Extended Summary: Service Innovation Management / Servitization and Customer Experience (1ZM11)
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Course
Service Innovation Management (1ZM55)
Institution
Technische Universiteit Eindhoven (TUE)
This is an extended summary of all lectures for the course Service Innovation Management (1ZM55). The new name of this course is Servitization and Customer Experience. This 55-page document summarizes the essence of all topics covered in the course (as far as I could imagine when writing it). It in...
Introduction (lecture 1)
Service: the application of specialized competences (knowledge & skills) through detailed processes and
performances for the benefit of another entity or the entity itself.
The tangibility spectrum.
The IHIP paradigm
Intangibility
→ Services cannot be experienced/consumed until the purchase is made.
Characteristics: Solutions:
Cannot be inventoried Focus on tangible cues
Cannot be easily patented Use personal sources
Cannot be readily displayed/communicated Stimulate word-of-mouth
Pricing is difficult Create company image
Communicate after-sale
1ZM55 - course summary 1
, Criticisms:
Physical acts on customers’ bodies: the experience may be tangible → physical changes
Physical acts to owned objects: physically transformed objects are tangible
Heterogeneity
→ Service quality depends on a variety of factors thus a consistent product cannot be provided.
Characteristics: Solutions:
Service delivery & customer satisfaction Industrialize service (develop on a wide
depend on employee and customer actions scale)
Service quality depends on many Customize service
uncontrollable factors
No knowledge if the delivered service
matches the planned/promoted service
Criticisms:
Physical acts to owned objects: can often be standardized
Non-physical acts to customers’ minds: can often be standardized
Processing of information: can often be standardized
Inseparability
→ Services are usually provided and consumed at the same time in the same place.
Characteristics: Solutions:
The customer participates in the production Training and selection
process → customers are co-producers
Manage customers
Problems with mass production
Multi-site strategy (franchising)
Not possible to keep in stock
Criticisms:
Physical acts to owned objects: the customer is usually absent during production
Non-physical acts to customers’ minds: only when the performance is live
Processing of information: the customer is usually absent during production
Perishability
→ Unused service capacity cannot be stored after service production.
Characteristics: Solutions:
Difficult to synchronize supply and demand Demand management
services cannot be returned or resold Supply management
Restricted in time and place
Criticisms:
1ZM55 - course summary 2
, Non-physical acts to customers’ minds: performance can be stored in electronic/printed form
Processing of information: performance can be stored in electronic/printed form
From 4 to 7 p’s
Product: Place: Promotion: Price:
Features Channel Advertising Level
Quality Transportation Web strategy Differentiation
Branding Storage Salespeople Discounts
+ People: + Physical evidence: + Process:
Employees (e.g. training Facility design Flow of activities
& rewards)
Signage Number of steps
Customers (e.g.
Employee dress Customer involvement
education)
Towards an experience economy
Goods are 'platforms' for services, and services are 'platforms' for experiences.
Different processes to innovation
Traditional R&D model → in R&D units
Challenges:
The difficulty of finding all relevant issues before entering real markets
1ZM55 - course summary 3
, Process length → slow response
Required resources
Rapid application model → in project teams
Challenges:
Required resources
Balancing resources between development and service provision
Practice-driven model → in customer relationships
Challenges:
Finding the core of novelty → make tacit ideas more explicit earlier
Service-Dominant Logic (SDL)
FP1: the application of specialized skills and knowledge is the fundamental unit of exchange
Previously, value was embedded in an object, and value can be added by embedding e.g.
knowledge and skills
FP2: indirect exchange masks the fundamental unit of exchange
The service for service exchange is hidden; it is compensated through money, which hides the
knowledge and skills that have been embedded in the offering
FP3: goods are distribution mechanisms for service provision
FP4: knowledge is the fundamental source of competitive advantage
The greatest value is created by focusing on process management (people, knowledge, skills,
etc.) → operant resources
FP5: all economies are service economies
FP6: the customer is always a co-producer of value
Previously, value was created in the production process (efficiency), but this does not necessarily
translate to value for the customer
FP7: the enterprise can only make value propositions
Objects do not inherently contain value → we can only offer something that has potential value for
the customer
FP8: a service-centered view is customer-oriented and relational
Operant & operand resources
1ZM55 - course summary 4
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