SERVICES

DEVELOPMENT AND
DESIGN
Services Development and
Design
 Why do new services fail?
 Challenges of service design
 Types of new services
 Stages in new service development
 Service classification: a design issue
• Equipment vs people based classification (Thomas)

• Maister and Lovelock- 2 X 2 matrix for service

classification
• The service process matrix (Schmenner)

• Haywood-Farmer- three-dimensional model

• The design of service systems (Wemmerlöv)

• Service blueprinting
Why do new services fail?
 Failure to understand customers expectations
 Failure to match service standards & design with
customers expectations.
 No unique benefits offered
 Insufficient demand
 Unrealistic goals for the service
 Poor fit within the organization portfolio
 Poor location
 Insufficient financial backing
 Poor timing
 Design and specification flaws
Challenges of Service
Design
 The characteristics of services are the roots
of the challenge in designing services.
 As services are intangible they are difficult to
describe and communicate.
 Four risks of describing services in words
(Lynn Shostack)
1. Oversimplification
2. Incompleteness
3. Subjectivity
4. Biased interpretation
New Service Development Stages

A. Front End Planning

1. Business strategy review/development
2. New service strategy development
3. Idea generation
4. Concept development and evaluation
5. Business analysis
B. Back End Implementation
6. Service development and testing
7. Market testing
8. Commercialization
9. Post introduction evaluation
Business Strategy
Development
 The new service strategy and specific
new service ideas must fit within the
larger strategic picture of the
organization.

New Service Strategy

Development
 Use the Ansoff matrix framework for
identifying growth strategies.
Idea Generation
 The idea should fit the basic business
and new service strategies.
 Sources of new service ideas
 Contact personnel
 Brainstorming session
 Employees
 Customers
 User research
 Competitors offerings
Service Concept Development and
Evaluation
 Once the idea fits the business and new
service strategies, it is ready for initial
development.
 At this stage:
a) Define the concept of the new service
b) Describe the specific features & characteristics
c) Develop the service design document
d) Evaluate the response of customers and
employees to the new service concept.
Business Analysis

 Determine the feasibility of the service

concept and its profit potential.

Implementation
 This is the service development and testing
stage
 Develop a detailed service blue print
 Translate the blue print in to specific
implementation plan.
Market Testing
It is needed to determine:
a) Market place acceptance of the product
b) Acceptance of marketing mix variables: -
pricing, promotion, and distribution
systems.
Commercialization
 This is the introduction stage of the
service to the market place.
 Two primary objectives:
1) To build and maintain acceptance of the
new service
2) To monitor all aspects of the service
during introduction and through the
complete service cycle.
Post Introduction Evaluation
At this stage:
a) Review the information gathered
during the commercialization of the
service.
b) Make changes to the delivery process,
staffing, or marketing mix variables
based on the response of the market to
the new service offer.
The concept of design
 As service is a process where people interact with the
production and delivery of an experience, service design should
encapsulate all aspects of that experience:
 The role of the customer

 The balance between front and back office

 The impact of technology, e.g. the involvement of equipment

 The location of service consumption (e.g. a fixed single

facility, multi-site, mobile)

 Employee skills/behavior and degree of discretion

 The nature of the service process, e.g. standardized,

customized
 The significance of procedures

 The nature and channels of communication

 The contribution of the physical evidence to service

satisfaction
 Operational efficiency and service quality.
Service Classification: A
Design Issue
Equipment vs people based classification
(Thomas)
Equipment-based
 automated (vending machine, car wash), monitored by

relatively unskilled operators (taxis, dry cleaning),

 automated operated by skilled operators (airlines,

computer timesharing).
People-based
 unskilled labour (janitorial services, guards)

 skilled labour (car repair, plumbing)

 professionals (lawyers, accountants) for service

production
 According to Thomas, placing a service on the spectrum

necessitates answering two questions:

1. How is the service rendered?
2. What type of equipment or people render the service?
 Maister and Lovelock- 2 X 2
matrix for service
classification
Classifying dimension Service operation type

Low client contact

Factory
Low customization

Low client contact

Job shop
High customization

High client contact

Professional service
High customization

High client contact

Mass service
Low customization
 The service process matrix
(Schmenner)
Degree of Interaction and customization

Low High
Low Service factory: Service shop:
 Airlines Trucking Hospitals
Degree  Hotels Auto repair
of  Resorts & recreation Other repair services
Labor Mass service: Professional services:
Intensity Retailing Physicians
Wholesaling Lawyers
Schools Accountants
Retail aspects of Architects
High commercial banking
 Haywood-Farmer- three-
dimensional model
 degree of contact : whether the customer has to be present, as is the
case with a haircut;
 degree of labor-intensity : whether it is possible to automate the
service, as with automatic teller machines; and
 the degree of service customization: how much standardization is
possible, e.g. can a standard programme be devised for all customers of
a health club?
 Where a service is low in all three dimensions (cell 1 e.g. the back office
of a bank) it is like a factory, with emphasis on quality control and
focusing on physical facilities and procedures.
 As one moves towards cells 5–8, two factors become prominent.
 Where the service is low in labor intensity, the customer’s impression of
the physical facilities, processes and procedures is important and care
must be taken to make sure equipment is reliable, easy to use and user
proof.
 As high contact and interaction services increase in labor intensity, more
attention must be paid to making sure staff behave appropriately.
 As customization increases (moving towards cells 3, 4, 7 and 8) the
service process and product must be designed to fit the customer.
 In services high on all three dimensions, physical facilities, procedures,
processes, personal behavior and professional judgment all become
important.
Contd
High 6 8
DC
Low
High 2 4

DLI
5 7

1 3
Low
Low DSC High
Ctd…
Examples of services in each octant:
1 Utilities, transportation of goods
2 Lecture teaching, postal services
3 Stockbroking, courier services
4 Repair services, wholesaling, retailing
5 Computerized teaching, public transit
6 Fast food, live entertainment
7 Charter services, hospitals
8 Design services, advisory services, healing
services
 Service Blueprinting
 It is a picture or map that accurately
portrays the service system so that
different people can understand and
deal with it regardless of their roles.
 It visually displays:
1. The process of the service delivery
2. The points of customers contact
3. The roles of employees and customers
4. Visible elements of the service evidence.
The Purpose of Service
Blueprinting
a) To enable employees, customers, &
managers know what the service is.
b) To make employees and customers see
their roles in the service delivery.
c) To understand all of the steps and
flows involved in the service process.
Blue Print Components
1. Customer action
2. Onstage contact employees action
3. Backstage contact employees action
4. Support process.
The Customer Action
 All the steps, choices, activities, and
interactions that the customer performs
in the process of purchasing, consuming,
and evaluating the service.
 Customers actions in legal service.
 A decision to contact an attorney
 A face-to-face meeting
 Receipt of documents
 Receipt of a bill
Onstage Contact Employee’s Action

 All the steps and activities that the

contact employee performs that are
visible to the customer.
 Onstage employee actions in a legal
service
 Initial interview
 Intermediate meetings
 Final delivery of legal documents.
Backstage Contact Employee Action

 Actions that occur behind the scenes to

support the onstage activities.
 Backstage contact employees actions in
a legal service.
 Preparation of the attorney for a meeting
 Preparation of the final document.
The Support processes
 Covers the internal services, steps, and
interactions that take place to support
the contact employees in delivering the
service.
 Support processes in a legal service.
 Legal research by staff.
 Secretarial service etc.
The Line of Interaction
 It represents direct interactions between
the customer and the organization.
 Anytime a vertical line crosses the
horizontal line of interaction, a service
encounter has occurred (a direct contact
between the customer & the
organization has taken place.)
The Line of Visibility
 It separates what the contact employees
do onstage from they do backstage.

The Line of Internal Interaction

 It separates contact employees activities
from those of other services support
activities and people.
Building a Blueprint
 Step 1 Identify the process to be blueprinted
 Step 2 Identify the customer or segment
 Step 3 Map the process from customers point
of view
 Step 4 Map contact employees actions,
onstage & backstage actions.
 Step 5 Link customers and contact
employees activities to support functions.
 Step 6 Add evidence of service at each
customer action step.