New Product Development and Services

Overview

• Apologies for absence: Lecture recorded to cover material despite instructor's absence.
• Agenda: Marketing of services, new product development, service excellence, measuring quality, etc.
• Group presentations resume: July 8th.

Services Marketing

Nature of Services

• Shift to service economy (e.g., banking, transportation, Uber Eats).
• Definition: An act that is intangible, not resulting in ownership (e.g., haircuts, rides).

Types of Services

• Government: Healthcare, public services, etc.
• Private not-for-profit: Charity, education, etc.
• Business sector: Varied services, including manufacturing and retail (e.g., dry cleaning, dining out).
• Manufacturing sector: Factory services, machine repair.
• Retail sector: Personal services like haircuts, dry cleaning, etc.

Measuring Service Quality

• Challenges: Intangible nature makes it hard to measure quality.
• Evaluation: Customer loyalty, word of mouth, ratings (e.g., Google ratings).

Characteristics of Services

1. Intangible: Can't be seen, tasted, felt, heard, or smelled before buying/using (e.g., furnace repair).
2. Inseparable: Produced and consumed simultaneously (e.g., haircuts).
3. Variable: Depends on who provides the service (e.g., different barbers may deliver different quality haircuts).
4. Perishable: Cannot store for future use (e.g., unutilized service hours).

Examples of Service Characteristics

• Pure services: Haircuts, massages, physiotherapy - no tangible product.
• Hybrid products/services: Automotive (sale of car + maintenance services), dining out (food + service).

Excellence in Service Delivery

• Reliability: Consistent quality (e.g., training for barbers to ensure similar haircuts).
• Responsiveness: Immediate service delivery (e.g., extra staff during peak hours).
• Assurance: Trust in service quality (e.g., certified professionals).
• Empathy: Personalized service (e.g., customizing haircuts for individual needs).
• Tangibles: Physical aspects like ambiance, cleanliness, uniforms, etc.

Best Practices for Top Service Companies

• Customer Centricity: Focus on customer experience due to the non-returnable nature of services.
• Service Quality: Ongoing auditing of quality (e.g., customer surveys).
• Handling Complaints: Empower employees to resolve issues on the spot.

New Product Development

Development vs. Acquisition

• Developing internally: Using R&D to create new products (e.g., Coca-Cola developing sports drinks in-house).
• Acquiring externally: Buying existing companies/products (e.g., PepsiCo buying Gatorade).

Challenges and High Fail Rate (95%)

• **Reasons for Failure: **
  • Overestimation of market demand
  • Poor product design
  • Incorrect positioning (e.g., wrong pricing)
  • Bad timing (e.g., economic downturns)
  • Inadequate promotion
  • High development costs
  • Competition (e.g., rival products launched ahead)

Stages in New Product Development

1. Idea Generation: Brainstorming or noticing an unmet need.
2. Scoping: Initial market analysis and feasibility.
3. Business Case Development: Detailed market demand, cost analysis.
4. Development: Creating prototypes, testing within the team.
5. Testing: Alpha and Beta testing with actual users.
6. Launch: Full market release, marketing campaigns.
7. Post-Launch Review: Evaluating success, considering adjustments.

Framework and Considerations

• Desirability: Do customers want it?
• Feasibility: Can it be made cost-effectively?
• Viability: Will it be profitable?
• Idea Validation: Through market research, customer feedback, prototyping.

Summary

• Importance of understanding characteristics of services and challenges in measuring quality.
• Best practices in delivering excellent services.
• Stages and factors to consider in new product development.

Next Session

• Topic: Pricing strategies.