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Importance of service economy
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1.0 Introduction
It has been argued that there is no universally recognised definition for services. However, Philip Kotler (1997) has defined services as ‘any activity that does not result in the ownership of anything’. There are generally two types of distinguished services, tangible and intangible. Tangible services are services that customers can touch and feel whereas intangible services cannot be perceived by senses. The service sector across the globe has had a revolutionary change and businesses such as Virgin Atlantic have been using the latest technology; mainly the internet; as a base for expansion but also to offer a larger customer base its services. Certain services such as those provided by Virgin Atlantic are an example of service consumption at business-to-consumer level (B2C).
For the purpose of this assignment, the services provided by Virgin Atlantic will be the point of focus. Service marketing focuses on four distinctive characteristics; intangibility, inseparability, variability and perishability; of services and how they affect both consumer behaviour and the marketing strategy employed by the organisation. The four characteristics of services of the airline are key to understanding how their customers interact with their staff and the service they provide. It is crucial to consider these four characteristics as it helps to distinguish and predict current and future customer behaviour.
Furthermore, to ensure the continuing success of Virgin Atlantic, it is also essential to discuss the expanded marketing mix also known as the service marketing mix. The additional variables of the traditional marketing mix,; people, process and physical evidence; have been added due to service providers in today’s ma...
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...f services. Available at:
http://www.scribd.com/doc/21328368/Characteristics-of-Services
Slideshare (2010) Characteristics of service marketing. Available at: http://www.slideshare.net/iipmff2/characteristics-of-a-service-marketing
Boundless (2014) Services marketing: intangibility. Available at: https://www.boundless.com/marketing/services-marketing/services-versus-products/intangibility/
Boundless (2014) Services marketing: perishability. Available at:
https://www.boundless.com/marketing/services-marketing/services-versus-products/perishability/
Virgin Atlantic (2014) Customer service training. Available at:
http://www.virginatlantic.com/en/gb/allaboutus/training/customerservicetraining.jsp
Cite Management Article Repository of Cite.Co (2006) Characteristics of services. Available at:
http://www.citeman.com/274-characteristics-of-services.html
The characteristics of a service are intangible, inseparable, perishable, heterogeneous and lack ownership. The marketing mix of a service is not perceptible and as the features of a service is distinctive to the features of a product, it has additional elements which are process, people and physical evidence.
Sociocultural factors embody the various culture aspects in which a business functions. It is of great significance that a firm has the ability to appeal to the culture that they are working within as it reflects their customer knowledge, determining their performance (David & Fahey 2000, pg. 113). One central issue in regards to sociocultural factors playing an important role in a business’ marketing mix is firm’s ability to adapt marketing strategies in regards to demographics. The universal aging population is a clear indicator of marketing strategies for airlines companies to evolve so that it caters to the needs of the population as a whole. In addition, with Qantas operating as a global company and multiculturalism as a universal force, it is crucial to cultivate innovative marketing plans to accommodate the diverse preferences and needs of other cultures (Teo 1994). As cultures differ in their forms of attitudes and behaviours, consumers coming from these diverse cultures, backgrounds and countries are susceptible to dissimilar intensities of service anticipations (Donthu & Yoo 1998).
In light of an evolving market, faced with new competitors, and after a careful analysis of their current customers, the Vanguard Group (hereinafter referred to as “Vanguard”) realizes it must rethink its entire marketing strategy. However, in order to protect and leverage their competitive advantage, which is their low management fees, and to optimize the loyalty that their customers continuously demonstrate toward their organization, they must now target the most profitable segment for them, and develop the best way to serve and delight these customers.
When a business aims to be as successful as possible in selling its products and services, it must examine in detail whether or not the products will be attractive and necessary; if the price is optimal; if the product is being distributed in the best locations; and finally, how interest and awareness can be created for the products. In order for a business to target all of these elements to the right people at the right time, it must employ the right type of marketing mix: Product, Price, Place and Promotion. In a dysfunctional time for the airline industry, most airlines, especially major carriers, are adapting the concept of "doing less with more." One low-cost carrier, JetBlue, is changing the domestic aviation landscape in this regard and is defying the odds. Here is a company that has examined each marketing mix elements carefully, has adapted them to its customer’s needs, and is succeeding because of this approach.
1. Issues 2. American Airlines’ objectives 3. The airline industry 4. Market 5. Consumer needs 6. Brand image 7. Distribution system 8. Pricing 9. Marketing related strategies 10. Assumptions and risks
Resources are being classified into tangible and intangibles assets as the followings: *Resources of *Virgin Group Tangible Resources Intangible Resources Capabilities of Virgin Group are established by the integrated resources that assisted it to stay competitive and to outdo its competitors. Valuable capabilities will aid Virgin Group to effectively tap and explore spotted opportunities as well as to minimize threats in the external environment. Should capabilities are consistently and effectively utilized, they will turn significant and be difficult to be imitated or substituted. With the resources discussed above, 3 capabilities of Virgin Group are identified as follows: - *Capabilities 1: Unique C*ulture of *"Making difference and creating uniqueness"* (*Contributed Resources: *Financial, Organizational, Human, Innovation*, Technological*) Creativity, Innovation are the foundations to Virgin and Richard Branson’s success! Technology push is the spine for innovation and likely to simulate process innovation in how service is provided when looking into Virgin. Technology is more likely to simulate process innovation. Every turn and businesses Branson venture has been with some kind of innovation or creativity element if not something unique, something that has not been seen or heard of before in the relevant market. Virgin Group has achieved a competitive advantage among its competitors by uniformly followed its culture in all business in serving good value and service to the customers in different ways. The basic and the core competence of all Virgin Group's business ventures are to do things just a little bit differently from the rest. And also they always tried to add value by adding a little fun to the business. By differentiating in strategy itself to fit of the activities and the ways of doing business have also differentiated itself from the rivals and make it difficult to imitate Virgin’s strategy. Hence, they have established their business to an untouchable position. How would you characterize the corporate strategy of Branson's Virgin Group? The answer to that question will not be so different from the ones above. However to better understanding we can characterize the corporate strategy of Virgin Group as "Making difference and creating uniqueness" in any kind of customers' service. They are not stuck to any business field so that makes them flexible of thinking and creating new ideas for their customers and the whole consumers around the world who need (or will need) Virgin's service.
Service is an intangible product involving a deed, performance or effort that cannot be stored or physically processed, were customers directly participate in the production process. Product strategy is therefore very vital for the organization's success. It needs to be developed and manage very careful in order to be successful. British Airways product strategy includes flight services, quality of flights, various destinations across Europe and the world, executive class, business class, speed, security, support facilities and years of experience. It provides the basic product and various alternatives to satisfy all the different customer needs.
According to Business Studies ‘’Customer service is one of the most important ingredients of the marketing mix for products and services. High quality customer service helps to create customer loyalty. Customers today are not only interested in the product they are being offered but all the additional elements of service that they receive from the greeting they receive when they enter a retail outlet, to the refund and help that they receive when they have a complaint about a faulty product that they have paid for’’ (Business Studies, n.d).
a) Good customer service is a critical component of a quality product. Collier (2011) states that service needs to be consistent, continuous, thoughtful and available. These are crucial in meeting and exceeding customer expectations. Collier also continues on to state that staff providing customer service must have appropriate skills, knowledge and personal attributes to execute a high standard of service. These skills have been identified by Collier as listening skills, punctuality, courtesy, integrity and grooming. The skills and qualities identified are reflected by the five key components of customer service tangibles, reliability, responsiveness, assurance and empathy. The five components have been provided by the SERVQUAL service measuring
The company continues to cement its identity into new emerging markets as it expands and collates material to continue plummeting the brand name. Utilizing established advertising agencies for promotion and market firms, Vodafone managed the resources available to “ensure performance by focusing on customer satisfaction and performance relative to competitors”. The marketing plan is divided into a logical sequence comprised of a number of steps, it occurs at the business-unit, product, and market levels.
One of the characteristics of service offered by AirAsia is intangibility. Services intangibility is inevitable and sometimes could be a challenge for every service provider. According to Pride & Ferrell (2011) intangibility of services can be defined as the characteristic that the service is not physical and cannot be perceived by the senses. For instance like AirAsia which provides flight services, it is impossible for the customers to touch the flight as it is a journey to specific destinations. They might be able to touch the plane, but in the context of services, the customers do not own the physical tools or equipment used to deliver the service but are only entitled to get the service which is the flight service.
Dubrouski, D. (). The importance of services marketing for organizational change from Slovenian perspective. Retrieved September 11, 2005, from http://www.utdt.edu/congresos/empresarial/papers-ama/047.pdf
Customer service is still plays an integral role in business. However, how companies serve their customers is changing.
Also, in the 1980s, the emergence of services marketing as a sub-discipline becomes a famous enlargement of marketing. For example, in the US, the great competition of service such as airlines, financial services, health services and telecommunications started during the 1980s. This resulted in encouraging practitioners to have a better understanding of service marketing in this industry (Kozak, 2007). Therefore, the importance of marketing was becoming widely recognized within the tourism industry and academics in the late 1980s.
The Service Management Excellence is not a short term phenomenon. It provides principles and techniques that will endure in the long run. Excellent service is not a yoke; it is imbedded in the way exceptional organizations ...