New Service Development Essay

The following sample essay talks about developing new services and the difference between the process of developing new products. To read the introduction, body, and conclusion of the essay, scroll down.

The difference between the new product development process (NPD) and the new service development process (NSD) is the involvement of customers in services. A service is an intangible good that relies and focuses heavily on customer involvement and experience. Four main characteristics of services outlined by Alam & Perry (2002) are intangibility, heterogeneity, perishability and inseparability and it is because of these characteristics that the NSD and NPD process differ.

Whilst extensive research has been carried out in the area of NPD, little attention has been paid to the specifics of NSD. Three key issues have been outlined by Alam and Perry (2002). The first issue is that little effort has been made to propose NSD models. Only two linear NSD models have been proposed however neither address important stages such as the development of the cross-functional team or parallel processing which leads to cycle time reduction.

Secondly there is limited knowledge of the nature of the NSD stages in service firms and how they are to be managed.

Finally Alam and Perry highlighted that many firms don’t realise the importance of the customer because they do not obtain information or involve them in their NSD process. The role of the customer in a service is the most crucial. Unlike a mass produced product, a service is an experience, which involves a heterogenic interaction between the customer and the service provider.

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A service is more flexible than a product and able to meet the changing needs of the customer more quickly. In order to be successful, services need to meet the customers’ individual needs hopefully leaving a positive impression on the customer.

Services are continually evaluated by the customer, with the customer evaluating the sum of its parts; if one area performs poorly, then the whole service results in a low evaluation. This is why feedback at every stage of the service is essential. Feedback allows the service provider to identify areas that need development in order to improve the customers’ next experience. With this in mind Alam and Perry (2002) suggest a NSD process that is customer orientated, involving the customer in all stages of the NSD process outlined in the below table. Alam and Perry (2002) propose 2, 10 stage NSD models, one linear and one parallel.

The model incorporates the key stages of idea generation, idea screening and the development of a cross-functional team. By providing a parallel model, Alam and Perry offer a NSD process that suggest stages that can be carried out concurrently in order to fast track development. Such a process is very useful in the development of services where speed is essential due to threats of competitor replication (service ideas cannot be patented). In contrast, the NPD process is much slower (whilst speed is still important) it is essential that the product be perfected before it is launched.

Products are able to be patented whilst service ideas are not which is why the element of speed is a differentiating factor between the NSD and NPD process. However they still suggest a sequential, linear model which would result in a more thorough NSD process to be carried out. The appropriateness of each model depends on individual circumstances. When developing a new service it is belived that customer orientation creates superior customer value and service quality inevitably enhancing customer satisfaction.

This highlights the necessity of involving the customer at each stage of the NSD process as Alam and Perry (2002) suggest in their model. Additionally, service delivery personnel are in the best position to receive feedback from the customer because they are in actual contact with the customers. Crawford & Di Benedetto (2011) recommend that service delivery personnel be involved in the concept generation phase whereby they can provide real-life insight, identifying problem areas and offer their solutions.