Services Marketing - Term Paper Example

Marketing and Consumer Rights April 3, 2008 Introduction The importance of marketing concept and its significance to consumer rights is brightly described by Peter Drucker who wrote "There is only one valid definition of business purpose: to create a customer"1. At its simplest, if you do not have any consumer for the product or service your business offers, then there is no reason for continuing existence (Adcock et al, 1995). A consumer service is "A deed, a performance, an effort" (Rathmell 1966) is not a thing, however something tangible, yet services rely on things for their performance. Development and implementation of a market orientation concept a services marketing context is important; the importance of the role of "rights" of consumers in today's global economy and marketing. In addition to this, consumer rights are an important imperative in manufacturing businesses nowadays as they are an important tool for enhancement and differentiation of the product offer. The zone of tolerance has been sited as an important concept in both the service management and consumer rights literature, and has been employed to model the relationship between different expectation levels (Zeithaml, Berry, Parasuraman, 1993) and has been used to supply a range, or scale upon which to place a particular outcome. According to Zeithaml, Berry and Parasuraman, (1996): Desired expectations represents: "the level of service the customer hopes to receive (or consumer rights), consisting of a blend of what the customer believes can and should be delivered." Adequate service represents: "the second, lower level of service is adequate service which is the level of service the customer will accept." Marketing and Consumer Rights Brands however can mean different things to different consumers. These differences largely stem from the way and manner brands can be perceived or understood. A cursory review of the history of brands informs us that consumers' perceptions of brands have not been static. It has evolved over the years as understanding of the concept deepened. Amber (2000) has defined brand equity as an intangible asset built by marketing, and which exists largely in the heads of stakeholders, especially those of the end consumer. The author further pointed out that if a company got its brand equity right, profits should largely take care of it. The importance of this statement can be understood from the components that make the equity of a brand. These are brand awareness and brand image. A brand that consumers have good knowledge about and can readily recall with favorable associations is an enduring asset to whoever owns it. Furthermore, it would have favorable image and therefore well perceived. Such a brand can be said to have a higher equity or value. It is not too difficult to sell products and services with this brand name tacked on it. Higher volumes of sales at minimal costs transcend into higher profits. Hart (1998) has outlined key principles for creating and building brand names. Some of the strategic considerations she counsels brand name creators to consider borders on (i) whether the new product or service is innovative or not (ii) line extensions are planned for the future and (iii) the nature of protection the brand can afford. It has been stressed that any name chosen should ideally be easy to pronounce, understandable to consumers and also consistent with the cultural values and norms of where it is to be applied. Parasuraman et al. (1988) claims that consumer perceptions of quality of service are a result of evaluating service delivery in relation to pre-consumption expectations known as the "disconfirmation" model. Disconfirmation models are based on the disconfirmation paradigm (Oliver, 1980). Quality is therefore defined as the gap between consumer's expectations and perceptions, and a customer will perceive quality positively only when a service provider meets or exceeds his expectations. Based on this paradigm Parasuraman et al. (1985) developed service measuring tool known as SERVQUAL. This measures service quality within certain service constructs, which act as service quality determinants. The two 22 items questionnaires with 5 points Likert scale answers were developed in order to measure expected and perceived quality within 10 service constructs. Later on, the number of constructs was reduced to five. These are as follows: 1. Reliability: the ability to provide the pledged service on time, accurately and dependably. 2. Responsiveness: the ability to deal effectively with complaints and promptness of the service. 3. Assurance: Knowledge and courtesy of workers and their ability to inspire trust and confidentiality. 4. Empathy: Individualised attention the company provides its customers with. 5. Tangibles: These include: the state of facilitating goods; physical condition of the buildings and the environment; appearance of personnel; and condition of equipment. In assessing SERVQUAL Parasuraman et al. (1988) defined it as a concise multiple-item scale with good reliability and validity that can be used to better understand the service expectations and perceptions of consumers. He suggested that the scale might be very useful in facilitating continuous improvement. However Shen et al. (2000) claims that with increasing market pressure, a continuous improvement may not be sufficient in maintaining a competitive edge. They suggest that service organisation shall use BPR and innovative approaches in order to increase competitiveness. It can be done by extending disconfirmation paradigm - customer needs and expectations have to meet and exceed through product innovation. Tan and Pawitra (2001) support this argument by pointing out that SERVQUAL was not designed to address the elements of innovation in service quality improvement. Dabholkar et al. (1996) cast doubts about the validity of SERVQUAL's dimensions. They state that the model applications in different industries reveal that the five dimensions may not cover aspects of customer service present in all service encounters. In marketing a service-oriented business, word-of-mouth is one of the most powerful and influential communication tools in the marketplace (Silverman, 2001). It is defined as "the sum of all comments about a certain product, service or company that are exchanged among people at any given time" (Rosen, 2000). The significance of word-of-mouth is even higher within a services context because of their intangibility and higher associated risk (Mangold, et al., 1999). Purchase decisions involve some kind of perceived risk (Solomon et al., 2002). Haywood (1989) indicated that services are considered to be riskier than products due to their characteristics of intangibility, inseparability, heterogeneity and perishability. Intangibility of Marketing Services The lack of tangible attributes means that it is difficult for a service provider to communicate its advantages and add-value benefits in an exploit or clear-cut way. Because of its intangibility a consumer cannot apply physical perception in order to access and evaluate it. Hence, other communication channels are used to collect valid information in the decision-making process. According to Bitner (1992) service process environment (servicescape), service encounter and other factors become crucially important. The reason for this was clearly raised by Johnson and Payne (1985) on describing the customer decisions making process. The clear example is risky choice heuristics; the situation when a customer uses "a rule of thumb" in choosing particular service provider. This is the reason why service providers use servicescape, a powerful communication tool to switch a potential customer. Lovelock et al. (1996) argues that intangibility of service places greater responsibility on service organizations to deliver what the promise "right" and "the first time". Moreover, in service organizations frontline staff and physical facilities fulfil the dual functions of production and marketing. They are viewed by the potential customer as signs of quality. Heterogeneity of Marketing Services It is often very difficult to reproduce a service consistently and accurately. Numerous factors were put forward by Zeithaml and Bitner (1996) that can affect the extent of heterogeneity of service provisions. To begin with the delivery of service often involves some form of contact between the consumer and the service provider. The behavior of the service provider influences the consumer's perception of quality. It is difficult to substantiate consistency and uniformity of behavior. Furthermore, it is not easy to standardize and control this element of service delivery. Secondly, service operations depend on consumers to articulate their needs or provide information. The accuracy of the information and the ability of the service provider to interpret this information correctly have a significant influence on the consumer's perception of service quality. Thirdly, the expectations and priority of the consumer may vary each time he/she uses the service. Moreover, priority and expectations of the consumer may change during the delivery of the service. The variability of service from one era to another and from consumer to consumer makes quality assurance and control complex. Service providers have to rely immensely on the competence and ability of their staff to understand the requirements of the consumer and for them to react to these in an appropriate manner. Inseparability of Marketing Services In service industries, the marketer creates or performs the service at the same time as the full or partial consumption of the service takes place. As Lovelock et al. (1996) indicates the high visibility of the conversation process means that the quality drawbacks are obvious. In addition, the involvement of the consumer in a delivery process makes him/her an integral part of the process. The essential element of this side is that it is not subject to direct managerial control. However, management have a wide range of so-called facilitating tools, designed to shape the cognition of a customer during the service process. The Perishability of Marketing Services Services are perishable and cannot be stored in one time period for consumption at a later date. This means that unlike manufactured goods, it is impossible to have a final quality procedure. To overcome this difficulty of marketing services, companies use different strategies such as advertising and creating a brand image to reduce uncertainty. This enables them to create a better standardization of service. Brand Perception and Service Marketing Perception, as is every attribute of the mind is not static. They are influenced and therefore do change. Thus, both the perception of a brand and the quality of service delivered by that brand are changeable. The former to a greater extent influences outcomes of the latter. A brand that is already well perceived by a customer often receives favorable disposition towards its service quality delivery. Customers form brand perceptions either experientially from the quality of service delivered by that brand or company or on the strength of marketing communications they have been exposed to or both. In the case of the former, if no drastic changes occur in the quality of service delivery, that perception shall be kept in place. The customer may alter his mindset only when the disparity between his expectation and service experience widens. With the non-experiential brand perceptions, the customer may come to the service delivery point only to confirm the mindset he has already formed. Whether the customer continues to hold that perception depends to a large extent on the service experience vis-'-vis his expectations. If the quality of service exceeds his expectations, the brand perceptions already formed are further strengthened. On the other hand, if his expectations are not met, it paves the way for "formed' perceptions to be altered. It needs also be pointed out that a customer can come to the service delivery point on a clean sheet or without any formed mindset. In that case, what transpired at the delivery point to a large extent determines the perception; he shall form of the brand. In practice, it is found that metrics for assessing brand equity in products have been more extensively researched than in services. The disparity between the two can be traced to the latter not being amenable to measurement. Krishnan and Hartline (2001) have pointed out that basic understanding of the nature of band equity for services is yet to emerge. The difficulty perhaps lies not so much in lack of understanding of the concept but more on effective application of existing measuring tools. This assertion itself can be invalid today because a great deal can take place in the research field over a period of five years. Characteristics that make for strong brands are not different from that which makes service brands successful. In a study involving more than 2500 brands, Clifton (2002) reported that three factors make brands strong. These are (i) clarity of vision and values (ii) consistency in the manner in which the brand is applied and (iii) leadership in the way the brand renews itself and exceeds customer expectations. The three giant fast food companies, namely McDonalds, KFC and Burger King, according to the study of Jones et. al. (2002) employed the same principles. In addition they were also involved in community activities. The clarity of what their brands stand for and their foci embodied in their visions, missions and goals constitute the first of the three-pronged brand building process. With this approach, employees and customers alike are adequately informed of what the brand is seeking to achieve and benefits that shall accrue to them if they are successfully accomplished. Such an approach garners employee commitment and also offer customers opportunity where to place their loyalty in the long term. A hallmark associated with all of these companies is their insistence on quality service. This standard is true of them irrespective of where their facility is located. For example, the McDonald brand name has created a loyal following largely because of this customer perception. In an attempt to provide quality service, the importance of metrics application cannot be over-emphasized. The model of Helliel and co-workers (2003) throws more light on this fact. Using a general service model of repurchase intention, they established that the main factor influencing brand preference was perceived value. Customer satisfaction and expected switching costs were found to exert lesser influence. These authors further observed that even though perceived quality does not directly affect customer satisfaction, it does so indirectly through customer equity and value perceptions. This particular study informs us about the utmost importance of perceptions in any brand building endeavor. High quality products can be created without input from marketing. However, in practice, it has been established that products that make market success received market or customer research support. There are several determinants that contribute to the success of a brand. Quality and quality perceptions in the mind of the customer are just but two of them. The importance of these factors has earlier been stressed. A brand can be successful in the short term with a quality that is not exceptionally high. However, continued market success requires continuous renewal to be able to meet customer expectations and values. Concerted efforts should also be made to influence customer perceptions towards the brand using appropriate marketing communication media and channels (Shimp, 1999). In today's competitive market situations, as is now the case in most business sectors, strong brands cannot be built if they are not supported by excellent services. Indeed, the market entry requirements of most sectors in terms of quality have witnessed upward adjustments in recent times. When the core attributes of a particular product or service category have been satisfied by most service providers, the differentiating yardstick then becomes the additional fringe benefits or value the customer can be provided with. This is where customers' expectations can be exceeded. Companies or brands that focus on such areas can gain competitive advantage. References Bitner, M. J. (1992), "Servicescapes - the Impact of Physical Surroundings on Customers and Employees," Journal of Marketing, 56 (2), 57-71. Rathmell, J.M. (1966), "What is Meant by Services'", Journal of Marketing, (October) 32-36. Zeithaml Valarie A., Mary Jo Bitner (1996): Services Marketing. New York : McGraw-Hill Companies. 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(1996). Developing Global Strategies for Service Businesses. California Management Review, 38 (2), 64-86. Rosen, E. (2000), The anatomy of buzz, London, HarperCollins Business. Silverman, G. (2001), The secrets of word-of-mouth marketing, New York, AMACOM. Mangold, W.G., Miller, F and Brockway, G.R. (1999), "Word-of-mouth communication in the service marketplace." The Journal of Services Marketing, 7 (1), pp. 73-89. Solomon, M., Bamossy, G. and Askegaard, S. (2002), Consumer behaviour. A European perspective, 2nd edition. Harlow, Pearson Education Ltd. Clifton, R. (2000). "Brands and their importance in growing a business" Interbrand, Great Britain. Jones P., Shears, P., Hillier, D., Clarke-Hill, C.,(2002). "Customer perceptions of service brands: a case study of three major fast food retailers in the UK". Management Research News, Barmarick Publications, 25(6): 41-49. Hellier, P.K., Geursen, G.M. , Carr, R.A. and Rickard, J.A. (2003). 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