An Evolving Model for the Offering of eBusiness Programs

Elsie S. K. Chan
Australian Catholic University, Australia
elsie.chan@acu.edu.au

Paula M.C. Swatman

University of South Australia, Australia
paula.swatman@unisa.edu.au

ABSTRACT
Tertiary institutions in the 21st century offer new degree programs to expand their market share and increase revenue. Most
program developers focus on the cohesion of the new program content and thereby miss some other important elements in
program offering. We believe that there is a need for an appropriate underlying model to support the offering of new
academic degree programs. In this paper we propose such a model, which has been developed and extended from a number
of existing marketing service product offering models. The paper initially reviews the literature on service product offering
models. Based on the reviewed models, we then propose a theoretical model for offering eBusiness tertiary education – a
model which may also apply to the offering of new programs in other disciplines.

1. INTRODUCTION
One of the implications of increasing globalisation is the fact that firms find it increasingly difficult to survive
purely on the basis of their past successes. They need to be continually innovative, and to strive to create new
ideas and new products (Kelly & Storey 2000; Verma et al. 2002). And this competition does not only apply to
the private sector – Marginson (2000) argues that ‘higher education’ has been a quasi-market1 with expanding
zones of commercial activity ever since the Australian Commonwealth Government reforms of 1987-89, which
restructured the higher education system. Newly-marketed services such as education usually exhibit some, but
not all, of the available market characteristics. Marginson (1997, p.38) claims that positional goods2 in education
provide students with a relative advantage in competing for jobs, income, social standing and prestige.
Offering a new service product with high ‘positional’ value, particularly where this includes self-funding places,
may help universities compete with other similar institutions and help students to compete for jobs.
The export of higher education (Gatfield 1995) and franchised courses3 in higher education (Goodall 1994)
further increases the institution’s revenue and thus increases its competitive edge and survivability.
Despite the apparently obvious benefits to be obtained from offering successful positional educational products,
however, a research project investigating the development and offering of new tertiary degrees in the then
highly fashionable field of e-business/e-commerce within the Asia-Pacific region revealed the rather disquieting
fact that all the universities within our sample were offering degree programs which were both ad hoc and
lacked a systematic underlying model. We believe that success in the offering of positional educational products

1
In a quasi-market in higher education, for example, there might be competition between institutions, corporate-
style management and some commercial activity, but the number of student places may be affected by factors
other than supply and demand (for example, public funding of tuition costs and the planning of student load) and
degrees and academic standards may remain regulated by universities, public authorities or by custom and
decree (Marginson 2000, p.51).
2
This applies where there are a limited number of places for a particular degree (such as medicine or law).
3
The rationale for franchising was that it was a way to broaden the range of courses on offer, improve the status
of the institution, and widen the target market (Goodall 1994, p.27).

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depends on a well thought-out strategy and, in this paper, suggest a model for offering new degree programs in
the form of for service products.
A number of researchers have created models to clarify the structure of service products – mostly related to the
business world, where a broad distinction can be made between goods and core services to define the type of
business and the supplementary services required. ‘Service products’, ‘service offers’ or ‘service offerings’ are
frequently used as interchangeable terms and normally describe a package consisting of a core service + extras,
peripheral services or secondary-level services (Grönroos 1990; Gabbott & Hogg 1996; Storey & Easingwood
1998). This description of ‘service products’, ‘service offers’ or ‘service offerings’ is, however, equally
applicable to a university setting. We introduce Grönroos’ augmented service offering (1990), Storey &
Easingwood’s augmented service offering (1998), Kotler & Fox’s educational offerings (1995) and Shostack’s
molecular model (1982), to provide a foundation for our own recommended model – the Educational Service
Product Model.

2. AUGMENTED SERVICE OFFERING MODEL (Grönroos 1990)

Grönroos argues that service can be seen as a product which can be developed, produced, and delivered,
marketed and consumed. He presents a conceptual model called the Augmented Service Offering (see Figure 1)
which describes the elements of a service in terms of their characteristics. The service offering must be
customer-oriented and must recognise all the aspects of a service which customers perceive.
Grönroos (1990) suggests four steps in managing the service offering:
ƒ Developing the service concept
ƒ Developing a basic service package
ƒ Developing an augmented service offering
ƒ Managing image and communication
The first step is to develop a service concept, which determines the intentions of the organisation and on the
basis of which the offering can be developed. Schools, departments or faculties in tertiary institutions are
education providers which, for example, would like to provide ‘good quality’ education to different types of
students. This could be part of their service concept.

Figure 1 Augmented Service Offering Model (Reproduced from: Grönroos (1990, p.82))
The second step is to develop a basic service package. The basic service package describes the bundle of
services needed to fulfil the needs of customers or target markets. There are three groups of services: core

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services, facilitating services (and goods) and supporting services (and goods). The core service is the motive
for operating in that market. For an airline, for example, it is transportation, while for a university it is providing
academic programs to students. The distinction between facilitating services and supporting services is not
always clear. Facilitating services are mandatory – if they are omitted, the service package collapses. The
optional facilitating services should be designed so that they also become a means of competition, helping to
differentiate the service.
In tertiary institutions, services such as student enrolments, student records, library, examination and
assignments are facilitating services. The supporting services can include information and communication
technology (ICT), for example, or email and online learning environments – which can also enhance the
institution’s competitive power. Facilitating services in one set of circumstances may become supporting
services in other situations. For instance, well-equipped gymnasia are a facilitating service for students studying
sports management. They are only supporting service for students who take eBusiness programs, however.
The third step is to develop the augmented service offering which is mainly concerned with the service process.
There are three elements in this offering: accessibility of the service, interaction with service organisation and
consumer participation.
• Accessibility of the service can include the number and skills of the personnel; office hours, timetables;
location of offices, workshops, service outlets; tools, equipment, documents and the number and
knowledge of consumers simultaneously involved in the process.
• There are four categories in interaction with the service organisation: interactive communication
between staff and students; interactions with various physical and technical resources of the
organisation; interactions with systems; and interactions with other students simultaneously involved in
the process.
• Finally, customer participation is a concept which means the customer has an impact on the service
s/he perceives – just as university students are participants in the learning process.
Grönroos states clearly that developing the service offering is a highly integrated process. This is significant
when developing a new academic program – a new supporting service cannot be added without explicitly taking
into account the accessibility, interaction and customer participation aspects of that service.
The last step is to manage image and communication. Grönroos argues that a favourable image enhances the
customers’ experience, but a bad image may destroy it. Market communication includes activities such as sales,
advertising, sales promotion and communication over the Internet. Therefore, managing image and
communication become integral parts of developing the service offerings.

2.1 Discussion of Grönroos’ model

Grönroos discusses the process for the development of a (new) service product, starting with the service concept
which determines the intentions of the organisation. If we apply this model to the development of new
educational programs, the service concepts are self-evident – that is, to offer a degree program to students.
Universities have a clear understanding of their intention or service concept, and we believe that there is no need
to include this in any new model for developing educational programs.
The second step is to develop the three parts of the basic service package, i.e. the core service, facilitating and
supporting services. Here, we would say the core service is the curriculum for the new degree program, such as
a new eBusiness degree program. The core service includes the objectives of the new program, together with the
number of courses and their contents; and the prerequisites required for each course.
The facilitating services depend totally on the core service. For instance, the facilitating services for offering a
new degree program in physics are completely different from those required when offering a new eBusiness
program. Sometimes a completely new facilitating service can be developed for a particular new educational
program – for example, very high-quality classrooms might be a selling point for an MBA degree program.
Supporting services, such as library or computer facilities, may be supplied from those already existing. This
may not be a major issue of concern.
The core service is the major concern and it will take considerable time and expertise to develop.
The third step is to develop the augmented service offering – how the service is being provided. Accessibility of
the service may include issues such as whether the programs are offered in on-line mode, in face-to-face mode,
or via a combination of the two. The delivery mode of the program may be in the format of lectures, tutorials,
workshops, discussions, student projects and industrial visits. Interactions concern the way in which students

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interact with staff members. This is not necessarily restricted only to academic staff members, but may also refer
to interaction with administrative staff in the enrolment and examination offices. For customer participation,
students are expected to participate in all the learning activities during their enrolment in order to obtain the
maximum benefit from their learning.
Of these three issues, only accessibility of the service is of great concern when developing a new educational
program. Interactions with the service organisation are already common practice in academic teaching units
and, when developing a new program, it is not necessary to take this issue into consideration during the planning
stages. As we already expect students to participate throughout the period of their study, customer participation
is, once again, not a new issue for an educational service product. Thus, we believe that only accessibility of the
service is relevant and appropriate in developing a new educational program.
The last step is to manage image and communication. These two issues are significant for developing a new
educational program, particularly in a highly competitive environment. There is a need to contribute to the
institution’s positive image, and to promote the new degree program. These are crucial aspects to be considered
when an institution offers a new program. Corporate image, however, cannot be established by program
developers alone. This is a long-term effort, and requires the assistance and support of a wide variety of other
stakeholders (including the university’s senior management and prospective employers of students) to build up
the institution’s corporate image. The complexity and multi-stakeholder nature of this issue make it
inappropriate as a component of our model.
The elements taken from Grönroos’ augmented service offering model we selected for developing a new
educational degree program include: core service, facilitating services, accessibility of the service, local image,
word-of-mouth communication and marketing communication.

3. AUGMENTED SERVICE OFFERING MODEL (Storey & Easingwood 1998)

Storey & Easingwood (1998, p. 335) argue that producing tangible products may require significant investments
of time and effort. In some cases, however, competitors can easily duplicate the core elements of a firm’s new
service and they therefore suggest that managers must understand the totality of their service offering from the
customer’s perspective. These authors explain that the purchase of a service is influenced not only by the
service itself, but also by such factors as the service firm’s reputation and the quality of the customer’s
interaction with the firm’s systems and staff – in other words, by the augmented service offering. These authors
formulate a conceptual model of augmented service offering (ASO) (see Figure 2 below), which builds on the
work of Cooper & Kleinschmidt (1987; 1990), de Brentani (1989; 1991) and Cooper et al. (1994) and has three
major components: service product, service augmentation and marketing support.

Figure 2 Components of the Augmented Service Offering (ASO)

Reproduced from: Storey & Easingwood (1998, p. 342)
Firstly, the service product in ASO consists of the core offering and thus includes descriptions of the product
itself and its characteristics. The service product was described as the basic service package by Grönroos (1990)

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and itself is made up of five underlying product aspects: product quality, product adaptability, product
distinctiveness, physical evidence and perceived risk.
• Factors present in product quality are the product’s reliability, accuracy and consistency.
• Product adaptability is the degree to which the specifications of a product can be updated to meet the
changing needs of a customer, different services can be packaged together to meet the requirements of
customers, or the offering can be adapted to the needs of the individual.
• Product distinctiveness measures the uniqueness of the product and the relative advantages a product
offers over its competition.
• There are two types of physical evidence – the tangible representations of the service and the physical
environment. Examples of tangible representations are ‘bank cards’ in the case of a bank’s service or,
in our present context, good quality lecture notes. Examples of physical environment are the bank’s
appearance and the user-friendliness of its facilities; in fact, these are part of service augmentation too.
In my case, it is a well-equipped lecture theatre or classroom.
• A product with high perceived risk is one for which the consequences of the product performing below
expectations are of major significance to the consumer; and where the expected performance is
difficult for the consumer to predict.
Service augmentation mainly relates to the service process and its impact. There are five main types: effective
communication, distribution strength, reputation, customer experience and staff-customer interactions:
• One of the elements of effective communication, such as word-of-mouth, can have a direct effect on the
service experience. Word-of-mouth communication at time of consumption can change a customer’s
perception of the service received.
• Distribution strength describes the accessibility achieved by the product in its target markets.
• Reputation measures the degree of confidence the customer has in the company and its products, how
reliable the firm is, and its perceived expertise in its field.
• Customer experience means existing customers are more likely to purchase a product they are familiar
with; and purchase it from a firm they perceive as meeting their needs.
• Staff-customer interaction measures the quality of the interactions between customers and staff in terms
of friendliness, courteous, promptness and efficiency of the contact.
Finally, there is marketing support which includes those internal marketing and marketing-related management
actions that the customers would not normally be aware of but which do affect the quality of the product and its
augmentation. The marketing support given to a new service is characterised by five elements, i.e. market
knowledge, investment in systems, staff training and skills, effective operations and launch strategy.
• Market knowledge measures the extent to which the firm understands the customers’ needs and wants.
• Investment in systems is the measure to which new operating systems and new equipment are
developed for the new products, as well as the extent to which new technology is employed in the
operation of the new service.
• Staff training and skills refers to training of technical staff in a field of customer contact; their skills
and knowledge of the product and their preparedness for a new product. A formal launch and gradual
launch are two main types of launch strategy.
• Effective operations is a measure of the extent to which operating and delivery systems can cope with
customer requirements, product demand, level of investment and the appropriateness of the product’s
technology.
• A formal launch will increase the product’s market visibility and increase sales – whereas a gradual
launch, initially aimed at only one or two customers, has the opposite effect.

3.1 Discussion of Storey & Easingwood’s ASO model

Storey & Easingwood (1998) provide a very comprehensive model which is mainly designed for use within the
finance sector – for example, in banking. The objective of the ASO model is to identify the constituents of a
new service offering which will lead to its success. This model is more complicated and ‘richer’ than Grönroos’

5
(1990), being made up of fifteen elements in three major circles (five elements in each circle). Amongst these
fifteen elements, several are relevant for offering a new educational degree program.
For the inner circle, service product, we consider that elements such as product quality, product adaptability,
product distinctiveness and physical evidence are appropriate for developing a new educational degree program.
Perceived risk, however, is less appropriate for our model because it is more reliant on customer perceptions,
which do not have to be considered from the perspective of educational program developers.
Of the elements contained in the middle circle, service augmentation, staff-customer interactions, reputation
and customer experience may not be appropriate for our model. Staff-customer interaction, for example, is
usually well understood within academic schools or faculties and does not need to be manipulated. The
reputation of an institution or a university takes time to establish and the program’s developers will certainly
contribute to it to at least some extent – but reputation is not the major goal of a program developer designing a
new degree. Customer experience is frequently not relevant, as students do not necessarily expect to have
experience of a particular university before they enrol there. The other two elements, distribution strength and
effective communication, however, are appropriate for our model and are consequently included.
Finally, two elements of marketing support are appropriate when offering a new degree program: market
knowledge, and staff training and skills. Market knowledge is the firm’s understanding of the customer’s needs
and wants. In fact, this relates not only to the needs of students, but should also include the needs of society and
the job market. Staff training and skills are important when considering whether there is sufficient expertise to
develop and deliver the new degree programs.
Other marketing support elements, however, such as launch strategy and investment of systems, depend
significantly on the individual university’s situation. When a new degree program is being offered, the budget
for program development is a crucial factor, as this will affect the development of program contents, facilitating
services and goods. The results of our own interviews with program developers suggested that not many
institutions had invested significant financial resources to develop their new program. This suggests that it is
not appropriate to include investment of systems and launch strategy as elements of the new model. If
institutions have invested heavily in new systems for the newly-created degree program to enhance their image
(mentioned in Grönroos’ model, Figure 1), however, we suggest this element be placed within local image. We
therefore exclude investments in systems from our model.
Effective operations are issues relating to whether the existing system can cope with the new service products in
terms of increasing the number of participants (students and staff members) in the system or, for instance,
whether the computer server can cope with the necessary traffic when the number of staff members and students
increases when offering a new program. For a short course, it may affect the decision of potential students to
choose the program. However, for a long-term program, this may not be a factor which influences students’
decisions.
The ASO model thus provides many elements suitable for the development of new educational programs.

4. EDUCATIONAL OFFERINGS MODEL (Kotler & Fox 1995)

Kotler & Fox’s 1995 educational offering model includes three levels of service offerings – core, tangible and
augmented. The core offer refers to what customers are really seeking and what need the service is really
satisfying. The tangible offer relates to those facilities that can enhance customers’ core service and benefits.
The augmented offer is the additional services and benefits that the marketer can offer the target market that go
beyond the core offer and the tangible offer. Figure 3 illustrates the educational offerings model, although it
should be noted that some of the terms included in this model are not defined by the authors themselves.

6
 Augmented
Product
Accessibility

Tangible
Packaging
Product

Brand Features
Name
Core Core
Financing Benefit Follow-up Product
Terms or Service
Service

Quality Styling

Guarantee

Figure 3 The Three Levels of Service Offerings

Reproduced from: Kotler & Fox (1995, p.279)

At the most fundamental level is the core offer, which relates to the core benefit or service of the core product –
educational programs.
The middle level, tangible offer, has five characteristics: features, quality, packaging, brand name and styling.
Features are individual elements of the offer which could be easily added or subtracted without changing the
service’s style or quality and each can be modified to make the offer more attractive to consumers. Quality
represents the perceived level of performance of service. Packaging is the container or wrapper surrounding the
specific product or service. Good packaging can add value beyond that perceived in the product itself. Kotler &
Fox (1995) believe that the products and services of an educational institution can be branded – that is, given a
name, term, sign or symbol that identifies them with the institution and differentiates them from competitors’
offerings. Kotler & Fox did not define styling in their book.
The outer level is the augmented offer and includes accessibility, financing terms, guarantee and follow-up
service. Kotler & Fox did not explain these terms clearly in their book, possibly because they considered these
terms sufficiently common to require no definition.

4.1 Discussion of Kotler & Fox’s educational offerings model

Compared to the previous two models we have discussed, Kotler & Fox’s (1995) model is simpler and is
specifically designed for offering educational programs. Although Kotler & Fox (1995) did not explain the
characteristics of several of their terms – styling, accessibility, financing term, guarantee and follow-up service
– in their book4, only follow-up service, any service (such as student alumni, library facilities, career centres or
sports facilities) which graduates can still enjoy even after they have completed the service (graduated), is
unique to this model (not present in other models).

5. MOLECULAR MODEL (Shostack 1982)

Shostack (1982) developed a molecular model, designed to be applied to either products or services, which uses
a chemical analogy to help marketers visualise and manage what she has termed a ‘total market entity’.
Shostack argues that, as in chemical formulations, a change in one element may completely change the nature of
the entity. At the centre is the core benefit, addressing the basic customer’s need, linked to a series of other
service characteristics.

4
Unfortunately, most of these characteristics are significant for our model

7
Service elements are often accompanied by physical objects which cannot be categorised as true product
elements. These objects, or pieces of ‘evidence’, play the critical role of verifying either the existence or the
completion of a service. There are two kinds of service evidence: peripheral evidence, possessed as part of the
purchase has little or no independent value (e.g. an airline ticket or, as in our case, a student card) and serves
only to confirm the service; and essential evidence which cannot be possessed by consumers. Essential evidence
may be so dominant in its impact on service purchase and use that it is, in effect, an element in its own right.
Shostack uses as an example of essential evidence the sudden loss of enthusiasm for DC-10 aircraft by US
passengers after a couple of crashes involving these planes during the 1970s. Despite the fact that all the DC-10s
in service were thoroughly checked, US passengers remained extremely unwilling to fly in these planes – and all
US airlines eventually stopped using them. Service elements and service evidence are linked by bonds, which
are used to signify clusters of elements having a high correlation in purchase decisions, or elements influencing
usage of other elements or any other relationship considered important by the marketers.
Now the remaining marketing elements need to be added to the model. The marketer must firstly consider the
entity’s distribution systems; then the entity’s cost, which also requires the setting of an appropriate price; and
finally, the promotion and advertising strategy of the entity. Figure 4 shows Shostack’s molecular model of
products and services.

Figure 4 Shostack’s Molecular Model

Reproduced from: (Shostack 1982, p.54)

5.1 Discussion of Shostack’s molecular model

Shostack’s molecular model is one of the earliest models to discuss product and service offering; and provides a
very clear method of distinguishing between products and services which are the basic elements of an entity.
The model provides guidelines for offering a service but does not describe how the services are developed.
Shostack suggests the service blueprinting technique for describing the service process and notes that when one
element in a molecule changes, it will affect the whole molecule. This reflects the real situation when
developing a new degree program. For example, when essential evidence changes − for example, if a degree
changes its offering mode from face-to-face to online – this will affect the offer of the whole program in term of
budget and development time and may delay the launch of the new program.
As is clear, there are significant similarities between these four models – and all of them have contributed, in
one way or another, to the development of our own model of new educational service product development. We
have combined elements from all these models in what seemed like the most effective and logical way, so as to
create a hybrid model which would truly reflect the realities of designing and implementing a new, market-
oriented degree program.

6. Comparison of the four service offerings models

The four models discussed above all show core product/benefit as essential for service offering. They also all
use a three-tiered circular model, composed of a central core with supplementary areas. There are differences in
the items within each of these areas reflecting the nature of the products in each case, however, and Table 1
compares these four models.

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Table 1 Comparison of the Four Service Offerings Models
Name Augmented service Augmented service Service offerings Molecular model
offering model offering model model

Diagram

Figure 1 Figure 2 Figure 3 Figure 4

Proposers Christian Grönroos Chris Storey and Philip Kotler and G. Lynn Shostack
Christopher J. Karen F. A. Fox
Easingwood
Year 1990; 1998 1995 1982
Purposes He provides a good They identify the They analyse a She provides this model
model of services as components of the service on three and the service
objects, to be model, and they levels: core, tangible blueprinting technique to
produced, and examine the relative and augmented. By the marketers that can lead
consumed for the contributions of understanding three to the kind of
purpose of service these components to levels, the marketer experimentations and
management. the success of new can fine-tune the management so necessary
services. This model service to be most to service innovation and
is mainly for attractive to development.
financial sectors. consumers. This
model is supports
institutions in
offering academic
programs.

Service package: Service product: Core product: Entity:

What customers ƒ core service ƒ product quality ƒ Core benefit or ƒ service element
receive ƒ facilitating ƒ product core service ƒ product element
services adaptability ƒ service evidence
ƒ supporting ƒ product
services distinctiveness
ƒ physical evidence
ƒ perceived risk

Augmented service Service Part of augmented Distribution system:

The service offering: augmentation: product: ƒ distribution strategy;
process ƒ accessibility of ƒ distribution ƒ accessibility and
the service strength ƒ follow-up Service blueprinting
ƒ customer ƒ effective service technique
participation communication
ƒ interactions ƒ staff/customer
interactions
ƒ customer
experience
ƒ reputation

Image and Marketing support: Tangible product: Cost and price of entity:
Marketing communication: ƒ staff training and ƒ features ƒ pricing strategy
strategies ƒ corporate image skills ƒ styling Image of entity:
ƒ local image ƒ effective ƒ quality ƒ advertising/promotion
ƒ word-of-mouth operation ƒ brand name strategy (including
communication ƒ launch strategy ƒ packaging; and evidence strategy for
ƒ marketing ƒ market Part of augmented service elements)
communication knowledge product:
ƒ investment in ƒ financing terms
systems ƒ guarantee

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7. MODEL FOR NEW EDUCATIONAL SERVICE PRODUCT OFFERING
Urban & Hauser (1993, p.166) suggest that the design process is based on an understanding of consumer
behaviour which recognises that consumers (customers) make decisions about products based on their own
perceptions of those products and on the priorities they implicitly assign to product benefits. Rust et al. (1995)
find that the traditional four Ps of product marketing (product, price, place and promotion) are inadequate to
describe the key tasks of a service marketer’s job and add three more Ps to describe service. These 7 Ps of
service provision are: product, price, place and time, promotion, process, physical evidence and participant. For
an educational program, the marketer is typically offering a service and needs to use a very similar marketing
mix: program, price, place (delivery system), promotion, processes, physical facilities, and people (Kotler &
Fox 1995, p.276).
We found that there are three major entities which influence program developers planning to offer new service
products: educational provider, students and government and society. All of the four models previously
analysed (Grönroos 1990; Storey & Easingwood 1998; Kotler & Fox 1995; Shostack 1982) emphasise the
characteristics of the service product to be offered, but none of these three entities is mentioned in their models.
Each entity, in turn, will directly shape the development of new service product through a variety of factors:
The educational provider is the university planning to offer the new service product. Before development of the
new service product begins, factors including: development time, and resources (which in turn include budget,
expertise, information and technology), must be considered. Development time is an essential factor. Say, for
example, the new program is to be brought to market within two weeks. If this is not possible, there is no need
to consider further. Budget is how much the provider will invest in the new program and will certainly influence
the quality of the new product. Other resources such as expertise, information and technology are obviously
crucial.
The student entity is equally important. Students’ benefits and expectation and learning styles are the major
issues here. Benefit from the students’ perspective is quite different from that of the program developers and will
influence the development of a new program. For example, students may think that one benefit of taking that
particular program is getting to know their classmates in order to form a network to further establish their career,
while the program developers may have quite different concepts of ‘benefit’. To the students, whether the
program provides them with value-added benefit is a major factor. Expectation and learning style may differ
from student to student; and from country to country, but these differences will influence the development of the
course – particularly in terms of distance or online learning.
The third entity is government and society. The relevant factors include government policy, social acceptance
and social economy. Government policy on education, for example, takes the form of financial support for
students, for research and for the institution’s own development – and this has a strong influence on which
institutions will develop which programs. Social acceptance relates to whether society is ready to accept the
new directions planned. These issues are summarised in Figure 5.

Educational Students Government

Provider and Society

• development time • benefit • educational policy

• resources • expectation and • social acceptance
learning style • social economy

Figure 5 Three major entities influencing development of new educational service products

In developing a new educational service product model, we rearrange elements from the four models analysed
and add a new one. As we mentioned when discussing this model, follow-up service and financial terms from
Kotler & Fox’s model (1995) were not defined or discussed by the authors, leaving us to explain these two
elements at this point. In our model, follow-up service relates to the relationship students build up with the
University at which they are studying. They belong to the university and can take advantage of the services it
provides to them. The question is how to continue this relationship after the service has been provided. For
example, a university graduate still has a tie with his/her university, but not such a strong one as that of current

10
students – and yet the effective management of alumni relationships is a major reason why US universities are
so much wealthier than their antipodean equivalents.
Market research and modelling need to be in place to arrive at the optimum price which can be charged for a
new program. Universities are, understandably, anxious to maximise income from fashionable new degree
programs – but a trade-off must be made between the price the market will bear and the quality of facilities and
staff students expect in return for a high-priced, premium product. Since program fees are not cheap, payment
schemes such as paying by employer sponsorship or scholarships should be promoted (this applies to full fee
paying international students as well, many of whom are sponsored by their government or their employer).
Payment options such as cash, cheque, or credit card at the university’s administration offices or at a bank have
been available to students for some time; and paying fees online is an attractive modern alternative. Financial
terms such as payment schemes and payment methods will need to be in place to arrive at the optimum price
which can be charged.
In our model, we add an entirely new element, newness, to the inner circle. Level of newness will affect the
development process significantly – completely ‘new’ programs take significantly more time and resources to
develop.
Our model, like most of those on which we draw, consists of three concentric circles: service product, service
distribution and marketing support.

Educational Provider

• development time Marketing support

• resources
Service Distribution

Students
• benefit
• expectation and Service
learning style product

Government & Society

• educational
policy
• social
acceptance

Service product Service distribution Marketing support

• core service • market
• distribution
• newness knowledge
strength/strategy
• product quality • local image
• effective
• product adaptability • advertising/
communications
• product distinctiveness promotion
• staff training and
• facilitating services • financial terms
skills
• service evidence • follow-up service

Figure 6 A Proposed Model for the New Educational Service Product Offerings

The inner circle is the service product which contains the core service the educational provider will offer. The
middle circle is the service distribution and concerns the way(s) in which the service will be distributed. The
outer circle is marketing support. Students may not be aware of the marketing support elements for degree

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programs, but these elements provide the context for the service and may well affect the success of the service
product.
In our model, the entities on the left side shape the development work of the new program, while the actual
detail for the developer is illustrated in the concentric circles. Changes to any element will affect other aspects
of the model. For educational developers, we can confidently predict that change will happen, and will happen
with increasing frequency – particularly in technology domains. Allowance for change must therefore be built
into the model and Table 2 identifies each element in the model.

Table 2 References for Elements of New Educational Service Product Offerings Model

Elements Descriptions
Service Product

core service Grönroos means the basic reason for being in business. In this research it refers
to the objectives of the new program together with the number of units and their
contents and the prerequisites of each unit, i.e. curriculum of a program.
newness refers to market and product newness in high and low levels.
product quality is an attitude formed by a long-term, overall evaluation of a performance.
product distinctiveness is the uniqueness of the product and the relative advantages a product over the
competition.
product adaptability is the degree to which the specifications of a product can be updated to meet the
changing needs of a customers.
facilitating services refers to mandatory service, without it the service product will collapse.
service evidence refers to pieces of ‘evidence’ play the critical role of verifying either the existence
of the completion of a service.

Service Distribution

distribution strength/strategy
effective communications
staff training and skills
follow-up service
refers to the accessibility achieved by the product in its target markets.
represents many ingredients of the communication mix, including the branding
and positioning of the product, the consistency of the strategy, which provide
customers reassurance when they decide to purchase the product.
training of staff in a field of customer contact; their skills and knowledge of the
product and their preparedness for a new product.
is a service or facility in which the customers can still enjoy them even the
customers have completed the service.

Marketing Support

market knowledge is the organisation’s understanding of the customers’ needs and wants.
local image refers to common consensus of quality assurance and positive branding
impressions amongst customers in the market.
advertising/promotion advertising can be defined as all paid-for, non-personal communication in
measured media. This includes television, radio, print, outdoor media, online
media, and cinema. Promotion is a specific activity, defined as the making of a
featured offer to defined customers within a specific time limit.
financial terms refers to price, payment scheme and payment methods.

8. CONCLUSIONS
There is a substantial body of literature on the topic of service product offering models. This literature provides
evidence to suggest that the offering of eBusiness programs should not be viewed as a unique case, but can be
used to identify a range of elements including: service product, service distribution and marketing support. In
this paper we have presented a brief overview of the service product offering models, illustrating the way in
which we have drawn upon these models to develop our own, rather specialised, model of new educational
service product development.

We believe that the model offers potentially helpful advice for the developers of new degree programs which are
designed to fill a rapidly-moving market niche. Developers of such programs should not only consider the

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curricula of their programs (in our model, this is referred to as the core service), but must also take other
components into consideration – primarily service product, service distribution and marketing support. The first
component, service product, describes the nature of the new offering, and the elements of this service product
include the core service (curriculum), newness (of the programs), product quality, product adaptability, product
distinctiveness, facilities services and service evidence (the career opportunity of the graduates). The second
major component is service distribution, which consists of the strength and strategy of the distribution, effective
communications (branding and positioning of the product), staff members’ skills and training and the follow-up
service for graduates. The third major component is marketing support, covering whether the developers have
market knowledge (on their own or through the hiring of consultants) on the product, the local image, the
advertising / promotion of the product and finally the financial terms of the product.

Tertiary institutions, even in those parts of the world where corporatisation is seen as not only inevitable but
advantageous, do not appear to be following through the logic of ensuring that their products and services will
meet the required standards of quality and attractiveness required in a fiercely competitive world. We believe
that the use of our model would assist the developers of high-profile degree programs (particularly Masters and
conversion Masters programs, which are particularly susceptible to fashion), to ensure that their new offerings
do, indeed, attract the right sort and number of students to ensure both financial viability of the program and
student satisfaction.

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