The Services Sector Marketing - Essay Example

The services sector marketing Introduction Services sector deals with services which are not tangible as compared to goods. Just like tangible goods, the services need to be marketed. Marketing is whereby the consumers’ needs are identified and then the respective products which will lead to the satisfaction of these needs are produced. In the case of services, we have the workers of a certain organization going out and identifying those services that are needed by the people. The services are then developed to suit these needs. The HSBC bank needs this information on services sector marketing so as to improve the quality of its services. This will be important for the bank to win a larger client base by getting new clients and also maintaining its current clients. The HSBC bank is a major bank in the UK and has more assets than the rest of the banks. This aspect makes it less risky as compared to the other banks and it is able to pay for all the costs it incurs in the day to day running of the business. The service sector is also very important to the economic wellbeing of a country as it contributes a considerable amount to the GNP. The essay will therefore seek to impart knowledge about the services sector marketing. It will also explain about the gaps model and its usefulness in improving the effectiveness of marketing. The gaps model This model was developed by authors and was based on the quality of service. The model was made based on the perceptions of the consumers towards the quality of service. It was concluded that the service quality depended on four gaps. Some in-depth measurement scales were developed a year later. The perceived service quality can be said to be the difference between the expectations of the consumer and their perceptions. This will depend on the four gaps’ sizes and directions with respect to the way the service quality is delivered as per the requirement of the company (Vovici Cooperation, 2009, pg 1). The gaps are grouped into an overall customer gap which is further classified into provider gaps. The provider gap has 4 gaps. Under the provider gap, gap 1 is lack of knowledge of the customers’ expectation; Gap 2 is the lack of proper designs and standards; Gap 3 is the lack of delivery as per the service standards; and finally Gap 4 is the lack of matching the performance according to the promises the organization made. The provider gaps are known as internal gaps. The overall objective is to close these gaps. The model aims at connecting the internal and external customers (Vovici Cooperation, 2009, pg 1). Customer gap The factors leading to customer gap include gap 1 which is the lack of knowledge about the customers’ expectations. This can be resolved through research which is aimed at finding out the needs of the customers. Various methods can be used to collect data from the people. These methods include questionnaires, observations and interviews. Through this, the organization is able to identify the various needs of the people and thus structure the services to meet these needs (Vovici Cooperation, 2009, pg 1). Research is important because the organization would otherwise have offered its services in the way they deemed fit which could have been contrary to the customers’ requirements. Structuring services that are as per the customers’ requirement of the customers will attract more customers and this will be to the overall benefit of the organization. In addition to this, the customers are happy to contribute or give their opinion to the way certain services should be and therefore identify with the organization. Another factor that leads to customer gap is gap 2 which is the failure to select the right designs and standards for a service. Wrong designs and standards lead to the development of services which are of poor quality and do not meet the customer’s needs. The customer is the center of focus and if this customer is not happy with the services he or she is being offered this is not good for the business. This gap should therefore be closed through employment of staff that is qualified to make the best designs and who are knowledgeable of the standards that are expected for the services to meet the needs of the customers (Vovici Cooperation, 2009, pg 1). The third factor leading to the customers’ gap is gap 3 which is the lack of delivery as per the service standards. Poor delivery will be determined by the people doing that task in the various sectors of service production. For a service to be produced, there are many people involved. If these people do not do their tasks as is well laid out, the quality of this service is likely to be compromised. This service may thus not meet the needs of the customers. The various units involved in service production should be integrated and be in constant communication with each other. The organization should also avoid making big promises which it cannot deliver (Vovici Cooperation, 2009, pg 1). The fourth factor leading to customers’ gap is gap 4 which is the failure to match performances with the promises made. Many organizations especially the service industries are in the habit of making promises to the people. Sometimes these promises are exaggerated and mislead the customers. Service industries rely on advertising to inform their customers of the available services they have to offer. While advertising, the organization uses words that make their services attractive. It is therefore upon the organization to perform as per the promises it made to the clients. Underperformance makes the gap to grow bigger (Vovici Cooperation, 2009, pg 1). The goal of every organization is to close the gaps that exist so as to make the customer happy. The happiness of the customer will be guaranteed by the provision of quality service. The provider gaps as we have seen are gaps 1, 2, 3 and 4. It is very important to look at these gaps in detail so as to understand them and what factors causes them. They have been briefly explained in the customer gap, thus it is important to explain them in detail. These gaps are explained below: Gap 1 This has to do with expectations of the customers. The gap is created due to the lack of knowledge of the customers’ expectations. This could be due to inadequate research. The inadequacy of the research could be caused by getting little knowledge via research results thus this knowledge will not fully help in developing the quality service. The research may also have veered off the service quality thus the results becoming less helpful. Another point to do with the research is whereby the research done was very successful and the results obtained were the best, but the organization failed to use these results in developing a service. The lack of proper communication between the staff along the structure of the organization also contributes to the widening of the gap. There could be lack of communication between the managers and the customers. This could affect the quality of the service because the customer is not able to air his or her grievances to the management. The management being superior has the powers to make decisions concerning the development of a service and can therefore improve on the service by using the information given by the customers who are the users of this service. It is therefore necessary for the managers to communicate with the customers so as to make any changes that are needed. The employees and managers should also communicate constantly. This will enable the employees to make their grievances and proper adjustments would be made in the organization (Vovici Cooperation, 2009, pg 1). Some of the grievances that the employees could present could be the condition of their working environment. Employees need to work in an environment that is conducive and one that they are comfortable in. There is also the issue of remuneration of the employees. Increases in salaries acts as an incentive and the employees are motivated to produce better services. Another problem is the line of people the employee has to pass through before he or she airs his or her problem. In some organizations, the structure is so complex having many leaders. An employee has to report to his immediate leader first and this person may fail to pass this information of the employee. The gap is narrowed or closed through improving these communications. There is also the lack of focus on the relationship that exists in the market. Market segmentation is the division of the various sectors of the market so that specialization can be done. Specialization helps in that the people specialized in certain skills can employ these skills in creating a service that is of very high quality and one that will meet the customers’ needs. Lack of this will mean that even the unskilled people work on certain aspects of the service and the overall result will be a service that is of poor quality. There is also the neglect of relationships and more focus on transactions. Relationships are very important and they determine how the service will be produced and bring about togetherness. Focus on transactions increases the gap and the main reason for production of a service, satisfying the customer needs, is abandoned. There is also the focus on new customers and neglect of the older customers. The organization takes the customers loyalty for granted and only focuses on acquiring new customers. The older customers feel neglected and may end up seeking the services of other companies. These relationships should therefore be maintained and encouraged (Vovici Cooperation, 2009, pg 1). There is also the issue of poor recovery of service. This has to do with when a particular service has failed. There should be measures put in place to deal with such situations. It has been observed that there is no encouragement towards listening to the customers’ problems. This shows deviation from one of the objectives of the organization. The organization is aimed at satisfying the needs of the customers by offering quality services. At times mistakes happen that lead to failure not through the company’s fault. The company should therefore be ready to listen to its customers so as to maintain them. Losing customers will lead to the long run failure of the company. There is also the case whereby a mistake has been done and things are all wrong. The company then ignores this fact and does not make any changes. This widens the gap and the company’s overall performance is affected. This gap should be closed by the company making amends and looking for better ways in which to correct these wrongs. There is also the problem of inappropriate recovery mechanisms in place. This mechanisms instead of making things better and correcting the mistakes done, add up to the problems or are ineffective. This means that no problem will be solved and this does not close the gap (Marketing Association of Australia and New Zealand, 2009, pg 1). Gap 2 This has to do with the designs and standards. Some designs are poor such as unsystematic development process of services. Lack of a system means there is no relationship among the parts and various functions and as we well know a process involves a series of steps. If these steps are not related then that means the service produced will be a flop. Some designs are vague and their originality and validity cannot be defined. These designs leave many loopholes and are prone to failures and errors. Such designs need to be checked out as they could lead to future mistakes. At times the designs could be in place but putting them into applications becomes a big issue. It is important for an organization to develop designs that it can apply in its process of developing a quality service that will satisfy the customers’ needs. Having designs that do not fit properly into their intended tasks does not help in closing the gap (Marketing Association of Australia and New Zealand, 2009, pg 1). The standards that are put in place should be customer driven. Such standards ensure that customer satisfaction is the main agenda. By doing this, the quality of the service will be given high priority and all efforts directed towards this. The result will be a service that is of high quality and one that will meet the needs of the customers and keep them happy such that their loyalty to the organization is maintained (Marketing Association of Australia and New Zealand, 2009, pg 1). Apart from maintaining the current customers, the organization will also attract other customers as its present customers will pass on positive information about the organization. Some organizations do not focus on management of processes and this leads to deviation from customers’ requirements. These processes of developing services should therefore be managed to ensure that the customer is the center of focus and that his or her satisfaction is vital. There are also problems of lack of formal processes to be used in the setting of goals for the organization. Informal means are always shaky and their reliability is not guaranteed (Marketing Association of Australia and New Zealand, 2009, pg 1). Formal means on the other hand could be guided by the law and will see to it that the goals are for the common good of the public and not just centered on the organization. The goals need to be clearly defined and for the good of the public. There is also the problem of inappropriate evidence and the scape of the service. This could be through the failure to produce goods according to the expectations of the customers. This is not good at all and it would lead to the disappointment of the customer and consequently of the organization as it is likely to lose its client base and profits. The services should always be designed in line with the expectations of the customers as it is they who decide the overall success of the organization. The service scope may not meet the needs of the customer and that of the employee. These needs of both employees and the customers are very important in any organization and they need to be met. The customers provide the income that the organization needs for it to run its business well and be in existence. It is therefore very necessary for the organization to ensure that the service scape is as per the needs of the customers. The employees are also very important as the service scape acts as their source of motivation. The employees are crucial in the production of these services because without them, no service would be developed and this would mean that the customers would not be served. This would affect the organization also as it would not have any profits to make due to lack of services to render. The employees therefore need to be constantly motivated and shown that their work is valued and appreciated. They should also be given tasks that they can accomplish. There is also the problem of maintenance and update of the service scape. A gap develops where the service scape available is not well maintained and there is use of obsolete service scape. This will mean inefficiency at its best and this does not reflect well on the organization (Marketing Association of Australia and New Zealand, 2009, pg 1). Gap 3 This one deals with the delivery of the service. It has been observed that there exist deficiencies in the policies of human resources. A problem that is noticeable is the poor recruitment. Poor recruitment leads to recruitment of the employees who are not well qualified to perform the tasks they have been recruited for. Proper attention is therefore needed during recruitment so as to ensure that the right people are the ones that are employed to save the organization from losing out in terms of quality of the service it produces. Well qualified employees work efficiently and effectively since their skills are sufficient. These are the employees who can work with minimum or no supervision (Marketing Association of Australia and New Zealand, 2009, pg 1). There is also the issue of ambiguity of one’s role and the conflict that a certain role presents to a person. Ambiguity comes about when the employee is not so sure about the role that he is supposed to play in the organization while the production of the service is taking place. The organization may employ an employee to carry out a task though it is not sure whether he or she would deliver. Role conflict comes in when the employee is given a task that he or she knows nothing about. The employee will end up under performing and this would lead to the production of poor services. This has a detrimental effect on the organization’s profits. The employee too is affected as he or she feels that he or she is not performing as per the expected standards. The gap thus widens and this is not good at all. The organization should delegate tasks to employees according to their qualifications. There is also the problem of conflict between the employee and the technology. The employee may not be conversant with a certain technology and may end up stressed due to lack of knowledge. The employer therefore needs to arrange for training and development of the employees so as that they may have knowledge of the new technology and thus gain the confidence to perform their duties. There is also a problem in the evaluation techniques used to evaluate the performance of the employees. These poor techniques lead to the wrong compensation of these employees and they are de-motivated. It is therefore necessary to use methods that are good and just to evaluate the performance of the employees and reward them where they deserve. Good evaluation systems enable the managers to identify other special cases such as which employees put in more efforts than the rest. Appreciating the employees makes them feel good and they work even harder. There is also the problem of lack of teamwork and empowerment of the employees. This affects the performance of the employees and consequently of the entire organization. Teamwork is very important as it helps strengthen the relationships among the employees and they are able to work together in harmony (Marketing Association of Australia and New Zealand, 2009, pg 1). There is also the issue of customers who do not play their roles as is expected of them. Some customers lack the knowledge as to what is expected of them in terms responsibilities and roles. For an organization to produce quality services, it relies on the information it is given by the customers. If the customers are not knowledgeable enough, they might decline to give this information or end up giving false information. This affects the organization and the profits in general. Some customers influence others in a negative way. This is by passing wrong information about the company so as to discourage them from soliciting the services of the company. This affects the market of the company and thus the profits of the organization. The organization should therefore send out its people to pass on the knowledge to the public about its service so that the potential customers may not shy away from the company (Zeithaml et al 2002, pg 137). There are also problems with the intermediaries of service. A problem that is faced here is the conflicts concerning performance and objectives of the channels. There are various intermediaries that are involved in the passing of these services. These intermediaries have differences in terms of objectives where others are more concerned with making maximum profits at the expense of the customers. This widens the gap and reflects negatively on the organization. There is also the lack of control of the quality and consistency of the services. As the services passes through different intermediaries their qualities differs and the consistency of delivery also varies. The customers are thus confused about the specific quality of service that the company offers. There is also the problem of tension existing due to want of control and power among the different intermediaries. The company should therefore use its own people to deliver these services (Zeithaml et al 2002, pg 143). Another problem is the lack of the capacity to match up supply and demand. The demand is not steady and it is constantly up and down. There is also the issue of wrong customer mix and relying too much on prices to solve the problem of demand. These problems impact negatively on the performance of the organization and show unsteadiness. The company should therefore develop a proper customer mix (Zeithaml et al 2002, pg 145). Gap 4 Is concerned with the lack of matching the performance according to the promises the organization made. There are problems such as lack of proper communication by viewing communication independently. External communication is very important as the organization is able to know the needs and problems of its customers. Another problem is that marketing is excluded from the communication plan. Marketing needs a lot of communication for it to succeed. Without communication, the organization faces probable losses. There is also the problem of lack of an internal program of marketing which would help in guiding the company in its daily operations. It is therefore necessary for the company to implement a program that will help boost its market for its services (Zeithaml et al 2002, pg 148). Another issue is the lack of effectiveness in the management of the expectations of the customers. This could be either through lack of management of the expectations of the customer through communication or through lack of education. Customers are known to have large expectations and some are even wild. Communication is therefore necessary in conveying the message of what the company’s services are and what purposes they are intended to fulfill. This helps in containing the expectations of the customers and the company is freed from unnecessary pressures (Lovelock et al 2006, pg 389). There is also the problem of over promising. Companies have the tendencies to promise so much to the customers. They tend to pass the information that their services are super. This is not always the case, as their intention is to make the customers purchase their services or products. The companies tend to over promise in advertising, selling and physically evidencing cues. These companies should refrain from doing so as this could make the customers distrust them even if they are talking genuinely about a certain service (Lovelock et al 2006, pg 392). Another problem is the poor communication horizontally. There is poor communication across the various departments in a company and also across the various tasks being carried out. The policies and procedures laid out are also different among various branches. This is not good for the company and the company needs to encourage horizontal communication so as to close up the gaps that are in the organization (Lovelock et al 2006, pg 394). Conclusion As it has been seen above, there are various gaps that exist in service sector marketing. The overall gap is customer gap and it encompasses provider gaps. A provider gap has four gaps namely: Gap 1, 2, 3 and 4. Under the provider gap, gap 1 is lack of knowledge of the customers’ expectation; Gap 2 is the lack of proper designs and standards; Gap 3 is the lack of delivery as per the service standards; and finally Gap 4 is the lack of matching the performance according to the promises the organization made. These gaps are contained in a model used in improving the effectiveness of marketing. This model was developed by authors and was based on the quality of service. The model was made based on the perceptions of the consumers towards the quality of service. It was concluded that the service quality depended on four gaps. All these gaps have been clearly explained. While using a gaps model, the best gap to start with is the gap 1 and then proceeding to the rest of the gaps. This is because this gap seeks to show the difference that exists between the customers’ expectation and the management perception. It is important to identify this because the customer is the key component and it is for him or her that the service or product is produced. If it was not for the customer, the services would not have been produced and the organization would not be in existence. The other provident gaps would then follow in terms of their number for example 2, 3 and finally 4. It is important to close these gaps for everyone to be happy. HSBC Bank should therefore follow that order and also take into considerations the recommendations I have made while addressing each of the problems. HSBC Bank needs to cooperate with its customers and together they will improve the service sector and this might lead the bank to even issuing bonuses or vouchers to its customers. With a large client base, HSBC can afford to award some of its loyal customers while also giving a chance to the new customers to win some prizes. References Vovici Cooperation (2009); Retrieved from: http://blog.vovici.com/blog/bid/18271/Service-Quality-Gap-Model on 17th November 2009 Marketing Association of Australia and New Zealand (2009); Retrieved from: http://www.marketing.org.au/?i=mhOLQLXYtU8=&t=jZS6ngCVPug on 17th November 2009 Zeithaml V, Bitner M (2002); Services Marketing; McGraw Hill: New York; pages 136-150 Lovelock C, Wirtz J (2006); Services Marketing; 6th Ed; Prentice Hall: New Jersey; pages 387-395 Read More