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4 developing service products:

CORE and

SUPPLEMENTARY ELEMENTS

LEARNING OBJECTIVES

By the end of this chapter, students should be able:

LO 1

LO 2

LO 3

Define what a service product is.

Know how to design a service concept.

Describe the flower of service and know how the facilitating and enhancing supplementary services relate to the core product.

LO 4

LO 5

LO 6

Know how service firms use different branding strategies for their product lines.

List the categories of new service development, ranging from simple style changes to major innovations.

Be familiar with the factors needed to achieve success in developing new services.

OPENING VIGNETTE1

Figure 4.1 Starbucks is a familiar brand that even has traditional tea consumers drinking out of its cups.

As you walk along the street, the aroma drifts through the air and attracts you. It is

drawing you toward the store with the green sign that has now become a common

sight. You enter Starbucks, the place where you can sit down and enjoy a great cup

of coffee in a comfortable settee or on a chair. You can also surf the Internet on the

free wireless broadband service that is available in many of the Starbucks outlets

around the world. Starbucks is a place that you would associate with coffee, before

anything else.

84 Chapter 4 • Developing Service Products: Core and Supplementary Elements

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As a service innovation, Starbucks has been transforming itself into a place for

entertainment. It wants to extend the pop culture. It does that through Hear Music

Starbucks. Customers can buy from an extensive selection of hand-selected and

compiled physical CDs in the Starbucks Hear Music Coffeehouses. Alternatively,

they can burn personalized CDs from a digital inventory of more than a million

sound tracks, including new recordings that can only be found in some Starbucks

outlets. Debut albums of some new musicians are actually launched and available

only exclusively at Starbucks outlets. Starbucks also sells movie DVDs and books

from emerging as well as established authors. It has tied up with Apple’s iTunes Wi-

Fi Music Store to allow music playing at selected Starbucks cafes, up to the last ten

songs played, to be browsed, bought and downloaded wirelessly onto the iPhone

or iPod. This music will sync back to the Mac or PC the next time it is connected.

Soon, we will no longer associate Starbucks with just mocha. Rather, we will see

it as a place to relax and feel at home. Starbucks is a company that has developed

new service innovations with great success. However, it cannot rest on its laurels

as competition is intense. It has to continue to reinvent itself to maintain its edge in

the industry.

...One of the trendsetters of

lifestyle services, Starbucks has

popularized the coffeehouse as contemporary

and chic...

Applying the 4Ps to Services 85