LO 3 Know the three components of a service product.

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1. Creating Service Products Understanding the Essentials of Design and Delivery

2. Introduction This presentation explores the concept of creating service products by detailing key components such as core offerings and supplementary services. It aims to help understand how these elements combine to enhance customer experiences and value propositions.

3. Core Product 01

4. Definition and Importance The core product represents the fundamental benefit or solution that customers seek when purchasing a service. It answers the question of what the customer is fundamentally buying. For example, in the hotel industry, the core product is accommodation and security, while in delivery services, it's timely and safe arrival of packages. Understanding the core product is essential, as it sets the foundation for the entire service experience and influences customer expectations and satisfaction.

5. Examples of Core Products Core products can vary widely depending on the industry. Examples include: 1) A hotel offering lodging and comfort; 2) A restaurant providing food and dining atmosphere; 3) A consultancy that delivers strategic advice. In more intangible realms, financial products like credit cards offer benefits such as convenience and rewards, while ETFs provide low-cost investment opportunities. The examples illustrate how core products cater to essential customer needs, regardless of their tangibility.

6. Intangibility Challenges Intangible products, like services, pose unique challenges for marketers. Customers cannot physically examine or try these offerings before purchase, leading to uncertainty and perceived risk. Marketers must focus on clear communication of benefits, build trust through branding, and leverage customer testimonials to alleviate these concerns. Additionally, providing physical evidence such as brochures or attractive websites can help frame the intangible experience positively, facilitating the purchasing decision.

7. Supplementary Services 02

8. Role in Service Delivery Supplementary services augment the core product and play a vital role in the overall service experience. These services can be categorized into facilitating services, which aid in the delivery or use of the core product (e.g., reservations or customer support), and enhancing services that offer additional value (e.g., loyalty programs or personal consultations). They help to smoothen the service delivery process, leading to increased customer satisfaction and loyalty.

9. Enhancing Customer Value Supplementary services can significantly elevate the perceived value of the core product. By offering exceptional supplementary services, businesses can distinguish themselves from competitors. For instance, a hotel may provide complimentary breakfast or shuttle services to enhance guest satisfaction. Such offerings not only boost customer experiences but also encourage repeat business and positive word-of-mouth. It’s essential to align supplementary services with customer needs to maximize their impact.

10. Differentiation Strategies To compete effectively in mature markets, businesses must leverage supplementary services as a strategy for differentiation. This can involve adding unique features such as personalized options, customer-centric policies, or innovative service packages that cater to specific client segments. By focusing on supplementary services, businesses can create distinct competitive advantages, ensuring customers perceive added value in their offerings, thus influencing their purchasing decisions.

11. Conclusions Creating effective service products involves a strategic integration of core and supplementary services. By understanding the importance of these elements and addressing the challenges of intangibility, businesses can enhance the customer experience and create compelling value propositions. Emphasizing supplementary services as differentiation tools can lead to improved customer satisfaction and loyalty, ultimately benefiting the organization's competitiveness in the market.

12. Do you have any questions? Thank you! Thank you!