Product the First P

Product - the first P

The product is an offering which meets the
customer need.
The service firm has to differentiate its services
from the competitors to create its own position in
the minds of the customers.
Differentiation gives the service its own position in
the face of competition
Theodore Levitts product concept model
(different levels of service)
It can be used to understand how service differentiation
can be achieved. 1. Core benefit- is the real need or want
that is being fulfilled. Without the core benefit there is no
service offering. When you buy a ticket from an airline, the
core benefit is traveling from place to the other place.
2. Basic service Without any extra benefits like Air
Deccan that provides minimum service with well trained
crew and timely travel.
3. Expected service- Like providing in-flight food and
other necessary services.
4. Augmented services- Providing customers the quality
service that is beyond the expectations.
5. Potential service- These levels include is
augmentations and the futuristic product developments.
Augmentation
Augmentation differentiates a service from
another. Providing free night suits to overnight
travelers, airline lounge for business class
passengers etc. Most competition takes place at
the augmentation level. Todays augmented
product can become tomorrows expected
product because customer may take certain
benefits for granted once they receive it.
Potential service
At this level, the service firm tries to find out better
ways of delighting customers. A hotel in a tourist
location may provide free service of sight seeing
tours, orange cultural evening by making the
service much more enjoyable. Educational
institute providing placements is a potential
service. If a company wants to be a market
leader, then the emphasis should be on the two
outer layers of the service rings.
Service offer and Service
package
The service package is the product dimension of
service. It includes all decisions involving the
essential concept of the services, the range of
service provided and the quality and levels of
services.
Customers needs are varied and complex. The
satisfaction of these multidimensional needs is a
service package. This is the bundle of tangible
and intangible products put together
Service delivery System

The final dimension of the service product is the
service delivery system-how the service is
provided to the customer. The delivery system
represents the interaction between the service
provider and the customer.
The delivery system includes training the
employees, organizing equipment and layout for
the flow of work.
It is carefully designed blueprint that describes
how the service is rendered to the customer.
Life Cycle
Service brands need constant rejuvenation, as the service
life cycle tend to be shorter than the products like cassette
rentals business has changed to VCD and DVD rentals.
Pagers and floppies have completed replaced with new
technological service products.
Traditional cinema halls have given way to modern
multiplexes though the basic service is still entertainment
through big screen cinema. The technology has changed
the product as sophisticated as well as to cater to the
different segments of cine goers.
Many basic services like electricity, petrol retailing,
hospitals and education continue for hundreds of years.
Plastic money through credit cards, debit cards are new
services, ATMs are replacing human tellers.
The rapid rise of mobile phone services has almost killed
the paging service. Computers replaced typewriters.
Similarly, individual writing letters are completely replacing
with internet.
Imitation products and completely
new products
The service products can be completely new, modified or
simply imitation brands of the existing products.
For example, many mutual fund and life insurance
products are only different in brand name and more or less
the same in every other feature. Even when the product is
not different from other existing offerings, the service
provider can still distinguish himself on two things-brand
name and quality of service. For example, all airlines may
provide transportation (core service) from point A to point
B.
But the smart ones differentiate based on brand building
efforts and a mix of tangible and intangible differentiations.
Travelers have their own preferences on the basis of this
differentiation like customer care
Educating customers
New service products may require the service
provider to explain and educate the consumer
about the concept, the benefits and the
operational aspects of buying the service
Technology and Services
Rate of diffusion is faster than the adoption.
Earlier, bank transactions were mainly manual but
today they are computerized and also the
information is through mobile like balance
amount, debit and credit etc.
ATM services are widely used.
Service products: Bundled with
conventional products and
standalone:
The service products can be sold separately or
bundled with other products. For example, buying
a car along with an annual maintenance contract
(bundling). Another example is Life insurance
coverage with health insurance. A creative
agency for the advertisement concept may be
separated with the media agent (unbundling).
Fewer options in the consideration
set
One can find multiple brands of goods at one retail store,
but for service like insurance, one has to go to different
insurance companies to find the attributes like premium
they charge, policy features etc. Many consumers settle
down after having enquiries with friends as they may not
be having enough time to go to different parties. The word
of mouth is critical for many services as consumers freely
exchange their experiences with others. Personal selling is
the best in the services like life insurance because
consumers may not like to go to the company for the
policy. Some service companies keep advertising or doing
promotions all the time. This is to try and remain in the
consumers consideration set all the time. Usually,
customers consider few alternatives and therefore one
should be more of a proactive service provider.
M.R. Can remove blind spots
..regarding what consumers will value in their
service.
For example, Harvard professor Schlesinger
mentions in one of his articles that a bank thought
customers would like humans to deliver cash,
until research proved that they preferred ATMs!
They found ATMs easier to use and were happier
with their service compared with human tellers at
the bank.
Services, technologyand Govt.
The design of a service product sometimes
depends on infrastructure and technology
availability.
For example, Star TV had a plan to launch Direct
to home (DTH) channels in India.
But it needed government permission to bring the
technology and hardware to India, which was
denied.
Technology in services
Call centres are technology intensive, and require
power and telecom infrastructure of a very high
quality.
So until a few years ago, service companies
would not have thought about them for any kinds
of services, pre-launch inquiries or post-sale
services.
But today every company of any significance has
call centres for various activities.
A Major New Service that failed
A new service that failed due to wrong product design
and pricing, was the Dhirubhai Ambani Pioneer offer
from Reliance.
This offer was confusing to consumers, and had a
very high initial price, which became an entry barrier.
The technology was also new (Wireless in Local Loop
or WLL), and required an expensive CDMA technolgy
handset compared to normal GSM technology phone
instruments.
The first few customers who bought into the new
instruments complained of quick battery drainage and
overheating of handsets.
Bundling Strategies
An example of a service bundle is an offer from Asian
Paints, the paint manufacturer, which they call Home
Solutions.
The advertisement says, Decided to get your home
painted? Allow us to take over, and goes on to
describe the worlds first ever painting service, in
which the company would take over and do
everything necessary to paint your house, including
buying the paint and hiring the labour and hopefully,
the cleaning up afterwards, which many painters
neglect to do after they have finished painting!

Designing the Front Office:
The tangibles
In case the service has significant elements that are
tangible (that can be seen, touched, experienced by
the customer), they need to be designed with care,
because they can create impressions in customers
minds about the quality of the service. A positive
impression can go a long way in creating favourable
brand equity for the service brand. Some companies
like McDonalds in the US and ICICI Bank in India
have gained a lot from a smart and consistent look for
their buildings, logos and other visible elements of the
product
Designing the Back Office: The
intangibles
Behind the line of visibility, the customer may not
be present. But two things make this an equally
critical area for design-
The customer can see the effect of the activity
behind the scene in some of the output
The employees who work in the back office need
to be comfortable and motivated


Back Office impacts the front.
In many modern services like the call centres,
back end operations like data recall about a
customer are quite apparent when a customer is
on line talking to an operator. If the operator does
not have access to historical data about a
customer, he would ask the customer to repeat
that information, thus creating a negative
impression.






Concept Selling: the Case of
Air2Web
Air2Web sold a service product that was born out
of convergence technologies. Wireless
applications such as the mobile phone, the
Internet and traditional clients such as banks,
pharma companies and almost anyone else who
wanted to communicate with their customers,
dealers or salesforce formed different parts of a
complex jigsaw puzzle that was provided by
Air2Web.
Air2Web .contd.
The company had to sell first the concept, then its
own capability to provide the technology backbone
which would enable say, a bank, to send an SMS on a
customers mobile phone to inform him that a deposit
had been credited to his bank savings account. Or, a
cement company that wanted to inform its dealer that
an order placed by him had been despatched,
including the trucks registration number.
These, and many other applications could be done
without the client (the bank or the cement company)
having to invest in hardware, software, and major I.T.
technology. All they had to do was tell Air2Web what
sort of communications they needed with whom, and
Air2Web would provide the solution.
Expectations of Consumers
Using this formula, these researchers developed a
questionnaire to measure service quality against their own
expectations. The customers expectations could be based
on various factors like

Word of mouth communications from friends or
acquaintances
Personal needs or preferences of the customer
Past experience of the providers service
External communication or advertising by the provider


Managing Consumer
Expectations
The Marketers Dilemma
if he pitches too high, creating high expectations,
he may not meet them, and leave the customer
unhappy.
if he pitches too low, the customer may not try
his service at all because he is not attracted to it.
A fine balance between hype and substance has
to be achieved.


Service Customisation versus
Standardisation
Standardisation usually permits rapid growth and
lower costs, due to smaller inventory, training,
wages and other expenses. Eg: NIITs courses
Customisation presents a chance to satisfy
customers, and earn higher profits if customers
value the customised offering
eg: American University courses are flexible,
customisable
Modular Services
Sometimes, a blend of standard service modules
can be offered and the customer can choose
some of them to fulfill his needs.
Eg., a customer can order some Chinese, Indian
and Mexican dishes in a restaurant, to create his
own meal.
Defects, Failures and Recovery
Services are prone to failure, unless the
provider is obsessive about service quality
Apart from trying to recover from individual
cases of service failure, a company can also
offer guarantees in advance that may promise
certain things like a refund of payment made
in case a service is not satisfactory. This can
be very demanding, and caution is needed in
designing a guarantee. But if done well, it can
prove to be a great differentiator from
competitors.
Exercise
Your neighbour wants to open a Restaurant in
your vicinity. He is consulting you as a MBA
student. Please guide him with 7Ps application.
Your neighbour wants to open a Barber shop in
your vicinity. He is consulting you as a MBA
student. Please guide him on the pricing for Hair
Cut, styling, Shaving, and other services after
doing all relevant calculations.There are already 3
decent salons in the vicinity. He wants to grab the
market. Suggest some innovative schemes too.