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Service OperationsManagement

T.V.Subramanian

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  Service Strategy and

Strategic Service Vision

By

T.V.Subramanian

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Strategic Service Vision Service strategy must begin with a vision of

the place and purpose of the enterprise.  Entrepreneurs idea ! unmet need

" strategic vision is formulated byaddressing #uestions about$

%. Target Mar&et

'. Service (oncept3. Operating Strategy

). *elivery System

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Strategic ServiceVision

+deally, a servicedelivery systemshould support the

operating strategy,which shouldsupport the serviceconcept, which

supports the targetmar&et

Target Mar&et

Service (oncept

Operating Strategy

Service *elivery System

(hapter ' - Strategic

ositioning

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Strategic Service VisionTarget Market Segments

What are common characteristics of important marketsegments?

What dimensions can be used to segment the market,

demographic, psychographic?

How important are various segments?

What needs does each have?

How well are these needs being served, in what manner,by whom?

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Strategic Service VisionService Concept 

What are important elements of theservice to be provided, stated in terms ofresults produced for customers?

How are these elements supposed to beperceived by

1.the target market segment,

2.the market in general,

3.by employees, etc.

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Strategic Service VisionOperating Strategy 

2hat are important elements of the strategy$

%. operations,

'. financing,

3. mar&eting,

). organiation, human resources, control4

On which will the most effort be concentrated4

2here will investments be made4

5ow will #uality and cost be controlled$measures, incentives, rewards4

2hat results will be e6pected versus competition

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Strategic Service VisionService Delivery System

2hat are important features of the service deliverysystem including role of$

%. eople,

'. Technology,

3. E#uipment, layout, procedures4

2hat capacity does it provide, normally, and at pea&levels4

To what e6tent does it, help insure #uality standards,differentiate the service from competition, providebarriers to entry by competitors4

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(ompetitive Environment ofServices

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%. 9elatively :ow Overall Entry Barriers +nnovations can be easily copied

'. Economies of Scale :imited 5igh Transportation (osts

3. Erratic Sales ;luctuations ;<Time=> 9andom "rrivals

). ?o ower *ealing with Buyers or Suppliers

Small sie of service firm

(ompetitive Environment ofServices

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%. roduct Substitutions for Service *isruptive Technology

'. 5igh (ustomer :oyalty +ncrease switching cost

3. E6it Barriers " firm may have employment of family

members and not profit ma6imiing as its goal.

(ompetitive Environment ofServices

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(ompetitive ServiceStrategies

There are 3 generic competitive strategiesaccording to Michael orter.

%. (ost leadership'. *ifferentiation and3. ;ocus

+n all of this remember the customer,

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%. See&ing Out :ow-cost (ustomers

'. Standardiing a (ustom Service

3. 9educing the ersonal Element in Service*elivery <promote self-service=

). 9educing ?etwor& (osts <hub and spo&e=

/. Ta&ing Service Operations Off-line

(ompetitive Service Strategies<Overall (ost :eadership=

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%. Ma&ing the +ntangible Tangible <memorable=

'. (ustomiing the Standard roduct

3. 9educing erceived 9is&

). @iving "ttention to ersonnel Training

/. (ontrolling Auality

?ote$ *ifferentiation in service means being uni#ue in brand image,technology use, features, or reputation for customer service.

(ompetitive Service Strategies<*ifferentiation=

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Buyer @roup$ <e.g. S"" insuranceand military officers=

Service Offered$ <e.g. Shouldice5ospital and hernia patients= 

@eographic 9egion$ <e.g. "ustin (ableVision and TV watchers=

(ompetitive Service Strategies<;ocus=

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(ustomer (riteria forSelecting

 a Service rovider*epending on the competition andpersonal needs, customers select aservice provider based on certaincriteria.

Some of the criteria are4444

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"vailability <') hour "TM=

(onvenience <Site location=

*ependability <On-time performance=

ersonaliation <Cnow customerDs name=

rice <Auality surrogate=

Auality <erceptions important=

9eputation <2ord-of-mouth=

Safety <(ustomer well-being= Speed <"void e6cessive waiting=

(ustomer (riteria for Selecting a Service rovider

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Service Qualifier $ To be ta&en seriously a certain level

must be attained on the competitive dimension, as defined

by other mar&et players. E6amples are cleanliness for a

fast food restaurant or safe aircraft for an airline.

Service Winner $ The competitive dimension used to ma&e

the final choice among competitors. E6ample is price.

Service Loser $ ;ailure to deliver at or above the e6pectedlevel for a competitive dimension. E6amples are failure to

repair auto <dependability=, rude treatment

<personaliation= or late delivery of pac&age <speed=.

Service urchase *ecision

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(ompetitive 9ole of +nformation inServices

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Three Stage EvolutionF %st Stage <Visibility=$ See physical operations more

effectively with information G E6. S"" Hpaperless operationI 

 F 'nd Stage <Mirroring (apability=$ Substitute virtual activities for

physical G E6. S"" Hautomate underwritingI 

 F 3rd Stage <?ew (ustomer 9elationships=$ *raw on

information to deliver value to customer in new ways G E6.

S"" Hevent oriented serviceI 

The Virtual Value (hain

<@ather, Organie, Select, Synthesie, and*istribute=

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"nti-competitive <Barrier to entry=

;airness <Jield management=

+nvasion of rivacy <Micro-mar&eting=

*ata Security <Medical records=

9eliability <(redit report=

:imits in the se of +nformation

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sing +nformation to (ategorie(ustomers

(oding -- grades customers on how profitable

their business is.

9outing -- is used by call centers to place

customers in different #ueues based on

customer code.

Targeting -- allows choice customers to have

fees waived and get other hidden discounts. Sharing G- data about your transaction

history with other firms is a source of

revenue.

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Service Firm Competitiveness

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Stages in Service ;irm(ompetitiveness

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Stages in Service ;irm(ompetitiveness