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Service Strategy

Service Strategy. Strategic Service Vision. Target market segment Service concept Operating strategy Service Delivery System. Competitive Environment of Services. Relatively Low Overall Entry Barriers Economies of Scale Limited High Transportation Costs Erratic Sales Fluctuations

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Service Strategy

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  1. Service Strategy

  2. Strategic Service Vision • Target market segment • Service concept • Operating strategy • Service Delivery System

  3. Competitive Environment of Services • Relatively Low Overall Entry Barriers • Economies of Scale Limited • High Transportation Costs • Erratic Sales Fluctuations • No Power Dealing with Buyers or Suppliers • Product Substitutions for Service • High Customer Loyalty • Exit Barriers

  4. Competitive Service Strategies(Overall Cost Leadership) • Seeking Out Low-cost Customers • Standardizing a Custom Service • Reducing the Personal Element in Service Delivery (promote self-service) • Reducing Network Costs (hub and spoke) • Taking Service Operations Off-line

  5. Competitive Service Strategies(Differentiation) • Making the Intangible Tangible (memorable) • Customizing the Standard Product • Reducing Perceived Risk • Giving Attention to Personnel Training • Controlling Quality Note: Differentiation in service means being unique in brand image, technology use, features, or reputation for customer service.

  6. Competitive Service Strategies (Focus) • Buyer Group: (e.g. USAA insurance and military officers) • Service Offered: (e.g. Shouldice Hospital and hernia patients) • Geographic Region: (e.g. Austin Cable Vision and TV watchers)

  7. Customer Criteria for Selecting a Service Provider • Availability (24 hour ATM) • Convenience (Site location) • Dependability (On-time performance) • Personalization (Know customer’s name) • Price (Quality surrogate) • Quality (Perceptions important) • Reputation (Word-of-mouth) • Safety (Customer well-being) • Speed (Avoid excessive waiting)

  8. Service Purchase Decision • Service Qualifier: To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline. • Service Winner: The competitive dimension used to make the final choice among competitors. Example is price.

  9. Service Purchase Decision (cont.) • Service Loser: Failure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization) or late delivery of package (speed).

  10. Stages in Service Firm Competitiveness

  11. Stages in Service Firm Competitiveness

  12. Case Analysis: American West Airline Questions: • What generic competitive strategy did America West choose when it entered the air passenger market? What are the dangers of this strategy?

  13. Case Analysis: American West Airline Questions: 2. Identify the service winners, qualifiers, and service losers in America West's market.

  14. Case Analysis: American West Airline Questions: 3. How has America West addressed the ”Strategic Service Vision”?

  15. Case Analysis: American West Airline 4. Prepare a market position map for America West comparing it with American, Delta and Southwest using the differentiation attributes of "cabin service" and "preflight service."

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