20140930061736_Topic 4 Aligning Service Design and Standards

STUDY GUIDE BMSV5103 Service Marketing

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Topic 4: Aligning Service Design and Standards

Learning Outcomes

By the end of this topic, you should be able to: 1. Describe the challenges inherent in and important considerations for

service innovation and design;

2. Present an array of different types of service innovations;

3. Develop and read service blueprints;

4. Discuss factors necessary for appropriate service standards;

5. Describe the development of customer-defined service standards;

6. Explain the profound impact of physical evidence;

7. Illustrate differences in types of servicescapes and roles played by the servicescapes;

8. Present the framework for understanding effects of servicescapes on behaviour; and

9. Elaborate the guidelines for physical evidence strategy.

Topic Overview

This topic will enable you to learn to identify the causes of gap 2 as well as effective strategies for closing this gap.


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Focus Areas and Assigned Readings

Focus Areas Assigned Readings

Zeithaml, V. A., Bitner, M. J., & Gremler, D. D. (2013). Services marketing: Integrating customer focus across the firm (6th ed). Singapore: McGraw-Hill.

4.1 Challenges of Service Innovation and Design

Chapter 8, pp 218-219.

4.2 Important Considerations for Service Innovation


4.3 Types of Service Innovation


4.4 Stages in Service Innovation and Development


4.5 Service Blueprinting

Chapter 8, pp 234–244.

4.6 Standardisation of Service Behaviours and Actions


4.7 Types and Development of Customer-Defined Service Standards


4.8 Physical Evidence

Chapter 10, pp 278-282.

4.9 Types and Strategic Roles of Servicescapes

Chapter 10, pp 282-288.

4.10 Framework for Understanding Servicescape Effects on Behaviour

Chapter 10, pp 288-297.

4.11 Guidelines for Physical Evidence Strategy

Chapter 10, pp 298-303.


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Content Summary

4.1 Challenges of Service Innovation and Design

The characteristics of services, which were discussed in Topic 1, are the heart of the challenges involved in designing services.

Because services cannot be touched, examined or tried out, people frequently resort to words in their efforts to describe them.

There are four risks of attempting to describe services in word alone: oversimplification, incompleteness, subjectivity and biased interpretation.

All these risks become very apparent in the innovation and service development process, when organisations may be attempting to design complex services never before experienced by customers.

4.2 Important Considerations for Service Innovation

Because services are intangible and process based, and because they frequently involve interactions among and between customers and employees, it is important to involve both customers and employees at various points in the innovation process.

The fact that services are intangible makes it more imperative for a new service innovation to have four characteristics: (1) it must be objective, not subjective; (2) it must be precise, not vague; (3) it must be fact driven, not opinion driven and (4) it must be methodological, not philosophical.

However, it should not become overly rigid or bureaucratised.

Common sense must dictate when flexibility and speed will override the structure.

It is also important to use a system or design mindset, sometimes referred to as “design thinking”, to be sure all elements are considered and integrated.


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Given the interdisciplinary and interactional nature of service design and its focus on customer experiences, a set of five principles has been proposed as central to service design thinking: (1) user-centred; (2) co-creative; (3) sequencing; (4) evidencing; and (5) holistic.

4.3 Types of Service Innovation

There are several types of service innovations, including service offering innovation, innovating around customer roles and innovation through service solutions.

As the new service development process was described, remember that not all new services are new to the same degree.

New service options can run the gamut from major innovations to minor style changes: major or radical innovations, start-up businesses, new services for the currently serviced market, service line extensions, service improvements and style changes.

In addition, it is also possible that service innovations may come about when the customer’s usage or co-creation role is redefined.

Many radical innovations effectively redefine the customer’s role in these ways.

Today’s customers are not looking for one stand-alone product or service but, rather, innovative solutions to their problems.

When companies begin to think in terms of solutions for customers, they start to spend more time with customers, listening to and observing their problems and identifying pain points that can be addressed through innovative solutions.

4.4 Stages in Service Innovation and Development

New service development is rarely a completely linear process. Many companies are finding that to speed up new service development, some steps can be worked on simultaneously, and in some instances a step may even be skipped.

The process of new service development is divided into two sections: front-end planning and implementation.


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The front-end determines what service concepts will be developed, whereas the back-end executes or implements the service concept.

The first process of front-end planning is business strategy development or review, followed by new service strategy development, idea generation, service concept development and evaluation and business analysis.

The front-end is sometimes called fuzzy because of its relative abstractness, which is even more apparent with intangible and variable services that with manufactured products.

Once the new service concept has passed all the front-end planning hurdles, it is ready for the implementation stage of the process.

The implementation stage involves service development and testing, market testing, commercialisation and post-introduction evaluation.

4.5 Service Blueprinting

A service blueprint is a picture or map that accurately portrays the service system to the different people involved in providing it so that they can understand and deal with it objectively regardless of their roles or their individual points of view.

Service blueprinting is a useful tool for designing and specifying intangible service process.

It is particularly useful at the design stage of service development.

The key components of service blueprints are customer actions, onstage contact employee actions, backstage contact employee actions and support process.

In designing effective service blueprints, it is recommended that the diagramming start with the customer’s view of the process and to work backward into the delivery system.


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The basic steps in building a blueprint are as follows:

(a) Identify the process to be blueprinted;

(b) Identify the customer or customer segment;

(c) Map the process from the customer’s point of view;

(d) Map contact employee actions, onstage and backstage, and/or technology actions; link contact activities to needed support functions; and

(e) Add evidence of service at each customer action step.

Service blueprinting is a particularly useful technique for service innovation and design. It can make a complex service concrete through its visual depiction of all the steps, actors, processes and physical evidence of the service.

Its key feature is the focus on the customer – the customer’s experience is documented first and is kept fully in view as the other features of the blueprint are developed.

4.6 Standardisation of Service Behaviours and Actions

Standardisation of service can take three forms:

Substitution of technology for personal contact and human effort (e.g. automatic teller machines, automatic car washes and airport X-ray machines);

Improvement in work methods (e.g. restaurant salad bars, routine tax and accounting services developed by firms); and

Combination of these two methods.

Standardisation, whether accomplished by technology or by improvements in work processes, reduces gap 2.

4.7 Types and Development of Customer-Defined Service Standards

The types of standards that close provider gap 2 are customer-defined standards: operational goals and measures based on pivotal customer requirements that are visible to and measured by customers rather than on company concerns such as productivity or efficiency.


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Two major types of customer-defined service standards can be distinguished: hard and soft.

An example of hard customer-defined standards can be found in all the Federal Express standards that comprise the Service Quality Index which falls into the category of hard standards and measures: things that can be counted, timed or observed through audits.

Another example of customer-defined hard standards in the Internet service is the set summary metrics that Dell Computer uses for fulfilment.

Soft customer-defined standards are opinion-based measures and cannot be directly observed, which must be collected by talking to customers, employees or others.

For example, Mini Maid Services, a firm that franchises home and office janitorial services, successfully built a business by developing a repertoire of 22 customer-defined soft standards for daily cleaning chores.

The steps for setting customer-defined service standards are as follows:

(a) Identify existing or desired service encounter sequence;

(b) Translate customer expectations into behaviours/actions;

(c) Determine appropriate standards;

(d) Develop measurements for standards;

(e) Establish target levels for standards;

(f) Track measures against standards;

(g) Provide feedback about performance to employees; and

(h) Update target levels and measures.


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4.8 Physical Evidence

Physical evidence is defined as the environment in which the service is delivered and in performance or communication of the service.

Effective design of physical, tangible evidence is important for the closing of provider gap 2.

General elements of physical evidence include all aspects of the organisation’s physical facility (the servicescape) as well as other forms of tangible communications.

Elements of the physical servicescape that affect customers include both exterior attributes (e.g. signage, parking, landscape, etc) and interior attributes (e.g. design, layout, equipment, decor, etc).

Internet is a more recent form of physical evidence that companies can use to communicate about the service experience.

Physical evidence of the service will influence the flow of the experience, the meaning customers attach to it, their satisfaction connections with the company delivering the experience and their social and personal interactions with others experiencing the service.

4.9 Types and Strategic Roles of Servicescapes

Three types of service organisations that differ on who actually comes into the service facility are self-service (customer only), interpersonal service (both customer and employee) and remote service (employee only).

Self-service is an environment where the customer performs most of the activities and few if any employees are involved (e.g. ATMs, movie theatres, check-in kiosks at airports, etc).

Remote service has little or no customer involvement with the servicescape (e.g. utilities, many professional services, etc).

Interpersonal services are called when both the customer and the employee are present and active in the servicescape (e.g. hotels, educational settings, hospitals, etc).


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Within the cells of the typology, the servicescape can play many strategic roles simultaneously. It is frequently one of the most important elements used in positioning a service organisation.

Similar to a tangible product’s package, the servicescape and other elements of physical evidence essentially “wrap” the service and convey to consumers an external image of what is “inside”.

The servicescape can also serve as a facilitator in aiding the performance of persons in the environment.

The design of the servicescape aids in the socialisation of both employees and customers in the sense that it helps convey expected roles, behaviours and relationships.

In addition, the design of the physical facility can differentiate a firm from its competitors and signal the market segment that the service is intended for.

4.10 Framework for Understanding Servicescape Effects on

Behaviour

The framework for underlying servicescape effects on behaviour follows from basic stimulus-organism-response theory.

In the framework, the multidimensional environment is the stimulus, the consumers and employees are the organisms that respond to the stimuli and the behaviours directed at the environment are the responses.

The framework represents a comprehensive stimulus-organism-response model that recognises complex dimensions of the environment, impact on multiple parties (customers, employees and their interactions), multiple types of internal responses (cognitive, emotional and physiological) and a variety of individual and social behaviours that can result.

4.11 Guidelines for Physical Evidence Strategy

Some general guidelines for an effective physical evidence strategy are:

(a) Recognise the strategic impact of physical evidence;

(b) Blueprint the physical evidence of service;


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(c) Clarify strategic roles of the servicescape;

(d) Assess and identify physical evidence opportunities;

(e) Update and modernise the evidence; and

(f) Work cross-functionality.

Study Questions

1. Research by Tuli, Kohli and Bharadwaj (2007) shows that service solutions, as defined by customers, are not bundles of products and services at all, but rather they are sets of customer-facing process. Explain what they mean with the help of an example.

2. Service blueprinting has been used effectively to design technology-delivered services including self-service websites and interactive kiosks. With an example, elaborate the service blueprints for any technology-delivery service you have chosen.

3. As Albert Einstein said, “Not everything that counts can be counted, and not everything that can be counted, counts”. In business, not all customer priorities can be counted, timed or observed through audits. Why?

4. Discuss two situations where servicescape can be an important element when it is used in positioning a service firm.

5. Many items in the physical environment such as signs, symbols and artefacts serve as explicit or implicit signals that communicate about the place to its users. With examples, describe how signs, symbols and artefacts can serve as explicit or implicit communicators.

6. Based on the following case study, answer the questions that follow.


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Case study

KTM Out to Upgrade Services and Create Higher Standards Keretapi Tanah Melayu (KTM) Berhad president Dr Aminuddin Adnan has pledged to increase the commuter train frequency, reduce crowding, create safer coaches with auxiliary police force presence and even have an express train service for certain destinations. “We are on a quest to create higher standards that are consistent with train stations in progressive nations. Our aim is to increase the frequency of train services from every 30 minutes to just 10. Our plans are unfolding in stages. “Now, we have 11 sets of six-car electric trains from Shanghai, China, that are running well. This is part of the 38 new sets of trains for KTM Komuter, which is funded by the Government Transformation Programme’s (GTP) Urban Public Transport National Key Results Area (NKRA)”, he said. Dr Aminuddin said the NKRA initiative would improve the quality of the service. He said KTM was also studying the possibility of introducing an express service from Port Klang to KL Sentral if there was demand. “For example, the all-women coaches received good support with 60 per cent females. “At the moment we are working out the time frame where by June we would be able to achieve the 10-minute target once we receive all the trains”, he said after accompanying Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Raja Zainal Abidin on a Komuter train ride. Nong Chik boarded the Komuter train at the Pantai Dalam station and alighted at the Bank Negara station and walked to his office in Jalan Raja Laut. “People using the trains are happy that the new six-car coaches from China have helped to reduce crowding. “When all the new trains hit the track, waiting time will be reduced from half an hour to just 10 minutes and this will encourage more people to use the Komuter”, he said. Nong Chik said the additional coaches had improved service. “The trains will reduce overcrowding in KTM trains along the popular routes and our aim is to reduce the number of cars coming into the city, thus cutting down on carbon footprint”, he said. Source: http://thestar.com.my/metro/story.asp?file=/2012/4/13/central/11093900&sec=central (a) KTM Berhad is on a quest to reach higher standards that are consistent

with train stations in progressive nations. What are the factors that can affect KTM's efforts to reach higher standards?

(b) Explain how KTM Berhad can develop the process for setting its

customer-defined standards.

Documents

20140930061736_Topic 4 Aligning Service Design and Standards