Presentation Slides

MD254: e-Service Operations MD254: e-Service Operations ManagementManagement

Aligning the e-Service Product with the e-Service Process:

OverviewOverview

Background Real-Time Marketing & Customerization A Framework for Positioning e-Service Products A Framework for Positioning e-Service Process in

B2C Operations Aligning the e-Service Product to the e-Service

Process Conclusion

BackgroundBackground

BackgroundBackground

The Problem with Positioning and Marketing of Traditional Services “Service professionals traditionally think about a new

service product as something that a centralized marketing department creates for its customers on the basis of understanding a new customer need.”

The success of this new service development approach depends upon … Accuracy of understanding customer needs Ability to create or customize the service to meet specific

needs of customers Competitive speed at which the new service is delivered

(Rust and Oliver, “The Real-Time Service Product,” from New Service Development, 2000)

BackgroundBackground

The Problem with Positioning and Marketing Traditional Services The traditional approach may take too long (i.e.,

many months to many years) Traditional approach cannot adapt quickly to

changing needs of customers

(Rust and Oliver, “The Real-Time Service Product,” from New Service Development, 2000)

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

(Rust and Oliver, “The Real-Time Service Product,” from New Service Development, 2000)

StandardizedProduct

CustomizedProduct

Not AdaptableOver Time

AdaptableOver Time

MassProduction

MassCustomization

Real-TimeServiceProduct

Real-TimeServiceProduct

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

(Wind and Rangaswamy, “Customerization: The Next Revolution in Mass Customization,” Journal of Interactive Marketing, 2001)

MarketingCustomization

Lo Hi

Personalization/1-to-1

Standardization

Customerization

MassCustomization

OperationalCustomization

Lo

Hi

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Real-Time Marketing Extends relationship marketing into customized

marketing Combines customized marketing with mass

customization production Customerization

Extends relationship marketing into customized marketing

Combines customized marketing with mass customization production

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Real-Time Service Product An individually customized service product that

Tracks changing customer needs continuously Updates itself to meet the customer’s personal needs through

interaction with the customer and the environment

The updating often occurs without conscious or overt action on the customer’s part

Provides customers with unique benefits Service products are customized to customers’ needs at their first

points of requirement Service products interact continuously with individual customers

and cater to their post-purchase product and service requirements, usually without the need for reference to or contact with the original producer

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Real-Time Service Product “Technological advances in a number of fields,

however, make it possible to develop new service products in real-time, that is, at the customers point of requirement (i.e. the customer’s place and time). Real-time products and services meet the needs of individual customers at the first time of use and also as those needs change over time.”

The approach is known as real time because it involves adapting the service product dynamically to both The specific customer segment (i.e., customer space) The constantly evolving needs of the customer (i.e.,

customer time)

(Rust and Oliver, “The Real-Time Service Product,” from New Service Development, 2000)

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Benefits of Real-Time Marketing Blurs the lines between goods and services Meets customers’ needs at first time of use Meets customers’ evolving needs Plays a powerful role in acquiring and

keeping customers

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Real-Time Goods Video camcorder – shaky

hands adjustment Vacuum cleaner –

suction power adjustment Cars – adjusts braking

function based on driving habits

Software agents embedded in physical products that provide personal services

Real-Time Services Phone service that

involves a cellular phone that can remember names and voice commands … adapting as needed

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Developing real-time service products involves … Individualizing the service product Vesting the service product with the power to

adapt itself to changing customer needs

(Rust and Oliver, “The Real-Time Service Product,” from New Service Development, 2000)

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

The Challenge … Real-Time Marketing Integrates and extends mass customization and

relationship marketing The different and evolving needs and preferences of

individual customers are satisfied over time Relationships with customers are managed at the

customer level (instead of at the marketing department level) and are often contained within the good or service itself

Decentralized intelligence is deployed … capable of anticipating or reacting to customer needs, either overtly or covertly, or to environmental changes

(Rust and Oliver, “The Real-Time Service Product,” from New Service Development, 2000)

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

4 C’s of e-Service Marketing Communication

A continual series of dialogues or conversations with customers Customization

Tailoring individual offerings (goods, services and digital content) based on understanding the customer’s particular needs and behaviors, to build the perception that the firm sees him/her as an individual

Collaboration Engaging the customer in the actual design and delivery of a

product offering Clairvoyance

“Reading the customer’s mind” or anticipating his/her needs regarding the firm’s products, and proactively offering those products

(R. Glazer, Journal of Interactive Marketing, Vol. 13, No. 1)

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Real-Time Service Product is designed by Intelligent Creation Technologies Radical new ways in which services are designed,

developed, produced, distributed, and sold Ex: CAD, rapid prototyping

They open new capabilities in the process of service conceptualization and design

Facilitate Modular design Focus on both product outcome (end result of the

transaction) and process outcome (the venue in which the product outcome is delivered)

Real-Time Marketing & Real-Time Marketing & CustomerizationCustomerization

Implications Real-time marketing responsible for real-time service

product Real-time marketing becomes part of the service

process Real-time marketing dynamically reengineers the

service product and the service process Therefore, service designers must incorporate data

collection and data analysis into the design of an e-Service … at least for dynamic (Real-Time) e-Services

A Framework for Positioning A Framework for Positioning e-Service Productse-Service Products

A Framework for Positioning A Framework for Positioning e-Service Productse-Service Products

How to Classify e-Service Products? Not Real-Time

? ? ?

Real-Time ? ? ?

What arethese types?

A Framework for Positioning A Framework for Positioning e-Service Productse-Service Products

To target e-Service customers, one must have … Segmentation of market into customer segments of

interest Same as with traditional marketing

Understanding of relevant classes of service products How ???

A means to link customers and customer segments to the appropriate service product

A Framework for Positioning …A Framework for Positioning …Electronic Service-Product Categories

How is a conceptual framework useful? A segmentation model based on e-Service

product content (the service product) Linkable to business models Linkable to customer segments Linkable to service process capabilities

Helps managers understand better the differences between classes of e-Service products

A Framework for Positioning …A Framework for Positioning …Electronic Service-Product Categories

Electronic Service Content

Market Segment

Static

Dynamic

Unique

Niche Market

One or a Few Services

Low Demand Low Online Customization High Offline Customization

No Joint Branding

Customized Mega Market

Many Services High Demand

High Online Customization Low Offline Customization

High Joint Branding

Broad

Market Extender

Several Services

Low/Medium Demand Medium Online Customization Medium Offline Customization

Low Joint Branding

Dynamic Mass Market

Many Services

Medium/High Demand Medium/High Online Customization

Low Offline Customization Medium Joint Branding

A Framework for Positioning …A Framework for Positioning …Electronic Service-Product Categories

NicheMarket

MarketExtender

DynamicMass

Market

CustomizedMega

Market

Unique Need Broad Need Broad Need Unique Need

Static Content Dynamic ContentBusiness Models

RetailAdvertisingInfomediary

Manufacturer

BrokerageUtility

Subscription

Community

(Business Models fromhttp://ecommerce.ncsu.edu/business_models.html)

A Framework for Positioning …A Framework for Positioning …Electronic Service-Product Categories

NicheMarket

MarketExtender

DynamicMass

Market

CustomizedMega

Market

Unique Need Broad Need Broad Need Unique Need

Static Content Dynamic Content

What implications does this have for appropriate choice of service-product attributes for each category?

Where would certain companies be positioned withinthis model?

A Framework for Positioning …A Framework for Positioning …Electronic Service-Product Categories

NicheMarket

MarketExtender

DynamicMass

Market

CustomizedMega

Market

Unique Need Broad Need Broad Need Unique Need

Static Content Dynamic Content

RaisinRack.com

BaltCoffee.com

Travelocity.com

AutoWeb.com

GEMM.com

A Framework for Positioning A Framework for Positioning e-Service Processese-Service Processes

A Framework for Positioning A Framework for Positioning e-Service Processese-Service Processes

Service Kiosk HTML & static files “Make-to-Stock” service-process strategy

Service Mart CGI scripts & executables “Assemble-to-Order” service-process strategy

Mass Service Customization Databases “Make-to-Order” service-process strategy

Joint Alliance Service Customization Federated databases, distributed knowledge mgmt., “Make-to-Order” service-process strategy Cross-organization processes Processes within processes

Low volumeLow/High offline flexibility

Low online flexibility

High volumeLow/High offline flexibility

High online flexibility

Medium offline flexibilityMedium online flexibility

Aligning the e-Service Product and Aligning the e-Service Product and the e-Service Processthe e-Service Process

Aligning the e-Service Product and Aligning the e-Service Product and the e-Service Processthe e-Service Process

Can we make the two individual frameworks more useful? Guide analysis of different implemented

service-products Match service-product to an appropriate

service-process

e-Service Product-Process Matrixe-Service Product-Process Matrix

NicheMarket

MarketExtender

DynamicMass

Market

CustomizedMega

Market

ServiceKiosk

ServiceMart

Mass ServiceCustomization

Joint AllianceService

Customization

Proposition:Best Strategy is to Pick Position

Within Oval

Aligning the e-Service Product and Aligning the e-Service Product and the e-Service Processthe e-Service Process

Electronic Service Product Structure

Electronic Service Process

Structure

Niche

Market

Market

Extender

Dynamic

Mass Market

Customized

Mega Market

Service Kiosk

Service Mart

Mass Service

Customization

Joint Alliance Service

Customization

peapodgift.com

Austrian CountryMarket

Raisin Rack

AlaskaChoiceSeafood Cellar Homebrew

A&A Italian Specialty

Chocoholic.com

Crusoe Island

shopping.msn.comaol.com

SummarySummary

Prepare your organizations for real-time service products

Understand the different types of e-service products

Understand the different types of e-service processes

When designing e-Service, make sure to align your service product and service process