CREATING NEW

MARKET THROUGH
SERVICE INNOVATION

GROUP NUMBER-7
BASUSREE BHATTACHARYA
KIRAN S
SUBHA RAJAN
K SHREEJIT
SERVICE INNOVATION
 Services dominate70% of the aggregate
production and employment in OECD nations
 Generate new markets
 Reshape existing one
 Innovation in service- process, product and
markets
 Most innovations are incremental or radical
 Market creating service innovation promises
far greater upside potential than incremental
 Ex – Enterprise Rent A Car
Company($8billion), google($110 billion),
Ebay($ 60 billion)
 ARRIVING AT A TAXONOMY
OF SERVICE INNOVATIONS
 Service innovations that create new markets differ
from each other along two primary dimensions:
 1. The type of benefit offered
 2. The degree of service “separability.”
 For example, Cirque du Soleil, the University of
Phoenix Inc.
 Technology has transformed innovation
 The delivery of “separable” care is growing.
 Doctors and nurses can advise patients via privacy-
protected e-mail or voice mail and can monitor
patients’ health through telemedicine.
 Online booking
 Separable 1. FLEXIBLE SOLUTIONS 2. CONTROLLABLE
CONVENIENCE
a. Federal express
b. eBay a. Google
c. CNN b. Skype

Type of
service
3. COMFORTABLE GAINS 4. RESPECTFUL ACCESS

a. Cafe coffee day a. Spice jet

b. Barnes and Nobles b. Southwest Airlines

Inseparable

Core Type of benefit Delivery

FLEXIBLE SOLUTIONS
 This cell describes service innovations that
offer a new core benefit and that can be
consumed apart from where and when they
are produced.

 These innovations allow their users to break

free of the constraints of time and place.
CELL 2 : CONTROLLABLE CONVENIENCE

 New market creation based on New Delivery

-Separable Service . E.g Google
 Google didn’t invent the core benefit of providing
information
 Made available relevant and rapid Web search for
information on any subject
 The two innovation that positioned Google for
dominance
-Developed search algorithms- whereas competitors
operated on looking for keywords and tallying their
frequency
-Linked computers instead of using large server
configuration to make search quick

• Hence they reshaped the world of internet

searching
• Other example: Skype technologies – offer free
calling between Skype members over internet
• Thus offering benefits of global telecom
-munication
 CELL 3: COMFORTABLE GAINS
 Service innovation that offers – core benefit
consumed at the time and place of production
 Example : Starbucks corp.
 Before Starbucks came in, both quality of coffee
and customer experience were inconsistent
 Offered improved experience to coffee lovers by
Brewed coffee of uniform quality

-emphasizing on relaxing atmosphere (tables are

spaced apart)

Other examples: Barnes and Noble

Large stocks of books on array of topics and easy

chairs
CELL 4: RESPECTFUL ACCESS

 Service innovation through new delivery benefit

and production consumption of services are
inseparable

 Example – Walgreen co. – Drugstore chain

 Stores are easy to get to and easy to get through

• Innovation geared to shoppers who place
premium on saving time and effort

•Free standing stores that are easy to access

• Ample parking, drive through pharmacy

windows, low shelves, excellent in store signage
and automated queuing of prescriptions
SUCCESS DRIVERS OF
SERVICE
INNOVATIONS
A Scalable business model
“Business Model Innovation improves margins”

 Be capital intensive

 Encourage customers to perform more

themselves

 Reducing people intensive – hard to check

productivity

 Create separable version of service

Comprehensive customer experience
management
Identifying the clues
 Functional clues : technical quality of
offering
 Mechanical clues : non human elements
 Human clues : behavior and appearance of
employees

A total experience is the convergence of theses

three clues
Investment in employee performance

The more important, personal and enduring the service,

the more pronounced the human effect

Where to invest ??
 Initial hiring
 Ongoing training & education
 Information sharing
 Performance based compensation
 Internal branding (reinforcing brand image to
employees)
Continues operational innovations
Service businesses are operations-intensive
Continuous innovation makes it difficult to imitate
and it improves operations and ca become a core
competence

Brand differentiation

• A trusted brand reduces perceived risk

• Communicating consistent message, performing
core service liability and finding ways to connect
with customers emotionally
An innovation champion
 Imagine the possibilities embedded in an idea
 Lead the transformation of idea into market
reality

A superior customer benefit

• Clear better solution for customer problem and

to stimulate customers try the product or service
Affordability
 Cost- structure innovation is very important
 i.e. to change consumer behavior but also
have the means to do so

Continuous strategic innovation

• Strategic innovation and integral part of service

business