Forward Thinking Strategies for Boosting Your Business - Essay Example

and Section # of Managing Products and Services The aim of this essay is to provide managersin Service industry with a set of guidelines which they should consider while managing their offered services. The conclusion is produced by critically analyzing the differences between Product Management and Service Management, thus making it a comparative study. In recent years the service industry has flourished dramatically. With the rise in purchasing power and leisure time of consumers and growth in complex products; the trend towards service industry has boosted. Today, a variety of service industries are found in the world e.g. banking, insurance, communications, transportation, travel and entertainment. Today, more than 60% of economy in developed countries depends upon service industry and more than 74% in United States alone. Therefore, today the experts seem to be more interested in focusing how to manage and market their services instead of products. This essay will help to understand the main features of this rapidly growing industry of present era. [1] Before the advent of service industry, the definition of product used to encompass the functionality of service as well because that service was particularly related to those products. This type of service is known as 'after-sales service'. But now due to increased interest in pure service industry, the scholars and professionals have begun to point out the differences between the two. Both product and service are offered to the customers with the aim of fulfilling their needs and demands and earning profits in return. But the literature tells us that it is the 'characteristics' of service which make it different and configurable in comparison to product. Those characteristics are explained as follows: [1] Intangibility: A service is intangible because it cannot be touched, seen, possessed, owned etc. Before using the service, a customer is unknown about its quality. And the service provider cannot assess and control the quality of service until and unless it receives the feedback of customers. It totally depends upon client expectations. So the customer is always uncertain about the value and quality of a service that he/she can experience after its use. Inseparability: A service is inseparable from its provider. That's if the provider is not present the customer cannot use the service e.g. A patient cannot be treated until and unless a physician is present to examine him/her. It also poses that often a customer wants the service to be provided in a specific way or by some specific individual __ it enhances the pressure of perfection in that particular individual that directly provides the service. Perishability: The service cannot be stored for future use or to present to someone as the specimen of quality. If the customer does not avail it, he cannot expect it to be there in the same condition, value etc in future as well e.g. if a client misses the appointment with lawyer that time can never be captured again. At one time the rooms in the most renowned hotel of the city are available but after a few days you might not get a single room vacant there. It means service greatly depends upon supply and demand. Variability: The quality and consistency of service is subject to greater change because it is delivered by 'people' and the behavior of human beings cannot be controlled. They can be in good temperament at one time and in a depressed mood the other. Thus, the quality of service greatly depends upon experience, knowledge, attitude, style, personality etc of the provider e.g. in a restaurant one waiter provides excellent service but another hardly knows how to please a customer. These characteristics show that provision of service or 'service production' is totally based upon 'personnel contact', also called 'people contact'; while a 'product manufacturing' does not need people (customers) for its completion. Both product and service are of two types in nature. [2] But it is to be noted that often a company which offers a product to the market place is also offering service along with it. The differentiation depends upon the proportion of two. If the tangible product is more with respect to the quantity with a little service along it then the offer falls under the category of product e.g. Ford offers consist of repair and maintenance services as well. At one end the offer may include a purely tangible product while on the other hand the offer is completely service. An offer that includes equal amounts of two is called 'hybrid' offer e.g. food restaurants provide both food and their service. An offer that offers more service and little goods along it is considered as service only .e.g. American Airlines passengers basically buy transportation service but on their way they are also offered food, drinks and an airline magazine. So it shows that today service and product go side by side. Therefore, the companies today are focusing upon 'customer experiences' in order to differentiate themselves e.g. Coca-Cola heavily invests in Event Management which is a service to entertain wealthy people. [1] The literature tells us that the process of Management involves two steps: one is "Planning" and other is "Marketing". [3] The processes of Product Planning and Sales Planning involve same steps which are: 1. Product/ Sales Planning: 2. Idea for new product/service 3. Product/service evaluation 4. Product/service development 5. Product/service lifecycle considerations [4] 6. Product/service portfolio management 7. Product/service differentiation [1] The difference comes when we have to market the two. Because of that much similarity often authors and professionals use the term 'Product/ Service Management Process' in order to explain it. The main differences involved in the marketing processes are: 1. The market of Service is niche which is normally the affluent people, while the product can be sold to anyone. 2. In marketing a Service, more people contact is involved in comparison to product. It involves two types of contact; one is face to face and other is over the telephone. It is called Interactive Marketing, means that the quality of service heavily depends upon 'how' the service is delivered to the customer and the service deliverer as well while in product marketing no body is least concerned about how a dealer is behaving with the end user who comes to him to buy a certain product and how does he/she looks like. 3. Another important difference between the two is that the employees of service industry have 24/7 availability to the employees, therefore people work there in the form of shifts and there is no concept of fixed holidays in a week, while in a product manufacturing concern there is no concept of 24/7 availability and they live a normal life. Because of this company has to do Internal Marketing [6] The internal marketing process involves the training and effective motivation of those employees who have a direct or indirect customer contact and all other supporting people in service provision process with an aim of making them learn the importance of customer and their behavior with them. They should know that only pleasing their customer can satisfy the customer and that is the only way for them to exist and remain in this industry. [1] Hence, the differences show that it is more challenging to market a service with respect to market a product. Those businesses which are completely service-oriented like consulting, professional or technology service businesses are faced with some of the most common and difficult challenges that do not necessarily apply to product businesses. These are stated below: 1. Clients cannot see or touch services before they purchase them: Because of this characteristic, it is difficult for the service provider to promote a service, control its quality and set price. It poses greater uncertainty and higher risk rate for the provider as he dose not know before actually providing the service that what the customer will like, will the quality of service be up to every customer standard, will the service providing mechanism will please the customer, will he be happy with the offered price etc. All such queries remain unanswered until the provider actually contacts with the customer. 2. Services are often produced and consumed simultaneously: It makes it difficult for the service provider to test and fix the problem before actually presenting it before the customer. Only after the customer uses it, the provider can know if there was any shortcoming in the quality. It also presents greater risk rate to the provider because without actual provision of the service it is impossible to estimate its shortcomings. That is why it is said that services are provided and consumed at the same time .e.g. a doctor cannot provide his service to the patient without the presence of the patient at that time. Only after examining by the doctor a patient can tell if he like the attitude of doctor, if he liked the way the doctor examined him and suggested medicine etc. 3. Trust is necessary: It is necessary for the service provider to develop an environment of trust with its potential customers. It requires greater public relationships and contacts. This is sometimes more important then the service offerings and value proposition of the service itself. Therefore, in the service industry it has been observed that service providers are often greatly involved in personal contact building and relationship building and they teach their teams the same as well. Because of this their business heavily depends upon the relation building with their customers which is normally not considered even least important in product industry. 4. Competition is often not who you think: The competitors of Product Companies are necessarily the Product Companies but for a service provider it is not necessarily the service provider itself. It means that often the customer is the competitor of the service provider. A single offended customer can even destroy a huge percentage of total business .e.g. in a restaurant if one customer is annoyed by the services he/ she can destroy the image of that restaurant by relating to it in bad words to whomever he/ she meets. 5. Brand extends beyond marketing: In service industry the brand building is not just about who the company is but it also depends heavily about how the employees of that company communicate about it. It means that not only customers' experiences and suggestions matter but also the words of employees of the company. If the employees themselves do not praise the services of the company before others then it also damages the identity and goodwill of the service provider. In Product Company employees' word of mouth cannot make havoc as the customers can physically consume the product. 6. Proactive lead generation is difficult: In service industry many providers have tried to use the concept of lead generation like in product companies but have failed. It means that not every product marketing tactic can be useful in service marketing process. Importance lies heavily on carefully working out selling services in the main strategy. In service industry only those selling techniques should be used which have already been practically proved useful otherwise it can cause heavy financial damage to the company. 7. Service deliverers often do the selling: The sales concept in service industry is quite different from that of product sales. Sales force cannot be utilized for this purpose because it heavily depends upon those employees who are directly in contact with the end user. These are the employees who are directly involved in the service provision .e.g. waiter in a restaurant, consultant in consultancy firm, nurse in a hospital, teacher in college etc. so, if these people are not good at dealing with the customer they can become a catalyst in the drop of sales. 8. Marketing and sales lose momentum: In product companies the gap between marketing activities and selling proportion does not do much harm but in service industry it poses a greater risk for the provider. Therefore, the cooperation between marketing and sales people should be quite balanced in order to boost profitability. If the marketing people are bringing in lots of customers but sales team cannot provide enough service to all those customers then this shortage can be very harmful for the name of the firm and can loose it a great deal of customers. 9. Passion is necessary, yet elusive: In service industry an all the time high passion and enthusiasm and active work of brain is required otherwise the sales can be dropped easily. The passion of staff is directly proportional to the financial success and is measurable as well. But it can be defined that how much passion all the time will be sufficient because it greatly depends upon the type of customers the service provider handles. Sometimes one customer is not at all concerned about the down spirit of the service provider but at the same time another customer can feel it seriously and can even leave the place at the same time causing serious damage to the repute of the organization. [7] All the above stated considerations suggest that in Service Management main role is played by the "customers" therefore, for better service provision the organizations are now advised to inculcate Customer Relationship Management (CRM) in their main strategy to follow. CRM approach provides various tools to better communicate with the customers. It is necessary for the management to keep them happy and satisfied because today's customers are more knowledgeable and intelligent in their buying habits and can easily stray away. CRM provides such tools and techniques that can be used to retain both types of customers for a longer time. This approach includes: 1. Order management and availability 2. Channel and partner management 3. Customer data management 4. Event management 5. Call centers 6. Technology-enabled service 7. Better field service 8. One-to-one marketing It is not necessary for a firm to act upon all the above tools, every intelligent organization choose those which can provide profit increase in their own particular environment. Not only Service industry but also the Product industry has been seen to act upon the concept of CRM and a lot of companies have induced various levels of CRM tools and techniques and are benefiting from them to a great extent. But the success of using CRM approach heavily depends upon the choice of its tools and techniques .e.g. a consultancy firm can use one-to-one marketing, order management and channel and partner management techniques but development of Call Center may prove a loss for it. [5] It is to be noted that this essay cannot provide all the necessary insight about managing the services because in literature very few studies are available which specifically deals with the service industry. Still a lot of work in this industry needs to be done. After having discussed all the concepts it is concluded that the process of Service Management and Product Management are exactly the same, the difference comes only in the process of marketing the two. If the Service Provider keeps in account the given nine considerations when formulating the Marketing Strategy for its services then it will be able to formulate a competitive strategy with minimum risk of loss. Works Cited 1. Kotler & Armstrong. Principles of Marketing. New Jersey: Prentice-Hall, Inc, 2001 2. Philip Kotler, Thomas Joseph Hayes, & Paul N. Bloom. Marketing Professional Services: Forward Thinking Strategies for Boosting Your Business, Your Image and Your Profits. New Jersey: Prentice-Hall, Inc, 2002 3. Donald R. Lehmann and Russell S. Winer . Product Management (McGraw Hill/Irwin Series in Marketing), 4th edition 4. Carter McNamara. Product and Service Management (recurring activities to manage a product or service). Field Guide to Non Profit Program Design, Marketing & Evaluation. 1997 5. Kristin Anderson and Carol Kerr. Customer Relationship Management 6. Serge Daudelin. What Is The Difference Between Product And Service Marketing. Ezine Articles. 7. Mike Schultz and John Doerr. Service Business Management: Nine Common And Difficult Challenges. Read More