New Development Products in Tourism

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NEW-PRODUCT DEVELOPMENT IN TOURISM

COMPANIES -

CASE STUDIES ON NATURE-BASED ACTIVITY

OPERATORS

Raija Komppula

University of JoensuuDepartment of Economics

Box 111

FIN-80101 JOENSUU

[email protected]

ABSTRACT

New product development in tourism companies has been a nearly ignored theme in

tourism marketing literature. Research on product development has in major studies

handled destinations, development of resorts or sites as a total tourist product. This paper

will introduce two case studies, which will aim to help us to identify the major problems as

well as key phases of the new product development process in a small tourism company.

The two examples represent Finnish activity operators, which at the moment have the

challenge to innovate more and more attractive activities to fulfil the customers needs for

emotional experiences. The theoretical framework for the study is based on the traditional

product (and services) development theory, which suggests it to be a process of following

stages: idea generation, service concept development and evaluation, business analysis,

service development and testing, market testing, commercialisation and postintroduction

evaluation. Based on the existing literature and our case studies we try to evaluate the

usefulness of the traditional product development model in small tourism business

marketing. We also try to present an advanced model for new product development in a

small tourism company.


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10th Nordic Tourism Research Symposium, October 18-20 2001, Vasa, Finland

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1. INTRODUCTION

In the general marketing literature there has been a considerable amount of research carried out into

new product development, the majority of which is based on manufacturing industries, but

relatively less attention has been given to services (Edget 1994, Jones 1995, Kelly & Storey 2000).

Although product development is a prerequisite for satisfying tourists needs and changing demands

as well as insuring the profitability of the industry, new-product development in tourism companies

has been a nearly ignored theme in tourism marketing literature. There has been very little interest

in the new product development processes in small scale tourism companies, how the new

innovations are developed into product concepts in individual tourism companies, although

especially in rural tourism development projects all over the Europe the authorities and marketing

organisations call for new tourist products.

The research on product development in tourism marketing is dominated by research on destination

development, representing in most cases planning approach (see e.g. Gunn 1988, Pearce 1989). In

the literature of destination development, destination planning and destination marketing a

destination is viewed as an amalgam of individual products and experience opportunities that

combine to form a total experience of the area visited ( Murphy, Pritchard & Smith 2000, 44).

Medlik and Middleton (1973) suggest that the destination product consists of five components:

destination attractions, destination facilities, accessibility, images and price. This components

model has been later borrowed by numerous authors.

Middleton (1989) also has introduced the term total tourist product (1989) or the overall tourism

product (Middleton & Clarke 2001). He suggests that from the standpoint of a potential customer

considering any form of tourist visit, the product may be defined as a bundle or package of tangible

and intangible components, based on activity at a destination. The package is perceived by the

tourist as an experience, available at a price (Middleton & Clarke 2001, 124-125). This tourist

product can be divided in two levels: the total level referring to the complete experience of the

tourist from the time one leaves home to the time one returns, being synonymous with the

components model. The other level is the specific level, which is that of a discrete product offered

by a single business. (Middleton 1989, Middleton & Clarke 2001)


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the customer process, which have been developed and organised by the service company.

(Edvardsson & Olsson 1999).

The three levels of a tourist product are the core product, the formal (or tangible) product and the

augmented product (Middleton & Clarke 2001; Kotler, Bowen & Makens 1999; see also Levitt

1981, and Grnroos e.g. 1990). The core product, the idea, the key message, is the essential service

or benefit designed to satisfy the identified needs of target customer segments. The formal product

means the specific offer for sale stating what a customer will receive for the money. This tangible

product is a marketing interpretation that turns the core into a specific offer. It contains the

facilitating products, the services and goods that must be present for the guest to use the core

product as well as some extra supporting products. The brochure description of the formal product

forms the basis for the sale. The terms product design or physical evidence are identified as one

way to differentiate the formal product. (Middleton & Clarke 2001, 129; Kotler et al. 1999, 274-

275)

The augmented productcomprises all the forms of added value producers build into their formal

product offers to make them more attractive. It comprises the difference between the contractual

essentials of the formal product and the totality of all the benefits experienced in relation to the

delivery of the product. The brand or the image of the product is always part of augmentation.

(Middleton & Clarke 2001, 129) The augmented product may contain supporting products which

are extra offered to add value to the core product and help to differentiate it from the competition.

Kotler et.al. (1999) suggest that accessibility, atmosphere (see also Murphy et. al. 2000, 45-46)

customer interaction with the service organisation and customer participation are components of the

augmented product. ( Kotler et.al. 1999, 274-275)

The model of a generic tourism product presented by Smith (1994 ) poses a product concept that

consists of the elements of the tourism product and the process by which those elements are

assembled. The relative importance of each element varies, depending on the specific type of

product, but all tourist products incorporate all five. The model explicitly acknowledges the role of

human experience in the tourist product. The generic product may take a wide variety of real forms,

but each form of same generic product will provide the same function, which in the case of tourism

is the facilitation of travel and activity of individuals away from their usual environment. (Smith

1994)

According to Smith (1994) the core of any tourism product is thephysical plant, which refers to the

place and the conditions of the physical environment, such as weather, water, infrastructure etc. The


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Smiths model seems to accept the argument indicated by Middleton (1989) that the tourist product

is based on some kind of an activity at a destination. The activities are tied to the physical plant, the

place, as well as the services available. The importance of the services (e.g. nature based activities)

and the place element (physical plant) for the customer vary depending on the primary and

secondary needs of the customer. The primary needs (core needs) are those which act as a reason

why the customer experiences a certain need, for instance, one might have a need to meet someone

in an other country for a business reason. This need can be satisfied by several means of travel

opportunities. When a customer has decided to travel for some primary need, the secondary needs

(underlying needs) arise: how to travel, what criterias are used to evaluate the options,

etc.(Edvardsson & Olsson 1999, Middleton & Clarke 2001) Core needs are those which give rise to

the demand for travelling and the underlying needs are implicit in the demand of a particular way of

travelling.

Smiths terminology and perspective is derived from a production orientated approach, which

emphasizes outputs and phases rather than consumer benefits and outcomes. Lumsdon (1997 offers

an alternative view and argues that the benefits to the customer are delivered only if the service

provider and the customer are central to the model. Instead of a tourist product he uses a term

tourist offering. According to him in tourism the core benefits and service interaction dominate and

therefore they constitute a tourism offering, which can be defined as a combination of services

which deliver primarily intangible, sensual and psychological benefits but also include some

tangible elements. He argues that the concepts of core product and augmented product presented by

Kotler, ..are one and the same in tourism, because of the underlying principle of inseparability, i.e.

consumption and provision occur at the same time and place. The core bundle of benefits accrue

from the degree of satisfactory interaction. (Lumsdon, 1997, 141-142) A modified framework of

the tourism offering set out by Lumsdon (1997) illustrates the point: it places the service offeringwithin tourism as a central component (Lumsdon 1997, 142)


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FIGURE 2. The tourism offering: a modified framework (Lumsdon 1997, 142)

The arguments of core service offering introduced by Lumsdon (1997) can be supported by findings

of Edvardsson and Olsson (1999), who argue that the service company does not provide the service

but the prerequisites for the various services. The company sells opportunities for services which

are generated in partially unique customer processes. The central goal of service development is to

develop the best and right prerequisites for well-functioning customer processes and attractive

customer outcomes. The prerequisites for the service are the end-result of the service development

process. The right prerequisites can be described by a model with three basic components: service

concept, service process and service system. (Edvardsson & Olsson 1999).

The term service concept refers to the description of the customers needs and how they are to be

satisfied. Service process relates to the chain of activities that must function properly if the service

is to be produced. Special attention should be paid to some critical activities so that the customer

process and the customer outcome achieve the right quality at reasonable cost. The service process

Physical evidence- Decor

- Staff Dress- Furniture- Colour scheme- Materials- Iconic features

- Image

Processes:

- Responce systems- Reception- Ticketing/billing- Queuing

- Staff procedures

People:- Staff training- Staff responsiveness- Level of staffing

- Counters

Core service offering:- Actual level of service- Customer image and expectations- Perceptions of value

- Atmosphere, feel good factor


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consists of clear description of the various activities needed to generate the service. The service

system constitutes the resources ( staff, the physical/technical environment, organisation structure,

the customers) that are required by or are available to the service process in order to realise the

service concept. (Edvardsson & Olsson 1999)

The core of the tourist product is the idea of the experience, activities in a destination, which are to

satisfy the primary and the secondary needs of the traveller. This core product can be seen as a

service concept which refers to the prototype for the service, i.e., the customer utility and the

benefits, which the tourist product intents to provide and convey to the customer. The description of

the service process of the tourist product includes the definition of the formal product . For the

customer it is expressed in a form of a brochure or an offer. In the company and for the staff the

formal product might mean the determination and definition of the chain of activities in the

customer process and the production process. This chain can be illustrated as a service blueprint.

The key components of service blueprints are the customer actions, onstage contact employee

actions, backstage contact employee actions and support processes. The customer actions area

displays the actions that customer performs in the process of purchasing, consuming and evaluating

the service. Employees actions that are visible to the customer are the onstage employee actions.

Contact Employee actions that takes place behind the scenes to support the onstage activities are the

backstage contact employee actions.The support process covers the internal services, steps and

interactions that support the contact employees in delivering the service. The four key action area

are separated by three horizontal lines. The line of interaction represent the direct interaction

between customer and the organisation. Line of visibility separates all service activities that are

visible to the customer from those that are not. This line also separates what the contact employees

do onstage from what they do backstage. Line of internal interaction separates contact employee

activities from those of other service support activities and people. (Zeithaml & Bitner 1996, 206-

207).

Service system includes the resources available to the service process for realising the service

concept. This means the involvement of the service companys staff, the customers, the physical

and technical environment as well as the organisation and control of these resources. The hospitality

element of the tourist product is produced mainly by the staff and other customers. Freedom of

choice and the customer involvement are highly dependent of the service process, the customer

himself as well as the physical environment. All these together, the service concept, the service

process and the service system create the prerequisites of the tourist experience, the augmented


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product, the very intangible expectations, which will or will not be fulfilled as the outcome of the

customer process.

3. DEVELOPMENT OF A NEW TOURIST PRODUCT A PRODUCT FORMULATION

VIEW

To stay ahead of the competition, proactive tourism companies must constantly look for new

product innovations. The traditional product life cycle theory indicates that typically a product will

have a s-curve with stages of growth, maturity, saturation and decline in sales and profits. This

theoretical model seems to hold true also for tourist products, which means that the question of

product development and new- product innovations is important in tourism companies. It is

sometimes difficult to define what is meant by a new product. Improvements to an existing product

can render that product so new as to make it seen by prospective purchasers as a genuinly new

product, and if an existing product is launched to a new market or to other purposes, that product is

also new for the customer.

In most cases the tourist products are advances on and modifications of existing products.

According to Zeithaml and Bitner (1996) the types of new product options vary from major

innovations to minor style changes.Major innovations are new services for markets as yet

undefined. Startup businesses consist of new services for a market that is already served by existing

products that meet the same generic needs.New services for the currently served marketrepresent

attempts to offer existing customers a service not previously available from the company, although

it may be available from other companies. Service line extentions represent augmentations of the

existing service line,service improvements represent the most common type of service innovation.

Style changes represent the most modest service innovations, although they are often highly visible

and can have significant effects on customer perceptions.

The service management literature points out that new-product development in service industries

should follow a structured planning framework (see e.g. Lovelock, Vandermerwe & Lewis 1999,

Zeithaml & Bitner 1996). The fact that services are intangible makes it even more imperative for a

new-product development system to have certain basic characteristics. The development must be

based on objective data about customer perceptions and market needs, not on the basis of managers

or employees subjective opinions. Employees frequently are the service or at least deliver the

service, which makes their involvement in new-product development highly important. Customers

can help the design the service concept and the service process particularly in tourism businesses


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where the customer personally carries out a major part of the service process. (Shostack 1984,

Zeithaml & Bitner 1996)

An underlying assumption of new-product development process models is that new-product ideas

can be dropped at any stage of the process if they do not satisfy the criteria for success at the

particular stage. The process can be divided into to sections: front end planning and implementation

(see figure 4). The front end determines what service concepts will be developed. The organisation

is assumed to have an overall strategic vision and mission, which determine the new-product

strategies of the organisation. (Zeithaml & Bitner 1996, 197-200) The different strategic options for

new-product strategies are presented in figure 3.

Markets

Offerings

Existing markets/Current

Customers

New markets/New

Customers

Existing Products

MARKET PENETRATION:

modification to existing product for

present market

MARKET DEVELOPMENT:

reposition present product to attract

new market

New Products SERVICE DEVELOPMENT:

introduce new product to present

market

DIVERSIFICATION:

launch of new product to new

market

FIGURE 3: New-tourist-product strategy matrix for identifying growth opportunities

(Modified from: Zeithaml & Bitner 1996, 201; Holloway & Robinson 1995, 82)

The first actual step in the new-service development (NSD) is the idea generation, which can be

systematic search of new ideas. Typical sources of ideas may be formal brainstorming, solicitation

of ideas from employees and customers, lead-user research, learning about competitors offerings

etc. According to studies referred by Kotler et.al. 1999 more than the half of the new-product ideas

come from within the company, one quarter comes from customers and the rest mainly from

competitors.

During the idea generation a large number of ideas are often created. The purpose of screening the

ideas is to reduce the number of ideas. The idea screening is the appropriate time to review carefully

the question of product line compability. (Kotler et.al. 1999, 291-292; Zeithaml & Bitner 1996,

202). The key questions to ask when screening product ideas are, if there is a market for the


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product, if the product is a right one for the company product strategy and if the product can be

produced profitably (Morgan 1996).

A clear definition of the service concept should be the outcome of the service development and

evaluation stage. The new service concept would then to be evaluated by employees and customers.

The next step is to determine the feasibility and potential profit implications. Demand analysis,

revenue projections, cost analyses, and operational feasibility are assessed at this stage. The stage

will involve preliminary assumptions about the costs of hiring and training personnel, delivery

system enhancements, facility changes and any other projected costs. (Zeithaml & Bitner 1996)

Once the new service concept has passed all the front-end planning stages, the concept is ready for

the implementation stages. During this phase, the concept is refined to the point where a detailed

service blueprint representing the implementation plan for the service can be produced and tested by

the personnel. The market testing phase is in tourism industry often implemented by introducing the

new tourist product to a certain group of customers or representatives of intermediary stakeholders.

If the product has passed all the former stages the service goes live and is introduced to the

marketplace (commercialisation). A very important phase is the postintroduction evaluation. At this

point, the information gathered during commercialisation can be reviewed and changes made to the

delivery process, staffing or marketing-mix variables. (Zeithaml & Bitner 1996)

In the next page the figure 4 illustrates the New-Service development process (Zeithaml & Bitner

1996, 200), which represents a traditional model for NPD.


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Business Strategy Development or Review

New-Service Strategy Development

Idea Generation

Screen ideas against new service strategy

Concept Development and Evaluation

Test concept with customers and employees

Business Analysis

Test for profitability and feasibility

Service Development and Testing

Conduct service prototype test

Market testing

Test Service and other marketing-mix

elements

Commercialization

Posintroduction Evaluation

Front-EndPlanning

Implementations


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budgets have been modest: the entrepreneurs have concentrated in answering inquires rather than

looking for new clients. The word-of-mouth promotion as well as the loyalty of existing customers

has directed their strategy to service development (introduce new products to present customers)

and market penetration (modification of existing products for present customers). Market

development (repositioning present products to attract new markets) has been considered and

practised within a couple of tourism networking and marketing projects run by consultants and

funded by the regional development authorities. These projects have targeted to European markets,

but the limited staff resources have been the reason for the minor opportunities to make larger

inputs in market development.

The new-product ideas are in most cases based on the opportunities of the three bases or other

physical plants available. The idea generation is derived from the capabilities of the owners as well

as their own interests. The company has also conducted a market research on the trends in nature-

based activity interests in Finnish business markets. In most cases the need for new-product

development comes from an existing client who wants to do something else than before.

The service concept, the core product is build on an idea of e.g. hard adventure, soft adventure,

water sports etc. The concept is then developed in accordance to the limiting factors of the

company resources, what is possible. The next step is the development and evaluation of the

service process. First the blueprint of the processes is built and then the process is tested by own

staff and family members or friends. Modules such as transportation, accommodation, meals and

different activities are scheduled. During this process also the costs are evaluated. After the first

testing the formal tourist product for the customer, the offering, is created and the first customer

testing group is invited to evaluate the product. In most cases the test groups consist of staff from

local or regional tourist organisations, which serve as intermediaries of the products.

The market testing and commercialisation phases can in this company not be separated. When a

new product has got its formal form, it is offered for the customers. Some products sell as such,

most of the offerings have to be modified, modules have to be changed etc. The core product may

live and the modifications of it, the formal products, may form a new product line. But in most

cases the core as well as the formal products sell only a couple of times and the company keeps on

the basic old products. The entrepreneurs do not pay much attention to the reasons of these failures

but keep on generating new ideas.


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Case 2.

The company in case 2 has started the operations in the area a couple of years ago. The enterprise is

run by two guys who both are trained wilderness guides. The other guy is originally foreigner but

has lived a long time in Finland and speaks fluent Finnish. This means that certain segments in his

home country constitute a great part of their targeted marketing, although at the moment the

companies in the nearby region still represent the major part of their clients. The company has no

own base for the activities but the office and equipment store is situated in connection with a hotel

in the city centre. This gives the company a great competitive advantage in terms of groups living at

the hotel.

The need for new-product development process usually starts from either a client or a travel agency

asking for something new or different for groups that already have tried everything. A lot of the

new products start from clients questions. The other reason comes from the company: they have to

have new products for customers that constantly use their services. The client, which is normally a

company, may come back only two or three times after the same kind of activity. The operator have

to create new products every year for certain clients, which means that many of the new products

have been once tailored for a certain company. About 50 % of the turnover consists of certain basic

programs, which are more or less variations of specific products.

When a new-product need arises, the operator must first narrow down the possibilities: safety

parameters, budget, limits of implementation, time factors. Very often the clients are looking for a

product, which is short ( maximum a day), sharp and attractive. How for example short is defined,

is dependent on the customer. In most cases the formulation of a product is only a question of

presenting an activity or activities, not practising it properly. Sharp means that the idea has to

appeal. If we think for example a four hours canoeing, the activity itself is not yet attractive, but the

idea comes from where the customer is going to canoe and why. The objective of the trip is

according to the entrepreneur as important as the activity itself. The presentation of the core

product, the idea of the product, has to appeal. One can almost sell an old activity with a new

presentation and a new aim, the same activity for a different reason, which comes then a new

activity.

This operator emphasises the significance of the activity and the experience rather than the place,

the physical plant. The clients needs determine the place where the activities are implemented. But

an old programs in a new place or terrain may be a new product, although in most cases the


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company operates in its home area. According to the entrepreneur the physical plant is always easy

to find through partners and networks.

The idea generation is in this company based on client requirements. The core products are created

as mobile as possible, as user friendly as possible and for as many persons as possible. The

modifications of the core product are then developed following the resources of the customer. The

service concept is dependent on the company resources (staff, equipment) as well as availability of

suitable partners and their resources. In the summer time the equipment is normally not a problem

but in the winter time it often is a limiting factor. The entrepreneurs use different kinds of sources

for idea generation. Most of the service concepts require very little investments in equipment or

physical plant, but the most difficult thing is to invent the core idea of the product. Ideas may come

from the literature, travel books, heritage and traditions of the region, the culture or the history of

the place, old movies, documents, television etc. A good imagination is a real gift for an activity

operator. Part of the ideas come from competitors or clients.

The idea is then developed to a theoretical program around the idea, meaning a rough molecular

model of the service , the process with a time schedule and requirements for the physical plant and

equipment, safety factors etc. This rough program has to be tested by own staff. After this first

testing the core product, the service concept is ready for further development. Once the core product

is reported in a rough blueprint there will also be an idea of what the actual production costs will

be.

The operator sells about 40 % of its turnover directly to the corporate entertainment customers.

About 40 % of the income comes through intermediaries. The importance of the intermediaries

brings the new-product commercialisation an important question. The company has to have a

proper selection of products with prices and a good presentation of the product. The discussions

with the intermediaries are a means of post-introduction evaluation of the product: if the product

does not sell it will be changed or skipped for the next years catalogue.

The fact is that most of the products that sell well, are easy: cooking coffee and making sausages

and pancakes by the fire. Behind all the product development procedures there is the underlying

business mission of the company: the company must not be cheaper than others, not the most

visible in the market but the best in customer service. This indicates that the equipment does not

have to be better, the places do not need to be better, but the customer service must be the best,

because that is what the customer will remember. The customer needs to remember that he had a

great time. The customer service means all the activities aiming at a best possible customer care


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during the customer process, including the pre-purchase phase and the presentation of the product in

the brochures.

5. DISCUSSION

In a nature-based activity operator company a core tourist product, the service concept, consists of

modules, which are based on the needs of the customer. Basic types of the modules are

transportation, accommodation, food and beverage as well as activities. A single tourist product is

an experience processed during different kinds of activities within a bundle of modules within a

service system of the company. Each module can also be handled as a service concept, service

process and a service system.

The underlying prerequisite for successful tourist product development is a continuous service

system development, which involves continuing development of the company strategy. So the

augmented tourist product mentioned by e.g. Middleton and Clarke (2001) is actually the

company itself, its reputation and image. According to Seaton (1996) the firm is just as much of a

product as the individual packages of offerings it makes. The corporate image refers to the kinds of

ideas and impressions people have of the organisation in general. The corporate identity is made up

of the perceptions formed by external audiences of everything a company is seen to do. Branding

does, at the level of the product, what corporate identity does at the level of the firm. (Seaton 1996,

126-127) When a customer turns to the activity operator, he or she expects the company to offer

experiences, which are created together with the customer and company. The task of the company

is to provide the best possible prerequisites for the experience, an attractive idea and description of

the product, successful service process and reliable, functioning service system. The tourist

experience product could be illustrated as in figure 5.


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FIGURE 5: The tourist experience product

Based on the case studies reported above as well as the theoretical discussion of the tourist product

we will suggest a new framework for new-product development in tourism (figure 6). This

framework must be considered as a first preliminary proposal and it needs much more investigation

among different kinds of tourism businesses.

In the framework we state that the new service development occurs in a service system

environment, which consists of the companys physical plant, the environment, staff, network ofpartners, competitors and customers. The service system creates the corporate image and identity of

the company as well as limits and the opportunities for the NSD. The company has to pay great

attention to the service system development, which enables or prohibits the new innovations.

The first stage in our NSD-framework is the service concept development, which can be divided in

four phases: idea generation, core product screening, concept testing, and concept development. The

service concept is the answer to the customers question of new experience, what is the new benefit

and value. The sources of idea generation for the for the experience can be divided into internal and

external. The main determinant should be the customer need and expectation. The core idea may

The Service concept- description of the

customers needs- the idea of the

experience- customer utility,- customer benefits- service modules

The Service Process:- chain of activities in

the customer process

- formal product,brochyre

- formal product,blueprint

The service system- business mission- Staff

- the physical plant- equipment- or anisation The tourist experience

- Actual level of service- Customer image and expectations- Perceptions of value- Atmosphere, hospitality,feel goodfactor


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get a form of key modules, which then are to be screened against the service system available. The

rough customer processes of the modules have then to be tested by the staff, after which they are

developed by e.g. skipping some modules and taking new ones instead. When the core idea is ready

the next stage of the NSD will start.

Service process development indicates the precise planning and pricing mode of the tourist product.

Every single module have to be blueprinted as a chain of activities, with time scheduling, costs,

identifying all the service quality factors and possible gaps in the delivery system (see Zeithaml,

Parasuranam & Berry 1990). The process prototype must once more be tested by the personnel,

after that the final formal product can be developed as a blueprint for the producers. In the market

testing stage the service concept and the process are tested by an external group of people, e.g.

members of intermediary. During the market testing stage the key components of the experience

are tested and the key message of the promotion, the appeal is identified for the

commercialisation of the product. After launching the product to the market it should be important

to investigate the sources of the success or unsuccess of the product in order to use the information

in further NSD processes.

There are also researchers, who argue that the new service development initiation strategies are

largely informal processes. Few firms systematically involve contact or operations staff in the

process. (Kelly & Storey 2000). Claude and Horne (1993) even suggest, relying on their empirical

data, that the entire service development outcome is a random event. Sometimes the venture will be

successful, sometimes not. According to them the pattern for NSD is not well defined and does not

adhere to conventional empirical mechanisms. They suggest that the entire new service

development becomes more entrepreneurial: the differences in services like individualised versus

group experiences, customised versus standardised and active versus passive customer participation

might influence how a new service is conceptualised and then commercialised. (ibid 62-63)

Nevertheless, for different branches in service industry some kinds of frameworks for NSD are

possible to be found and trial-and-error methods of new-product development must be replaced by

more scientifically based modern marketing research techniques Hodgson (1990). We argue that the

more a company pays attention to its new product development procedures the better chance it has

in succeeding with the product strategy in the changing markets. But in tourism industry the

different branches (e.g. accommodation, transport, activities) have different risks in their service

systems, which propably makes the NSD processes branch specific. The framework presented in

this paper may be applied in activity operator businesses but must be much more investigated in

other branches of the industry.


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SERVICESYSTEMDEVELOPMENTr

SERVICE CONCEPT DEVELOPMENT

Idea generation for the core product

Core product screening, rough process

Concept testing (internal)

Concept development

SERVICE PROCESS DEVELOPMENT

Module creation and development

Service blueprinting

Prototype testing (internal)

Business analysis

Formal roduct blue rintin

MARKET TESTING

Product testing (external)

Financial evaluation

COMMERCIALISATION

Formal product offering (presentation of the

POSTINTRODUCTION EVALUATION


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Raija Komppula 20

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Documents

New Development Products in Tourism