Flower of service and pricing of services

1. Aligning Service Design and
Standards

2. Service Products
Service products consist of:
• Core Product  central component that supplies the
principal, problem-solving benefits customers seek
• Supplementary Services  augments the core
product, facilitating its use and enhancing its value and
appeal
• Delivery Processes  used to deliver both the core
product and each of the supplementary services

3. Flower of Service
Core
Information
Consultation
Order-Taking
Hospitality
Payment
Billing
Exceptions
Safekeeping
Enhancing elements
Facilitating elements
KEY:

4. Flower of Service
• There are two types of supplementary
services
– Facilitating : either needed for service delivery, or
help in the use of the core product
– Enhancing : add extra value for the customer

5. Spectrum of Branding Alternatives

6. Developing New services
– Reengineer service processes
– Use physical goods as a source of new service
ideas
– Use research to design new services
– Understand how to achieve success in new service
development

7. Distribution of services
• Distribution relates to both core and supplementary
services and embraces three interrelated elements
– Information and promotion flow, negotiation
flow, product flow
• Channel options include:
– Customers visit the service site
– Service providers go to their customers
– Service transaction is conducted remotely

8. • Place and time decisions include where services
should be delivered in bricks-and-mortar context,
when it should be delivered
• Delivery in cyberspace is facilitated by technology;
e-commerce allows 24-hour delivery, saving time
and effort
• Intermediaries play roles in distributing services -
franchising

9. • Factors Favoring Adoption of Transnational
Strategies
 Market drivers
 Competition drivers
 Technology drivers
 Cost drivers
 Government drivers

10. Pricing of services

11. Costs
Physical Effort
Psychological
Burdens
Sensory
Burdens
Incidental Expenses
Operating Costs
Purchase
Time
* Includes all five
cost categories
Purchase and Service
Encounter Costs
Search Costs*
Post Purchase Costs*
Necessary
Follow-up
Problem
Solving
Money

12. Revenue management
– Maximizes revenue from a given capacity at a
point in time
– Manage demand and set prices for each segment
closer to perceived value
– Use of rate fences

13. Fences to demand curve

14. Ethical issues in pricing
– Complex pricing schedules
– Unfairness and misrepresentation in advertising
– Hidden charges
– Too many rules and regulations