Christopher J. Easingwood

New Product Development For Service Companies

It is well known that services differ from manufactured goods in a number of significant ways. Services are largely intangible, produced and consumed simultaneously, heterogeneous and perishable. These differences can lead to changes in service management. Christopher J. Easingwood has investigated how new products development practices in service organizations may reflect these differences. He has profiled practices found in a sample of service companies in the United Kingdom on topics ranging from idea generation to post-launch assessment, together with the strategic role and organizational location of new products. A number of special characteristics of the new product activity in services companies are identified. For instance, the number of new product introductions may be restricted due to customer and staff confusion when faced with a proliferation of service products. Test markets are used primarily to ensure the proper functioning of the service rather than to provide a base for a national sales projection. These and other characteristics appear to be appropriate adaptations to the special features of services. They are part of a pattern that shows some of the ways that service companies have adapted the new product development process to meet unique problems in the service environment.

Determinants of new product performance: A study in the financial services sector

Contributes to the growing body of information on the determinants of performance in new products. Examines a sample of “typical” new products (instead of the more usual comparison of successes and failures) and identifies the factors that are crucial for producing outstanding performance in the financial services sector. Shows that marketing factors (i.e. effective distribution and effective communications) are the keys to new service success. In addition demonstrates the importance of the quality of the service offered and the quality of the tangible evidence of the service as a basis of outstanding performance. These key determinants of performance need to be built on the skills of the frontline staff and the push they give to the new product. Reiterates the importance of synergy when developing new products. Product advantage is not the key success factor, contrary to previous findings in other sectors. Attributes this to the nature of the sector studied (financial services) where sustainable competitive product advantage is rarely achieved. Makes a comparison between success factors for consumer services and industrial products/services.

The Augmented Service Offering: A Conceptualization and Study of Its Impact on New Service Success

Abstract Unlike companies that produce tangible goods, service firms typically cannot rely on product advantage as a means for ensuring the success of a new service. Developing a competitive response to a tangible product may require significant investments of time and effort. In many cases, however, competitors can easily duplicate the core elements of a firm’s new service. This fundamental difference between new products and new services means that managers who hope to find the keys to new-service success must look to factors other than sustainable product advantage. Chris Storey and Christopher Easingwood suggest that managers must understand the totality of the service offering from the customer’s perspective. They explain that the purchase of a service is influenced not only by the service itself, but also by such factors as the service firm’s reputation and the quality of the customer’s interaction with the firm’s systems and staff—in other words, by the augmented service offering (ASO). Using the results of a study they conducted in the consumer financial services industry in the U.K., they identify the components of the ASO, and they examine the relative contributions of these components to the success of new services. In their model, the ASO comprises three elements: the service product, service augmentation, and marketing support. The core of the ASO—the service product—includes such dimensions as product quality, product distinctiveness, and perceived risk. The study’s results suggest that improvements in the service product open up new opportunities for the firm, but have only modest effects on sales and profitability. Rounding out the ASO model are service augmentation and marketing support. Service augmentation encompasses such dimensions as distribution strength, staff-customer interactions, and reputation. The customer recognizes and responds to these elements of the ASO, but they are not part of the product core. Marketing support involves those marketing and management actions that affect the quality of the product and its augmentation, even though customers typically are not aware of them. These elements include knowledge of the marketplace, training of contact staff, and internal marketing. Enhanced service augmentation has significant effects on profitability and sales for the firms in this study, but it does not offer enhanced opportunities. The marketing support elements contribute significantly to all aspects of performance for the firms in this study.

A nonsymmetric responding logistic model for forecasting technological substitution

Abstract This article presents a simple model of technological substitution termed as nonsymmetric responding logistic (NSRL). Based on the theory that substitution is an imitation process, the model can accommodate different patterns of technological substitution by allowing the imitation effect to vary over time systematically. It allows the S-curve to be symmetrical as well as nonsymmetrical, with the point of inflection responding to the substitution process. Data from four medical innovations are analyzed to illustrate the generality of the model.

Success factors for new consumer financial services

A study of the characteristics of successful new consumer financial products is described. The first stage of the investigation involved the identification of financial product attributes possibly associated with success. A total of 43 were found. Information was then collected on these attributes for 77 new financial products and was simplified by grouping into nine distinct factors. The article describes all nine factors in detail with illustrations. Four of the factors are particularly associated with success. They are: “overall quality” (the product, the delivery system, after‐sales service, the organisation′s reputation for quality); having a differentiated product (being first, being innovative); product fit and internal marketing (the new product complementing existing products and receiving the support of staff); and use of technology.

The Impact of the New Product Development Project on the Success of Financial Services

This article explores the impact of a number of aspects of the new product development project on the success of new financial services in the United Kingdom. It is found that synergy between the new product and the organisation, and the quality of internal marketing are particularly associated with eventual success for the new product. Technological advantage, market research and responsiveness (i.e. speed of development) are also associated with success. Banks seem to be particularly effective in their use of market research, whereas Building Societies are good at in ternal marketing and synergy. New interest accounts have been particularly successful due to the use of market research and the speed of their development.

Types of New Product Performance: Evidence from the Consumer Financial Services Sector

Using the results of a large survey of new consumer financial services, this research investigates the benefits that new products bring to a company. It is argued that merely assessing sales, market share, and profits (“product benefits”) ignores such wider reasons for developing new products as developing a market or improving customer loyalty (“company benefits”). Three distinct dimensions of performance are identified: sales performance (e.g., sales and market share); profitability, and enhanced opportunities (longer-term company benefits). All are related to success. However, it is found that highly successful new products must produce multiple benefits. It is also found that approximately half the value derived from the introduction of the new products is derived from company benefits. As such, these wider benefits should be used as performance measures for new products. When evaluating new products, firms base the evaluation almost entirely on financial criteria (e.g., revenue, profit, or profit margin) or other such closely related measurable items as sales volume and market share (Griffin and Page, 1993). However, using financial criteria alone takes a very narrow view as to the extent of benefits to the company of developing new products. It has been found that many products are specifically launched to complement existing products, to use company resources more fully, to broaden or improve the company image, to diversify, or to grow into new markets (Shipley, Edgett, and Forbes, 1991). Therefore, it can be argued that these are the important benefits that a new product brings to a firm, not the level of sales or profitability. As such, these wider benefits should be used as performance measures for new products. However, this is only slowly gaining acceptance in practice. Even “failures” in financial terms can be considered to be successful if these wider benefits are taken into account. For example, Maidique and Zirger (1985) found that in a number of cases, new product failures contributed “to subsequent successes by augmenting the organizations knowledge of new markets of technologies or by building the strength of the organization itself.” Similarly, Souder (1988) modified the definition of technical failure in new product development projects to “high” and “low” failures, depending upon the extent of technical knowledge gained. This article considers the importance of these wider benefits of new product development in the context of new services. These wider benefits are termed “company benefits” to distinguish them from financial and sales-based benefits (termed “product benefits”). Company benefits accrue to the firm as a whole; whereas, product benefits are measured in relation to the individual product. To date, there has been virtually no attempt to study empirically the wider range of measures of performance (Hart, 1992). However, given “the notion that superior performance requires a business to gain and hold an advantage over competitors” (Day and Wensley, 1988), it is vital to understand these benefits. This article explores the nature of these benefits and reports the results of recent empirical research into the performance of new consumer services. The consumer services a sector chosen for examination is financial services. Specifically, this research identifies the different types of benefits new service products are producing for firms; explores the relationships between company benefits, product benefits, and new product success, and assesses the relative importance of different types of benefits.

Marketplace success factors for new financial services

Examines the effects of service offered on the success of new customer financial services in the United Kingdom. Shows that previous research has concentrated on the new product process ignoring what are termed direct factors (characteristics that affect the interaction between the service offered and the consumer). Finds that a number of characteristics describing the service core and the augmented service offering are highly correlated with success.

The Value of Multi-Channel Distribution Systems in the Financial Services Sector

An examination of the use of multiple distribution channels in the marketing of financial products in the UK is conducted. A cluster analysis of 153 new financial products shows that 85 per cent of the products belong in one of three multi-channel distribution channels: a ‘Balanced’ strategy draws on all the distribution routes; ‘Network’ strategies utilise a network of outlets; ‘Arms Length’ strategies employ those channels such as direct mail, direct response advertising or intermediaries that do not involve direct contact between company staff and customers. Finally, an association between the use of multiple channels, especially if they are used intensively, and success is demonstrated. Success is estimated both on a single overall scale but also on a number of sub-dimensions.

Positioning of Financial Services for Competitive Advantage

The financial services sector is becoming increasingly competitive. Deregulation allows formerly nonoverlapping financial institutions to compete. To survive and succeed, financial institutions must develop strong positions. A position summarizes the distinctive competence that a company seeks to convey to the marketplace to establish its competitive advantage. In this article, Christopher Easingwood and Vijay Mahajan describe a number of positioning attempts in the financial services sector. They are guided by two central objectives. The first is to show how the special characteristics of services give rise to eight different positioning possibilities for financial services organizations. These positions present a range of potential options from which the manager may choose. For instance, an “extra service” position is one option, a “performance” position is another. The second objective is to demonstrate the use of the positioning framework, with examples taken from the insurance sector to provide illustrations rather than a complete picture of insurance positioning. The article concludes with a number of recommendations. For instance, financial institutions should avoid overcrowded positions and occupy underexploited positions. If accepted, these recommendations should help the financial services executive develop a competitive positioning strategy.