TOM 453 chapter 3 notes

TOM 453 chapter 3 notes - Chapter 3 Chapter Service...

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Unformatted text preview: Chapter 3 Chapter Service Strategy Strategy Strategy Plan to achieve organizational goals a Position a firm in relation to its competitors a The Strategic Service Vision The a Target market segments • Identify the target market; characteristics a Service concept • Identify the important elements of the service to be Identify provided e.g., on-time performance provided a Operating strategy • Identify important elements of strategy e.g., operations, Identify finance, marketing, human resources finance, a Service delivery system • Identify details regarding technology, equipment, Identify personnel, procedures personnel, Competitive environment of services Competitive a Relatively low entry barriers • Innovations not patentable, most services not capital-intensive a Low opportunities for economies of scale • Service proximity to customers a a Demand fluctuations No size advantage in dealing with buyers or suppliers • Low bargaining power a Product substitution • Potential product innovations may make service obsolete a Customer loyalty • Personalized service creating barriers to entry Competitive Service Strategies Competitive a Three generic competitive strategies Three (Michael Porter) (Michael • Overall cost leadership • Differentiation • Focus Overall cost leadership Overall a Efficient scale facilities, tight cost control, high capital Efficient investment investment a Seeking out low-cost customers e.g., Sam’s club Standardizing a custom service (for routine situations) e.g., Standardizing H&R Block tax prep H&R Reducing the personal element in service delivery (can Reducing work if it results in increased convenience) e.g., ATMs work Reducing network costs e.g., hub-and-spoke system Taking service operations offline (when customer need not Taking be present) e.g., dry cleaning, film processing be a a a a Differentiation Differentiation a Unique e.g., customer service, features offered, wide Unique network network a Making the intangible tangible e.g., Village Volvo, Making amenity kits amenity Customizing the standard product e.g., addressing Customizing customer by name customer Reducing perceived risk e.g., guarantee Giving attention to personnel training e.g., formal training Giving programs programs Controlling quality e.g., consistent level of service through Controlling explicit procedures explicit a a a a Focus Focus Serving a target market a Overall cost leadership and/or Overall differentiation to a particular target market differentiation a Winning customers Winning a a a a a a a a a Availability e.g., access beyond regular hours Convenience e.g., choice of location Dependability e.g., reliability – Village Volvo, on-time Dependability performance, baggage handling performance, Personalization e.g., addressing by name, customizing the Personalization service service Price Quality e.g., expectations vs. perceptions Reputation e.g., positive word-of-mouth Safety e.g., airlines Speed e.g., response time Winning customers (contd.) Winning a Service qualifiers • Threshold level that must be satisfied e.g., Threshold airline safety record airline a Service winners • Dimensions used by customer to choose among Dimensions competitors competitors a Service losers • Failure to meet or exceed expectations Competitive role of information Competitive Creation of barriers to entry e.g., online Creation reservation systems, frequent user club reservation a Revenue generation e.g., yield management, Revenue expert systems expert a Database asset e.g., customer profiles, Database buying habits buying a Productivity enhancement e.g., inventory Productivity status status a Limits in the use of information Limits Fairness e.g., yield management a Invasion of privacy e.g., sharing buyer Invasion profiles profiles a Data security a Reliability e.g., accuracy of data a Stages in service firm competitiveness competitiveness a Available for service Available • Non competitive e.g., some government Non services services Journeyman a Distinctive competence achieved a World-class service delivery a Case: Central Market Case: ...
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