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Berry: Creating new markets through service innovation

16 important questions on Berry: Creating new markets through service innovation

Few companies succeed in creating service innovtions that generate new market of reshape existing ones. How can companies move in that direction according to Berry?

executives must understand the 4 types of market-creating service innovations and the 9 factors that enable these innovations.

Market-creating service innovations promises far greater upside potential than imitative/incrementally improved service offerings. How does service innovation differs from product innovation? (3) (Berry)

1 The actual providers (service delivery staff) are part of the customer experience and thus party of the innovation
2 Services that require the psysical presence of the customer, need local decentralized production capacity.
3 Service innovators usually do not have a tangible product to carry a brand name

The matrix of Berry describes 4 types of market-creating service innovation. Describe the first cell 'Flexible solutions'?

These innovations offer a new core benefit and can be consumed and produced apart. By focusing on this type of innovation, executives can turn unsolved customer problems into service innovation opportunities that spawn (paaien) new markets. F.e. Fed.Ex. rapid/reliable services.
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The matrix of Berry describes 4 types of market-creating service innovation. Describe the second cell 'Controllable convience'?

Innovations that create markets on the basis of new delivery benefits offer controllable convencience. Companies should look for innovative ways to put customers in control of how they access a desired service (f.e. via technology). This can open untapped markets. F.e. Google: providing/ delivering information that's produced separate from the customer.

The matrix of Berry describes 4 types of market-creating service innovation. Describe the third cell 'Comfortable gains'?

Innovation that offer a new core benefit consumed and produced at the same place and time. It proviced comfortable gains, new experiences with direct benefits to customers emotional of psychical comfort (f.e. Starbucks). Managers of this innovations need to look for creative ways by which the service experience can be more comfortable/distinctive/enjoyable etc.

The matrix of Berry describes 4 types of market-creating service innovation. Describe the fourth cell 'Respectful access'?

Innovations that offer a new delivery benefit and production/consumption are inseparable. Companies create new markets are granting (verlenen) customers respectful access. Demonstrate respect to the customers time and presence in using the service. F.e. SWA: affortable, short-haul transportation. By enhancing the ease of the customers experience of a service, company can attract new customers and even create new markets.

Decribe the first driver that contribute to successful innovation "a scalable business model" (Berry).

Many service innovations are people-intensive and thus harder to scale. Their are different strategies to strengthen business models. F.e. become more capital-intensive (eBay invest in auction trading platforms and minimizes that way the need of staff + f. e. online services replace people).

Decribe the second driver that contribute to successful innovation "comprehensive customer-experience management" (Berry).

Services generally involve many more customer touchpoints. These experiences hinge upon (hangen af van) three experience clues (functional clues>technical quality, mechanical clues>non-human elements, human clues>behavior/appearance of employees). These clues create a total experience that directly influences the customers assesment of the quality and the value.

Decribe the third driver that contribute to successful innovation "investment in employee performance" (Berry).

Customers' perceptions of employee effort in delivering service have an especially strong impact on customer satisfaction and switching behavior.

Decribe the fourth driver that contribute to successful innovation "Continuous operational innovation" (Berry).

Service businesses are operations-intensive. Its difficult for imitators to catch up with service innovators that are continually improving operations.

Decribe the fifth driver that contribute to successful innovation "Brand differentation" (Berry).

The following factors help to build a strong, trusted brand: distinctively communicating a consistent message, performing core services reliably and finding ways to connect emotionally with customers.

Decribe the sixt driver that contribute to successful innovation "An innovation champion" (Berry).

Innovations always require champions: mobilizer of resources, lead the idea transformation, a doer etc.

Decribe the seventh driver that contribute to successful innovation "A superior customer benefit" (Berry).

Innovations can create new markets only if they offer a clear and better solution to a problem of sufficient importance to stimulate consumers to try the product or service.

Decribe the eighth driver that contribute to successful innovation "Affordability" (Berry).

When people want to change their behavior, they also need to have the means to do so. Cost-structure innovation is a common path to customer affordability.

Decribe the ninth driver that contribute to successful innovation "Continuous strategic innovation" (Berry).

Service (and manufacturing) businesses can't neglect (verwaarlozen) strategic innovation.

The success drivers for innovation require an organizational culture that supports human performance and innovation. What does this mean for companies according to Berry?

Companies seeking to create new markets with services, must create a culture for innovation. Employees must have the confidence to take risks and to freely share thoughts and suggestions with anyone in the organization.

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The question on the page originate from the summary of the following study material:

Managing Service Innovation | Flikkema

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