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Customer Service Theory: Extended Marketing Add in library

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Question:

Discuss the relevant literature on customer service theory (i.e. the concepts, models and theories from the final 2 lectures in this module?
 
Evaluate your organisation’s extended marketing mix to support the above discussion. ?
 
 

Answer:

Introduction

The turn of the millennium has seen extreme changes in the global economy. Services have performed a critical role in these changes, because services are becoming the way companies meet their markets. These days companies have understood that in order to survive in this competitive world depending on the product they offer will not take them far, but also an addition offering which they bring to their customers will differentiate them from their competitors. These days the organizations which offer innovative, new and unique customer services are succeeding in the market where as some of the established organization which fails to provide the customer services have seen a shutdown. (Carmen & Langeard, 2012)

Service Marketing is not a self-enclosed task however service marketing is integral to service organizations as a whole. The strategies, framework & concept of service marketing were developed as a result of interlinked the forces of many organizations, industries & individuals that have perceived the increasing importance of services in the present world economy. (Murray & Schlacter, 2010)

Originally service marketing development focused on service industries. However, technology & manufacturing companies realised that in order to compete successfully in the market place, services are the prerequisite to complement their product.  Providing services by most of the industries has now become a necessity instead of option. (Zeithaml & Bitner, 2009)

Defining Services

Both non-profit organizations and profit oriented organizations have a wide range of activities which are labeled as services. Weather an organization is successful or not it completely depends on creating value to the customer & delivering excellent service quality to customers. So services cannot be defined easily. There are various ways of defining services each marketing literature provides a different definition of services. (Donnelly, 2010)

The sum-up of all the definitions of services conclude that services deals with the components which are intangible in nature. There may not be an ownership or physical transfer with the purchase of services. However, still it creates number of advantages after or during the service experience or interaction. (Zeithaml, Parasuraman & Berry, 2013) 

 

Characteristics of Services

Service is an economic activity which creates values and provides advantages for customers at specific places & times resulting in bringing about a desired change in or on behalf of service recipient. The various characteristics of services include:

Intangibility: Services are intangible in nature that means it cannot be touched as they are not physical objects. The buyer of the services does not get an opportunity to taste, touch or smell them unlike purchase of goods. While promoting or selling of a service the organizations have to concentrate on the benefits & satisfaction that a customer derives having spent on the services. (Kotler, 2013)

Perishability: Services are highly perishable in nature like labour. In services the time element assumes a significant position. Services cannot be stored, so if we are not using a service today it is off waste. If labour stops performing their tasks, it is of no use and a waste. An unemployed person, unoccupied premises, unutilized credit etc. are all economic waste. This it can be said that services have high perishability level. (Bitner, Booms &  Tetreault, 2010)

Inseparability: Services are mostly supplied or created simultaneously. They cannot be separated from each other, for example doctors, beauticians, entertainment companies, etc. all create & offer services at a same given time. The providers of the services & services offered are so closely associated with each other that are not separable. Services are first sold, then produced & consumed, whereas goods are first produced, then sold and at last consumed. Hence, the most important characteristic of services is inseparability which is a challenging factor for service management industry. (Ballantyne, Christopher & Payne, 2012)

Heterogeneity: The quality of services cannot be standardized, as the nature of services makes it unfavourable to set a standard for any service. The price paid for services could be either too low or too high as is seen in the case of sports or entertainment organizations. Even if customers pay the same price it is not possible to sell the same type of services. The reason behind this is the individual’s difference in perception at the level of users & providers. For a service firm it is very difficult to establish standards for the output of service because of its heterogeneous nature. (Alford & Sherrell, 2013)

Ownership: After the completion of selling process of goods, they are transferred to buyer’s name & he/she becomes the owner of those goods. However, it is not possible to do this in case of services. The services cannot be owned by the users, they can only access the services. For example, a person can make use of swimming pool, hotel room or doctor’s services but he cannot own those services, the ownership remains with the providers. Thus, ownership does not get affected while selling the services. (Levitt, 2011)

Simultaneity: Services cannot move through distribution channels and cannot be delivered to potential user or customer. So in case of services, either the provider goes to the user or users are brought to the services. Services have a limited geographical area; the producers of the services have normally a small operational area. When buyer comes to the producer directly it costs lots of money and time to the buyer. On the other hand when producer approaches the buyer, time is take away from service provider & the cost of services rendered increases. Therefore, time & travel economics provide incentives to locate more service centre near to the customers, which leads to emergence of smaller service centres. (Booms & Bitner, 2011)

Quality measurement: It is very difficult to quantify or rate services; we cannot measure services in terms of service level. Service industry this requires another tool for measurement. For example, the food served in a restaurant cannot be quantified, however, the way the food is served by the waiter or the staff’s behaviour cannot be ignored at the time of rating the total process. Therefore, it is not possible to determine the level of satisfaction at which customers get satisfied. Thus a service organization needs to sell customer convenience, atmosphere, consistent service quality, etc. (Murray & Schlacter, 2010)

The traditional 4 P’s of marketing mix are unable to effectively measure the service quality, because services are intangible and cannot be quantified and the marketing in today’s world is more oriented towards customers. Therefore in order to measure the quality and delivery of service, it is necessary to add 3 more P’s which are known as extended marketing mix. These 3 P’s include Process, People & Physical Evidence. (Rathmell, 1966)

People: All the human actors which play a role in the delivery of service and thus influence the perceptions of a buyer: namely, the personnel of organization, the customer & other customers in the service environment. Every human actor that participates in the service delivery provides cues to the customer relating to service nature itself. How these people have their personal appearance, how they are being dressed and how their behaviour & attitude is, everything influences the perception of the customer regarding the services. The contact person or the service provider plays an important role. Some of the services like counselling, consulting, teaching & other services based on professional relationship, the provider is the service. According to the researches the service providers act as a focal point of service encounter which are crucial for the organization. In many of the service situations, customers themselves can also influence delivery of the service, resulting in affecting quality of service & their own satisfaction. For example, the patients in a health care greatly affect the service quality they receive when they either don’t comply or comply with health regimens provided by the doctor or heath consultant. (Berry & Parasuraman, 2011)

Physical Evidence: The environment in which the delivery of the service takes place and where the organization & customer interact, & any component that is tangible which facilitates communication or performance of the service. The physical evidence of a service consists of all the representations of the services that are tangible like equipment, signage, brochures, etc. In some of the scenarios it can consist of physical facility where the service is offered which in other terms is known as “service space”. Physical evidence cues provides excellent opportunity for an organization to send strong & consistent messages regarding the purpose of the organization, the intended segments of the market & service nature. (Rathmell, 2012)

Process: The actual mechanisms, procedures & activity flow by which the delivery service takes place is known as process. The actual delivery steps which a customer experiences or the operational service flow, also provide customers with evidence on which they can judge the service. Some services are very complex that needs the customer to flow an extensive & complicated series of action to complete the process. Another differentiating characteristic of process is that it can provide customer with the evidence that whatever the service follows a production line/standardized approach or whatever the process is a customized or empowered one. All the evidence that a service provides are aligned with its market position & vision. (Kotler, 2009)

The three additional P’s in the marketing mix act as separate element because all or any of them may affect the satisfaction level of customer and decisions related to repurchase.

 

SERVQUAL Model

This model was developed by A. Parasuraman in USA. This model is based on the expectations disconfirmation approach which is called as disconfirmation paradigm.

The model of service quality that is developed helps in identifying the reasons for any gaps between the expectations of the customer & their perceptions. There 5 gaps which are discussed below:

Gap 1- This is the gap between what the expectations of customer is & what the management of the company thinks customer expects.

Gap 2- This is the gap which occurs when management fails to design service standards which help in meeting the expectations of the customer.

Gap 3- This gap occurs when the delivery system of an organization (i.e. technology, people & processes) fail to deliver the specified standards.

Gap 4- This occurs when the communication of the organization with the customers promises a level of service performance which processes, technology & people fail to deliver.

Gap 5- This gap is the product of all the above four gaps that separates customer from the organization. (George, 2010)

In order to find the extent & level of Gap 5, marketers developed 21 0r 22 item SERVQUAL scale. This model identifies 5 core competences of service quality, i.e. reliability, assurance, tangibles, empathy & responsiveness.

Tangibles include appearance of physical facilities, communication, personnel & equipment.

Reliability is the ability of an organization to perform the services promised dependably & captured accurately.

Responsiveness is the willingness to assist customers & to give them prompt services, whilst capturing the notion of flexibility & the ability of an organization to customize its services according to the needs of the customers.

Assurance is the courtesy & competency of employees & their ability to convey confidence & trust.

Empathy represents provision of caring and providing customers with individualized attention. (Regan, 2013)

 

Extended Marketing Mix for Elle UK Fashion Magazine

The extended marketing mix for Elle UK consists of 7 P’s i.e. Product, Price, Place, Promotion, Physical Evidence, People and Process that have been discussed below:

Product

Elle UK is the world’s largest selling fashion magazine. It is the international authority on style having 44 print editions worldwide & 37 websites. The company recognizes the importance of fashion amongst today’s generation, so Elle UK is the sexy, stylish & spirited magazine, it was the first magazine which inspired readers to celebrate their individuality & create their own style. Elle UK is mainly for the women who love fashion. This depicts that Elle UK has in-depth knowledge about the expectations of the customers or readers & it responds fast to the changing customer environment. Elle UK has grown rapidly in past decade which has made it the biggest magazine seller. (Levitt, 2011)

Price

Elle UK magazine follows a competitive pricing strategy, the reason behind adopting this pricing strategy is that it operates in a competitive market, where it has many competitors like Glamour Magazine, Look Magazine, Vogue Magazine & Grazia Magazine which print same type of fashion content in their magazine and also the customers are price sensitive. But according to the market researches it has been depicted that customers are will to pay more for Elle magazines which have lead it to reach the top selling magazine in UK. Elle also adopts a value based pricing strategy for its premium edition which helps it to maximize its profits. (Grandpierre, 2013)

Place

Elle has wide network of distribution and has followed intensive distribution strategy. Elle UK utilizes all available outlets and has taken a shelf space in most of the stationary shops, big coffee houses, famous book stores, e-book stores, online stores, airports, in flight and also at professional places like doctor’s clinics, designer stores, etc. the major selling of Elle UK is through online stores. Elle UK has developed a very extensive network of company owned publishing houses who directly sell to MNC’s giants. By adopting the above strategies Elle UK is able to saturate the market with its fashion magazine. (Magazines Direct, 2015)

Promotions

Elle UK is a well know and a top selling magazine in UK which is knows for it sexy, stylish & spirited magazines. It uses various channels of advertising in order to bring awareness among the target customers. The various channels used for advertising include print media (i.e. newspapers), social media websites (like facebook, pin interest, twitter, etc.), Hoardings (roadside and at airports) & Television advertising (advertisement at fashion channels). Also Elle UK runs many promotions for its existing and new customers. (Hearst, 2015) It provides yearly membership for its fashion magazine to new and existing customers at subsidized rates, also in order to promote the magazine Elle puts canopies in the big malls of UK and sell the magazine at subsidized prices in order to attract more new customers. (Hearst Magazines, 2015)

 

Physical Evidence

The brand image of Elle UK magazine is committed to sustainable business practices which is evident from the fact that the magazines which are printed and published are prepared from 100% recycled papers. Every Elle’s magazine contains the useful information related to the latest fashion and trends available in the market that attracts the readers about the magazine and tends them to have its subscription. (Graham, 2009) Elle Magazines have a brand logo which differentiates it from other competing magazines available in the market. Elle magazine also has its presence online where readers can visit there online website and gain more information about the magazine. (ICTMN, 2014)

People

Elle has a highly motivated and energetic staff of people who work in close cooperation with each other in order to develop and market new magazine editions. Elle has a minimized hierarchical management; employees at junior level are free to reach the top management and discuss issue and concern with them. The organization has a free flow of communication and avoids hierarchy, there is a 360 degree feedback system and also Elle adopts an open door policy for its employees. (Lucas, 2009) Elle has a set of employees that work closely with each other in order to publish and print innovative ideas in their magazines. The work culture at Ellie is very cool and calm that energizes the office atmosphere and brings lots of positive vibrations that bring lots to innovative ideas. Elle’s top management involves its employees at lower level in decision making. The human resource and marketing team is responsible for internal marketing of Elle’s to make sure that employees stay happy and are motivated. Monthly and quarterly meetings and one-o-ones are conducted by the managers and top management to ensure that all the employees’ issues and problems are discussed and resolved, and employees are committed & aligned to achieving the organizational objectives & goals. (Johnston, 2013)

Process

The service delivery process should also reinforce values. Elle UK prints and publishes magazines of the same paper quality. Elle also focuses on saving the paper so it has many e-magazines which are available online so that readers can buy them and read them as a soft copy, which saves lot of cost to the company as well as it is environment friendly. Elle UK encourages its members to buy online subscriptions and yearly subscription which saves a reasonable amount of money for the customers. Elle provides quality and latest fashion information in its magazines which is collected by its market researchers. The market researchers recruited by Elle are MBA Fashion Designing graduates who have proper knowledge of the latest trends and fashion available in the market. They gather information from various sources, like online fashion stores, visiting fashion outlets in malls, visiting television fashion channels, etc. (Ponsford, 2014) Once the useful information is gathered then it goes for the screening, all the relevant and trendy fashion information is shortlisted and goes for the approval of Brand manager and DGM, once the approvals and required copyrights and patents are received then the information goes to the legal department to check if the information that will be printed is following all code of conducts and is legal and follows all the regulatory laws. After the approval from the legal department finally the selected articles goes to the printing house for printing and then to the publishing house once the magazines are printed. (Elizabeth, 2009)

 

References:

Elizabeth, N. (2009). The Magazine Publishing, London: Rutledge

Graham, M. (2009). Media convergence, UK: Palgrave Macmillan

Grandpierre, K. (2013) How ELLE magazine conquered the world Available at: < https://www.inaglobal.fr/en/press/article/how-elle-magazine-conquered-world > [Accessed 10th February 2015]

Hearst Magzines, 2015. [Online] Available at: <https://www.hearstmagazines.co.uk/ellemagazine> [Accessed on 18th February 2015]

Hearst, 2015. ELLE. [Online] Available at: <https://www.hearst.co.uk/brands/elle> [Accessed on 18th February 2015]

ELLE UK, 2015. About Us. [Online] Available at: <https://www.elleuk.com/more/contact-information-work-experience-internships-british-elle> [Accessed on 18th February 2015]

ICTMN Staff (2014) Not Happy! Natives Pan Pharrell's Headdress Look on Elle UK Cover Available at: <https://indiancountrytodaymedianetwork.com/2014/06/03/not-happy-natives-pan-pharrells-headdress-look-elle-uk-cover-155142>
IPSO (2015) Available at: <https://www.ipso.co.uk/IPSO/index.html> [Accessed 15th February 2015]

Johnston, L. (2013) Rebranding Feminism: The ELLE Debate. Available at: <https://www.elleuk.com/fashion/what-to-wear/elle-rebranding-feminism-debate-mother-london-lorraine-candy-ruby-tandoh-vagenda> [Accessed 15th February 2015]

Lucas, C. (2009) Magazines in a Recession. [Online] Available at: <https://www.inpublishing.co.uk/kb/articles/magazines_in_a_recession.aspx> [Accessed 21th February 2015]

Magazines Direct, 2015. [Online] Available at: <https://www.magazinesdirect.com/subscription/marie-claire/32371376/marie-claire.thtml?promotion=jansalebrand&utm_medium=Text+link&utm_source=BRAND+WEBSITE&utm_campaign=XMC+brand+site+hardlinks&utm_content=Main+Menu+Text+Link> [Accessed on 18th February 2015]

Ponsford, D. (2014) UK magazine combined print/digital sales figures for first half 2014: Complete breakdown. Press Gazette, [online] 14th August. Available at: <https://www.pressgazette.co.uk/uk-magazine-combined-printdigital-sales-figures-first-half-2014-complete-breakdown> [Accessed 10th February 2015]

Carmen J.M. and Langeard E. (2012). “Growth Strategies of Service Firms”, Strategic Management Journal, 1, 7 - 22.

Donnelly J.H. Jr (2010). “Marketing Intermediaries in Channels of Distribution for Services”, Journal of Marketing, 40, 55 - 70.

Levitt T. (2011). “Marketing Intangible Products and Product Intangibles”, Harvard Business Review, 81, 94 - 102.

Murray, K. B. and Schlacter, J.L. (2010). “The impact of services versus goods on consumers’ assessments of risk and variability”, Journal of the Academy of Marketing Science, 18, 1, 51-65

Rathmell J.M. (2012). “What is Meant by Services?”, Journal of Marketing, 30, 32 -36.

Regan W.J. (2013). “The Service Revolution”, Journal of Marketing, 47, 57 - 62.

Zeithaml, V.A. and Bitner, M.J. (2009). Services Marketing, New York, New York: McGraw Hill.

Zeithaml V.A., Parasuraman A. and Berry L.L. (2013). “Problems and Strategies in Services

Marketing”, Journal of Marketing, 49, 33 - 46.

Levitt T. (2011). “Marketing Intangible Products and Product Intangibles”, Harvard Business Review, 81, 94 - 102.

Murray, K. B. and Schlacter, J.L. (2010). “The impact of services versus goods on consumers’ assessments of risk and variability”, Journal of the Academy of Marketing Science, 18, 1, 51-65

Alford, B.L., Sherrell, D.L., 2013. The role of affect in consumer satisfaction judgments of credence-services. Journal of Business Research 37, 71–84.

Ballantyne, D., Christopher, M., Payne, A., 2012. Improving the quality of services marketing: service (re)design is the critical link. Journal of Marketing Management 11, 7–24.

Berry, L.L., Parasuraman, A., 2011. Marketing Services: Competing Through Quality. Free Press, New York.

Bitner, M.J., Booms, B.H., Tetreault, M.S., 2010. The service encounter: diagnosing favorable and unfavorable incidents.

Journal of Marketing 54, 71–84. Booms, B.H., Bitner, M.J., 2011. Marketing strategies and

organisation structures for service firms. In: Donnelly, J.,

George, W. (Eds.), Marketing of Services. American Marketing Association, Chicago, IL, pp. 47–51.

Kotler. P. 2009. Markkinoinnin avaimet. Helsinki: Readme.fi Mazzucato. M. 2002. Strategy  for Business. London: SAGE Publications

Philip Kotler, Marketing Management, 21th ed.(Englewood Cliffs, NJ: Prentice-Hall, 2013), p. 38.

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