Customer Service and Business

¶ … John in his situation are differentiation, cost leadership, and response. In marketing and economics, differentiation is distinguishing a service/product from others. John has issues with service that makes his customers deter to his competitors. By making John's service more attractive to his customers, differentiation takes place. John wishes to outsource some of the business' customer service to a company in India. This costs less than it would if he hired American employees and would allow him to gain additional support in the area of customer service.

Michael Porter developed the concept of cost leadership that has become a main business strategy. Cost leadership describes a means of establishing competitive advantage. By operating at the lowest cost within the industry, John adopts the cost leadership strategy. Taking his business to a foreign country that employs workers at a lower rate enables John to take his resources and divert it to other processes. The customers receive the attention and support they need and John saves money. His business remains a competitor and everything remains stable, allowing John to expand his business and have a higher likelihood of making more money.

An excellent example of cost leadership is Walmart. "The firm is a master at using technology, mass purchasing, and retail savvy to keep its costs so low that it can offer customers the lowest prices and still make a reasonable profit" (Schermerhorn, 2010, p. 223). If John reduces costs through outsourcing service to a foreign country, he can offer lower prices, competitive prices, and still generate profit. John effectively manages the marketing of the company himself. He can divert some of the resources saved from performing such a transition and divert it towards marketing costs. This can help him gain new customers to replace the ones that left due to poor customer service.

The next aim is response, specifically, proactive market response. This means a re-allocation of marketing investments and focus on marketing research. "Anticipation is even more critical to be prepared to face a downturn economy than in growth periods. Perhaps more critical for understanding of global marketing is also the trend to analyze similarities and differences in market response across countries" (Bowman & Gatignon, 2010, p. 51). Since John has already secured some small European-based contracts, his aim towards expansion can be helped along through marketing research to see what services he can keep and what he can remove to allow for both growth and efficiency within his business.

Efficiency is an important part of any business. This along with costs, quality, and responsiveness are key issues John has experienced lately within his business. Quality has diminished in John's business. This has come due in part to comparison of other competitors by customers. Competition brings better service and faster response time, tying responsiveness with quality. Because service is a big part of John's business, and the quality of service has diminished due to decrease responsiveness of employees tending to customer issues, the overall efficiency of John's business has lessened, resulting in a loss of customers and profitability.

Responsiveness dwindles thanks to support staff unable to implement needed updates and changes. Certain hardware platform is also unavailable with repeated and long outage periods. John's resources spent on support staff that cannot successfully implement or install updates correctly leads to coordinating outages and lack of customer support through notifications and contact. If john makes the decision to outsource to a company experienced in technical and customer support, he will be able to (like he did in the past), purchase additional equipment when needed and continue to give the necessary amount of support customers need to feel happy with his business and services.