Marketing Regulation and Consumer Behavior Term Paper

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The authors also note however that poor statistics serve as a de-motivating force, and that service companies should try harder to emphasize the positives rather than the negatives associated with working in the services industry if they want to continue to capture quality employee's interest.

Yet another problem with "service" in the service sector is "outsourcing." "Contracting out" (Postner, 1990) has long been noted as a primary problem in the service sector and related to service sector analysis because it is difficult to gather statistics on service when so many services are contracted out to agents abroad that may be willing to provide services for less money than it would cost a company to hire a traditional employee.

John (2003) proposes a simple solution to the "most obvious" problem in the services sector, which many describe as "customer service." The author suggests service institutions offer what he calls "customer-focused management" where the service sector attempts to take advantage of customer input to manage service better. An organization can reward consumers for participating in surveys for example; that help companies pinpoint problems with the services they provide, so they can improve them (McClure, 2003). Companies can also survey customers to find out what they would be willing to do to improve service, even if this means paying more money for a service to guarantee better quality (John, 2003; McClure, 2003).

Smith (2004) also comments on the problem of "service" in the service sector. Smith suggests companies adopt more formal approaches to improving service including use of the six sigma factor analysis. Rylander & Provost (2006) also note the six sigma factor may be useful for online market research to improve customer service. The authors suggest that lack of "human contact" is a "major reason for customer dissatisfaction" and poor customer service makes companies have to fight and compete to "regain customers they should have taken care of" to begin with (Rylander & Provost, p. 13). The authors suggest that technology and quality management techniques when combined can improve service in the service sector industry. This is accomplished through market research that leads to a collection of surveys that help managers develop a customer service management philosophy which they refer to as "six sigma" (p. 13). The idea is that companies need to get back in touch with the consumer. If they do, they will find the purchaser and the user both want to have a better buying experience. For this to happen, the company must improve the service it offers. For the service to improve, the employees providing the service to customers must feel valuable and appreciated. They must feel their skills and abilities are put to good use. So, managers have an obligation to their employees to commit to better quality service "in house" before they can provide better service externally, or to external consumers.

In house customer service is the service a company provides to its employees (Rylander & Provost, 2006). A company has an obligation to survey consumers to find out how far they can stretch a dollar, and inform consumers of why they need to increase prices. If consumers understand how much skill and talent is necessary to provide them with the ideal service they demand and desire, they are more likely to pay for it (Rylander & Provost, 2006). When consumers pay for better service, the company then has to realize they are doing so because they expect better service. The management philosophy then should be directed toward giving employees what they need to motivate them to perform their best for consumers, so they can retain their customers (both internally and externally).

Discussion & Conclusions

Clements (2002) said it best when he commented the world today is "choice-driven" and the profitability of the "customer for life" should be the primary motivator for service sector companies to promote what they offer as the "best" or "world class" when offering guarantees to the consumer, including the purchaser and the end user (p. 35). If a service sector company wants to make a difference, then they have to impress customers with quality service regardless of the type of service they offer. Managers can help improve service by adopting a philosophy that tells internal customers (employees) how valuable they are and external customers (consumers) how valuable they are. The answer to the service problem in the service sector is then simple. Using online market research (Hogg, 2001) and other types of consumer surveys, service sector companies can find out what drives consumers to buy and use their services. Once they know this, they must then determine what consumers are willing to pay for services. Companies then must deliver what they claim to external customers, so productivity increases and service sector companies can pay their employees what they are worth. Employees that are well-compensated for their time and VALUED by a company are more likely to remain motivated and productive than employees that are paid consistently low wages. If a service sector company wants to improve the service they provide they should first pay attention to how they serve their internal customers.

If a service sector company does not have the financial resources to pay employees higher wages, they can look to alternate ways and methods to enhance motivation and productivity. Not all employees are motivated by wages and financial incentives alone. Many employees for example, are motivated by benefits like personal days off (Clement 2002). Other employees may be motivated by their title, or by a manager's recognition of their talent, skill or effort at quality customer service (Gandhi & Ganesan, 2002; John, 2003; Hogg, 2001). It is important that companies survey their external customers for information about how to improve service, and their internal employees to find out how the company can enhance performance (Gandhi & Ganesan, 2002).

While much of the empirical evidence reviewed for this report focused on how surveying external customers is important so companies can please consumers, it is also important that companies stop to survey their internal customers, which include employees that provide services to consumers (John, 2003; McClure, 2003; Gandhi & Ganesa, 2002). When employees are surveyed, management should pay close attention to what employees need to feel justly compensated or rewarded for the work they do on the job. When managers discover this, they will find out what it takes to intrinsically motivate employees to excel in their work.

If employees are happy on the job, they will likely provide better quality service. When competition is fierce in the service sector, the consumer whether the purchaser or the user, will always work with the service company offering the best quality. The role of the manager in a choice-driven industry is to define for the consumer what they can do to fill the consumer's needs. The manager has to provide value to the consumer. The manager also has to work closely with human resources professionals to find out what the employee working in the service sector values. Once they discover this, customer service, both internally and externally, improves.

Service sector companies have no choice but to find new ways to motivate and encourage their internal customers to provide the best services they possibly can. If all managers in the service sector were to change their philosophy so they were more customer centered, more "internal" customer centered, than much of what is wrong with the service sector today should improve.

Companies could enhance customer service and then promote their brand for the betterment of everyone. A company can relinquish its worries about competition if it can place itself as the best service provider in the market, and this will happen once the employees of a service sector company are satisfied that they are valued and that their needs are met. Recruiting people with talent becomes an easy task for human resources managers when internal employees are happy and spread that information to possible incumbents. Companies generally get a reputation for how they do business, but also for how they treat their employees. A marketing strategy must focus on enhancing the service provided to internal and external customers if a service sector company wants to be successful, and wants to dominate its market. Using the strategies outlined above, including extensive review of online and offline market research, then the service sector company will dramatically improve its service and internal and external consumers will benefit.


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