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CHAPTER 8:
SERVICE INNOVATION AND DESIGN
CHAPTER TOPICS
Challenges of Service Innovation and Design
Important Considerations for Service Innovation
Types of Service Innovations
Stages in Service Innovation and Development
Service Blueprinting: A Technique for Service Innovation and Design
Technology Spotlight: Facebook: A Radical Service Innovation
Global Feature: The Global Service Innovation Imperative
Strategy Insight: Strategic Growth through Services
CHAPTER OBJECTIVES
1. Describe the challenges inherent in service innovation and design.
2. Present an array of different types of service innovations, including service offering innovation,
innovating around customer roles, and innovation through service solutions.
3. Discuss the importance of engaging customers and employees and employing service design
thinking in service innovation.
4. Present the stages and unique elements of the service innovation and development process.
5. Demonstrate the value of service blueprinting as a technique for service innovation and design
and how to develop and read service blueprints.
LECTURE TIPS & AIDS
1. An interesting way to begin a discussion of this chapter is to ask if anyone has considered starting
their own business. Most students have at some point. A good discussion can revolve around how
they would go about this—what would they need to know, what steps would they follow? This can
lead nicely into a lecture/discussion of the new service development steps and blueprinting.
Another good way to structure this discussion is around a major assignment. This can be a team,
individual, or pair assignment. The following directions lay out this type of an assignment for
undergraduates.
This assignment gives you the opportunity to design a new service or redesign an existing
service based on your newly acquired service marketing expertise. You may choose to do
this assignment on your own or with a partner.
There are many things to consider when designing a service. You should first decide
which market segment(s) you want to target and how you want to be positioned relative
to the competition. Then you will need to describe the service. You should use
appropriate service marketing concepts to describe your service and your proposed
marketing strategy. You should also illustrate the service you have created (or re-created)
by developing a blueprint of it. If you are redesigning an existing service, you should also
include a blueprint of the original service.
Your report should be typed, professionally presented, and be between 8-10 pages. You
will also have the opportunity to present your new service to the class. Each person (or
partners) will give a short presentation (10 minutes) describing the key elements of
his/her service and the related service marketing concepts. Think of the presentation as a
brief pitch you are giving to get funding for your new service idea or to convince your
boss of a needed redesign in the company's service.
A more extensive assignment, appropriate for upper level undergraduates or graduate students
follows:
New Service Development Project: Using the new service development process
described in Chapter 8 as a guide, design and develop a new service offering. This could
be a new service for a team member’s company, or an entrepreneurial service. Use tools
and frameworks from class to assist your development efforts. It would normally not be
possible in the class time frame to conduct extensive primary research with customers to
support the new service, however the need for such research should be acknowledged and
informal customer interviews may be part of this project. A service map/blueprint of the
service must be included.
3. Another excellent way to explore this topic is through guest speakers, particularly managers who are
responsible for new service development in their companies. Or, an entrepreneur who has
successfully developed a new service could be invited to share his/her approach and experiences.
QUESTIONS TO USE WITH CHAPTER OPENING VIGNETTE
Chapter 8: PetSmart
1. If you live near a PetSmart brick and mortar store, drop by for a visit. What services are offered at the
store? Be as specific as you can. Carefully observe the design and layout of the store facilities. How
does the physical evidence of the store facilitate the actions of employees, human customers, and
pets? Be as specific as you can.
2. If you cannot visit one of PetSmart’s brick and mortar stores, research the company online via their
website and social media pages. What evidence of new and innovative services being offered by
PetSmart can you find? Be as specific as you can.
3. What are some ways in which PetSmart can continue to innovate its offerings for pet parents and their
pets?
ACTIVE LEARNING ACTIVITIES
1. This exercise requires a field trip to observe a local service business. The instructor can allocate one
class period to complete the field trip and another for presentations. Alternatively, the field trip can
be done outside of class so that only one class session is used. The instructor and/or the class choose
a type of service business with many local competitors so that different service delivery options are
available (services like specialty coffeehouses, automobile oil changing services, and hair salons are
ideal for this assignment). Small groups of students will then visit a service business of their choice
within the designated industry (e.g., every group must visit a specialty coffeehouse). The exercise
consists of the following activities:
With your group, visit the business you have chosen. You will need to gather enough
information to do a blueprint of the service. Create a blueprint of the service that can be
presented to the class. Make sure all of the blueprinting elements are complete.
Each group then presents its blueprint to the class. Don’t be afraid to be creative in your
presentation -- role playing, short videos or story telling can make your blueprint “come to
life!” The class votes on the best blueprint, and a prize is awarded to the winning team.
After the “contest,” the instructor and the class can analyze similarities and/or differences in
the delivery of the services the groups have blueprinted.
2. Compare two services on the Internet. Discuss the design of each in terms of whether it meets your
expectations. How could the design or the service process be changed? Which one is most effective
and why?
1. Create a photo essay that captures a service delivery process and all of the physical evidence
(including the servicescape) and the impact it has on customers. (A photo essay is a group of
photographs with a common theme, used as instruction through its presentation, accompanied by
narration.) The photo essay should not be merely a collection of pictures, but should reflect
theory, capture customer (and perhaps employee) emotions, provide perspectives and insight, and
allow for discovery of information in following a firm’s service delivery process.
2. Class members will be working in small groups to complete this service blueprinting exercise.
The activity involves the following steps:
Each group creates a blueprint for one of the services described on the next two pages, either
“Diets to You” or “Azure River Tubers.” Groups should refer to textbook for the basic steps
for designing a blueprint, the generic map, and the sample blueprints.
Groups then share their blueprints with the class, and the class discusses the content of the
blueprints and the process of developing them. To conclude the exercise, the class
brainstorms potential uses of blueprinting.
“DIETS TO YOU” DELIVERS TO HOMES*
The paperboy delivers the paper. The mailman delivers the mail. And Diets to You
delivers diet foods–about 900 calories each. So the day begins for 100 dieters who
pay on average $75 a week for fresh, low-calorie, low-fat meals delivered to their
homes or offices five days a week.
Carolyn Adamson began this business in 1991. She and her partner recently ironed
out the bugs and began talking to potential franchisers. “I’m surprised I don’t have
any competition,” says Ms. Adamson. The idea seemed so obvious to her, and
customers agree.
Three years ago, Ms. Adamson and her partner were working as technical writers in
an engineering firm, and hating it. “We were both on diets but never had enough time
to cook low-cal, low-fat meals at home,” she recalled. If only someone delivered
fresh food to the door!
Advertising such a service in the local newspaper, the two attracted eight customers
and quit their jobs to work on the business full time out of a caterer’s kitchen they had
subleased. Ms. Adamson has not advertised since; for fear of attracting too many
customers too soon, but finally she’s ready. Ms. Adamson has hired a publicist and
expects business to double this year.
“I’m eating their breakfast right now,” says Charles Baldwin, a cheery-sounding
customer of Diets to You. Putting down his blueberry muffin, the referee explained
that he signed on two years ago, lost twenty pounds, and never gained them back.
The menus only repeat every six weeks and include such fare as lasagna, quiche,
soups, Mexican food and pizza. “It’s basically not diet food,” Ms. Adamson said.
“We just use diet ingredients and cut the portions.” The meals come in 900, 1200 and
1600 calorie servings, with no more than 20 percent of the calories coming from fat.
The bigger the portion, the more you pay. At the Garcia household, Angela Garcia
orders 1200 calorie meals for herself and 1600 for her husband, three times a week.
Since both spouses work, she said, “It really fits our lifestyle.”
Today’s breakfast: muffins, vanilla yogurt and a pear. Lunch: home-style turkey soup,
bagels and fruit. Dinner: baked Greek shrimp and noodles in tomato-garlic sauce,
broccoli, salad, and for dessert, lemon cookies.
[*Note: The service described here is fictitious but is adapted from: Lenore Skenazy (1988). “Dieting
Service Delivers to Homes.” Advertising Age. March 14.]
Azure River Tubers
Azure River Tubers (Tubers), which has an exclusive concession agreement with the
State Department of Natural Resources, offers tubing trips down the Azure River
from Scenic Bend to Lookout Bridge, a distance of 12 miles. The Azure River is
located about 15 miles south of Capitol City and runs through a series of canyons.
The journey offers outstanding views and the chance to enjoy an undeveloped and
unspoiled natural environment.
Most customers are college students and young adults from Capitol City who enjoy
spending an afternoon in the sun floating down the scenic Azure River. Because it is
hot and sunny, customers need to be prepared. They are advised by Tubers in its
brochures, advertisements and website to bring sunscreen, hats and long-sleeved
shirts to wear over their bathing suits. Many tubers forget at least one of these
essential items. The Tubers Rental Shack at the river stocks a complete line of
accessories for anyone who has forgotten something.
Customers start their journey down the Azure River at Scenic Bend, where they park
their vehicles in a parking lot owned and maintained by Tubers. Parking costs $5 for
all day, but is free for those who spend at least $20 in the Tubers Rental Shack.
Before they begin their tubing trip, customers must rent a tube at the Tubers Rental
Shack. Tubers inventories over 200 tubes in a backroom of the rental shack. Two
college students work there part-time, filling the tubes with air and maintaining them.
Each tube is checked for air pressure and leaks before it is rented to a customer.
Customers can either bring their own refreshments or buy food and drink from the
Tubers Rental Shack. In addition, Tubers will sell or rent small floating coolers to
keep snacks cold. The coolers can be attached to a tube with a hooked rope.
Many tubers like to stop during the trip and go ashore. They have picnics, swim and
enjoy the scenery.
At the end of the 3-4 hour trip, customers arrive at Lookout Bridge, where they exit
the river. If they wish, they can take a shower at the Tubers Deck House next to the
bridge. A Tubers van takes them back to their vehicles at Scenic Bend where they
started.
4. An alternative, and more extensive, written project could be used to provide students with more
experience in service blueprinting. An assignment that might be appropriate for such an assignment is the
following:
Class members will be working in small groups. Each team will choose a service that is easily
accessible and familiar to the team, or to a subset of the team’s members. This can be an
on-campus service, a local service establishment, a service where one of the group members (or a
family member) is employed, or a firm where one of the team members was previously
employed. The focus can be a service provided to external customers or an internal service
provided to employees inside an organization. It can be a service that stands on its own, or a
service that supports a manufactured product. In choosing a focus, keep in mind the various
components of the project as some contexts will be more amenable to the assignment than others.
The requirements of the project are as follows.
(1) Describe the service you have chosen in terms of its brand positioning and target
customers.
(2) Develop a blueprint of the service, drawing on the material in chapter 8 of the text on
service blueprinting. Many people find that Visio software is the best software to use for
actually creating the blueprint, although PowerPoint software can also be used. Analyze
the blueprint (2-3 pages, double spaced) in terms of its alignment with the service brand
position.
(3) Document and analyze the servicescape and/or other physical evidence of the service,
drawing on the material in chapter 10 of the text, and related readings. Collect,
photograph, or video tape all elements of physical evidence for this service. Turn in these
materials together with an analysis (2-3 page double-spaced) of the servicescape and/or
physical evidence. Does the servicescape/physical evidence reinforce the brand
position?
(4) Write a management memo. Assume you are consultants to the managers who are
responsible for the service you have chosen. Write a memo (using appropriate memo
format) addressed to them that explains the blueprint, the servicescape and/or physical
evidence, and your analysis. Highlight key insights from the blueprint and your
servicescape and physical evidence analysis that reinforce or contradict the brand
positioning. In the memo, discuss at least two ways the blueprint could be used and
suggest recommendations based on your analysis. The memo should be no longer than 2
pages, single-spaced. Assume these managers are not familiar with service blueprinting.
POSSIBLE WEB SITES FOR CHAPTER 8
Company Location
ARAMARK www.aramark.com
Bank of America www.bankofamerica.com
eBay www.eBay.com
Expedia www.expedia.com
IDEO www.ideo.com
Mayo Clinic www.mayoclinic.com
Netflix www.netflix.com
PetSmart www.petsmart.com
Tide Dry Cleaners www.tidedrycleaners.com
APPROPRIATE CASES FOR CHAPTER 8
From previous Zeithaml, Bitner, and Gremler Services Marketing texts:
Merrill Lynch: Supernova [included in the sixth edition of this text: Zeithaml, Bitner, and
Gremler (2013) Services Marketing: Integrating Customer Focus Across the Firm, New York,
NY: McGraw-Hill Companies]
United Breaks Guitars [included in the sixth edition of this text: Zeithaml, Bitner, and Gremler
(2013) Services Marketing: Integrating Customer Focus Across the Firm, New York, NY:
McGraw-Hill Companies]
Michelin Fleet Solutions: From Selling Tires to Selling Kilometers [included in the sixth edition
of this text: Zeithaml, Bitner, and Gremler (2013) Services Marketing: Integrating Customer
Focus Across the Firm, New York, NY: McGraw-Hill Companies]
People, Service, and Profit at Jyske Bank [included in the sixth edition of this text: Zeithaml,
Bitner, and Gremler (2013) Services Marketing: Integrating Customer Focus Across the Firm,
New York, NY: McGraw-Hill Companies]
JetBlue: High Flying Airline Melts Down in Ice Storm [included in the sixth edition of this text:
Zeithaml, Bitner, and Gremler (2013) Services Marketing: Integrating Customer Focus Across the
Firm, New York, NY: McGraw-Hill Companies]
Using Services Marketing to Develop and Deliver Integrated Solutions at Caterpillar in Latin
America [included in the sixth edition of this text: Zeithaml, Bitner, and Gremler (2013) Services
Marketing: Integrating Customer Focus Across the Firm, New York, NY: McGraw-Hill
Companies]
Giordano: Positioning For International Expansion [included in the fifth edition of this text:
Zeithaml, Bitner, and Gremler (2009) Services Marketing: Integrating Customer Focus Across
the Firm, New York, NY: McGraw-Hill Companies]
Shouldice Hospital Limited (Abridged) [included in the fifth edition of this text: Zeithaml, Bitner,
and Gremler (2009) Services Marketing: Integrating Customer Focus Across the Firm, New
York, NY: McGraw-Hill Companies]
Custom Research Inc. (A) [included in the fourth edition of this text: Zeithaml, Bitner, and
Gremler (2006) Services Marketing: Integrating Customer Focus Across the Firm, New York,
NY: McGraw-Hill Companies]
easyCar.com [included in the fourth edition of this text: Zeithaml, Bitner, and Gremler (2006)
Services Marketing: Integrating Customer Focus Across the Firm, New York, NY: McGraw-Hill
Companies]
The Quality Improvement Customers Didn’t Want [included in the fourth edition of this text:
Zeithaml, Bitner, and Gremler (2006) Services Marketing: Integrating Customer Focus Across
the Firm, New York, NY: McGraw-Hill Companies]
Ernst & Young LLP [included in the third edition of this text: Zeithaml and Bitner (2003)
Services Marketing: Integrating Customer Focus Across the Firm, New York, NY: McGraw-Hill
Companies]
From other sources:
Cleveland Clinic [Harvard Business School Case 9-607-143, 2007]
Pharmacy Service Improvement at CVS (A) [Harvard Business School Case 9-606-015, 2006]
Zipcar: Refining the Business Model [Harvard Business School Case 9-803-096, 2005]
Golden Arch Hotel: McDonald’s Adventure in the Hotel Industry [American Graduate School of
International Management (Thunderbird) Case, A02-05-0017, 2005]
Bank of America (A) [Harvard Business School case, 9-603-022, October 2002, written by
Stefan Thomke]
Everdream [Harvard Business School case, 5-800-251, 2000]
Sothebys.com [Harvard Business School case, 9-800-387, 2000]
