Page 185 - DMGT522_SERVICES MANAGEMENT

Services Management

Notes 8.4.1 Service Strategy

The first step in designing a successful service delivery process is to develop a specific service
strategy by identifying and understanding the specific needs of the customer. Through thoughtful
market research, the target market can be identified and its needs understood. The next step is to
determine what it is that these customers really expect from a particular type of service. Even
within a given industry, customer expectations vary significantly with the type of service and
the particular customer needs. For example, customers eating at a quick service restaurant like
Wendy’s or Panera Bread will not have the same expectations as they will have at a steakhouse
like Bugaboo Creek or at a Michelin three star restaurant in Paris like L’Ambroisie.
The challenge with learning about customer needs is significantly magnified for new services.
There has been much debate in the literature about whether customers can, in fact, correctly
identify what they really want in a new service. Customers may not be able to specifically
articulate a new service concept, but they can certainly describe their basic needs and their basic
expectations from a service delivery process. For example, a service like Chuck E. Cheese’s
addresses the needs of parents who want to take their small children to a restaurant to have a fun
meal away from home. Chuck E. Cheese’s offers safe games and activities with small prizes for
“winners” (all children win something) and animatronic music and entertainment. Kids are
permitted – and even encouraged – to run around the facility and have fun while their parents
enjoy an afternoon or evening away from home. The prizes and animatronics might not have
been identified by prospective customers as part of a desired service, but the notion that kids
like to move around and play games, that they like to win and be rewarded, and that they are
attracted to animals, music, and movement would certainly be recognised by most parents. This
chain’s service concept clearly incorporates both the needs of the customers and the creativity of
the service designer.
Similarly, Apple has responded creatively to meeting customers’ needs in the design of its retail
stores. Some of its customers know exactly what they’re looking for and want to be able to
immediately locate their choice and pay for it quickly. Others, however, wish to wander, browse,
and play with the products before they make a decision. Apple stores have successfully addressed
the needs of both groups of customers in its service design: a carefully organized and well-
labeled floor plan; a “genius bar,” where customers can get advice about products and help with
problems; an efficient checkout system that is available for customers who want efficiency and
speed of service; and an airy, open layout design with products displayed on tables to satisfy the
needs of those just browsing. The store layout provides clear evidence of the direct link to
different customer preferences – and its creativity and innovative feel differentiates Apple
stores from those of its competitors.

These design challenges are equally important for online services. Amazon, for example, learned
from its customers that free shipping was an important factor in their purchasing decision, so it
now offers free shipping with a minimum $25.00 purchase. Amazon also provides information
on other books purchased by people who bought the same book(s) that you have.

Note Lynn Shostack identified four risks inherent in describing services.

8.4.2 Service Concept

The actual design of the service delivery process begins with the service concept, which provides
the link between the service strategy and the service delivery process. The service concept
describes in detail exactly what the customers’ requirements are, in term of how they perceive

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