THE AUGMENTED SERVICE OFFERING - A CONCEPTUALIZATION AND STUDY OF ITSIMPACT ON NEW SERVICE SUCCESS

Unlike companies that produce tangible goods, service firms typically cannot rely on product advantage as a means for ensuring the success o f a new service. Developing a competitive response to a tangible produ ct may require significant investments of time and effort. In many cas es, however, competitors can easily duplicate the core.elements of a f irm's new service. This fundamental difference between new products an d new services means that managers who hope to find the keys to new-se rvice success must look to factors other than sustainable product adva ntage. Chris Storey and Christopher Easingwood suggest that managers m ust understand the totality of the service offering from the customer' s perspective. They explain that the purchase of a service is influenc ed not. only by the service itself; but also by such factors as the se rvice firm's reputation and the quality of the customer's interaction with the firm's systems and staff-in other words, by the augmented ser vice offering (ASO). Using the results of a study they conducted in th e 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 A SO comprises three elements: the service product, service augmentation , and marketing support. The core of the ASO-the service product-inclu des such dimensions as product quality, product distinctiveness, and p erceived risk. The study's results suggest that improvements in the se rvice product open up new opportunities for the firm, but have only mo dest effects on sales and profitability. Rounding out the ASO model ar e service augmentation and marketing support. Service augmentation enc ompasses such dimensions as distribution strength, staff-customer inte ractions, and reputation. The customer recognizes and responds to thes e elements of the ASO, but they are not part of the product core. Mark eting support involves those marketing and management actions that aff ect the quality of the product and its augmentation, even though custo mers 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 profitabilit y and sales for the firms in this study, but it does not offer enhance d opportunities. The marketing support elements contribute significant ly to all aspects of performance for the firms in this study. (C) 1998 Elsevier Science Inc.