Strategic Marketing Quality Service as a Major Means of Differentiation - Essay Example

Quality Service as a Major Means of Differentiation Name Course Lecturer Date Executive Summary Marketing plays a significant part in the success of an organisation. The capacity and ability of an organisation to develop a market oriented strategy that establishes competitive performance and position for the organisation is paramount in creating and developing sustainable competitive edge. As the globalisation and technology continue to advance at a very high rate, competition is increasingly becoming unbearable. For this reason, there is need to focus on new approaches of strategic marketing in order to be able to beat the competition and remain relevant in the market. One crucial factor in strategic marketing is service offering. The type and quality of service is becoming a major means of differentiation. The intangible elements are becoming increasingly essential in strategic marketing as well. This report discusses the role of intangible elements (service) in strategic marketing as well as offering management recommendation for enhancing strategic marketing through type and quality of service. Table of Contents 1.0 Introduction 1 2.0 Critical Evaluation of Hooley, Piercy and Nicoulaud Proposals 2 3.0 Recommendations 8 4.0 Conclusion 12 5.0 References 13 1.0 Introduction The purpose of the report is to discuss the role of service as a major means of differentiation. Companies are moving from differentiation through focus on the intangible elements on offer to differentiation through the type and quality of service they offer. It explains how the intangible elements are becoming increasingly important across the whole spectrum of enhancing differentiation. In addition, this report discusses the role of service as the major means of differentiation as well as a strategic marketing tool. The report discusses Woolworths Limited; the impacts of type and quality of service it offers as the major means of differentiation. This will help to understand focus on the intangible elements clearly and comprehensively as a major means of differentiation. Woolworths Limited is a retailer with primary activities in supermarkets, discount departments stores, home improvement and hotel. It controls a considerable market share in Australia retail market. The report discusses the role of service in strategic marketing in this organisation. After assessing the impact of service in strategic marketing, the report provides management recommendations on how it can better service offering and develop it as a differentiation strategy. 2.0 Critical Evaluation of Hooley, Piercy and Nicoulaud Proposals There is a change taking place of shifting from exchange of tangible output towards the exchange of services; these are defined as the application of specialised skills and knowledge (exchange of competences) through actions, deeds, processes and performance for the benefit of another entity or even the entity itself as Hooley, Piercy & Nicoulaud (2012) report. In this viewpoint of marketing, Woolworths Limited should not provide products but should actually render a service to consumers through the consumption of the products. This logic view of marketing has already made huge impact on both strategic marketing and relationship marketing of organizations and will continue to influence future marketing strategies. As such, it should not be “if” to adopt this strategic marketing but “how and when” should Woolworths adopt and implement it. It should change from placing its emphasis on its offerings and start focusing on the service the products will provide to the consumer as Lampel & Mintzberg (2012) asserts. A service is an intangible, time perishable experience that is performed for a consumer acting in the role of a co-producer. Services include processes, deeds and performances (Varadarajan 2010). On the other hand, strategic marketing is the identification of one or several sustainable competitive advantages that a company has in the market it operates or it intends to pursue and the allocation of the required resources to exploit them. Strategic marketing plays a major role in the future of this company; it represent how it effectively differentiates itself from the competitors by capitalizing on its strengths (both potential and current) to provide consistently better value to its customers than the competitors value. The goal and aim of Woolworths Limited is to maximise its positive differentiation over and above the competitors in the eyes of the target customers. Service marketing is a tool that this company cannot afford to ignore, it presents the company with the best chance to maximise and increase its profitability as well as sustainability in the target markets as (Lovelock 2011) points out. Woolworths Limited used to focus on the competitive strategies and benefits that its products would provide; marketing stemmed from what was great about a product to the quality of service that the product is offering. This logic was based on economics as well as movement of goods from the manufacturer to the consumer. Unfortunately, this philosophy remained unchallenged until the early 1990s. Eventually, discrepancies between marketing of goods and marketing of services came in to play (Gummesson 2008). However, the philosophy of service marketing redefines marketing so that it is primarily a service providing activity. Significantly, Woolworths Limited sells services to its customers; its goods are only a medium for its services to the consumers as Kirca, Jayachandran & Bearden (2005) advises. This is similar to the companies that produce a razor, they do not sell a razor but rather sell the services of a barber through the use of the razor. This understanding is paramount in this spectrum of recognising the type and quality of the service offered as a major means of differentiation. Cravens & Piercy (2008) adds that service marketing changes the concentration from product to consumer service. For instance, for car manufacturers, instead of producing and offering the customers a reliable car, the car manufacturers should provide the service of consistent mobility to the customers. By providing consistent mobility, the manufacturers shift from product focus to service focus through the car. This should be the same for marketing of tasty can of soda; the company gives the customers thirst quenching service. Importantly, Woolworths Limited focuses on providing quality services through its products. Marketing of service requires a close relationship with customers (Vlachos et al., 2009). As such, Woolworths Limited has developed more of a relationship than ever with its prospective customers. Instead of providing a physical good, it focuses on meeting the consumer needs through a specific service. As such, it understands the wants, lifestyle and desires of its customers. Zeithaml Bitner & Gremler (2006) outlines that service marketing have enabled Woolworths Limited to have an intimate relationship with its customers and its target market; it lets the feedback guide its decisions on what to offer in future. This marketing of service has a massive impact on the Woolworths strategic marketing. Notably, this company has already implemented strong practice of strategic marketing and it is now focusing on the overall direction of its offering with the target consumers. For this reason, it is necessary to use aspects such as geographic, demographic and psychographic segmenting to pinpoint target consumers. This is particularly important as the market segments have different needs, desires and lifestyles. As Lampel & Mintzberg (2012) underscores, understanding the segments have enabled Woolworths to satisfy the exact need of customers in the respective segments. The company consistently seeks to understand and know the values, lifestyle and attitude of its customers as well as what motivates them to buy its services and products. In addition, this enables it to look the customers from the consumer’s point of view. Essentially, this explains the role of service in strategic marketing in Woolworths Limited. Another significant role of service in strategic marketing is that it takes strategic marketing to the next level of consumer consideration. An organisation using service marketing makes strategic plans as demonstrated by Woolworths Limited. The company focuses on strategic questions such as what desires and needs it is meeting with the service, what trends and changes in future will lead potential customers to need its services, and what can the service do to improve the customer’s lives as Grönroos (2006) asserts. Once Woolworths has realistic grasp on these answers, it develops strategic marketing plan with service dominant state. In addition, service enables Woolworths to study the situational analysis and its current state. By this, it views situational analysis from service point of view and also determines how the service currently fits in its economic environment. Actually, Lusch & Vargo (2006) indicate that instead of focusing on the profile of its products, Woolworths’ looks at the service received through the use of the product as well as how the consumers perceive the value of the service. Grönroos (2008) point that service marketing opens up direction and views of an organisation to possibly improve its offerings. Ultimately, this leads Woolworths to identifying new opportunities and hence provides its customers with the service that they desire through the physical good. This is similar to persons looking for reliable transport; they look to purchase not a good car but the service of reliable transport. As such, it is up to the car manufacturers to switch from viewing the physical car as what the customer values to services of reliable transport. Service marketing helps Woolworths to identify such opportunities and exploit them. By doing so, it is able to acquire large share of the market (42%). Service helps Woolworths to focus and gear towards what services the consumers’ values, this develops strategic marketing of the organisation by focusing on the service type and quality as Ballantyne & Varey (2008) corresponds. Arora & Singer (2006) direct that by factoring in service dominant logic, Woolworths takes its strategic marketing to a new level; it reaches out to its customers with intent to form a long term relationship based on the service and not merely retaining the customers. As marketing recognises the value of keeping customers coming back or making repeated purchases, quality service helps Woolworths to develop strategic marketing that further emphasizes the relationship by redirecting its objectives from making sales to maintaining a consistent and strong relationship with the customers as Kotler (2011) recommends. As such, service helps Woolworths Limited to redefine the relationship between it and its customers. This indicates service as the major means of differentiation by playing a significant role. When Woolworths produces products that are similar to another organisation, when the price and quality of the competing products are similar or are nearly identical, quality service makes the difference. Quality service activities differentiate the undifferentiated products in the mind of the consumer as Grönroos (2007) pin points. By Woolworths offering excellence services, it does not only enhance differentiation but it also give the company a competitive tool. Superior services starts with the improvement of innovative offerings flexible enough to meet the wide range of the consumer needs. Quality services support differentiation by developing programs that match these offerings to the appropriate customer segments. By realising this, Woolworths improves its agility to serve its customers more effectively. With the traditional sources of competitive advantage vanishing quickly, there is need to increasingly recognise service excellence not only to improve performance but also to improve and sustain profitable growth as Edvardsson, Gustafsson & Roos (2005) affirms. Woolworths’ focus on service differentiation makes its customers to be co-producers of the service provided; this is by continuous provision of feedback. On the other side, Woolworths uses the feedback to enhance the service. When customers purchase a product, they can only benefit from the service by using the good and adapting it to their needs (Kotler 2011). As such, it becomes an endless process of where the customers are involved in increasing the value of the service as opposed to a separation of consumption and production. Therefore, through the service, Woolworths involves the customers as active members in the process. This explains the role of quality service as a major differentiation strategy. Notably, Vargo & Lusch (2008) specify that the product features can easily be duplicated by rival competitors from any place around the world and price advantage can be eroded instantly but high quality service can be the differentiator as rules of competition change. The quality and excellence of service cannot be duplicated in any way. This offers Woolworths a real chance of standing out from the crowd and differentiating through offering of quality and excellence service. As the expectations for service quality continue to rise, new opportunities come up. These opportunities can only be exploited by an organisation focusing on service quality. Before other organizations play a catch up, Woolworths have already seized the opportunity and climbed to another level. Additionally, service quality helps Woolworths Limited to move away from gearing messages to consumers and instead it starts focusing and engaging in interchange with its consumers. As such, it starts to dig deep in its relationship with the customers and gets to really know the customers better as Gummesson (2007) titles. It is able to gather information about its customers better, about what services that they are looking to satisfy by purchasing its product and services. This is made easier by the advancement of technology, the company can use various means to gather information such as internet marketing and search engines research marketing. It finds what the consumers are searching every day, their motives as well as what motivates them to purchase its products. The service in this context helps the organisation to develop creative strategic marketing; the organisation is offering service through creativity. 3.0 Recommendations Personalization is a major tool that your company, Woolworths Limited, can use to enhance quality service delivery to its target markets. The social content of interaction between the service or the retail person and the customers is crucial. Woolworths should advance it as a significant mediator of patronage behaviour and customer satisfaction as Vargo & Lusch (2008) recommends. The influence of this role of service enhancing aspect is well illustrated within the nexus SERVQUAL, a comprehensive measure of service quality. As such, it is not something that is theoretical but it has also been implemented and proved to be a great success. Personalisation significantly influences evaluation of quality service and customer experience. As demonstrated, for an organisation like Woolworths delivering service in interactive encounters with the customers, personalisation emerges as the most significant determinant of perceived service quality as well as of customer satisfaction and other patronage indicators as Bitner et al., (2002) underpins. As such, this will not only enhance the role of service as a major means of differentiation but will also enhance evaluation of service by customers and increase customer satisfaction. Notably, some managers in Woolworths Limited, especially taking positions in the service business, often find that their past experience has not prepared them well enough for working on some challenges that regularly face the company in marketing of its products and services. It is therefore very important for you, as the managing director, to develop professional skills in strategic marketing of these services. Vargo & Lusch (2008) report that acquiring professional skills in strategic marketing management requires the ability to look across a broad cross section or marketing situations, to understand their commonalities and their differences and to identify the appropriate strategic marketing and differentiation strategies in every instance. Developing the understanding would also need to study the competitors’ products to know the quality and aspects of their services. This will provide the base where Woolworths will differentiate its services and hence strategically market these services. In addition, it is important for your managers to get exposure to marketing strategies and problems in different industries; this is especially very rare among your managers in the marketing department. Conversely, such exposure will increase their ability to identify as well as learn from experience of other organisations facing parallel situations in other service industries as Lusch & Vargo (2006) strengthens. For Woolworths Limited to be successful in quality service marketing and developing strategic marketing of service, Skålén (2009) recommends that it has to look ahead to its objectives based on the services it provide. Moreover, it has to be flexible in order to adjust its objectives as it receives feedback from customers. It should strategically develop the services according to the changes in consumer preferences; this should also consider changes in business environment as well as economic changes. As Cravens & Piercy (2008) state, this means that it has to further advance its relation with customers as well as be prepared to improve on its offerings or even change the offerings to meet the value needs, lifestyle, wants and desires of its customers as well as fetch more customers in the market. In essence, this will focus about the performance of the company instead of increasing sales. Another recommendation is to redefine the relationship between Woolworths and its customers. Furthermore, as service marketing creeps in, Woolworths should realise that it would benefit from placing a strong emphasis on building service relationship with all its customers as well as creating a service dominant organisational philosophy that is centered on the service value co-creation as Ballantyne & Varey (2008) recommends. This will not only develop a new marketing philosophy based on quality service but also will enable Woolworths to better its services as well as improve service offerings by opening up new opportunities to develop a deeper understanding and knowledge, this would be a huge competitive advantage for your company. The more it will engage with customers, the better service value it will be able to offer to the customers and hence customer satisfaction. Strategic marketing involves putting together a plan of action for the best use of the company resources as well as developing tactics to meet organisational wide objectives. To achieve this, Woolworths should consider the overall market and the market segments that it intends to target and also identify the most appropriate mix to satisfy the customers as Vargo (2009) recommends. To this end, it should develop a strategic plan and tactics that will be able to exploit the vast organisational resources available. This means that the plan should not exceed the resources available as it may again strain it and therefore shift the focus or fail to hit the target as Grönroos & Ravald (2011) states. Again, the plan and tactics should not be simple to implement, they should match the resources both personnel and otherwise. This will optimise the strategic plan and the tactics to achieve the organisational wide objectives. Once your company has been able to develop service value and quality, it is important to focus on maintaining the value and the quality of the service. Service is about performance and when the quality and value changes, the customers will notice very quickly. This is unlike product where customers may take long to notice change in value and quality of the product. Service is very perishable, it cannot be stored and hence customers will notice change in service very quickly. Therefore, it is essential that you maintain the service value and quality once you have been able to develop them. They should only be changed according to the customer preferences as indicated above (Lovelock 2011). It is inescapable that globalisation has become the custom in service marketing. The growing number of businesses shifting to service focus is enough evidence; businesses are now evolving their business practices to suit service provision. As Rust & Chung (2006) notes, service focus is also changing the business practices as well as the world economy, service delivery dominate the major economies of the world. Businesses are focusing on service as a competitive business imperious. They have come to the understanding that the exceptional features of services result to unique prospects. As such, to be able to compete effectively, Woolworths has to adapt to the ever changing world economy and identify and address challenges it is likely to face in its quest for service offering (Grönroos & Ravald 2011). 4.0 Conclusion Essentially, the type and quality of service plays a significant role in differentiation. It is the only way that Woolworths Limited cannot be duplicated or copied by competitors and hence offers Woolworths Limited a real opportunity to develop differentiation strategy. The service value and quality is paramount in differentiation. Your company has to develop a relationship with consumers where it is able to get feedback and hence offer quality services according to the desires, needs, wants and lifestyle of the consumers. 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