DEVELOP NEW PRODUCTS
AND SERVICES
D1.HCS.CL6.07
Slide 1
Subject elements
This unit comprises four elements:

Analyse markets
Evaluate market trends in food production and/or food
and beverage service
 Create products or services based on market analysis
and within budgetary constraints


Monitor sales performance of products
and services
Slide 2
Assessment
Assessment for this unit may include:

Oral questions

Written questions

Work projects

Workplace observation of practical skills

Practical exercises

Formal report from supervisor
Slide 3
Element 1:
Analyse markets
Slide 4
Analyse markets
Performance criteria for this element are:

Target markets are identified in accordance with
enterprise marketing and merchandising policies

Analyse market competition

Client requirements are monitored informally in order to
evaluate market trends and client needs

New products and services are identified
Slide 5
Analyse markets
Performance criteria for this element are:

Opportunities to improve sales and services are
identified

Product and service range is monitored to identify the
demand for individual items and seasonal variations

Product and service range is planned
Slide 6
Need for new products and services
Need for new products and services
It is normal practice for businesses, regardless of industry,
to develop and introduce new products and services.
This may include:

Improvements to existing offerings

Complete changes of direction
Slide 7
Need for new products and services
Need for new products and services
New products and services will only be successful if:

It is unique when compared with competitor’s offerings

It provides value for money

The customer views the product or
service as valuable in their eyes
Slide 8
Need for new products and services
Examples of new products and services
What have been successful new products and services
that have entered:

Generally

The hospitality industry specifically?
Slide 9
Change
A rolling stone gathers no moss!
Slide 10
Change

What is change?

Why is it important?

What influences change
Change is inevitable
Slide 11
Continuous improvement

What is it?

Why is it important?

Who is responsible for implementing it?
Slide 12
Continuous improvement

Regardless of their visit it is important that the customer
receives a ‘quality offering’

A quality offering is being able to use a combination of
products and services

This combined offering, at a minimum, must meet the
customer’s:
 Needs
 Expectations
Slide 13
Continuous improvement
Need for continuous improvement
Continuous improvement and change focuses on improving:

Products

Services
Slide 14
Continuous improvement
Products and Services

Which is more important – product or service?

What do these include?

Which aspects can be improved?
Slide 15
The customer

The customer is............
Slide 16
Market segments
Identify market segments
Any hospitality organisation, like in any business in any industry,
cannot be everything to everyone.
It must:

Break down the potential audience into
segments with similar characteristics

Choose those segments they
believe will be the focus of their efforts
Slide 17
Market segments
Generic market segments

Age

Social background

Economic background

Cultural background

Special interests

Physical and mental abilities

Dietary needs
Slide 18
Market segments
Hospitality market segments

Business

Leisure

Religious

Sporting
Slide 19
Market segments
Tourism market segments

Outbound Tourists

Inbound Tourists

Domestic Tourists

International Tourists
Slide 20
Target market segments
Identify target market segments
What are the key target segments for:

Resorts

City hotels

Budget accommodation

Stand alone restaurants

Fine dining restaurant in a hotel

Corner bar

Coffee shop?
Slide 21
Target market segments
Benefits of establishing target market segments
The analysis and collection of information in relation to different
target market segments will guide:

Products and services offered

Prices charged

Where advertisements are placed

How advertisements are targeted

Staff required
Slide 22
Analyse market competition
Importance of analysing the market?

What do you want to analyse?

What information do you seek?

Where do you get this information?
Slide 23
Analyse market competition
What is market analysis?

Market analysis provides us with the information necessary
to understand what can cause changes in our operational
environment

A prime intent of this activity is to gain a more
insightful and detailed view of the organisation
and where it sits in the overall business and
other settings

Helps identify ‘current market situation’
Slide 24
Current market situation
Market situation

Total market characteristics – size, growth, trends

Customer needs, perceptions and buying behaviour

Products – service characteristics

Prices

Customer service and distribution

Channels

Communication
Slide 25
Current market situation
Competitive situation

Industry structure

The geographic market in which they compete

Their current marketing performance

Their competitive position

Strengths and weaknesses, and vulnerabilities of each
significant competitor

Their objectives and competitive strategies

Industry profitability
Slide 26
Current market situation
Product situation

For each product/service that the organisation offers,
sales, profits, contribution margins and growth should be
displayed

Product lifecycle and expected demand over the product’s
life should be considered

Growth of the product/service should be
contrasted with total market growth
Slide 27
Situation Analysis
Analyse the environments
It is vital to understand what can cause changes in our
operational environment.
It is important that managers analyse what is happening both:

Outside the business (external environment)

Inside the business (internal environment)
Slide 28
Analyse the environments
SWOT analysis

Strengths – what the business does well

Weaknesses – what the business can improve upon

Opportunities – where the business can improve or take
advantage

Threats – where the business may become
disadvantaged, weakened or susceptible
Slide 29
Analyse the environments
Analysis of external environment

Competitors

Economic climate

Customer preferences

E-business
Slide 30
Analyse the environments
Analysis of external environment

Environment

Technology

Political issues

Legal issues
What other external influences exist?
Slide 31
Analyse the environments
Analysis of internal environment

Environment

Organisational structure

Products

Services

Equipment

Marketing
Slide 32
Customer focus

Before we can tailor our products and services to provide an
offering that the customer wants, we first need to find out
what they actually want

Many businesses make the mistake of providing an offering
they THINK the guest wants, but what is offered doesn’t
meet their needs
Slide 33
Customer focus

Who are your customers?

What are the needs of your customers?

How do you identify their needs?
Slide 34
Customer needs
Generic needs

Value for money

‘Offering’ reflecting what was advertised

Expectations met/exceeded

To feel respected

To feel welcomed

To be served by friendly staff
Slide 35
Customer needs
Generic needs

To be dealt with in a prompt and courteous manner

To receive assistance when necessary

To be in comfortable, clean surroundings

To feel remembered and recognised

To be heard and understood
Slide 36
Customer needs
Specific needs
What are the specific needs of your markets?

Business

Women

Family

Leisure

Elderly

Others
Slide 37
Expectations
Expectations come from:

The company’s image or reputation in the market

Past visits

Advertisements and promotional messages

Competing hotels

Industry standards

Comments from family, friends and colleagues

Price charged for the offering
Slide 38
Identify new products and services
As mentioned, an ongoing process for a hotel to stay ‘fresh,
unique and in demand’ is to identify new products and services
to attract and maintain customers.
In hospitality the product/service offering is combined to meet
customer needs and consists of the following elements:

A tangible product or products

Environment

Services
Slide 39
Identify new products and services
Products

What is classified as a product?

What are examples of products in the hospitality
environment?
Slide 40
Identify new products and services
Services

What is classified as a service?

Who provides the service?

What are examples of services in the
hospitality environment?
Slide 41
Identify new products and services
Characteristics of services
Pure services are activities or benefits characterised by:

Intangibility

Inseparability

Perishability

Variability
Slide 42
Opportunities to improve sales and
services
Need to identify improvement opportunities
The need to identify opportunities for improvement is especially
important when new products and services are introduced as
new opportunities may become apparent as they are
implemented into the marketplace:

How can you do this?
Slide 43
Opportunities to improve sales and
services
Ways to identify improvement opportunities

Observing what occurs in the workplace

Develop and use a checklist to guide what you observe

Involve workers in your observations

Analysing documentation
Slide 44
Opportunities to improve sales and
services
Ways to identify improvement opportunities

Being advised by management/owners

Monitoring the external business environment

Making ‘improvement/continuous improvement (CI)’ a
standing topic in every staff meeting

Involving staff
Slide 45
Generate ideas
Generating ideas

How would you generate ideas?

Why is it important to involve staff in the process?
Slide 46
Generate ideas
Common techniques to generate ideas include:

Talking to colleagues and supervisors

Looking at what happens in other venues

Contacting industry peak bodies

Reading industry literature

Conduct internet research

Using creative thinking techniques
Slide 47
Generate ideas
Creative thinking techniques

Brainstorming

Visualising

Making associations

Lateral thinking

Six thinking hats
Slide 48
Generate ideas
Use relevant knowledge
In addition to creative thinking ideas, there is always the need
to apply relevant knowledge to a situation where workplace
improvements are being considered:

Technical knowledge

Service-based knowledge

Information from different work areas

Information from colleagues
Slide 49
Review ideas
Review ideas for relevance and practicality
When you have captured ideas and information relating to them
your next step is to review and evaluate these ideas.
Slide 50
Review ideas
Review ideas for relevance and practicality
This allows you to:

Make legitimate and rational decisions about the options
which were generated.

Evaluating the alternatives to determine:
 Which ones remain as viable alternatives
 Which ones should be discarded as
inappropriate
Slide 51
Review ideas
Practicality considerations

Impact on other existing house protocols, policies and
procedures

Impact on layout

Staff ability

Expected revenue

Cost

Impact on service delivery
Slide 52
Monitor and identify demand for
products and services

Once new products and services have been identified it
is important to identify the demand for specific items
and any seasonal variations that may affect it

How can you do this?
Slide 53
Monitor and identify demand for
products and services
Product and service lifecycles
When deciding on the introduction of products and
services it is important to understand how long they will
have a positive and profitable impact. Most products and
services will have some lifecycle.
This lifecycle is divided into four stages:

Market introduction

Market growth

Market maturity

Sales decline
Slide 54
Monitor and identify demand for
products and services
Identifying demand for individual products and
services

Observation

Conduct a trial run

Place an advertisement

Suppliers

Industry associations

Journals and articles

Other hotels in the chain

Competitors

Feasibility study
Slide 55
Monitor and identify demand for
products and services
Understand seasonal demand
Ways to identify seasonal demand include:

Analyse historical data

Review sales figures

The level of demand for specific products
and services at different times

Identify expected peak times

Identify expected low demand times
Slide 56
Planning product and service range
Once ideas for products and services have been identified
as a concept, further thought must be given as to how it is
to be introduced into the market:

What are product considerations?

What are service considerations?
Slide 57
Planning product and service range
Product considerations

Product line decisions

Packaging

Warranties

Branding

Brand rejection
Slide 58
Planning product and service range
Service considerations

Intangibility

Inseparability

Perishability

Variability
Slide 59
Element 2:
Evaluate market trends in food
production and/or food and
beverage service
Slide 60
Evaluate market trends in food
production and/or food and beverage
service
Performance Criteria for this Element are:

Identify and access information sources on market
trends in food production and/or food and beverage
service

Evaluate market trends for relevance to the
enterprise current and potential markets

Identify and access relevant information
to assist development of new products
or services
Slide 61
Understanding trends
Identify and access information sources on market
trends
Understanding trends of the industry is vital in ensuring
that what you are seeking to provide to the market is not
only fresh and relevant but is in demand:

How can you gather information on industry trends?
Slide 62
Understanding trends
Types of information sources

Colleagues, supervisors and managers

Representatives

Developing your own industry network

Conferences and seminars

Product launches

Trade magazines
Slide 63
Understanding trends
Types of information sources

Hotel school publications

Newsletters

Brochures

Advertisements

Government bodies
Slide 64
Understanding trends
Types of industry statistics and trends

Industry Statistics

General industry trends

Tourism patterns

Technology

Leisure time
Slide 65
Understanding trends
Types of industry statistics and trends

Environmental issues

Discount operators

Customer demands

Quality demands
Slide 66
New product and service development

Every hospitality business conducts product and
service development, whether it's done intentionally or
unintentionally

This section will explore some of the steps associated
with product and service development
Slide 67
New product and service development
Risks in new product and service development

Developing a new product or service first and hoping it
will sell

Financial risks

Duplication from competitors

The time taken to develop new products
or services, particularly in fast moving
industries
Slide 68
Steps in product and service
development
New product or service development process steps

Idea generation

Screening

Idea evaluation

Development - technical and commercial

Commercialisation
Slide 69
Element 3:
Create products or services
based on market analysis and
within budgetary constraints
Slide 70
Create products or services based on
market analysis and within budgetary
constraints
Performance criteria for this element are:

Incorporate relevant market trends into food service and
menu planning

Develop products and services to take account of market
trends

Develop products and services to take
account of enterprise operational constraints
or limitations

Construct products and services to
meet profitability targets
Slide 71
Incorporate trends into menu
planning
Types of menus

Table d’hôte

À la carte

Banquet

Conferences
Slide 72
Incorporate trends into menu
planning
Types of services

Breakfast:
 Continental
 English breakfast
 American
 Eastern
 Morning tea
 Brunch
Slide 73
Incorporate trends into menu
planning
Types of services

Lunch

Afternoon tea

High tea

Dinner

Supper
Slide 74
Menu constraints
Menu length

Cost to maintain each dish on the menu

Ready availability of ingredients

Time available to prepare ingredients
Slide 75
Menu layout trends
Entrée

6 or 8 offerings
Mains
One or two of each of the main foods:

Beef, lamb, chicken, fish, seafood,
vegetarian options
Slide 76
Menu layout trends
Side orders

Potato dish (hot)

Green vegetable (hot)

Salad (cold)
Desserts

Chocolate flavoured

Citrus flavoured

Hot dessert

Cold dessert (ice cream)
Slide 77
Menu layout trends
Cheese plate

Cheddar, brie, blue cheese
Coffee and tea selection

Local styles are popular

Italian style coffee

Wide variety of tea
Slide 78
Menu balance
Balance in terms of:

Prices

Ingredients

Cooking styles

Complexity and simplicity

Traditional dishes

New experiences

Taste
Slide 79
Final menu considerations
Considerations

Personal likes and preferences of the owner/manager

Equipment available in the kitchen

Staff skills

Historic records

Market research
Slide 80
Final menu considerations
Considerations

Seasonal offering

Staff numbers

Contractual requirements

Demographic considerations

Local produce
Slide 81
Develop products and services in line
with market trends
Food and beverage trends

What are different food and beverage trends around
the world?

Refer to Manual on pages 77 – 83 for examples
Slide 82
Consider organisational constraints
and limitations
Organisational requirements

Access and equity principles and practices

Maintaining ethical standards

Meeting goals, objectives, plans, systems and
processes

Legislated obligations
Slide 83
Consider organisational constraints
and limitations
Organisational requirements

Management and accountability channels

Manufacturer’s and operational specifications

OHS policies, procedures and programs

Quality assurance and continuous
improvement processes and standards
Slide 84
Consider organisational constraints
and limitations
Involve stakeholders

Quantities of items to be obtained or prepared

Timelines that apply

Restrictions that apply – such as preferred supplier
arrangements, budget, compatibility, space issues,
compliance requirements

Compliance issues that need to be
addressed
Slide 85
Consider organisational constraints
and limitations
Involve stakeholders

The needs of those who will be using the product

Customer needs, wants and preferences

Introduction and commissioning requirements

Training required

Financing arrangements
Slide 86
Consider organisational constraints
and limitations
Types of resources
Resources can encompass:

Physical resources

Human resources

Financial resources

Intellectual property
Slide 87
Consider organisational constraints
and limitations
Common resources

Location/premises

Occupational health and safety (OHS) resources

Plant/machinery

Raw materials – used to produce the
products or service

Refurbishment requirements

Staff amenities
Slide 88
Consider organisational constraints
and limitations
Common resources

Stock and supplies

Storage space

Technical equipment and software

Staffing

Training

Training materials
Slide 89
Consider organisational constraints
and limitations
Notification of new products and services
It is essential that an organisation which chooses to
introduce a new product or service to the market lets all
relevant stakeholders know about it:

Customers

Managers

Finance

Human resources

Sales and marketing

Staff
Slide 90
Consider organisational constraints
and limitations
Communicate information about new products and
services
This product and service knowledge can therefore include:

Details about physical products

Information about the services that are available

Information on prices, specials, deals and
packages

Details about the operation of the business
Slide 91
Consider organisational constraints
and limitations
Develop organisational policy, procedures and
standards

Organisational service culture and values

Strategic goals of the organisation

Service policies, guidelines and processes

Ethical standards established by the organisation

Legislation, codes and practice

Technical standards
Slide 92
Consider organisational constraints
and limitations
Effective communication of expectations
Communicating customer service standards can come in
many different ways including:

SOPs (Standard Operating Procedures)

Job descriptions

Task sheets

Orientation programs
Slide 93
Consider organisational constraints
and limitations
Effective communication of expectations

Formal meetings

Staff briefings at the start and end of shifts

Training sessions

Observation and mentoring

Informal communication during a shift
Slide 94
Consider profitability targets

Naturally the introduction of new products and services
normally is an expensive exercise from a financial point
of view

When deciding on new products and services they
must be done in a way that is financially feasible in the
long term

No business aims to introduce any new concept
unless there is some financial benefit to it
Slide 95
Consider profitability targets
Initial costs

Closure of revenue generation outlets or rooms

Refurbishment costs

Purchase of furniture, fixtures and equipment

Removal of old equipment

Project management planning and
implementing costs
Slide 96
Consider profitability targets
Initial costs

Purchase of new supplies including food, beverages,
furnishings or amenities

Employment of staff

Training of staff

Promotional materials and activities to
make customers aware of new offerings

Loss of productivity until people
come ‘up to speed’
Slide 97
Consider profitability targets
Budgets

What is a budget?

Why is it important to have one when planning new
products and services?

What is contained in a budget?

Who prepares a budget?
Slide 98
Deciding prices
Deciding on prices for new products or services
Determining a fair and accurate price for any new product
or service can be hard as no existing benchmarks may
have been set:

How do you set prices?

What needs to be considered?
Slide 99
Deciding prices
Pricing questions

How do my customers perceive my product or service,
in terms of price and value?

How do my prices compare with my competitors?

What values and benefits do my customers
get from my product or service?

Are my prices consistent with those
benefits and values?
Slide 100
Deciding prices
Pricing questions

What is the current supply and demand relationship of
my product or service?

Am I in an industry where the demand for my product or
service has a short life cycle, and thus I need to cash in
quickly?

Do I have a product with a recognizable name
that allows me the luxury of overpricing?
Slide 101
Deciding prices
Pricing considerations

Price indicates ‘value’

Understand customer perception of ‘value’

Consider fixed and variable costs

Consider the competition

Consider different price points
Slide 102
Element 4:
Monitor sales performance of
products and services
Slide 103
Monitor sales performance of
products and services
Performance criteria for this element are:

Evaluate new products and/or services in consultation
with stakeholders

Analyse products and services in terms of business
objectives

Adjust products and services based on
feedback and profitability
Slide 104
Evaluate new products and services
Need for evaluation
After new products and services have been implemented,
a formal evaluation needs to analyse and assess the
above information to determine operational effectiveness:

Why is this important?

How do you do it?
Slide 105
Evaluate new products and services
Evaluation questions

Did it work?

What aspects worked and what didn’t?

Did it represent value for money?

Were sufficient contacts or sales made?

Did it come in on budget?
Slide 106
Evaluate new products and services
Evaluation questions

Did the campaign/idea achieve the stated objectives?

To what extent?

What feedback was received from customers and
agencies?

What implications does this have for future
undertakings?

What wouldn’t we do the same next time,
and why?
Slide 107
Evaluate new products and services
Areas to evaluate

The procedures or systems

The workflow – that is the order in which things are
done

Whether or not there are gaps or overlaps in service
provision

The workload of staff

The time it takes to do a task or job

Job design
Slide 108
Evaluate new products and services
Areas to evaluate

Level of customer satisfaction with the service or
product provided

Cost

Level of interest created

Demand patterns

Ease of implementation

Increase in sales or leads

Return on investment
Slide 109
Evaluate new products and services
Getting feedback from stakeholders

Owners of the business

Site/property managers

Supervisors

Staff, teams and workgroups

Customers

Government agencies
Slide 110
Methods to gather feedback
Getting feedback from internal management and staff

Encouraging staff to feedback all relevant comments
from customers

Not shooting the messenger

Setting agenda items for staff meetings

Developing appropriate documentation
Slide 111
Methods to gather feedback
Getting feedback from internal management and staff

Conduct regular meetings

Conduct specific feedback sessions

Get staff to provide scheduled feedback when
problems occur

Gather thoughts during debriefing sessions
at the conclusion of shifts
Slide 112
Methods to gather feedback
Getting feedback from customers

From guest comment cards

Use an online option

Observing customers

Direct communication from customer/guest to staff

Management meeting customers on departure

Requiring frontline customer/guest contact
staff to inquire about the customer experience

Staff should also be required to feedback any
comments they have overheard
Slide 113
Analyse products and services
against business objectives
Importance of business objectives
The basic requirement when analysing the success of new
products and services is its ability to reach its desired
objectives of performance standards:

What types of business objectives exist in relation to
new products and services?

How can you measure success against these
objectives?
Slide 114
Analyse products and services
against business objectives
Types of business objectives
The basic requirement when analysing the success of new products and
services is its ability to reach its desired objectives of performance
standards.
Business objectives may be related to:

Quantity

Quality

Time

Sales figures

Profitability

Customer satisfaction

Service standards
Slide 115
Analyse products and services
against business objectives
Monitoring and evaluating implementation success of
new products and services

Work out what needs to be monitored

Decide on methods or measures to use (see next slide)

Compare what is happening with what
should be happening

Take appropriate action
Slide 116
Analyse products and services
against business objectives
Methods of analysis

Reports

Obtaining customer feedback

Using a pretend customer

Observation

Use of checklists

Brainstorming sessions

Staff input and review
Slide 117
Adjust products and services
Possible changes to products and services
As a result of input from all stakeholders and a
comprehensive analysis of the performance of new
products or services the following actions may need to be
taken to improve the successful implementation of
products or services:

Remove the product or service if it is not successful

Reduce or expand the product or service
range

Amend product or service inclusions
Slide 118
Adjust products and services
Possible changes to products and services

Change or enhance the promotional message

Establishing additional or revised pre-programmed
decisions to address shortcomings or problems

Providing training to staff to improve service provision

Revising the allocation of duties to staff

Buying new equipment, or more equipment
or different equipment

Making changes to establishment policies and
standard operating procedures (SOPs)
Slide 119
Adjust products and services
Possible changes to products and services

Increasing staff numbers

Changing operating/trading times

Changing layout of the premises/department

Organise more information for customers

Change prices to meet customer demands
whilst still meeting financial expectations
Slide 120