Service Concept

Concept, Why focus? (Johnston and Clark)

Service Concept
Dictionary meaning of Concept: A mental picture of a group or class of objects formed by combining all their aspects(characteristics) Service concept is a complete picture of what service will be like, and the outcomes. It is concerned with present, what the organization does now. It is a mental picture that is held by customers, employees and shareholders about the service provided by the organization

Service Concept
It is a critical element in knowing and defining what the organization is selling or providing and the customer is buying/using Service concept is a core task in managing service operations. Organizations choose to compete through service concepts. Service concept can be used as a strategic tool

Customers buy concepts

When buying or using services, customers tend not to be simply buying the elements of a service but something much greater and usually more intangible. The concept will vary from one organization to another, although the elements may be common across the organizations.

Some examples of Service Concepts

A Hotel Elements: a bed, bathroom, food, shops, swimming pool Concepts: A low cost stay, comfortable nights sleep A relaxing and pampered stay, A unique and unforgettable experience

University/higher education Elements: Lectures, books, computer lab, accommodation, food, play grounds Concepts: educational experience Learning from celebrity academicians International presence Meeting students from a section of society

Other concepts in service operations

Magical experience ( Disneyland) A great evening out ( amusement , performance) Peace of mind ( health resorts, Ashram) Pampered Luxury( Ritz Carlton, Oberoi) Amidst nature ( closeness to wild through safaris)

Service concept defined:

It is a shared understanding of service provided and service received. And comprises of information about: The organizing idea The Service Experience The Service Outcome The Service Operation The Value of the Service

The organising idea

The essence of the service bought, or used by the customer A clear information on what the organisation is selling /providing and what the customer is buying/receiving

Service Experience
Customers direct transaction of the service process, which concerns the way the service provider deals with the customer over the period service tillit is fully delivered. For example: Exhilarating and entertaining Fun and lively, Range of attractions Plenty of food and drinks Academic discipline

Service Outcome
The result of service for the customer Examples: Great day out Fun time Thrills Recovery from sickness Social development Family entertainment Scholarship Reaching destination in time

Service Operations
Processing of materials, equipment, customers, staff, technology and facilities to deliver outcome and the way in which the service will be delivered Examples: Signage's to show way Ample parking space Site maps to locate places of fun queuing systems Range of food outlets Adequate amenities at places Attention/empathy/guidance

Service Operations are organized

Service operations look for a balance between maximizing value for customers and minimizing cost to the organization. It endeavors to strike a profitable balance between: - Maximizing the benefits to the customers - Minimizing the financial and sacrificial costs to the customer - Minimising the cost to the organisation

The Value of the Service

The benefit that customers perceive to be inherent in the service weighed against the cost of that service Price is the value placed on the service Cost of service to a customer is combination of financial price, and the cost, ( inconvenience of making purchase), or (sacrifice as called by Zeithaml) Cost of buying a service should also include cost of going to the service provider, the cost of effort and the time involved.

Value is not necessarily low price

Value is the customers assessment of benefits of services. Benefits may not be the outcome and experience, operation but also psychological factors , as feeling of well-being or being recognised in a restaurant Organizations do not just add value, but reinvent ( breaking all old notions) Examples: increased customer interactions, websites, disadvantages of automation)

The service concept-a shared view

Marketing concept: It is the management philosophy that encourages organizations to understand and then satisfy customers needs and fulfill the objectives of the organization Service Concept: It is a shared understanding of what the organization provides and what the customer receives.

Business Proposition and Service

1. Business proposition: Defines the way in which the organization would like to have its services perceived by all its stakeholders-customers, employees, shareholders, and lenders 2. Perception of Service: As perceived by the customers

Concept vs business model, idea, vision, mission, strategy brand

Business model: Describes as to how an organization achieves its financial goal. The model may thus carry some components of value part of concept, but the core aspect of customer experience is missing in the business model Idea: An idea is an initial notion of a service to be provided. Concept is more complete picture describing details on what service will be, its experience and outcome.

 Vision: It is usually concerned with where the organization hopes to be at some time in future. Whereas, Service concept is concerned with what the organization does presently Mission: Mission covers many notions from vision statement. So it is also concerning future against concept which concerns todays reality. Mission is more concerned with organizational values

Brand: It is how the organization presents itself and its promise . It is the customers perception of the organization. Concept is a shared view and more concrete. Strategy: It concerns long term plans and sets the route to achieve the mission developed by top management Service concept lives in present times and is a shared instrument

Challenges before managers

Understanding the concept clearly Differentiation between experience and outcome( Hotels) Managing a customer presence of customers inside the operation ( necessitates efficient back office operations) Customer moods ( training to staff dealing with customers) Managing real time ( service cannot be postponed) Coordination between operations and business success Innovations- to meet competition Continuous improvement- require a culture

Designing service concept

Experience: multi-levelled in place of single experience Outcome: Define :frills, psychological benefits, enthusiasm, leisure, physical comfort, education Operation: support service, dramatic displays, narrative explanation, scripting Value: information, education, extra benefits

Service concept as a strategic tool

Organizational alignment can be created by developing a shared understanding Service concept can create differentiated services to get strategic advantage Service concept helps to create a focus.

Types of Service Concepts and Focus

Skinner (1974): A factory that focuses on a narrow product mix for a particular market niche will outperform the conventional plant which attempts a broader mission This philosophy applies equally well to service industries Focus : Concentrating on providing a particular segment of customers with a narrow range of services Focusing a narrow range of services is the most efficient way of designing and delivering services

The benefits of focus to organization

Simplified operation Predetermined service Dedicated operation Dedicated facilities Tight process control Ease of training Lower costs

Four Service Concepts based on Focus

1 Service focused: limit the range of services provided, Range of services is narrow Markets served are large Barclaycard Credit card is limited to retailing but is popular in many countries A fixed menu restaurant Consultancy firms limited to certain areas

2 Market focused: limit the markets served but extend all services, Example: Rural banks American Express ( travelers cheques, airline tickets, range of insurance) for international travelers Referral hospitals

3 Service and market focused: provide a narrow range of services to a niche market, Ex. Consultancy, architectural services 4 Unfocused: provide a wide range of services for a wide range of people, that everything for everyone, Ex. Internet, Disneyland, supermarkets, police services, leisure centers

Strategy in Growth of service organization

Organizations first increase the range of services Then expand the markets Focus is then achieved by separating out the organization into distinct operations

Unfocused service operations How to get benefit of focus

Business focus: Split business to deal with different types of customers Ex. Holiday Inn, 1. Express hotels focus on value for money, offer competitive rates 2. Crowne Plaza Hotels provide upscale lodging to discerning travelers 3. Inter-continental Hotels provide five-star service Ex. Oberoi Group 1. Luxury and Resorts: The Oberoi (11Hotels) 2. International travelers: (7hotels) 3. Small luxury hotels: Trident Hilton Hotels-8

 Operational focus: Split operations into several parts so that each caters for a set of needs Example: Malls (or Hypermarkets) provide different types of shops, retailers, cinemas, a variety of eating places, thus allowing customers to choose their own service experience Dedicated lounges or channels are other examples

Encounter focus: In organizations business and delivery channels remain identical but they wish to Be seen providing a wide range of services customised for the individual They use front-line staff to customise initial experience The staff is encouraged to recognise and deal with varying needs of the customers. Key accounts are created in B to B services