Service Strategy. Nature of Service Competitive Environment Competitive Strategies Role of Information. The Alamo Drafthouse

Transcription

1 Service Strategy Nature of Service Competitive Environment Competitive Strategies Role of Information The Alamo Drafthouse 2 1

2 Case Questions Define the service concept. Identify the target market. What is the service winner? Describe the service package. What are the weakness and threats? I. Nature of Service Customer Participation: attention to facility design, opportunities for co production, concern for customer and employee behavior Simultaneity: opportunities for personal selling, interaction creates customer perceptions of quality Perishability: cannot inventory, opportunity loss of idle capacity, need to match supply with demand Intangibility: creative advertising, no patent protection, importance of reputation Heterogeneity: customer involvement in delivery process results in variability 4 2

3 Competitive Environment of Services Relatively Low Overall Entry Barriers Economies of Scale Limited Erratic Sales Fluctuations No Power Dealing with Buyers or Suppliers Product Substitutions for Service High Customer Loyalty Hobby or job satisfaction High Exit Barriers 5 II. Service Strategy: Cost Leadership There is usually a segment of the market that buys solely on the basis of low price. Standardizing a Custom Service (fast haircut) Reducing the Personal Element in Service Delivery (self service, web site) Reducing Network Costs (hub and spoke) Taking Service Operations Off line (drop off/pick up) 6 3

4 Service Strategy: Differentiation Differentiation in service means being unique in brand image, technology use, features, or reputation. Making the Intangible Tangible (complimentary towels) Customizing the Standard Product (Burger King) Reducing Perceived Risk (service guarantee) Giving Attention to Personnel Training (Southwest) Controlling Quality 7 Service Strategy: Focus Cost and differentiation for a particular target market, not the entire market. Buyer Group: (USAA insurance and military officers) Service Offered: (Shouldice Hospital and hernia patients) Geographic Region: (neighborhood restaurant) Target market could be too small. 8 4

5 How Customers Select a Service Provider Price (Quality surrogate) Availability (24 hour ATM) Speed (Avoid excessive waiting) Convenience (Site location) Dependability (On time performance) Personalization (Know customer s name) Quality (Perceptions important) Reputation (Word of mouth) Safety (Air travel) 9 Winning Customers in the Marketplace Service Qualifier: To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examplesare cleanliness for a fast food restaurant or safe aircraft for an airline. Service Winner: The competitive dimension used to make the final choice among competitors. Examplesare price or reputation. 10 5

6 Strategy: Sushi bar vs. Sushi train 11 Strategies and Operations Low price Standardized work, maximum use of resources, reduce design to reduce material cost. High quality Higher cost for product and service design, and process design, and more emphasis on supplier quality. Speed Extra capacity, automation, and higher levels of popular inventory items. Convenience More stores, on line services, express delivery Product or service variety High variation in resource; higher worker skills, more inventory and complex management. 6

7 Southwest Airlines Limited Service Selected routes between midsize cities Productive ground crews Lean and effective flight crews Standardized 737 aircraft Frequent, reliable departures High aircraft utilization Consistent Quality, Low Cost 13 Strategic Service Vision Service Delivery System Fun cabin atmosphere to differentiate service Use only Boeing 737 aircraft to control maintenance & operating costs Hire cabin crew based on attitude Operating Strategy Service Concept Target Market Segment Quick turnaround at gate results in high utilization of aircraft No assigned seating rewards punctuality and promotes on time performance Short flights with frequent departures Serve peanuts & soft drinks only Use of inner city or low traffic airports avoids congestion Carry on luggage State of Texas residents Business traveler who drives because of inadequate service Inexpensive family travel on weekends 14 7

8 III. The Service Package Supporting Facility: The physical resources that must be in place before a service can be sold. Facilitating Goods: The material consumed by the buyer or items provided by the consumer. Information: Operations data or information that is provided to enable efficient and customized service. Explicit Services: Benefits readily observable by the senses. The essential or intrinsic features. Implicit Services: Psychological benefits or extrinsic features which the consumer may sense only vaguely. 15 Designing a Service Package 8

9 Criteria for Evaluating the Service Package 17 Criteria for Evaluating the Service Package 18 9

10 The Service Process Matrix Degree of Interaction and Low Customization High Service Factory Service Shop * Airlines * Hospitals Low * Trucking * Auto repair * Hotels * Other repair services Degree of labor Intensity * Resorts & recreation Mass Service Professional Service * Retailing * Doctors High * Wholesaling * Lawyers * Schools * Accountants * Retail banking * Architects

11 IV. Competitive Role of Information External (Customer) Internal (Operations) Online (Real time) Creation of barriers to entry: Reservation system Frequent user club Switching costs Revenue generation: Yield management Point of sales (POS) Expert systems Offline (Analysis) Database asset: Selling information Development of services Micromarketing Productivity enhancement: Inventory Status Data envelopment analysis (DEA) 21 Using Information to Categorize Customers Coding grades customers on how profitable their business is. Routing is used by call centers to place customers in different queues based on customer code. Targeting allows choice customers to have fees waived and get other hidden discounts. Sharing data about your transaction history with other firms is a source of revenue

12 Limits in the Use of Information Anti competitive (membership, frequent flyers) Fairness (yield management) Invasion of Privacy (selling database) Data reliability (credit report) 23 12