(10)Differentiation New Services

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Service Differentiation

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Service Differentiation

The act of designing a set of meaningful differences to distinguish the company’s offering from competitors’ offerings.

• Kotler (1997)

Differentiation is closely related to the concepts of positioning and branding.

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Bases for Differentiation

Cost * Service product Personnel Channel

* Probably not ideal, unless you’re the biggest player in a volume industry

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Cost Differentiation

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Service Product Differentiation

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

In product industries, services differentiation can be extremely effective.

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Personnel Differentiation

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Channel Differentiation

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

How Can We Discover New Points of Differentiation?

Map the consumer’s CONSUMPTION CHAIN:

“…the first step toward strategic differentiation is to map your customer’s entire experience with your product or service.”

(MacMillan and McGrath (1997, pg. 144)

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Mapping the Consumption Chain

How do people know they need your service? How do consumers find your offering? How do consumers make their final selections? How do customers order and purchase your service? How is your service delivered? What happens when your service is delivered? How is your service paid for? What is the customer really using your service for? What do customers need help with when they use

your service? How are service failures handled?

Source: Adapted from MacMillan and McGrath (1997)

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Developing New Services

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Why Do New Services Fail?

A. Lack of clear advantage over existing competition

B. Lack of well-developed PROTOCOL: “a statement that identifies a well-defined target market before product development begins; specifies customers’ needs, wants, and preferences; and carefully sates what the product would be and do.”

- Berkowitz et al.

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Developing New Services

Should involve customers Should involve service workers Should be objective, rigorous process

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

New Service Continuum

Style Changes

New Services for

Existing Markets

Major Innovations

RISK

REWARD

NEW SERVICE DEVELOPMENT PROCESS

Idea Generation and Screening

Concept Development and Evaluation

Business Analysis

Service Development and Testing

Market Testing

Commercialization

Services Marketing© 2006, Tom J. Brown, Ph.D.Spears School of BusinessOklahoma State University

Developing New Services

“Our biggest competitor, by the way, isn’t IBM or Sony. It’s the way in which people currently do things.”

– Mil Ovan, marketing executive with Motorola