Developing and implementing a Service Product Strategy

A service is essentially the act of providing for a customer some function or task that they either can’t or don’t wish to perform themselves.

Understanding the concepts of Service Product Strategy
  • Strategic Service Concept

An organization’s strategic service concept defines the essential value proposition to potential customers.  A fast-food restaurant or hairdressing service, for example, might define their respective strategic service concepts in terms of home delivery or in-home service provision; the essential value proposition to customers in each case being enhanced service accessibility.

  • Market Positioning Statement

A market positioning statement serves to define the place and terms of competition.  A local or regional building society, for example, may not be able to redefine the physical place of competition but is certainly able to define the terms by which it decides to meet, counter or sidestep the competition posed by other financial institutions in its marketplace.

Correspondingly, someone thinking of establishing a new restaurant, bed-and-breakfast accommodation or laundry service is well advised to consider carefully the nature and location of the service to be provided, the (unfulfilled) needs and wants of markets to be served, the nature of competition to be faced, and what they will need to do in order to ensure a place of competitive difference, advantage and appeal in the market.

  • Service Marketing Concept

The service marketing concept defines the package of benefits to be offered by the core, supporting and facilitating services provided.  In the first example given above the benefits lie in the elimination of the need to travel to the service provider, to wait and interact with other customers at the place of service provision, as well as in greater convenience for the customer.

Kiwi Experience Case Study Solution

  • Service Operations Concept

The service operations concept specifies how, that is the means by which a service will be provided or delivered.  In the case of the home-delivery fast-food restaurant this means determining how menu options will be communicated, orders taken and fulfilled, how the food will be prepared and delivered so that it remains fresh, and methods of payment.

Regardless of the potential benefit(s) of the service offered, the value to the customer lies in how the service is defined, delivered, and ultimately perceived by the customer.  This means that a fundamental issue or question facing a service provider is: “What is the essential value of what we have to offer?”

The answer to this question defines an organization’s strategic service concept; that is, the essential nature of the service to be offered, its benefits and customer value.

The example of Law Line provided in the text illustrates well how a new service was created by addressing this very question.  The text also explains how service concepts can be defined with reference to the degree of customization, labor intensity and personalization involved.

Once the strategic service concept has been defined, it is then necessary to consider where in the market a service will compete, against whom, and on what terms.  This analytical process serves to define a market positioning statement which enables a service provider to define their place or niche in a market to competitive advantage.

From these two steps follow the service marketing concept and the service operations concept.  The former defines what will be marketed and how; the latter, the place and means of service delivery.  Both must be framed with reference to customers’ needs, wants and expectations.

In this way a service provider ensures that what is to be offered, how and where, are designed in such a way as to be customer relevant and meaningful, and competitively advantageous.

Developing a service product strategy

Developing a service product strategy must involve consideration of three essential elements:

  • The nature of the service(s) to be offered and its/their marketable benefits
  • The place and manner of service provision
  • The requisite enabling resources

Above figure 7.4 shows the key steps involved in planning, creating and delivering an integrated and coherent service product strategy. We also explain how this process is grounded in the strategic service concept, the service marketing concept, and the service operations concept.

Concluding Note

Correspondingly, because service organizations frequently derive their competitive differentiation and appeal from the place of service provision or delivery, it is often the case that this too needs to be considered as a vital part of one’s service product strategy.

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