Quiz 3: Service Strategy


The service firms develop various strategies so as to attract the customers from diverse back grounds. As the customers are heterogenous, so are their requirements. The strategies developed would be implemented depending on the nature and the behavior of the customers. Customer satisfaction is the ultimate goal of any service provider. Not all service providers target the same group of customers. Depending on the brand and the service they dealers work with the target market as well as the customers also varies. The service strategies would be developed focusing on a particular niche market and developing strategies to attract those customers by understanding their purchase behavior. The service providers are found to use different service strategies as focus and over all cost leadership or focus and differentiation. Examples of these two types of services can be understood as follows. 1. Strategy of Focus and Overall cost leadership: This strategy would be implemented focusing on the customers who are very cost conscious and look of cheaper products with maximum number of attributes. The service firm would have a tough time in designing and developing the services that are cost effective as well as serving the purpose. The examples of these types of service firms would be •Insurance policy firm that does business over phone so as to reduce the expenses on field visit and employing staff. This would reduce the cost of the company and the policy can be given at a reduced cost. •Ready to cook food processing firm that focus on the middle class customers who cannot afford a restaurant meal frequently but can opt for this ready to cool range of products that would taste similar but at a relatively lesser costs. 2. Strategy of Focus and Differentiation: In this type of strategy the focus is on the higher end customers who are not bothered about the price but the additional attributes and services. The service firm need not have to do statistical calculation on the cost effectiveness as the customers wouldn't be comparing the prices. The examples of the same are •The exhibition cum sale of the branded jewelry that claim to have life ling buy back guarantee and service. •The new model of XX brand car being launched and free test drive provided. The customers are given early bird offer with one year free service. •The airlines that are costly but provides customized meal and accessories for comfort.

The retailers develop many marketing strategies so as to increase their customer count and retaining the customers. The managers develop service strategies to understand the demand and the purchase behavior of the customers and modify the products and services meeting the customer expectations. Of the various marketing and service strategies, micro marketing is found to be effective and customer oriented. In micro marketing the target customers are focused and products are developed according to the requirement. This is done by collecting information regarding the purchase behavior of the customers, percentage of the gender, majority age group and the financial capability of the customers through various data collection methods. These data are made use of and the products that the majority population may prefer is made available in the near by stores of those territory there by increasing the sales and the profitability. Although micro marketing may enhance the business and profitability it also comes with ethical concerns. 1. The customers are forced to share their personal information such as contact number and account details through scanner or while paying the bill. These information may not be used with out the consent of the customers which would be a privacy breach. 2. The information so collected are used by other marketing agencies to send push messages about their products, the customers may not be interested in those. This can be a situation of violation of privacy. 3. Sending newsletters and mails would be disturbing and annoying unless the customers prefer to have those. 4. The firm doing business through micro marketing should maintain their ethical code of safeguarding the information and protecting the privacy of the customers.

The marketers develop various service strategies to cover the heterogenous customers. In the process of doing so, the information they collect are more relevant as the strategies are developed based on the information received. Each strategy demand a varying criteria of information type and source. The service strategies are being developed by the retailers with the information source about the customer's purchase behavior. It can be said that the service strategies and the information goes hand in hand as they are interdependent. The service strategies that are developed includes overall cost leadership, differentiation and focus. Depending on the strategy implied any of the competitive information can be made use of such as creation of barriers to entry, revenue generation, database asset and productivity enhancement. As asked let us examine which of the competitive information is most powerful for each of the three service strategies. 1. Overall cost leadership: In this strategy the cost effectiveness is given the priority and steps are taken to reduce the expenses with in the firm. The information tool that can be used in this would be productivity enhancement, as it gives emphasis on inventory control, waste management, and effective use of the investment. This would enhance the productivity in the most cost effective way. 2. Differentiation: This strategy is implemented for customers who look for the brands than the cost. Creating barriers can be the most powerful information for this strategy as the customers would be loyal to a brand and the price fluctuations of the competitors seldom have any impact on their brand choice. 3. Focus: In focus strategy, the information about the customers is the vital element. The target market to be focused is decided based on the buying behavior and capacity of the customers. Hence the database assets would be the powerful information tool for this strategy as it would contain all the information regarding the purchase nature of the population the retailer choose to look for such as gender, income capacity, frequency of purchase, number of local festivals and much more.