OPSM 405 Service Management

1. Koç University OPSM 405 Service Management Class 13: Review Zeynep Aksin zaksin@ku.edu.tr

2. Chapters covered from the book • Introduction • Strategic positioning • New Service Development (focused on tools: blueprinting, conjoint analysis) • Managing Service Experiences: Starbucks • Service Quality (tools: Poke Yoke, service guarantees)

3. From lecture notes • Value proposition, focus strategy, strategic service vision, service profit chain: Shouldice, Southwest • Service encounters: Zipcar • Service guarantees • Customer relationship management: Starbucks

4. Firms compete on product attributes. This requires process capabilities. • Price (Cost) P • Quality Q • Customer service • Product quality • Time T • Rapid, reliable delivery • New product development • Variety V • Degree of customization “order winners” To deliver we need “capabilities”

5. Low Service Factory Service Shop High Low: Taylorism High: High performance workplace Degree of Workplace Empowerment (Process) Management challenges efficient technology creating warmth incentive design quality control Degree of Customization process design flexible technology managing loyalty managing people Mass Service Professional Service

6. Recall: The service value chain internal quality customer loyalty $ $ $ Euro $ $ $ YTL customer satisfaction employee satisfaction employee loyalty Value employee productivity

7. The Value Profit Chain - Schlesinger • Determinants of employee and customer loyalty • cycle of failure - low wages, little training, => limited customer loyalty, high turnover • cycle of capability - share of profits, greater control, => highly productive employees, satisfied customers

8. Strategic service vision: the external view Target Market Segments what are the market segments? Positioninghow do customers view the service? Service Concept what is the service bundle? Value/Cost Leveragingperceived value-cost? Operating Strategy investment / purchasing decisions? Strategy/System Integrationis everything consistent? Service Delivery System what are resource needs?

9. Identifying quality shortfalls word-of-mouth personal needs past experience expected service Gap 5 perceived service Customer Provider service delivery Gap 3 Gap 1 Gap 4 external communications to customer service quality specifications Gap 2 management perceptions

10. Sources of pleasure displeasure in service encounters • Recovery: how employees respond to service failure • Adaptability: employee response to customer needs and requests • Spontaneity: unprompted and unsolicited employee actions • Coping: employee response to problem customers

11. Controlling customer behavior • Normative controls • Instrumental controls

12. Service guarantees: What is a good guarantee? • unconditional • easy to understand • meaningful • easy to invoke • easy and quick to collect on

13. Guarantees for professional services:marketing benefits • prices are high • negative consequences of unsolved problems are high • services highly customized • brand name recognition can be tough • buyer resistance is high

14. Guarantees for professional services:quality benefits • understanding customer needs • understanding service delivery process • forces firm to establish measures of customer satisfaction • a general emphasis and focus on service quality

15. Guarantees for professional services:the risks • co-production: double moral hazard • can be giving the wrong message • doesn’t always provide good feedback on quality • ethical issues: can’t guarantee outcomes • international setting: cultural differences

16. The full picture:customer satisfaction, customer retention, and market share Time Enter Them Us t-1 Leave Enter Us Them t Leave Enter Us t+1 Them Leave

17. Radikal gazetesi 28 Mayıs 2005

18. RELATIONAL Learnable – Usable – Mutable Social – Interaction Increase Emotion & Cognition PHYSICAL Theme – Layout – Sensory Increase Physical Interaction & Cognition CONTEXT Increase COMMITMENT & LOYALTY ENGAGEMENT TIME ACTIVE Educational Escapist Continuity Dynamic Entertainment Esthetic Memorabilia PASSIVE ABSORBTION IMMERSION Creating the Process of Customer Experience

19. Defining terminology complexity vs. divergence what is done? how is it done?

20. Output analysis: PC Example(source Dolan) Weight <= 2 lbs 1.2 2-5 lbs .9 >5lbs 0.0 BatteryLife 1 hr 0.0 2hrs 0.2 4hrs 1.5 8hrs 1.5 Resolution Below avg 0.0 Avg. .4 Above avg. .5 Price 1000 1.0 2000 0.5 3000 0.0 Product A: 2 lbs 1hr below average 2000 Product B: 5 lbs 4hrs average 3000 ProductC: >5lbs 8 hrs average 1000 Share of preference approach: Prob. of choosing A: 1.7/6.6=26% Prob of choosing B: 1.9/6.6=29% Prob. of choosing C: 3.0/6.6=45% Value of A= 1.2+0+0+0.5=1.7 Value of B = 1.9 Value of C = 3.0 Sum = 6.6 Market share: average purchase probability across all subjects

21. Summary • Blueprints for documentation • Analyze for complexity & divergence for positioning • Understand links between positioning and costs (service delivery system) • Conjoint analysis to assess customer valuations • Use output from conjoint analysis to link valuation, purchase, aggregate market share and profitability