Ejecuci´ on en serie o paralelo

Next to the core service and the supplementary services a service provider has to define a service programme. Although there are providers which offer only a single service, most providers provide a full set of services which add up to a so-called service programme (see Figure 5.6). For a bank, for example, diverse core services (or ‘products’) and supplementary services can be differentiated. The range of core services includes accounts, loans, credits, investment products.

Typical supplementary services are phone and online banking, advice in money issues, software for organising private finances, etc.

So far, we have talked about single services as well as supplementary services.

But many providers offer a wide range of services, i.e. a set of services called the service programme. For example, banks offer accounts, investment facilities and loans. In many cases, it is difficult to decide whether a certain service is an addi-tional service or a modification of the focal service. For example, it could be argued that airlines offer flights as the only core service. On the other hand national flights and international flights can be regarded as two separate core services. You might ask: What’s the matter with that differentiation? However, it is important to acknowledge that the range of the service programme can have a significant impact on customers’ evaluations and behaviour. A major influence of the service programme concerns the cross-buying behaviour of customers. One goal of services marketing is to enhance customer relationships, i.e. making

cus-Supplementary service 1 regarding core service 1

Supplementary service n regarding core service 1 Core service 1

Supplementary service 1 regarding core service n

Supplementary service n regarding core service n Core service n

Comprehensive supplementary service 1

Comprehensive supplementary service n Service programme

FIGURE 5.6 Structure of a service programme

tomers buy more of the provider’s services. Of course, service companies can only realise this objective when they offer more than one service. But, not every service programme leads to intensive cross-buying behaviour. To achieve this, a provider must offer a synergetic service programme to enhance its relationships.

One example for the relationship enhancement strategy via enlarging the service programme is the approach of banks to offer insurance services and vice versa.

The car rental company Sixt also tries to realise more of its potential with its cur-rent customers by selling cars in addition to cur-renting cars (see Figure 5.7).

The service programme has gained importance in many industries during the last decade. In order to make customers more loyal and profitable, providers enlarge their service ranges. Examples of these industries are the financial services sector (e.g. banks offering insurance services), the educational sector (e.g. universities offering senior university programmes and training courses for companies) or the tourism industry (e.g. airlines offering cars to rent in cooperation with car rental companies). In the tourism industry hotels often enlarge their service programme for competitive advantage. See Services marketing in action 5.6 which describes the plans of the hotels consortium Leading Hotels of the World that extends its service line for its member hotels in order to ensure member acquisition and retention. These examples show that the existing service programmes are very different. More precisely, service programmes can be distinguished according to different criteria, as can single services: car rental companies which often only offer cars to rent as a single core service versus hotels which often offer further services, like restaurant or conference services next to the traditional hotel serv-ice, or the degree of target group focus, such as airlines offering car rental services in addition to flights for their customers versus universities offering programmes for target groups other than their traditional ones.

FIGURE 5.7 The Sixt service programme Source: Sixt 2004.

Overall, a service programme not only contains several core services but also the supplementary services a provider offers. Regarding supplementary services, the provider has to decide which supplementary services are offered for which core services. On the one hand, services can be offered independently from the core service, while, on the other hand, there are supplementary services which are only offered in connection with specific core services (see Figure 5.6). Looking at a hotel for example, business services are often offered to regular guests as well as to conference guests (even when they are not staying in the hotel). However, room service is only offered to guests of the hotel.

Why might service providers design a comprehensive service programme? What are the advantages of a broad service programme?

Risk distribution. A full service programme helps to minimise risk because the risk associated with the different services is distributed. When one service fails, another might compensate for the losses. This logic could be observed in the European bank market at the turn of the twenty-first century. During the new economy hype, banks focused strongly on wealthy private clients, while espe-cially non-wealthy private clients as well as SME (small and medium enterprises) were neglected. Some banks even tried to ‘outsource’ their commercial banking organisation. But then, after the stock exchange crash, the preferred segment of wealthy clients suddenly was not as profitable as before because the services which had made them profitable previously, investments, were less lucrative.

Consequently, banks were lucky that the other two segments which predomi-nantly used the account and credit services helped to compensate for the lower performance of the previously more valuable segment of wealthy private clients.

SERVICES MARKETING IN ACTION 5.6:

Leading Hotels extends its line

In today’s information age, independent hotels need even more proactive market-ing help to compete with the broadshouldered chains. Consortia such as Leadmarket-ing Hotels of the World have recognised this fact of life in what has become a global universe and is extending its line of services beyond traditional reservation pro-grammes. At Leading Hotels’ June 2002 annual convention held in Los Angeles, several line extensions were announced, ranging from financial management and consulting services to comprehensive educational programmes.

Perhaps the announcement made with the most fanfare was the plan to form a joint venture with the Hotelschool The Hague to be known as The Leading Hotel Schools of the World. The organisation is designed to provide the most advanced, luxury-focused education in the hospitality industry. The curriculum will be targeted at both students seeking a career in the industry as well as experienced managers.

Source: Hotels 2002.

Cost synergies. Offering a wide range of similar services helps to realise synergies on the cost side. This is especially the case when all services of a programme can be offered with the same production factors. When for two services, more or less the same qualifications are needed, then spare capacities of the employees can be used for offering similar services. For example, when a bank is additionally offer-ing insurance services, the bank employee is taught about these in order to be able to sell and manage the new services. But when the implementation of the strategy by means of technology systems is required, other employees (e.g. pro-grammers and database experts) are needed.

Cross-selling potentials. If a service provider knows that its customers need other services which fit into the service strategy of the provider, an opportunity to realise cross-selling potentials exists for the service provider. One example of this is the tendency in the financial services sector to offer a full service programme.

Banks offer insurance, while insurance companies offer bank products. By this strategy, banks and insurance companies try to use their competencies in order to offer other financial products. The intention is to realise the full potential of the existing customer relationships.

Switching barriers. The more services a customer purchases from a certain provider, the more the customer will become accustomed to that provider and so too the tougher and more elaborate it will be to dissolve the relationship with the provider, especially by competitors. In the financial services example, a customer who has not only to change their bank account but also insurance contracts when switching to another financial services provider will perceive higher switching barriers than in the case of a customer who only has to change his bank account.

Loyalty effect. When customers use a broad service programme, this will lead to better customer relationships. From the company point of view, they will gain more knowledge about the customers. Every interaction with the customer repre-sents the opportunity to gain information about the customer. The more services a customer uses, the more interactions take place and therefore the more informa-tion can be gained which can be used to improve the relainforma-tionship, e.g. by offering customised services. From the customer’s point of view, the more services used, the more the customer will get to know the company, its services and employees.

Providing that the customer associates positive perceptions with the company, services and employees, then more contacts because of the higher number of services used should result in a closer relationship with the customer being realised, which will eventually lead to the higher loyalty of the customer.

There are many reasons for broad service programmes. However, there are also disadvantages of broad service programmes that might prevent a service provider from offering them.

Higher complexity. The more services a company offers, the more complex is the management of these services. On the individual level, providing several services leads to higher requirements with regard to the service personnel. On the organi-sational level, a broader service programme leads to more complex structures and processes. For example, controlling the success of several services is more com-plex than controlling just a single service.

Negative side effects. In the event that one service of the whole service programme has certain quality or image problems, these might easily be transferred over the whole service programme in the customer’s perception. While in the other direc-tion, i.e. with positive side effects, there can also be synergies regarding customer perceptions, a provider with a broad service programme might have problems with negative side effects.

Image adulteration. The more services a provider offers, the more difficult it will be for the service provider to realise a precise and clear image in the market. This will be especially the case if the services offered are not very similar. However, in the case that the company intends to offer a broad range of similar services image adulteration is not a problem.