Capturing the Value of Supplementary Services

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A brief note on Supplementary service verses standard service:

The service as a product is essentially described as a package or bundle of different services, tangibles and intangibles, which all together form the total product. The package is divided into two main categories: the first one is the main service, which is called the 'core service' or 'substantive service'. The other one is 'auxiliary services' or 'extras', which are often referred to as 'peripherals' or 'peripheral services'. These are also known as supplementary services. The core service is the basic value provided by the service product. It is the reason to purchase or consume services. This is the reason for which any company is in business too. Supplementary services are those that facilitate and enhance use of the core services. These are services other than core that companies offer to their customers to give additional value to their products or to encourage customer loyalty.

Flexible Services Offering:

It has been observed through research that most suppliers typically provide customers with more services than they want or need at prices that often reflect neither the value of those services to customers nor the cost of providing them. Too many times the manufactures continue to let sales people give away whatever services they think it will take to land a deal, even if those freebies dramatically reduce the profitability of business.

To overcome the cost associated with the above issues, the author has suggested the ‘flexible service offering’ model to enable manufacturing and service companies reduce the number and cost of services they use to augment their core products. This approach enables the company to identify a naked solution or a naked system (which is the bare-bones-minimum number of services uniformly valued by all customers in a given segment at the lowest possible price that yield a profit). These naked solutions are then wrapped with options – particular...
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