New Service Development
Learning Objectives
Discuss the new service development process.
Prepare a blueprint for a service operation.
Describe a service process using the dimensions
of divergence and complexity.
Use the taxonomy of service processes to classify
a service operation.
Compare and contrast the generic approaches to
service system design.
Levels of Service Innovation
Radical Innovations
Major Innovation: new service driven by information and computer
based technology
Start-up Business: new service for existing market
New Services for the Market Presently Served: new services to
customers of an organization
Incremental Innovations
Service Line Extensions: augmentation of existing service line (e.g.
new menu items)
Service Improvements: changes in features of currently offered
service
Style Changes: modest visible changes in appearances
Technology Driven Service Innovation
Power/energy - International flights with jet
aircraft
Physical design - Enclosed sports stadiums
Materials - Astroturf
Methods - JIT and TQM
Information - E-commerce using the Internet
Service Design Elements
Structural
- Delivery system
- Facility design
- Location
- Capacity planning
Managerial
- Service encounter
- Quality
- Managing capacity and demand
- Information
New Service Development Cycle
• Full-scale launch
• Post-launch review
Full Launch Enablers Development
• Formulation
l
nte na
Co izatio of new services
objective / strategy
People
xt
Te
• Idea generation
• Service design
n
am
ga
and screening
and testing
s
Or
• Concept
• Process and system
development and
design and testing Product
• Marketing program testing
design and testing
• Personnel training Technology Systems
• Service testing and
pilot run
• Test marketing Tools
Design Analysis
• Business analysis
• Project authorization
Service Blueprint of Luxury Hotel
Strategic Positioning
Through Process Structure
Degree of Complexity: Measured by the
number of steps in the service blueprint. For
example a clinic is less complex than a
general hospital.
Degree of Divergence: Amount of
discretion permitted the server to customize
the service. For example the activities of an
attorney contrasted with those of a paralegal.
Structural Alternatives for a Restaurant
LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE
No Reservations TAKE RESERVATION Specific Table Selection
Self-seating. Menu on Blackboard SEAT GUESTS, GIVE MENUS Recite Menu: Describe Entrees & Specials
Eliminate SERVE WATER AND BREAD Assortment of Hot Breads and Hors D’oeuvres
Customer Fills Out Form TAKE ORDERS At table. Taken Personally by Maltre d’
PREPARE ORDERS
Pre-prepared: No Choice Salad (4 choices) Individually Prepared at table
Limit to Four Choices Entree (15 choices) Expand to 20 Choices: Add Flaming Dishes;
Bone Fish at Table; Prepare Sauces at Table
Sundae Bar: Self-service Dessert (6 choices) Expand to 12 Choices
Coffee, Tea, Milk only Beverage (6 choices) Add Exotic Coffees; Sherbet between
Serve Salad & Entree Together: SERVE ORDERS Courses; Hand Grind Pepper
Bill and Beverage Together
Cash only: Pay when Leaving COLLECT PAYMENT Choice of Payment. Including House Accounts:
Serve Mints
Taxonomy of Service Processes
Low divergence High divergence
(standardized service) (customized service)
Processing Processing Processing Processing Processing Processing
of goods Information of people of goods Information of people
Dry Check Auto repair Computer
No Cleaning processing Tailoring a programming
Customer Restocking Billing for a suit Designing a
Contact a vending credit card building
machine
Ordering Supervision
Indirect groceries of a landing
customer from a home by an air
contact computer controller
No Operating Withdrawing Operating Sampling Documenting Driving a
customer- a vending cash from an elevator food at a medical rental car
service machine an ATM Riding an buffet dinner history Using a
worker Assembling escalator Bagging of health club
interaction premade groceries Searching for facility
(self- furniture information
Direct service) in a library
Customer Customer Food Giving a Providing Home Portrait Haircutting
Contact service service in a lecture public carpet painting Performing
worker restaurant Handling transport- cleaning Counseling a surgical
interaction Hand car routine bank a tion Landscaping operation
washing transactions Providing service
mass
vaccination
Generic Approaches to Service Design
Production-line
• Limit Discretion of Personnel
• Division of Labor
• Substitute Technology for People
• Standardize the Service
Customer as Coproducer
• Self Service
• Smoothing Service Demand
Customer Contact
• Degree of Customer Contact
• Separation of High and Low Contact Operations
Information Empowerment
• Employee
• Customer
Customer Value Equation
Value
Re sults Pr oduced Pr ocessQuality
Pr ice CostsofAcquiringtheService
