Transcript Service Strategy and Market Position

Service Strategy
1
Strategic Service Concept
STRUCTURAL
 Delivery System: front-back-office,
automation, customer participation
 Location:, demographics, competition, site
characteristics
 Facility Design: size, aesthetics, layout
 Capacity Planning: queues, number of
servers, average/peak demand

2
Strategic Service Concept (cont.)
MANAGERIAL
 Service Encounter: service culture, employee
selection, training, motivation
 Quality: service guarantee, methods...
 Managing Capacity and Demand: strategies
 Information: data collection

3
Competitive Environment of
Services
Relatively Low Overall Entry Barriers (no patent)
 Economies of Scale Limited
 High Transportation Costs
 Erratic Sales Fluctuations (demand)
 No Power Dealing with Buyers or Suppliers
(small size)
 Product Substitutions for Service (Language CD)
 High Customer Loyalty (lock-in customers)
4
 Exit Barriers (difficulty to drive-out marginals)

Competitive Service Strategies
(Overall Cost Leadership)






Overall Cost Leadership
Seeking Out Low-cost Customers (Metro market, BİM)
Standardizing a Custom Service (Medical Check-up)
Reducing the Personal Element in Service
Delivery (ATM/teller, call centre)
Reducing Network Costs hub-and-spoke (UPS,
Airlines)
Taking Service Operations Off-line (kiosks for pick-up
and delivery, 800 calls, help desks in low-cost
5
locations)
Competitive Service Strategies
(Differentiation)

Differentiation in service: being unique in brand
image, technology use( Internet banking),
features (array of services), reputation for
customer service, or dealer network (Remax real
estate)
6
Competitive Service Strategies
(Differentiation)





Making the Intangible Tangible: free diagnosis, free
facilitating goods
Customizing the Standard Product: Burger King maketo order
Reducing Perceived Risk: Village Volvo
Giving Attention to Personnel Training: Hamburger
University
Controlling Quality Gaps
7
Competitive Service Strategies
(Focus)

Buyer Group: (e.g. USAA insurance and
military officers, only students, Turkcell)

Service Offered: (e.g. Shouldice Hospital
and hernia patients; Dünya Göz Hastanesi)

Geographic Region: (e.g. Regional
TV/Radio; Radyo ODTÜ)
8
Customer Criteria for Selecting
a Service Provider









Availability
Convenience
Dependability
Personalization
Price
Quality
Reputation
Safety
Speed
(24 hour)
(Site location)
(On-time performance)
(Know customer’s name)
(Quality surrogate)
(Perceptions important)
(Word-of-mouth)
(Avoid excessive waiting) 9
Service Purchase Decision


Service Qualifier: To be taken seriously a certain
level must be attained on the competitive dimension,
as defined by other market players. Examples are
cleanliness for a fast food restaurant or safe aircraft
for an airline.
Service Winner: The competitive dimension used by
customers to make the final choice among
competitors. Examples are price, convenience,
reputation.
 A service winner may become a qualifier (ATM)10
Service Purchase Decision (cont.)

Service Loser: Failure to deliver at or
above the expected level for a competitive
dimension. Examples are failure to repair
auto (dependability), rude treatment
(personalization) or late delivery of package
(speed).
11
Competitive Role of Information
in Services
Strategic Focus
Competitive Use of Information
On-line
Off-line
(Real time)
(Analysis)
Creation of barriers to entry: Data base asset:
External Reservation system
Selling information
(Customer) Frequent user club
Development of services
Switching costs
Micro-marketing
Revenue generation:
Productivity enhancement:
Internal Yield management
Inventory status (Frito-Lay)
(Operations) Point of sale(shopping cart,
hand-held comp)
Data envelopment
Artificial Intelligence
analysis (DEA)
12
The Virtual Value Chain
Stages in Physical Value Chain
(Inbound logistics, Production process,
Outbound logistics, Marketing/Sales)
 Marketplace vs Marketspace
 Creating New Markets Using Information
 Exploiting the Virtual Value Chain

13
Limits in the Use of Information

Anti-competitive (Barrier to entry)

Fairness (Yield management)

Invasion of Privacy (Micro-marketing)

Data Security (Medical records)

Reliability (Inaccurate data)
14
America West Airlines
Competitive Features

Service Qualifiers:

Service Winners:

Service Losers:
15
America West Airlines
Strategic Service Concept

Delivery System:

Location:

Facility Design:

Capacity Planning
16
America West Airlines
Strategic Service Concept (cont.)

Service Encounter:

Quality:

Managing Capacity and Demand:

Information:
17