Introduction to services marketing - Essay Example

?Introduction to services marketing “There is no doubt that if marketing were done perfectly, selling, in the actual sense of the word, would be unnecessary” Peter Drucker Introduction: Marketing of services has attained greater significance over the years, due to globalization and the increasing competition at a global level (Cunningham, Young, Ulaga & Lee, 2004). The services sector is has grown substantially in the recent years and hence has become an integral part of economy. In order for firms to survive in such a highly competitive industry, marketing of services is inevitable (Lovelock, Wirtz, 2004). In the realm of marketing, innovation holds supreme significance. It is only through innovation that firms can differentiate their products / services in the market and generate value and relevance for their services or products in the eyes of their target market / segments (Kleinknecht, 2000: 169-186). The development of technology fuelled by a simultaneous development in the field of information and technology, has led to a complete transformation with regard to delivery and execution of various services. It has now, completely revolutionized the manner in which services were executed, and hence widened the scope to product and process the services. The opening of various global economies has further expanded the playing field for various firms, thus further intensifying the competition at a global level. Such changes over the years, have led to a rise in customer expectations, with regard to service delivery, and pressurized the firms to provide better, faster and cost-effective services to their customers, in order to sustain their competitive positioning in the industry (Lovelock, 2008). This paper discusses the various differences between high-contact and low-contact services and explains the manner in which customer experience differs between the two. High-Contact and Low-Contact Services: Customer contact is a vital characteristic with regard to service delivery, since it determines the quality of service experience from the perspective of marketing. The term customer contact refers to the physical presence of a customer in the services marketing system, and it can be classified into two categories: high-contact services and low-contact services. According to Pride and Ferrell (2006) the term customer contact is defined as "the level of interaction between the service provider and the customer necessary to deliver the service" (Pp. 367). High contact services, include such services as observed in: healthcare, real estate, legal issues, hair care, healthcare services etc., while low-contact services include: tax preparation, auto repair, dry cleaning etc. High-contact services entail the presence of the customer at the time of service delivery while there is no such requirement in case of low-contact services. For instance, in hospitality industry, the customer presence is necessary and inevitable to enjoy or avail the services, while in case of low-contact services such as auto-repair, for instance, the customer need not be present while the repair work is in progress (Pride and Ferrell, 2006). In case of high-contact services, the customer is generally required to visit the service site, while there is no such pre-requisite in case of a low-contact service. Instead, access to the service is made available to the customers, via a method called self-service, for instance, as is observed in case of e-card delivery; buying from a kiosk; or via the internet. The contact points are usually held in remote places, and there is no actual physical contact between the service providers and the customers. Thus, in each service transaction the customers have very low contact with the service provider, as compared to that in case of a high-contact service. The service marketing system with regard to high-contact and low-contact services can be better explained with the help of the following diagrams: Figure 1: Service delivery system in a high-contact service Figure 2: Service delivery system in a low-contact service Source: Lovelock, (2010, Pp. 51-52) The type of service offering i.e. high-contact and low-contact services can be differentiated on various grounds such as: the location from where the services are offered; the layout of the service delivery system; the product and process design; etc among others. There are various differences between high-contact and low-contact services. In case of high-contact services the location of the operation must be based near the customers at all times, while in case of low-contact services the operations can be based near supply, transportation or labor. In case of high-contact services the facilities must be able to take into consideration, various aspects which are directly related to the customer's experience such as their physical and psychological needs and expectations while in case of low-contact services, the sole purpose and objective of the facilities is to enhance their production. In high-contact services, the type of service is defined by factors such as environment or the actual physical product while in case of low-contact services the customer is not concerned about the type of service but more so with the completion date or delivery date of the same. The various levels of production process have a direct impact or bearing on the customer in case of high-contact services while in case of low-contact services the customer is not directly involved in the processing stage. The service time in case of high-contact services depends highly on the customer's needs and requirements, while in case of low-contact services, the work is performed in accordance with a fixed schedule and the customer hardly has any say with regard to the time of completion. The key differences between high-contact and low-contact services are described in detail below: The location: The type of location chosen by the firms for service delivery is highly dependent on the amount and level of customer contact, which is an essential and inevitable part of during the production process. Thus, in cases where the customers form an intrinsic part of the service delivery system, the locations chosen by the firms, are generally near the customers' homes or workplaces. This is highly observed in high-contact services for instance, car washes, dry cleaners, hair stylists or fast food restaurants; which are conveniently located near places which are conveniently accessible to their target customers. However, on the other hand, in case of low-contact services, the type of locations for service delivery holds little or no significance, as there is little or no customer contact. For instance, in case of mail deliveries, the offices of the firms or the service distribution networks are usually placed / located near major sources of supply i.e. in this case, major places of transportation such as interstate highways for trucking purposes or airports for sending the parcels through airline shipments (Hoffman, Bateson, 2010). The layout and design: The service providers have to ensure that the layout or the point of service delivery is not only easily accessible to the customers but also must be appropriately designed to afford them greater satisfaction and enhance their service quality. This is especially true in case of high-contact services where the customer is required to visit the place of where the service is being offered. Furthermore, the service providers must also take into consideration the choices, tastes and preferences of the customers while delivering services and hence the layout and design of the center of service provision matters a great deal. For instance, in case of a family restaurant, the design and layout must be such that it affords convenience and a good experience for the entire family and takes into consideration the needs of the children accompanying the families. However, there is no such requirement or need in case of low-contact services, since the customers are not required to be present in such cases (Hoffman, Bateson, 2010). Product design: In case of high-contact services, the customers are highly involved in the product design stages since they are directly involved in entire process during the time of service delivery. For instance, in case of a hair salon, the customer is involved with the manner in which they want to get their hair styled, which involves constant directions, instructions, and signs given to the service provider. The customers here, are in charge of defining the product / service. However, in contrast, the low-contact services do not involve any interaction between the customer and the service provider, during the process of service delivery. In case of low-contact services, the customer is involved directly with the service provider in only two instances, i.e. before and after the service is delivered. For instance, in case of auto repairs, the customer interacts with the service provider before the process begins, not during the process itself (Hoffman, Bateson, 2010). The differences between high-contact and low-contact services offer a platform for classifying and assessing the service production systems followed by firms. According to a customer contact model developed by Chase (1978) it was suggested that the level of contact between the customers and the service system or the service provider holds greater significance, and is directly related to the effectiveness service providers in offering better quality service. It further states that there is an indirect relationship between customer interaction and the service provider and the quality of service offered, i.e. the lower the contact between the customer and the service system, the higher the service quality and vice versa (Macintyre, Parry and Angelis, 2011). Such a relationship between the level of contact with the customers and the quality of service being provided, leads to a distinction of services and categorizing them in accordance with various categories or elements of work, for instance, differentiating services by way of front-office and back-office operations. The front-office is a high-contact service while the back-office is a low-contact service. Such a differentiation helps the service providers in taking care of various elements in their service delivery system, and at the same time ensuring that the final product helps in enhancing the customer satisfaction (Metters et al., 2006 in Macintyre et al., 2011). In areas where the customer contact is relatively higher, the management mostly focuses on enhancing the experience of the customer. However, after bifurcating, the high and low contact areas, the management focuses on attaining higher customer satisfaction through optimum service provision through all its service outlets. In conclusion, the high-contact service outlets must sacrifice efficiency, in the larger interest of the customers, although no such requirement is essential in case of low-contact services (Hoffman, Bateson, 2010). Customer Experiences: The increasing competition has commoditized the products and services, leading to the generation of a higher value for the customers. Thus, it has become highly essential for the service providers to increase their value proposition to increase their competitive standing in the industry. Thus, needless to add, the customer experience has become an inevitable and undetectable part of the service offering system, and hence the same is evident from the level of their involvement in the service offering. It further entails that the product or service value today, is created not only through the product and services itself, but on the basis of the manner in which it is perceived by the customers. The perception of the customers, in turn, is directly related to their experiences with the product or services. According to Pullman and Gross (2004 in Macintyre et al., 2011) the high degree of reliance on customer loyalty, by the product or service providers is on account of the increasing relationship between the quality of service and customer experience. As mentioned previously, customer contact is one of the vital elements any service delivery, since it is directly associated with customer experience. Services which involve high-contact with the customers are relatively difficult to control since it involves higher degree of contact with the customers. Contact with customers often leads to complexities, and hence require highly skilled personnel, and good public relations management. Any interaction with the customers can affect the manner in which they perceive a given product or service, and hence there must be a high degree of customer relationship presence and a strong element of human relations present while dealing with such an aspect. Companies and firms involved in high-contact service offerings must exploit this trait, to their maximum benefit, in order to derive greater value from their customers, in terms of positive feedback. Firms involved in offering high-contact services such as McDonalds, rely heavily on the ambience or the layout design; establishing emotional connections and relationships with the customers; building customer loyalty; etc in order to generate a better quality experience for the customers. Such services tend to enhance the customer’s shopping experience, and add value to the brand. It further, encourages the customer to participate in and be an integral part of the firms, or the service offering, thus further enriching their experiences. High level of customer involvement / engagement is one of the key pre-requisite of all high-contact services, since it is directly related to the manner in which the customers perceive the product or service. According to Pullman and Gross (2004 in Macintyre et al., 2011), the customer loyalty can be increased through establishment of emotional associations with the customers. Various studies conducted in the past, to study the manner in which customers are influenced by the firms, to generate a positive response from them, it was observed that firms usually differentiate between the services provided by them and the various other substitute products available in the market, by providing exceptionally high quality of services in case of high-contact services. According to Prahlad and Ramaswamy (2004 in Macintyre et al., 2011) one of the key features of high-contact services, with regard to customer experience, is the fact that customer experiences can be enhanced by actively involving the customers in the service delivery process or co-creating. Customer involvement in the product helps in drastically increase and improve the quality of the same, thus resulting in a higher and better customer experience. Service marketing is a vital branch of marketing management, and holds supreme significance in present day markets. Optimizing service provision is the only key to enhance customer satisfaction and the same can be easily achieved, if the services are appropriately categorized in accordance with their nature or type, i.e. high-contact or low-contact services. In conclusion, image building is one of the key criteria of building customer loyalty and enhancing the customer experience, which can be achieved successfully through effective service marketing. References: Cunningham, L.F., Young, C.E., Ulaga, W. & Lee, M. (2004). Consumer views of service classifications in the USA and France. Journal of Services Marketing, 18(6): 421-432 Hoffman, K. D., Bateson, J. E. G., (2010). Services marketing: concepts, strategies and cases, Cengage Learning Publication, Pp. 208-209 Kleinknecht, A. (2000). Indicators of manufacturing and service innovation: Their strengths and weaknesses, In Innovation Systems in the Service Economy. Edited by Metcalf, J.S. & Miles, I. London: Kluwer Academic Publishers. Pp. 169-186 Lovelock, C. and Wirtz, J. (2004), Services Marketing: People, Technology and Strategy, (5th Ed.), Pearson Prentice Hall, New Jersey. Lovelock, C., (2008). Services marketing people, technology, strategy. Pearson education publication, Pp. 198-200 Lovelock, C., (2010). Services marketing, 6/E, Pearson Education Publication, Pp. 50-52 Macintyre, M., Parry, G., and Angelis, J., (2011). Service design and delivery, Springer Publication, Pp. 85-86 Pride, W. M., Ferrell, O. C., (2006). Marketing: concepts and strategies, Cengage learning, Pp. 367-68 Read More