Lecture 3 Service Product

31/01/2021
RMIT Classification: Trusted
Chapter 4
Developing service products:

core and supplementary
service elements
Slide 1
Copyright © 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781486002702/Lovelock/Services Marketing 6e
Learning objectives
4.1 Describe what is meant by the service product

concept
4.2 Describe the ‘Flower of Service’ model and explain
how the facilitating and enhancing supplementary
services add value to the core product
4.3 Formulate a service product strategy
4.4 Explain key principles of service re-design
4.5 Explain various service branding strategies
Slide 2
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The augmented product
“ We live in an age in which our thinking

about what a product is must be quite
different from what it ever was before. It is
not so much the basic, generic central thing
we are selling that counts, but the whole
cluster of satisfactions with which we
surround it.”
Source: Theodore Levitt, ‘Marketing Success through Differentiation - of
Anything’, Harvard Business Review, Jan-Feb 1980.
Slide 3
What is a service product?
1. The core service: what is being

delivered
2. Supplementary service: value-
adding services other than the
core
‒ The importance of each attribute
varies and may depend on
whether the service is high or
low contact
3. Delivery process: place and
manner of service delivery and
how customers are treated
Slide 4
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Slide 5
Classifying supplementary services
Facilitating Supporting
• Information • Consultation
• Order-taking • Hospitality
• Billing • Safekeeping
• Payment • Exceptions
Slide 6
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Class activity
- Choose a service that you have experienced.
- Identify core service and supplementary services of that

service.
Slide 7
Information technology can be

used to enhance delivery of
supplementary services
• E-wallets vs. cashless payment via
cards and smartphones
• ATMs & POS
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© Slick Shoots/Alamy
In order to take market share of the lucrative coffee market away from Starbucks, Gloria
Jean’s, Coffee World and so on, McDonald’s refurbished many stores to include an
upmarket café (McCafé) that appeals to coffee lovers in many of their stores around the
world.
Slide 9
Courtesy of Qantas
The facilitating service element: throughout the pre-flight experience, Qantas utilises
technologies such as airport kiosks and mobile check-in to drive value by delivering speed,
ease and convenience for customers
Slide 10
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© Tupungato/Shutterstock.com
FedEx provides facilitating services by allowing shippers to track the movement of their
packages around the world
Slide 11
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Managerial implications
• Not every core service is necessarily surrounded

by all possible supplementary services
• Should supplementary service be provided in-
house or outsourced?
• Can supplementary services be transformed into
core service products?
• The place of service provision can also be a vital
part of the service product strategy
• The adoption of IT can be both beneficial and
detrimental
Slide 12
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Developing a service product

strategy
1. The nature of the

service(s) to be
offered, benefits and
consumer value
2. The place and
manner of service
provision
3. The requisite
enabling resources
Slide 13
13
Slide 14
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Alternative service concepts for

meal delivery
Slide 15
15
Creating new services

1. Major service innovations: new core
offerings for markets that have not
been previously defined, e.g.,
broadcast TV, eBay
2. Major process innovations: new ways
of delivering existing core products
with additional benefits, e.g., virtual
universities, online retailing
3. Product line extensions, e.g., new
menu item or airline route
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Creating new services

4. Process line extensions: distinctive new
ways of delivering existing services, e.g.,
adding a lower contact distribution channel
(banking, stockbroking),
BarnesandNoble.com
5. Supplementary service innovations: adding
new facilitating services or improving
supplementary services, e.g., self-checkout
at hotels
6. Service redesign: most common type of
innovation involving modest changes in the
performance of current products (see next
two slides)
17
Slide 18
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Service redesign
1. Self-service: active customer participation, e.g.,
ATMs, online banking, automated check-in kiosks
at airports
2. Direct service: moving the point of delivery to the
customer’s location, e.g., car servicing, Weight
Watchers, mobile bank
3. Pre-service: helps hasten the service activation
process, e.g., tour company, Marriott hotel
4. Bundled service: combines multiple services into a
package, e.g., Telstra, tour operator
5. Physical service: manipulation of tangibles
associated with the service, e.g., HSBC Bank
Slide 19
19
A different perspective on
creating new services
• Unique value proposition and

differentiation, e.g., Virgin Airlines, Jetstar
and Tiger Airways*
• New-service fit
• Customer involvement
• The role of frontline personnel
Slide 20
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Branding strategies for services
• A brand is a perceptual thing that is based in reality

but reflects the experiences, differences and thus
perceptions of consumers
• Signal a certain level of quality
• Act as a proxy for what and how the service will be
delivered
• Create differences between services
• Brand equity is the added value of a brand over
and above the value of a generic equivalent
Slide 21
21
Slide 22
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Slide 23
23
Slide 24
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Slide 25
25
Slide 26
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Slide 27
27
Slide 28
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Slide 29
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Slide 30
30
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Next week
Topic 5:
Understanding costs and developing pricing strategy
Distributing services through physical and electronic
channels
Pre-class reading
○Lovelock et al. (2015) Chapter 5 & 6
Slide 31
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31/01/2021

RMIT Classification: Trusted

Developing service products:

RMIT Classification: Trusted

4.1 Describe what is meant by the service product

RMIT Classification: Trusted

The augmented product

“ We live in an age in which our thinking

RMIT Classification: Trusted

What is a service product?

1. The core service: what is being

RMIT Classification: Trusted

RMIT Classification: Trusted

Classifying supplementary services

RMIT Classification: Trusted

- Choose a service that you have experienced.

- Identify core service and supplementary services of that

RMIT Classification: Trusted

Information technology can be

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

• Not every core service is necessarily surrounded

RMIT Classification: Trusted

Developing a service product

1. The nature of the

RMIT Classification: Trusted

RMIT Classification: Trusted

Alternative service concepts for

RMIT Classification: Trusted

Creating new services

RMIT Classification: Trusted

Creating new services

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

• Unique value proposition and

RMIT Classification: Trusted

Branding strategies for services

• A brand is a perceptual thing that is based in reality

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

RMIT Classification: Trusted

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