrocer experienced rapid growth as more customers embraced the
service. The company's actions included:
•Expanded Service Area: Coverage extended to additional neighborhoods and nearby cities.
•Fleet Growth: Increased the number of delivery vehicles to meet demand.
•Market Penetration: Established partnerships with local businesses and restaurants for wholesale supply.

Stage 7: Evaluation and Improvement (2024): GreenGrocer assessed its performance and future directions:
•Data Analytics: Utilized customer data to optimize product offerings and delivery routes.
•Sustainability Metrics: Tracked and reported on environmental impact and packaging reduction efforts.
•Challenges: Ongoing competition from larger grocery chains.
•Conclusion: GreenGrocer's journey from a local organic grocery store to a thriving online grocery service
exemplifies the importance of identifying market opportunities, maintaining a sustainability focus, and adapting to
changing customer needs. By emphasizing eco-friendly practices and quality, GreenGrocer succeeded in carving
out a niche in the competitive online grocery market, offering customers a unique and environmentally responsible
shopping experience.
 Success factors for a new service product
• Unique attributes and characteristics for the customer, not available with
competitors
• Value for money
• Superior to competing products in terms of meeting customer needs
• Excellent relative product quality, relative to competitor’s products, and in
terms of how the customer measures quality
• Superior price/performance characteristics for the customer relative to the
compatitors product
• Products/attributes easily perceived as being useful by the customer
• High visible benefits
 The Service Product Mix
• Service Mix can be assessed in terms
of – width, length, depth and
consistency
• Service width- Number of different For example, in a well-known medical center, there
are individual managers for every service line
service offered by company offered by the center like children’s services,
• Service length- Total number of service emergency services, orthopedics, heart, cancer, etc.
Here, all the various product lines offered by the
items in the mix centre will be its service product mix. Similarly, the
• Service Depth- Number of variants service product mix of a bank may include more
than a hundred financial services.
offered in each service line
• Service Consistency- Refers to how
closely the service lines are related in
consumer perception, distribution
channels and so on.
The Service Product Mix Expansion-
• Service firms can add new service lines
• Expanding each service line
• Add more variants to each service
• Improve service-line consistency
• Service Width: • Service Length: • Service Depth: • Service
• Retail Banking • Long-Term • Customer Consistency:
• Corporate Banking Support • Training and
Banking Relationships • Financial Compliance
• Investment • 24/7 Planning • Standardized
Services Accessibility • Loan Products Procedures
• Wealth • Mortgage • Investment • Quality
Management Services Expertise Assurance
• Digital Banking • Digital Security • Security
Protocols
• Example of a Service Product Mix with Width, Length, and Depth:
• Company: XYZ Marketing Solutions
• Service Width: Marketing Services
Service Category 1: Digital Marketing
1. Service Length: Social Media Marketing
1. Service Depth: Facebook advertising, Instagram advertising, Twitter campaigns, LinkedIn marketing
2. Service Length: Search Engine Optimization (SEO)
1. Service Depth: On-page optimization, off-page optimization, local SEO
3. Service Length: Pay-Per-Click (PPC) Advertising
1. Service Depth: Google Ads, Bing Ads, keyword research
4. Service Length: Email Marketing
1. Service Depth: Newsletter campaigns, drip campaigns, A/B testing
Service Category 2: Content Creation
5. Service Length: Blog Writing
1. Service Depth: Industry-specific blogs, SEO optimization, guest posting
6. Service Length: Video Production
1. Service Depth: Explainer videos, product demos, YouTube channel management
7. Service Length: Graphic Design
1. Service Depth: Logo design, infographics, branding materials
Service Category 3: Marketing Strategy
1. Service Length: Market Research
1. Service Depth: Competitive analysis, target audience profiling
2. Service Length: Branding Strategy
1. Service Depth: Logo redesign, brand guidelines, repositioning
3. Service Length: Marketing Consultation
1. Service Depth: Campaign planning, budget allocation, performance tracking
• Service Width: XYZ Marketing Solutions offers a range of marketing services.
• Service Length: Within each service category (Digital Marketing, Content Creation, Marketing Strategy),
there are various service options or variations.
• Service Depth: Each service variation can be customized or tailored to meet the specific needs of clients,
providing a deep level of expertise.
• This example demonstrates how a marketing services company can have a diverse service product mix with
different service categories, variations within each category, and the ability to provide customized solutions
to clients based on their unique requirements.
 Service differentiation
• Means providing meaningful changes in the service offer, which add value to
the customer and are capable of generating quality perceptions distinct from
competitive offers.

• The major service differentiators are-

• Basic Service Package
• Accessibility
• Interaction
• Customer participation
• Tangibles
• Service personnel
• Service channels
• Service image
Example of Service differentiation
Service Life Cycle Management
“Just like humans, services also follow a life cycle. The stages in the service life cycle are
introduction, growth, maturity and decline. The stages are identified based on the two variables,
that is sales and profit. Each stage needs to be manages using appropriate strategies”

• Introduction Stage-
• Companies enjoy the benefit of novelty if the service is new/innovative
• Initial expense is high due to promotion
• Focus on creating awareness and knowledge of the service among the target customers
• Sales increase slowly
• Service firms do not expect profit at this stage
• Firms make efforts to reduce this stage to the shortest time period possible

• Growth Stage-
• Sales grow at a faster rate and focus on persuading target customers
• Word-of-mouth plays a significant role in image building
• Profit generating Stage with high turnover and less promotional expenses
• End of Period indicates declining growth rate of sales and increased intensity of competition
• Profit starts declining at the end of period and firms strive hard to stretch this period to the longest
• Maturity Stage-
• Stage with Stabilisation in turnover and downward tendency of the profit curve
• Severe Competition and heavy investment to match competition
• Increased expenses reduce profit margin and profit curve experiences downward
slide
• Sales curve peaks at the beginning at this stage, gradually declining thereafter
• End of maturity stage- increased rate of decline in sales and profit curve reaches its
lowest level

• Decline Stage-
• Sales curve slides down at faster rate, profits evaporate and soon the service
becomes a loss- generating one
• As soon as the service product reaches this stage, service firms seriously consider
dropping the service product/ revamping it.
Class Activity
• Design a service mix for the service of your choice
Group Activity
• Approach- Brainstorm and create a new service concept
• Consider factors such as target audience, service features, pricing, and unique selling
points (USPs).
 Develop Marketing Plan-
 The template should include sections for the service name, target audience, pricing
strategy, promotional tactics, distribution channels, USPs
 Instruct each group to fill out the marketing plan template based on their service
concept.

 Develop Advertisement for your service

 Ad can be print media ad or video ad or you can enact the Advertisement