Service Marketing of Tiger Airways Australia - Essay Example

?Service Marketing By [Presented to] of [October 16 Introduction The primary purpose of organizations is to offer products and services to the masses in an effective and efficient manner. Regardless of the precautions set forth to ensure effective services, organizations are tend to face some sort of service failure in the business and social environment. It needs to be understood that customers have some pre-conceived notions and set beliefs pertaining to a product or service and a major or minor breakdown in those notions and beliefs create service failure. Service failures can be extremely costly for organizations as customers tend to switch to other organizations for better experiences and contentment in terms of services. Hart (1990) stated that recruiting a new customer costs five times than to keep current customers happy and content. This statement holds great value in every sense as organizations often try hard to keep customers happy by offering great services. At the same time, organizations have service recovery tools that help in gaining customers loyalty and trust back. Service recovery tools often help in enhancing customer’s retention by properly responding to service failures. The assignment aims at highlighting the impact of service failure on the business along with developing a service recovery model based on understanding and empowering customers. The organization chosen for this purpose is Tiger Airways Australia based in Melbourne, Victoria. In the past, Tiger Airways has received a number of complaints ineffective customer care service, flight delays and improper handling of grievances. This can be considered as a serious service failure offering a reason to be dissatisfied and frustrated with the services being offered. The analysis would help in understanding and analyzing the ways through which service failure can be addressed using service recovery tools in an effective and efficient manner helping the organization to win customer’s trust and loyalty back. An Overview of the Organization Tiger Airways Australia is a low cost airlines based in Melbourne, Australia. It started its operations in the year 2007 with strong focus on domestic markets. The organization has been performing well but not that well to compete with other competitors because of serious problems pertaining to the services being offered. As per the Bureau of infrastructure, Transport and Regional Economics in Australia, Tiger Airways have consistently lower percentage of on-time arrival and departure with high percentage of cancellations. Tiger Airways also used marketing strategies to boost its sales figures and presence across the country through an advertisement campaign named “The Low Fare Revolution”. Tiger Airways have been hit by a number of criticisms pertaining to its services and can be considered as an ideal organization to analyze the concepts of service failure and recovery. Concept of Service Failure When organizations offer services to customers, the only motive is to make them feel good and content with the offered services. Customers also have pre-conceived and experienced notions on services and when these notions do not match with the services being offered; it is termed as a service failure. Service failure often frustrates customers along with making them change the service provider. It creates negative a negative impact on the business activities along with offering an edge to customers. It needs to be mentioned that service failure is bound to happen and organizations are supposed to be good enough to tackle service failures. Tiger Airways have been accused of poor customer service and high rate of cancellation. Further, the support and guidance from the management is almost negligible that has reduced the satisfaction level of customers. The service recovery tools that could have been of great help in dealing with service failures have been discussed in the following part in an analytical manner. Service Recovery and its Importance As discussed above, service failure is an inevitable incident that is bound to happen in the service industry. Research has shown that service failures can either enhance the customer relationship or compound the problem in the short as well as in the long run (Greene, William, 1993), It is important to have speedy recovery methods and tools in order to retain existing and potential customers. It needs to be understood that customers are driven by quick answer to their questions and problems. Goodwin and Ross (1992) stated that satisfaction level after complaint handling is a secondary satisfaction but can prove to be higher of service recovery is speedy and prompt. Thus, it is important for organizations to deal with service failure in a prompt manner along with making an effort to empower customers through transparent flow of communication and better services in the future. Tiger Airways have been labeled as an organization paying little attention to customer’s problems and grievances. The ever increasing delays in arrival and departure have offered little satisfaction to customers. Most customers are not happy with the services offered by the organization and on top of that the customer service support is almost defunct making the whole process of communication; a failed attempt to gain emotional and economic satisfaction. This has also damaged the reputation of the organization making it one of the worst overall airlines in Australia with a 55% satisfaction rate in the year 2009 (Saurine, Angela (2009). This percentage has further reduced to 49% in the next year with minimal efforts being taken to improve the overall situation. Service failure offers a chance to examine the existing processes of an organization but Tiger Airways failed to so on consistent basis creating a hole in its own pocket in the short as well as in the long run. The number of dissatisfied customers switched to another airline offering consistent services and thus making things difficult for Tiger Airways. Service Recovery Effort after Service Failure Service failures often create troubles for the organization and customers. It needs to be understood that service recovery is not all about managing complaints but addressing reasons behind the failure of services. A proactive approach of handling customer’s complaints can be considered as a practical initiative. However, there are other service recovery efforts need to be taken after the service failure. Some of them include: (Stefan Michel, 2008) Offering the Right Justice- it is important to offer right justice to every customer in order to mitigate the impact the of service failure. The customer service department should be trained to understand the problem of customers along with handling it in a compassionate manner. The problem or grievances should be addressed in a professional manner offering prompt solution and hope to customers. Understanding the Scale of the Problem- Usually problems and service failures are analyzed on the basis of the number of complaints received from customers. However, the management should find out the actual reasons behind the failure of the service along with making early in roads to avoid them in every possible manner. Encouraging Customer Complaints- it is important to encourage customer to complain on the failure of the service. This would help in understanding the dissatisfaction and frustration level of customers along with finding ways to reduce them in the long run. Acknowledging the Service Failure- it is important to acknowledge the service failure. Many organizations blame customers for not understanding the service and terming it as a failure rather than taking the responsibility of the service failure. It is important to acknowledge the mistake along with communicating the same to customers along with promising to amend the failure through speedy service recovery tools and initiatives. Best Service Recovery Tool As per the Bureau of infrastructure, Transport and Regional Economics in Australia, Tiger Airways have consistently lower percentage of on-time arrival and departure with high percentage of cancellations and offering right justice by strengthening the customer service department can be considered as the best service recovery tool for the organization in the present as well as in the future. As per Clive Dorman’s article published in The Sydney Herald (2011), Tiger Airways has been taking customer’s complaints seriously by strengthening its customer care department in order to handle customer’s complaints along with offering them solutions for their grievances and problems. It will help the organization to interact with customers along with revamping its image in the competitive global business environment. Impact of the Intervention on the Customer Loyalty It needs to be mentioned that customer loyalty plays an important role in offering growth and development to organizations in the competitive and complex business environment. The impact of service recovery tool on customer loyalty is of great influence especially when the service recovery tool is speedy and spontaneous in nature. Tiger Airways could have gained customer’s confidence and loyalty by introducing a robust and proactive customer service department. However, it took almost three years to understand and address this issue resulting in a 55% satisfaction rate in the year 2009 and further 49% in the year 2010. The customer loyalty was also lost offering inevitable losses to the organization along with dampening its prospects of standing tall in front of its competitors in the present as well as in the future. Overall, the current intervention has reduced the customer loyalty and can be considered as a late effort and initiative by Tiger Airways. This has also thwarted its progress and prospects of becoming a competitive and profitable organization in Australia. 2. Customer Satisfaction and Financial Performance of an Organization Customer satisfaction is defined as the value and benefits offered to customers through cost effective products and services. Customer satisfaction can be considered as a tangible and intangible feeling and experience often enhancing the growth and development of organizations in wide arrays of markets across the globe (Berry, Leonard, Parasuraman, 1991). The financial performance of an organization is dependent on the acceptance of its products and services in the competitive business environment and wide arrays of societies. It needs to be understood that organizations are successful because of huge customer acceptance and reach. It is important to identify and analyze the notion of customer satisfaction along with linking it with the financial performance of an organization. The organization chosen for this purpose is Tiger Airways operating in Australia with a poor track record. Customer Satisfaction Trends in the Service Industry Service industry is driven by effective and efficient services offered by organizations. Customers are either satisfied or dissatisfied as there is no other option to evaluate the satisfaction level. In today’s time customers look for high quality services with prompt answer to their queries ((Hart, Heskett, Sasser, 1990). Customers are offered a number of choices that compels service providers to satisfy their wants and requirements in a compassionate and prompt manner. Most airlines offer great experience along with effective customer care services making customers feel important and special. Tiger Airlines failed to do so in the past as well as in the present deteriorating its position and reputation as a potential service provider amidst the sky. The customer satisfaction level has been poor and the management is responsible for jeopardizing the image of the organization through little initiatives and actions. This has also affected the financials of the organization in a negative manner making it weak and snubbed. Financial Performance and Customer Satisfaction The financial performance of an organization often attracts customers to be a part of it in the short as well as in the long run. Generally, customers perceive profitable organizations as the one accepted well in the competitive business environment. These organizations have high trust quotient that is related to the satisfaction level of customers. It needs to be mentioned that organizations with stable and strong financial performances may not be considered as the ideal one enhancing customer satisfaction as customer satisfaction is measured through the contentment and opinions of customers. There is no denying that positive financial performance is because of the acceptance and appreciation by customers across the world and thus customer satisfaction plays an important role in enhancing the overall financial performance of the organization (Mittal, Frennea, 2010). Financial Performance of Tiger Airways The financial performance of Tiger Airways has been dismal in the past as well as in the present. A series of customer’s complaints embedded with delays in arrival and departures of flights have resulted in little economic benefits. It can be assumed that the organization has been meeting its expenditure through revenue but there is little balance between the inflow and outflow of cash resulting in a weak financial position. The level of customer satisfaction has also decreased with a 55% satisfaction rate in the year 2009 and further 49% in the year 2010 (Saurine, Angela (2009). This has affected the financial performance of the organization making it all the more weak and unstable in the air and on the land. Thus, it can be said that that neither the financial performance nor the customer satisfaction level has been good enough to save the organization from criticism. The next part highlights the positive and negative link between the financial performance of the organization and customer satisfaction. Link between the Financial Performance and Customer Satisfaction Financial performance and customer satisfaction are two different concepts prevailing in the business environment. There is no denying that customer satisfaction plays an important role in enhancing the financial performance of an organization. With increase in the customer satisfaction, there is an increase in the number of loyal customers creating potential customers through word of mouth. This increases the sales and revenue of the organization by strengthening its financials in the present as well as in the future. However, positive financial performance is not always considered as the prime reason behind the customer satisfaction as an organization doing well may not offer positive customer satisfaction all the time. It is important to increase the level of satisfaction through effective customer services and minimizing service failures along with developing potent and proven service recovery tools and programs. This would help in earning the loyalty of customers that would automatically create a positive impact on the financial performance of the organization. Conclusion The importance of service recovery tools and programs in minimizing the impact of service failures needs no introduction and description. It helps in enhancing the customer satisfaction along with earning the loyalty of millions of customers (John, Joby (2003). Tiger Airways failed to develop a service recovery program on time that also affected its financials along with create dissatisfaction among existing customers. The assignment offers a clear picture of service failure, service recovery and importance of customer satisfaction in an informative manner. The understanding has been presented through thorough research and analysis that can be considered as quite effective in fulfilling the prescribed objectives of the assignment. References Berry, Leonard L. and A. Parasuraman (1991), Marketing Services: Competing Through Quality, New York: The Free Press. Clive Dorman (2009) Tiger Airlines starts taking complaints seriously, Retrieved on October 15 http://www.smh.com.au/travel/travel-news/tiger-airlines-starts-taking-complaints-seriously-20090610-c2vt.html Greene, William H. (1993), Econometric Analysis, New York: Macmillan Publishing Company Goodwin C, Ross I (1992). Consumer responses to service failures: influence of procedural and interactional fairness perceptions. J Bus Res Hart CWL, Heskett JL, Sasser WE (1990). The profitable art of service recovery. Harvard Bus Review Hoffman KD, Kelley SW, Rotalsky HM (1995). Tracking service failures and employee recovery efforts. J Serv Mark John, Joby (2003). Fundamentals of Customer-Focused Management: Competing Through Service. Westport, Conn.: Praeger. Saurine, Angela (2009). "Australians reveal their worst airline". Retrieved on October 15 from 2 http://www.news.com.au. Stefan Michel (2008). Turning customer frustration into customer loyalty, Retrieved on October 15 from http://www.imd.org/research/challenges/upload/TC089_08_recovering_from_service_failure.pdf Vikas Mittal; Carly Frennea (2010). "Customer Satisfaction: A Strategic Review and Guidelines for Managers." 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