Technology and Services Marketing - Report Example

Running Head: Technology Technology and Services Marketing & Program> Executive Summary The way the world does business now has changed dramatically. What used to be limited by constraints of time and space are no longer relevant in the contemporary business environment. There is no context where this is more true than in the field of services marketing. The particular characteristics of intangibility, inseparability, perishability, and variability are most aptly addressed by the new digital technology and communications capability that works real time, covers a wide coverage, and reaches the individual to whom the service product is intended. The high degree of reliability and accuracy and the relatively low cost (compared to previous and more conventional types of brick-and-mortar marketing) provide new pathways in exploring new services and new services marketing techniques. Conventional forms of communication involving broadcast, digital reproduction, digital, wire and wireless technology have been bundled together to create new forms of communication applications through convergence techniques. Convergence has made possible new social phenomena known as social networking, where communities of internet users find a common venue for exchanging ideas, opinions, and information. This is a natural environment for services marketing to proliferate, and the new technologies have created capabilities around which new services are developed. The revolutionary approach to this new way of doing business, however, has met with special challenges concerning acceptance by management, mobility of employees, security requirements and intellectual property rights. While these challenges may be formidable at present, they are a necessary hurdle to address if the business is to succeed in the future. Table of Contents Title Page 1 Executive Summary 2 Table of Contents 3 Introduction 4 A Brief Background of Services Marketing 4 The Development of Communications Technology 5 Technological Avenues for Services Marketing 7 Challenges to the Adoption of New Technology in Services Marketing 10 Conclusion 11 Bibliography 12 TECHNOLOGY IN SERVICES MARKETING Introduction Marketing is the means by which goods and services are made accessible to customers in order that they may satisfy their needs. There are two types of products – goods and services. Most literature on marketing deal with tangible goods. However, more and more business tends to gravitate towards providing services, and in ways that were inconceivable before. The trend towards service management is further enhanced by advances in technology and the use of real-time, far-reaching communications systems around which contemporary social cultures are built. This paper will explore the role of technology in expanding and transforming the realm of services marketing into an entirely new genre of business undertaking. It begins with a brief description of services marketing, and proceeds to the use of technology in this area, ending with a discussion of the advantages and disadvantages of the new technological applications. A Brief Background of Services Marketing Services are products that, like goods, could also be produced and marketed. There are some major differences, though, between a product-good and a product-service. A service is essentially an activity done for the benefit of a person or a thing. Services are intangible, which is why services marketing is sometimes called “selling the invisible” (Coldren, 2006). Examples of service-oriented businesses include law firms, IT services and telecommunications providers, management consultants, financial and insurance institutions, opinion and poll tracking research firms, and many other business-to-consumer and business-to-business operations. There are four essential characteristics of product-services that distinguish them from product-goods. These are intangibility (or invisibility), inseparability, variability, and perishability. Obviously, services, being activities, are intangible in the sense that they are incorporeal (without physical embodiment), although not entirely indiscernible, since there exists some outward manifestations of the creation of the service. Evidence of the service is the experience of the consumer, and the benefit afforded him. Secondly, services are inseparable from the two parties to the service – the customer as recipient of the service, and the producer rendering the service. In goods marketing, the producer is seldom the marketer as these pertain to two discretely different departments of functions. For services, production and marketing go hand in hand. The service is produced at the moment the client avails of it. Thirdly, services are variable, and despite all attempts to standardize it the different service events are each unique. This is because the customer is a participant to the creation of the product-service, and much depends on the customer’s input in qualifying the service. Finally, services are perishable. Unlike goods, they could not be stored in inventory, although the capacity to create them can. The service expires upon application or consumption; it exists in real time. These four characteristics impact upon the seven P’s of service marketing – the traditional 4 P’s (product, price, promotion and place) and the additional three (people, physical evidence, and process) that pertain to services. The Developments of Communications Technology Technological developments are always occasions for improving services in response to human needs. Inventions in the past century such as means of transportation by land, sea and air have provided great facility in transporting raw materials and equipment necessary for the creation of both goods and services. Great strides have been made in electronic means of communication such as the wire (telephone), broadcast (radio and television), wireless (mobile phones), digital reproduction (fax machines) and more recently interactive (personal computer) communications systems, both hardware and software, all of which have created a closer interaction between the market and the marketer. Recently, a leap towards the more effective employment of digital methods has been undertaken in the form of technical convergence. This is the process by which telecommunications, information technology, and the media – sectors that used to operate independently – are interconnected in order to function as an integrated service. (Papadakis, 2007). The diagram following depicts the concept of convergence. (Source: Papdakis, 2007) The special capabilities that have been made possible by technological convergence have opened bright, new possibilities for marketing in general, and services marketing in particular. It has enabled services to be created and delivered in virtual space, thus broadly expanding its reach and revolutionizing the forms and guises of the new product-services. Technological Avenues for Services Marketing A whole new technological Ecosystem has evolved out of convergence that is too revolutionary that it may be ignored only at the risk of business obsolescence and failure. The new methods of network marketing provide capacities for lead generation, increased exposure, interactive channels of communication, and a comprehensive CRM or Customer Relations Management. A recent offshoot of the new technology are the evolution of new phenomena known as Social Media or Social Networking, Micro-Blogging, and Buzz Marketing. This last development, Buzz Marketing, is a term used for word-of-mouth marketing, and as such has in various ways been with us for a long time. However, due to the new communications media, there has been an enhancement of the interaction of consumers in amplifying the original message intended by marketing efforts to get across. The word “buzz” itself “used to mean anything the marketer does to make people talk…[Now] Buzz marketing is about creating strategic, compelling programs that hit people emotionally and credibly. It is about creating relationships between people and brands that influence the choices they make and making them want to embrace the brand.” (Amy Finn, as cited in Salzman, Matathia & O’Reilly, 2003). Thus, Harry Potter, Pokemon, X-files and the Blair Witch Project are examples of marketing buzz. (Elliot, 2004) As mentioned, other phenomenon of modern digital communications are social media or social networking, and micro-blogging. This is an approach to communicating information, ideas and opinions among the community of internet users which is both collaborative and dynamic (Jones, 2008) In these social networks, people are no longer just communicating but conversing, exchanging views and opinions and in the process bond together as a community. They are also, from a business point of view, venues wherein leads are generated and sales transactions are closed. There are many venues, but five of the most popular social networks or mini-blog sites, according to Lyon (2009) are: 1. LinkedIn – This is advantageous to use for business referrals and leads. This is a business-orientated site used primarily for professional networking. It has a primary demographic of males averaging 41 years of age. A participant develops “connections” he knows and trusts in the business. Their connections, in turn, develop their own connections, (called second degree and third degree connections), and so on. This network allows one to be introduced to possible business opportunities. 2. Twitter – Twitter is used to notify one’s clients of latest business developments; promotions and opportunities. It has its biggest demographic at 35-49. This is a “follow-me” site that allows one to put in up to 140 characters which are displayed on the individual’s profile page and delivered to those who have subscribed to, or are following you. One can restrict or allow open access to your “tweets”. Twittering is free unless one uses SMS (short message service). There are 6 million unique visitors monthly; it is currently “the fastest growing site in the Member Communities category for 2009. Although discovered by the media, still under 7% of the population uses it, but growth over last year was a whopping 1,382%” (Lyon, 2009) 3. BizNik –BizNik may be used to establish oneself as an expert in the spa industry through published articles and content. BizNik is a good place for one to go to share conversation about business. The site is based on relationships, not referrals. On this venue, one can teach a seminar; post on the boards; download articles; host an online event; attend an online event, and so forth. 4. Facebook – Facebook is ideal to “tap into the fountain of youth”. It is possible to join in by city, school, office or workplace and other similar group or association. One may choose his friends and use privacy settings which provide control to the type of information that is automatically shared. Its most popular application is the capability of uploading unlimited photos. Furthermore, “gifts” may be sent for $1.00 with a personalized message to friends. It is also possible to post free classified ads to those in your network. Facebook has recorded a 228% growth year over year; its fastest growing demographic are those aged 25 years and older. 5. MySpace –MySpace is used to recruit, introduce, educate, and increase awareness of one’s business and industry. It is one of the fastest growing websites, with its most common users aged 18 years and older. MySpace is an interactive network, a user-submitted site of friends, groups, videos, musicians, photos, blogs, etc. One may use “bulletins” to deliver his message. Groups can share a common page and message board; it affords full service classified listings. Moreover, one may upload recordings and avail of the many features of this service. There are a few other elements of modern convergence marketing. For instance, Mobile Marketing is gaining in popularity. It is the ability to reach consumers on their mobile devices wherever they are, to convey incentive advertising and email campaigns. It is still presently in its early stages, perfecting mobile-friendly formats and interesting ways to deliver advertisements and other such messages. According to studies, ad agencies are in a rush to develop mobile- based promotional tools. Presently only 19% of mobile users have used mobile marketing, but research shows that it increases consumer awareness by up to 24% and increases intent to purchase by almost 5%. Statistics show that 3.3 billion people worldwide have mobile phones, many with the potential capability to browse the web at the touch of a finger. Challenges to the Adoption of New Technology in Services Marketing In a white paper published by AT&T, some challenges to social networking are discussed. The most salient ones are as follows: Security – As internal company users avail of collaborative application on the internet, security will become a major concern. There is the threat of proliferation of viruses which could damage databases. More than that, there is also the possibility of fraud, the stealing of client information and even instances of payment card fraud. Necessarily, since transactions will be conducted over the net, new solutions will have to be devised to ensure that payments are secure and reliable. Intellectual Property – Corporate boundaries will tend to blur as the demarcation between the external and internal environments interlink. Thus, employees will have to be very careful concerning the information they share. Information leakage becomes a distinct possibility because of advances in SEO or search engine optimization. Employees will thus have to be provided more thorough training on protecting the company’s intellectual property rights. Storage – The company will have to define bandwith, memory, and archiving storage as these, desirable as they are, will require hardware an software provisions at a cost. Rich media lifecycle should be defined, so that online congestion will be minimized or altogether avoided. Adoption – Managers oftentimes resist change, and this is also true with social networking, despite its popularity as a personal activity. Executives responsible for undertaking the adoption may resist the intrusion of new technology, preferring things “the way they are”, and in the process waylaying corporate strategy. Speed of innovation – The average time between the creation of an idea and the development of a mature application is about two years. Most corporate executives will require more time than this to “specify, justify, develop, pilot and implement business applications.” (AT&T, 2008). By the time decision to adopt is made, it is possible that the technology intended has long been overtaken by more recent innovation. Corporations will need to speed up their “idea-to-readiness” process and mindset changes in order to keep up with the technology, if they wish to remain competitive, moreso if they wish to lead. Lack of appreciation – Two of the main drawbacks that social networking will present (to the minds of corporate executives) is that networking time is not seen by them as cost efficient (and is at times seen as “goofing-off”), and that corporations must give greater freedom to employees in managing their working hours if social networking is to work. Management will have to address its biases and think radically while finding new methods of ensuring productivity. Risk of losing human and intellectual capital – Companies which maximize the benefits of social networking also experience an increased mobility of employees, because the latter are able to maintain active professional dialogue with counterparts in other environments and around the world. Thus, the company must find ways of motivating good employees to remain with the company despite the competition for good human resources. Conclusion There is no shortage of testimony about the effectiveness of technology in providing services to remote places and opening markets for the firm’s further growth. The way business is done today has radically changed, and there is no way a company may remain strong and competitive without having to deal with these changes. The technology is but the catalyst; the profound transformations have occurred more in the social arena, where human relations have been redefined and human interactions have gained a more profound dimension. Services created across the globe are made available to markets worldwide on a round-the-clock basis – it is in this context that the fast-expanding field of services marketing is to continue to grow. Bibliography AT&T. (2008) The Business Impact of Social Networking: A White Paper in Cooperation with Early Strategies Consulting. Coldren, C. (2006) Four Factors that Distinguish Services Marketing. Retrieved 25 September 2009 from Elkin, T. (2002) Technology. Advertising Age, 1/7/2002, Vol. 73 Issue 1, p16-16 Elliot, S. (2004) Pursuing Marketing Buzz. New York Times, 10 May 2004. Retrieved 25 September 2009 from Gibson, S. (2006) IBM rolls out service products. eWeek, 11/27/2006, Vol. 23 Issue 47, p12-12 Jones, R. Leveraging Social Media to Educate. Search Engine Watch, 28 August 2008. Retrieved 25 September 2009 from < http://searchenginewatch.com/3630690> Lyon, L. (2009) Marketing in the New Technological Eco-System. 1 September 2009. Retrieved 25 September 2009 from Papadakis, S. (2007) Technological convergence: Opportunities and Challenges. Retrieved 25 September 2009 from Pereira, P. (2007) SMBs are hungry for IT.. eWeek, 11/12/2007, Vol. 24 Issue 35, pC6-C6 Salzman, M., Matathia, I. & O’Reilly, A. (2003) BUZZ: Harness the Power of Influence and Create Demand. John Wiley & Sons, New Jersey. Songini, M. L. (2006) SAP to Add Marketing Piece To Hosted CRM Service. Computerworld, 5/15/2006, Vol. 40 Issue 20, p12-12 Taft, D. K. (2004) Catching Web services in .Net. eWeek, 5/24/2004 Supplement, Vol. 21, pN1 Read More