Transcript New service innovation

Slide 14.1
Chapter 14
New service innovation
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.2
New service development (NSD)
1.
2.
3.
4.
5.
6.
7.
8.
Introduction
Growth in services
Technology and new services
Characteristics of services
Customer relationship process
New service innovations
NSD process
Summary & recap
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.3
Introduction
• Growth in services
• Characteristics of services
Services are processes where customer is part of it
• Viewed differently to products
• Services contribute to new business models:
eBay
new way of conducting business
Ryanair
new way of flying
Amazon
new way of viewing and buying books
Napster
new way to buy music
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.4
Growth in services – but what does this mean?
Within the EU services now account for
60% of GDP (Eurostat, 2006).
Growth in knowledge intensive
business services (KIBS)
huge growth in coffee bars,
smoothie bars and hair salons?
Since 2003, shares in oil
companies have doubled.
Halliburton and Schlumberger, the
world market leader for oil services,
have more than tripled.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.5
Growth in services – but what does
this mean? (Continued)
So, a company that was earlier employing
cleaners,
decorators,
maintenance workers,
canteen staff, etc
would now purchase the services of road and rail transport.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.6
Outsourcing and service growth
Expected gains that companies can derive from
outsourcing include:
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the reduction of operational costs;
the ability to transform fixed costs into variable costs;
the ability to focus on core competencies;
access to the industry-leading external competencies
and expertise.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.7
Typology of services
Business-tobusiness
services
(traditional)
Business-tobusiness
services
(KIBS)
Consumer
services
Internal firm
services
Public
services
Not-for-profit
services
Description
Services
provided for
businesses
Specialist
services
provided to
businesses
Services
provided to
individuals
Services
provided by
internal
functions
Services
provided by
local and
national
government
Services
provided by
charities
Examples
Accountancy
Legal advice
Training
Management
consultancy
IT consultancy
Shops
Hotels
Banking
Health and
beauty
Finance
Personnel
IT
Health
Education
Leisure
Prisons
Hospices
Counselling
Aid agencies
Customers
Frequently
purchased by
professionals,
who may not
be end users
Frequently
purchased by
professionals,
who may not
be end users
Purchased by
consumer of
the service
Consumers of
the service
have no choice
of provider
Funded
through
taxation and
little choice for
consumer
Funded
through
charities
maybe
government
grants
consumers
chosen or
choose.
Challenges
Providing highquality tailored
and personal
service
Providing high
quality
services to
businesses
who have high
purchasing
power
Providing a
consistent
service to a
wide variety of
customers
Delivering
customised,
personal
service. And
demonstrating
value for
money.
Delivering
acceptable
public services
against a
backcloth of
political
pressures.
Balancing
needs of
volunteers,
donors and
overwhelming
needs of
customers.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.8
Technology and new service development
Technology has become the most significant enabler of
innovation in services.
Transforming the roles of both employees and customers.
Easing the connectivity between service developers and
customers.
E.g. ebay . . .
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.9
Technology and new service
development (Continued)
Founded in September 1995
eBay, Inc. is possibly the most successful
web-based enterprise in existence.
Four
dimensions
service Illustration
New service concept
On-line auction community of traders
New client interface
Introduction of payment system that helps
eBayers trade more easily – Paypal
New service delivery
system
Huge investment in technology
infrastructure to improve reliability and
performance
Technological options
Introduction of voice over internet protocol
service – SKYPE
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.10
A range of new services that also create new business
models, where technology plays a key role
Company
Industry sector
New service/new business model
eBay
On-line auction
A new way of buying and selling through a
community of individual users
Ryanair
Airline
A new way of consuming air-travel with no frills
service and emphasis on economy
Amazon
Retailer
New way to buy goods – on-line retailer
Napster;
iTunes
Music retailer
New way to buy and download music
Google
Internet search
engine
A fast way to search for information on the
internet
Partygaming
On-line gambling
Gambling and gaming from the comfort of your
own home
Myspace
Social networking
A community of users on-line who can chat and
share music, images, news from their own
home
You-Tube
On-line video and
film archive
A community of users sharing home made
video clips plus recorded favourite clips from
movies
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.11
Characteristics of Services
Services are
co-produced
by the customer
Services are
heterogeneous
Services are
processes
Services are
produced and
consumed
simultaneously
Services cannot
be transported
Services are
intangible
Services are
perishable
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.12
The customer relationship process
Service
quality
Service
value
Services
marketing
Customer
retention
Relationship
quality
Customer
value
Customer
satisfaction
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.13
New service innovation
As with products service, innovations can be classified
in many ways:
• eBay was new to the market; Google’s on-line auction
is new to Google;
• Internal process innovations, e.g. Amazon: delivering
books to consumer is not new, but using internet;
• Line extensions to services, e.g. banks offering
insurance;
• Service modifications, e.g internet access to airline
passengers.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.14
Typology for innovations (Ozdemir, 2007)
Booz et al. (1982)
Lovelock (1984)
New to the world products: new products that
not only represent a major new challenge to the
supplier, but which are also seen to be quite
new in the eyes of customers
Major innovation: new services for markets as yet
undefined; innovations usually driven by
information and computer-based technologies
New product lines: new products which
represent major new challenges to the supplier
Start-up business: new services in a market that
is already served by existing services
Additions to existing product lines: new
products that supplement a company’s
established product lines, so rounding out the
product mix
New services for the market presently served:
new service offerings to existing customers of an
organisation (although the services may be
available from other companies)
Improvements and revisions to existing
products: new products that provide improved
performance and so replace existing products
Service line extensions: augmentations of the
existing service line such as adding new menu
items, new routes and new courses
Repositionings: existing products that are
targeted to new markets or market segments
Service improvements: changes in feature of
services that currently are being offered
Cost reductions: new products that provide
similar performance at a lower cost of supply
Style changes: the most common of all “new
services”; modest forms of visible changes that
have an impact on customer perceptions, emotions
and attitudes, with style changes that do not
change the service fundamentally, only its
appearance
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.15
Customer roles in NPD (Nambisan, 2002)
Customer role
Customer as
resource
Customer as cocreator
Customer as user
NPD phase
Ideation
Design and development
Product testing
Product support
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.16
The service innovation process
Different from NPD: customer is part of the process
• Blueprinting the service
Identify every activity and every possible
outcome in the process
• ‘Prick-eared’ market research
Direct contact facilitates dialogue
• Service prototypes
Difficult because customer is part of process
Level of integration determines ability to prototype
E.g. a doctor’s home visit
a visit to the cinema
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.17
Customer interaction process
Determinants
Customer
Service
encounter
Service
provider
Encounter
management
Customer
roles
Critical incidents
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.18
How do customers evaluate services?
Perceived service quality . . .
Perceived service value . . .
Customer expectations . . .
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Reliability
Responsiveness
Assurance
Empathy
Tangibles
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.19
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Reliability
– Providing service as promised
– Dependability in handling customers’ problems
– Performing services right first time
– Performing services at the promised time
– Maintaining error free records
•
Responsiveness
– Keeping customer informed when service will be performed
– Prompt service to customers
– Willingness to help customers
– Readiness to respond to customers’ requests
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Assurance
– Employees who instil confidence in customers
– Making customers feel safe in their transactions
– Employees who are consistently courteous
– Employees who have knowledge to answer questions
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.20
•
Empathy
– Giving customers individual attention
– Employees who deal with customers in a caring manner
– Having the customers best interests at heart
– Employees who understand the needs of their customers
– Convenient business hours
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Tangibles
– Modern equipment
– Visually appealing facilities
– Employees who have neat, professional appearance
– Visually appealing materials associated with service
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.21
Categories of service mix
1.
2.
3.
4.
Pure tangible good
Tangible good with accompanying services
Hybrid
Major service with accompanying minor goods
and services
5. Pure service
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.22
New service innovation
For many years the literature overlooked this concept!
Innovation deemed to require a new physical “thing”
But, the world of business suggested new services could
deliver even more significant changes (new business
models):
First Direct
Ryanair
eBay
Apple’s iTunes
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 14.23
The End
Thank you for listening
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008