Marketing of Service: R-Cubed Case Study - Essay Example

Marketing of Service- R Cubed Case Study Question Using the framework: Human Resource Strategies for Delivering Service Quality through People evaluate R Cubed’s human resource management strategies The philosophy and operating strategy of R Cubed is based on providing a learning, creative and rewarding environment to the staff. The three internal “Rs” including Rewarding, Reflection and Recognition were defined for all staff. The human resource strategies defined by R Cubed shows that company was aiming to deliver quality services to its customers through its people. The diagram of Gaps Model of Service Quality shows that there are various points of service layout, where the gap can negatively impact service quality. Gaps Model of Service Quality Source: Dr Robyn Ouschan The Gap 3 is the Service Performance Gap and like most of the other service companies, R Cubed has designed the strategies that could reduce the performance gap. Gap 3: Performance Gap To provide quality services to customers and to reduce the Performance Gap internal marketing is important in the organization. Through internal marketing R Cubed has made promises with its service providers and encouraged them to offer best services to the clients. Human resource strategies provide the best way to the company to show concerns of the company towards employees. The Services Marketing Triangle Source: Dr Robyn Ouschan Theoretical human resource strategies which increase service quality by people include hiring the right people, developing the people, providing people needed support systems and retaining the best people. Human Resource Strategies for Delivering Service Quality Source: Dr Robyn Ouschan 1. Selecting the right people The underline belief based on which recruitment strategy of R Cubed was defined was to recruit people who knew what they were doing and had experience to achieve personal and company goals. Senior consultants from the market were hired and to reduce authoritative culture no ‘junior’ positions were defined. Moreover, the people who R Cubed hired to deal with the customers were not the researchers but they were the experienced managers who could better guide the customers by providing them excellent information. 2. Developing the people Various human resource strategies were introduced at R Cubed to keep the people motivated and to enhance their continuous development. The four months planning cycle was introduced in which all employees used to go off-site for review planning and discussion. Another aim of this strategy was to enhance employee participation and training them. R Cubed also conducted Ops meetings on weekly basis so that all employees could understand the operations of various departments Actually it was the belief of R Cubed’s owners that learning environment and organization structure allow individuals to flexibly set their own pace. Education budget for each employee from support staff to director level equivalent to 10 percent of their gross salary was set. At the same time to achieve company objectives, the education budget was given on “use it or lose it” basis. Moreover, with the exception of sales staff, there were no cubicles in the office layout. Although options were analyzed to change the office layout however, directors and staff members found that the office layout could significantly build a culture of learning and eliminate isolated islands of knowledge. Even when office was shifted to a relatively bigger place, the similar office layout was created. The office layout not only offered a learning culture to the staff but it also helped the staff to build relationships with the customers. Moreover, service quality increased as customer had access to work area and they never got the feeling that anything was hidden away. 3. Providing people needed support systems Just recruiting senior and experienced consultants could not ensure high service quality at R Cubed; therefore, better systems were introduced to reduce consultants’ workload. For example, various existing research companies were know for their ‘telephone book reports’ however, R Cubed replaced them with visual summaries that had answers instead of just information and this system reduced the workload by eliminating on average 40 hours a month. Another system which was introduced at R Cubed to reduce repetitive task which were not liked by consultants was automated micro-based computer programs written by specialist programmers. Again this approach reduced the cost of monitoring by an average of 40 percent and also made it easier for the clients to get monitor information in a more cost effective way. R Cubed also developed a system through which related tasks were given points on the basis of their relative performance. This system helped R Cubed consultant to spend less time on tasks which had low value for the clients. In this way company not only improved the systems for employees but also created more value for the customers. 4. Retaining the best people R Cubed had been able to retain the competent and independent people by offering them what they actually wanted. The owners of the company themselves belonged to research industry therefore, they knew that consultants do well for themselves as compared to the companies in which they work. Based on this assumption, company introduced a remuneration system with four elements. In this system, to retain the staff, more than average industry salaries were offered, team bonus share equivalent to 15 percent of net profit after every month were introduced, individual point bonus with cash rewards was established and a fixed payment for higher management positions and directors was offered. R Cubed had paid more salaries than average industry salaries to its people during bad times because company knew that experienced and competent people were very important both in good and bad times. All employees at R Cubed except the support staff had flexible hours and did not have set hours. Moreover, employees were given authority to make important decisions related to their work. The key factors that have been defined leading this gap include deficiencies in human resource policies, failure to match supply and demand, customer not fulfilling roles and problems with service intermediaries. Question 2: R Cubed indicated that they will establish a local office in either Sydney or Melbourne with a full time staff of its own. Based on the service distribution options available argue the pros and cons of each strategy and then recommend which one you believe is the best course of action for R Cubed. Swire (2009) argues that there are various ways companies can adopt to enter into Australian market such as branch offices, trusts, joint ventures, partnerships, corporations and subsidiaries however, for the companies planning to invest in Australia, the most suitable strategic option is to either establish a branch office or to establish an Australian subsidiary company. Swire also highlighted that most of the foreign companies entering into Australia go for establishing their subsidiary local company. Strategic Options 1) Setting up a local office The first strategic option, R Cubed can go for is to establish its own office in Australia. Pros Cons By establishing a local office in Melbourne or Sydney, R Cubed can enjoy the status of limited liability and separate legal entity. The expansion to Australian market by establishing an office will expose the company to political, economic, legal and other risks. R Cubed will get registered in Australian Securities Investment Commission The objectives and performance of R Cubed may not remain up to the desirable standard. A foreign company having local office in Australia as a subsidiary gives dividend which is not subject to withholding tax. The service quality may not remain consistent and it may become difficult to control declining level of quality. R Cubed can get international recognition by expanding into Australian market by establishing its own office If R Cubed enhances control in its Australian office then it can raise issues of empowerment. a) To hire an Australian After establishing a local office in Australia, if R Cubed goes for an Australian, then it will benefit the company because expatriates charge high for managing their living etc. Moreover, he/she will have more understanding to culture and people and will be better able to negotiate with local and foreign companies in Australia. On the other hand, after hiring an Australian, company may not ensure that the core philosophy and operations strategy has been delivered and implemented at R Cubed Australia. Since company’s operational strategies and human resource strategies are the major determinants of company’s success therefore, there are chances of failure. b) One of the three directors should go or existing senior staff member should be promoted to director position and posted to Australia If R Cubed promotes its one of the existing senior staff member to director position and posts him to office in Australia then it will benefit the company because an existing staff member will be in a better position to deliver and ensure R Cubed philosophy. Moreover, it will also give career development chance and learning opportunities to the staff of R Cubed to work as expatriates. On the other hand, cost of hiring an expatriate will be surely high as compared to hiring an Australian. As mentioned in the case study that research consultants are usually difficult to retain as they keep on looking for more opportunities therefore, there is always a chance that the existing consultant of R Cubed may find a good better opportunity and may not consider the interest of R Cubed for the interest of his own. 2) Buy an existing consultancy and integrate into R Cubed Another option which R Cubed can go for is to acquire an existing consultancy and later on integrate it into R Cubed. Pros Cons R Cubed can reduce its various kinds of risks if opts for this option such as political influence. Acquiring a firm in Australia can be risky for the company if the image of the company is not good. Company will also get an already set up office and there will not hassle to find a suitable place The values and operating procedures of existing staff may not allow them to adjust easily in the philosophy and operations strategy of R Cubed. The already established name of the existing company will help R Cubed to achieve attention of various existing clients of the acquired firm. The conflicts with the existing staff of the acquired firm may emerge on the objective and performance issues. Therefore, based on pros and cons of different strategic options available to R Cubed, it is suggested to R Cubed that company should acquire an existing firm in the Australian market. It will be less risky for the company. There are various examples in corporate history where acquisitions and mergers have gone successful. The major benefit for R Cube will be that company will have its existing clientele base in Australia. Secondly, it is a good option to promote the existing consultant of R Cubed and post him as director to Australia office. After setting up the office and communicating and implementing the existing strategies of the company, R Cubed can keep on pursuing its practices. The following graph shows that targeting Australian market is also beneficial for R Cubed because New Zealand and Australia are similar markets and early entry can be made in this market. By targeting Australian market and by acquiring am existing company in this market will become the less risky international growth strategy of R Cubed. However, in the long run company can explore distant markets. Cultural Distance and Learning Source: Global Marketing: Foreign Entry, Local Marketing and Global Management by Johansson (2006) Question 3: R Cubed has a unique service culture. When establishing the new office in Australia with a new staff what marketing communication strategies should they use to communicate this culture? The communications and services marketing triangle shows that to build a strong relationship between service providers and customers; company has to focus on interactive marketing and for building strong relationship between company and customer, external marketing communication plays its role. Communications and the Services Marketing Triangle Source: Dr Robyn Ouschan Before recommending marketing communication strategies to company, evaluating what the challenges company can face in Australian market is also important. Australian market is very similar to New Zealand market because twenty population of the population of both markets are migrants. R Cubed will not face major challenges in Australian market however, to communicate the unique culture of the company following marketing communication strategies are recommended. Integrating Communications in Service Marketing Advertising The company should focus on printed and outdoor advertising. The company can publish its brochures and send to major companies through its representatives. Most of the companies are more exposed to printed newspaper advertisements than TV or radio. Sales Promotion The company should not invest much for sales promotions. After advertising the next strategy of R Cubed should be to attract and retain customers by offering them best solutions. In this way company can retain its clientele base while attracting the new. The quality services will surely bring more clients to the company through good word of mouth. Employee branding The positioning strategy of R Cubed should be based on skills of the staff of the company. In a business like research and consultancy, clients are more attracted by the experience and expertise of the staff. The company has used the same strategy in New Zealand and this strategy will also work in Australian market. Public Relations Building customer relations is very important for the company because it is the belief of R Cubed Company that the value can be created by developing relationships with the people. R Cubed has built strong relationships with its customers through engaging and involving clients. Moreover, R Cubed perspective in New Zealand was to attract and work with good quality clients and the same strategy can be used in Australian market. Service Branding The major attraction for the client in this industry is the service of the research firm. Therefore, by developing a strong branding model in the Australian market, R Cubed can attract quality customers. It is important that while developing the service branding model, company communicate the cultural and working values of R Cubed. Brand equity can be only built in Australian market, if R Cubed, if external communication of the company brings brand awareness and brand meaning. The Service Branding Model Source: Dr Robyn Ouschan Direct Marketing R Cubed can also establish its marketing team which may give presentations in major companies and show them the values and success history of R Cubed. Company can never win the trust of Australian companies unless they understand how R Cubed is different from the other companies. Therefore, through direct marketing, strong relationships can be built with clients. Bibliography Johansson, K. Johny. Global Marketing: Foreign Entry, Local Marketing and Global Management. Boston, Massachusetts: McGraw-Hill Publishing Group, 4th Edition, 2006. Lovelock, Christopher, and Reg Price. "R Cubed Case Study." In Services and Marketing: People, Technology, Strategy, 678. Prentice Hall, 2001. Ouschan, Robyn. Service Marketing . 2008. Swire, Mary. Doing Business in Australia. 2009. http://www.lowtax.net/lowtax/html/offon/australia/aus_business.html (accessed September 26, 2010). Read More