Chapter Seven

Service Development and Design

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 Objectives of the chapter
At the end of the chapter students will be able:

• understand the challenges inherent in service design

• know steps in the new-service development process
• Show the value of service blueprinting and quality function
development in new-service design and service improvement

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7.1 Challenges of Service Designing
 Because services are intangible, they are difficult to describe
and communicate.
 Further, because services are delivered by employees to
customers, they are heterogeneous.
 These characteristics of services, are the heart of the challenge
involved in designing services.

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 Because services cannot be touched or tried out, people
frequently resort to words in their efforts to describe them.
 Lynn shostack, a pioneer in developing design concepts for

services, has pointed out four risks of attempting to describe

service in words alone. These are:
 Over Simplification; words are simply inadequate to describe a

whole complex service system.

 Incompleteness: people tend to omit details or elements of the service

with which they are not familiar.

 Subjectivity: Any one person describing a service in words will be
biased by personal experiences and degree of exposure to the
service
 Biased interpretation: No two people will define ―responsive,‖
―quick‖, or ―flexible‖ in exactly the same way

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7.2 New Service Development
The fact that services are intangible makes it even more
imperative for a new service development system to
have four basic characteristics:

 It must be objective, no subjective

 It must be precise, not vague
 It must be fact driven, not opinion driven
 It must be methodological not philosophical

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7.3 Types of new services
Not all new services are “new” to the same degree. The type of
new service options can run the range from major innovations to
minor style changes, as described in the following.
 Major innovations: are new services for markets as undefined

 Start up business: consist of new services for a market that is already

served by existing products that meet the same generic needs.
 New Services: attempts to offer existing customers of the organizations a
service not previously available from the company
 Service line extension: such as a restaurant adding new menu item and
a university adding new courses or degrees.
 Service improvements: Changes in feature of services that are already
offered
 Style changes :do not fundamentally change the service, only its
appearance

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 7.4. Stages in New-Service Development 

 The steps can be applied to any of the types of new services just
described. Much of what is presented in this section has direct
parallels in the new-product development process for manufactured
goods. Because of the inherent characteristics of services, however,
the development process for new services require unique and
complex adaptations.

 An underlying assumption of new product development process

model is that new product ideas can be dropped at any stage of the
process if they do not satisfy the criteria for success at that particular
stage. Figure 7-1 shows the checkpoints (represented by stop signs)
that precede critical stages of the development process. The process
shown in Figure 7-1 is divided into two sections: front-end planning
and implementation.
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 Services Development and Design

New Service Development Stages

I)Front End Planning

1. Business strategy review/development
2. New service strategy development
3. Idea generation
4. Concept development and evaluation
5. Business analysis
II)Back End Implementation
6. Service development and testing
7. Market testing
8. Commercialization
9. Post introduction evaluation
 New Service Development Process
h Business Strategy Development or Review

h New Service Strategy Development

Front End h Idea Generation
Planning
Screen ideas against new service strategy
h Concept Development and Evaluation
Test concept with customers and
h Business
employees
Analysis
Test for profitability and feasibility
h Service Development and Testing
Conduct service prototype test
h Market Testing
Implementation
Test service and other marketing-mix
elements
h Commercialization
h Post introduction Evaluation
9
Source: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.
 7.4.1 Front-End Planning
Business Strategy Development
It is usually assumed that an organization will have an overall
strategic vision and mission.
◦ Clearly a first step in new service development is to review
that vision and mission.
◦ The new service strategy and specific new service ideas
must fit within the larger strategic picture of the
organization.

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New-Service Strategy Development: The types of new services
that will be appropriate will depend on the organization’s goals,
vision, capabilities and growth plans. By defining a new-service
strategy (possibly in terms of markets, types of services, time
horizon for development, profit criteria, or other relevant
factors), the organization will be in a better position to begin
generating specific ideas.

Offerings Markets
Current customers New customers
Existing service Share building Market development
New service Service development diversification

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Idea Generation: The step in the process is the formal solicitation of
new ideas. The ideas generated as this phase can be passed through the
new-service strategy screen described in the preceding step. Many
methods and avenues are available for searching out new-service ideas.

Service Concept Development and Evaluation: Once an idea surfaces

that is regarded as a good fit with both the basic business and the new –
service strategies, it is ready for initial development. In the case of a
tangible product, this would mean formulating rather basic product
definition and then presenting consumers, with descriptions and
drawings to their reactions.

Business Analysis: Assuming the service concept is favorable

evaluated by customers and employees at the concept development
stage, the next step is to determine its feasibility and potential profit
implications. Demand analysis, revenue projections, cost analyses, and
operational feasibility are assessed at this stage.
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 7.4.2 Implementation
Once the new service concept has passed all of the from-end hurdles, it
is ready for the implementation stages of the process.

Service Development and Testing: In the development of new tangible

products, this stage involves construction of product prototypes and
testing for consumer acceptance.
Market Testing: Because new-service offerings are often intertwined
with the delivery system for existing services, it is difficult to test new
services in isolation. The new service might be offered to employees of
the organization and their families for a time to assess their responses to
variations in the marketing mix or the organization might decide to test
variations in pricing and promotion in less realistic contexts by
intentions to buy the service under varying circumstances, While this
approach certainly has limitation compared with an actual market rest, it
is better than not assessing marker response at all. 06/20/2022 13
Commercialization: At this stage in the process, the service
goes live and is introduced to the marketplace. The stage has two
primary objectives.

Post introduction Evaluation: At this point the information

gathered during commercialization of the service can be
reviewed and changes made of the delivery process, staffing of
marketing-mix variables on the basis of actual market response to
the offering. No service will ever stay the same. Whether
deliberate or unplanned, changes will always occur.

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 7.5 Service Blueprinting
 7.5.1 What is a service Blueprints?

A service blueprint is a picture or map that accurately portrays

the service system so that the different people involved in
providing it can understand and deal with it objectively
regardless of their roles or their individual points of view.

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Blueprint components: The key components of service blueprints
are four. They are customer actions,” onstage,” contact employee
actions; “backstage “contact employee actions, and support
processes.

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 The support processes section of the blueprint covers the
internal services, steps, and interactions that take place to
support the contact employees in delivering the service.
Again in the legal example, any service support activities such as
legal research by staff, preparation of documents, and secretarial
support to set up meetings will be shown in the support processes
area of the blueprint.

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 18
Express Mail Delivery Service
SM Truck
Packaging
Truck
Packaging
Forms Forms
EVIDENCE
CONTACT PERSON CUSTOME PHYSICAL

Hand-held Hand-held
Computer Computer
Uniform Uniform

Customer Customer Receive

Calls Gives Package
Package
(Back Stage) (On Stage) R

Driver
Picks Deliver
Up Pkg. Package

Customer
Service
Order

Airport Fly to
Dispatch
Receives Sort Unload Load
Driver Fly to
& Loads Center & On
Destinatio Sort Truck
SUPPORT

Load on
PROCESS

Airplane
n

Sort
Packages
 19

SM Overnight Hotel Stay

Bill
EVIDENCE
CUSTOMER PHYSICAL

Desk
Hotel Cart for Desk Elevators Cart for Room Menu Delivery Food Lobby
Exterior Bags Registration Hallways Bags Amenities Tray Hotel
Parking Papers Room Bath Food Exterior
Lobby Appearance Parking
Key
Arrive Give Bags Call Check out
Go to Receive Sleep Receive
at to Check in Room Eat and
Room Bags Shower Food
Hotel Bellperson Service Leave
SUPPORT PROCESS (Back Stage) (On Stage)
CONTACT PERSON

Greet and
Process Deliver Deliver Process
Take
Registration Bags Food Check Out
Bags

Take
Take Bags Food
to Room Order

Registration Prepare Registration

System Food System
The four key action areas are separated by three horizontal lines.

 First in the line of interaction, representing direct interactions

between the customer and the organization. Any line a vertical line
crosses the horizontal line of interaction, a direct contact between the
customer and the organization, or a service encounter, has occurred.

 The next horizontal line is the critically important line of visibility.

This line separates all service activities that are visible to the customer
from those that are not visible.

 In reading blueprints it is immediately obvious whether the consumer

in provided with much visible evidence of the service simply by
analyzing how much of the service occurs above the line of visibility
versus the activities carried out below the line. This line also separates
what the contact employees do onstage from what they do backstage.
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