Service Strategy

What is service value? What is a Strategy? Service competitiveness? Service Strategy?

What is Service Strategy?

Service strategy is the set of plans and policies by which a service organization aims to meet its service objectives Service strategy is a deliberate search for a plan of action that will develop a businesss competitive advantage and compound it.

Why an organization needs service strategy

To draw a route to desired outcomes on service to defend itself against competitors and to remain competitive To focus its activities and energies To help to define service it offers To provide consistency in service and help reduce uncertainty

Service Strategy Concerns

Refining of mission, long term goals etc. to operational goals It translates strategic positioning into a clear operational plan Decision making on aspects of capacity, facility size. Facility location, skills, service quality, service delivery, service recovery

Steps in Service Strategy

Setting of order winners and order qualifiers Target Market segment Setting of service concept Setting of operating system Setting of service delivery system Taking decisions on locations, facilities, execution activities

Order Qualifiers
Those competitive priorities ,that respond to What characteristics must my service have just to be able to compete? Fast food--- speed Package delivery---- packaging design(safe at destination) Air travel------- time Gourmet restaurant-------- environment

Quality Winners
What characteristics should I emphasize to convince the customer to buy my service instead of my customers Oberoi hotels, Hiltons, ----- Luxury Jet Airways--- price Shatabdi travel----- time

Target market segment

Determine common characteristics Identify dimensions to segment market Develop demographic, geographic or psychographic basis Determine importance and needs of segmentation as perceived by the organization Monitor how well the needs are being served? Identify who is responsible to serving the needs

 Example: 1.Who could be the customers for Macdonald? 2. Who could be the customers for a gourmet lunch at a luxury hotel. 3.Who could be the customers for a liner voyage

Service Concept
Service concept is set of competitive priorities that target market values Focus is on results that must be produced It describes how the target market, employees and market as a whole perceive the service elements Elements of service to be provided, in terms of results for the customers Alignment of service concept with business of the organization What efforts are implied to design, deliver and market the concept? NEEDS DETAILED DISCUSSION

Operating Strategy
What are important elements of strategy in operations, Which of these require concentration of efforts? Where will investments be made? How will quality and cost be controlled? What results will be expected against competition in areas of cost, service, quality, productivity, morale of servers

Service Delivery System

Important features of service delivery system including role of people, technology, layout, procedures, equipment What capacity of service delivery does it provide normally and at peak levels? To what extent it helps insure quality standards? To what extent it differentiates from competition? To what extent it provides barriers to entry

Competitive priorities
The set of operationally oriented dimensions that companies can compete on ------ Competitive priorities Cost, quality, delivery(time),service, flexibility, environment (Ambiance)

Services as Competitive Advantage:

Services stand out in areas of: Nature of output Degree of customer contact CA is built around these two imperatives

Service as CA
Service organizations can compete on: 1. Outcome ( nature of) 2. Experience ( customer contact plays a vital role) Five positions are: Failing: below industry expectations Arrogant/Complacent: outcome is excellent but customer treatment is poor Retaining customers in the short run: possible to retain customers for short time even if outcome is poor Average: Little to choose from several players World Class: As the best in all that is done

Service Growth Planning

Mfg. companies grow by: Adding machines, building new plant, expanding existing facility High volumes on principles of economy of size. Standardization Centralization of controls Going nearer to site of availability of raw materials, cheaper labour, availability of skills, state subsidies. Infrastructure, tax concessions

Service organization ,
Services have different characteristics: Rely on extensive customer contact Location has to be near to customers Decentralization is desired Economy of size is detrimental in many areas

Strategy for Growth of Services

1. Multisite service firms 2. Industry Roll-up 3. Franchising

Multi-site service firms

Customer contact varies from place to place and hence same rate of success is not obtained. The model cannot be replicated from place to place Multi-site firms have to move away from the owners personality quirks,

Multi-site service life cycle Stages

1.Entrepreneurial stage Firms work under the owners personality quirks Skills of local marketing and PR matter most Motivation of employees matters Innovation is the key Service delivery system, operating strategy are developed for replicating elsewhere

2. Multi-site rationalization Development of procedures, training, accounting systems vital for multi-site Individual personality of entrepreneur is lost or diluted 3 Growth Operations and design are already established Sales publicity becomes feasible against local public relations Wider consumer audience becomes a critical skill

4. Maturity Challenges to maintain market position Maintaining standards and operational control over dispersed employees is difficult Low level employees start leaving as these are not at the hub of an exciting new idea.

5 Decline/ Regeneration Service concept becomes stale Decline sets in revenues Regeneration is the necessity through revision of service concept

Roll ups
Use of traded stock to buy up small firms. Increases market coverage Roll-ups succeed as single unit service set up is retained. Local culture and customer contact is retained Once single units, now can share facilities and bring down costs

Franchising: sale of rights to operate to someone else in return for a portion of sales as royalties Rapid growth In absence of patenting , it provides easy way to access the specifications, practices, controls. There is thus danger of leakage of secrets. franchise can lead to a situation of better profits

Franchising
Area Advantage Disadvantage Facilities Finance Operations Time Customer contact Franchisee bears Franchisee incurs Franchisee entrepreneurial spirit Fast Depends on franchisee Limits control Franchiser saves Controls are difficult

customers can shift loyalty to franchisee Extremely difficult for franchiser Franchiser gains Brand gets established

Quality

Franchisee has a lot to decide Franchisee profits get limited

Profits Marketing