A NEW MODEL FOR MANAGERS USED FOR POSITIONING THEIR ORGANIZATIONS IN MARKET PLACE
Ahmadreza Shekarchizadeh, University Technology Malaysia, Malaysia
ABSTRACT
Diagnosing position of an organization for top managers in the competitive environment
is vital for making strategies to grow firm. The purpose of this paper is finding a model for managers to diagnose position of their organization in the market place. Managers usually are too busy to study complicated strategic models, so the aim of this paper is offering a model without usual complexity for top managers. Top manager who uses this model is like the captain who uses his map to realize his situation and the rout to his destination.
Keywords: marketing, quality, position
INTRODUCTION
The variety of firms in the service industry makes generality regarding strategy difficult. A scheme is presented to classify service organizations in a way that provide strategic insight and transcend narrow industry boundaries. This scheme can be used to think about the choices being made to position the service in relation to its competitors. According to (Fitzsimmons & Fitzsimmons, 1994), Positioning is a marketing term used to describe the process of establishing and maintaining a unique place in the market.
A BRIEF HISTORY
After reviewing the literature, author realized that there isn’t a model without usual complications for managers in order to position their organization in market place. One of the most well known classification schemes developed by Christopher Lovelock (C. H.
Lovelock, 1983) that are regarding possible strategic dimensions which transcend industry boundaries. He has classified the services for strategic insights referring nature of the service act, relationship with customers, customization and judgment, nature of demand and supply,
People Things Direct Recipient of the Service
Services directed at peoples bodies:
Passenger transportation
Health care
Exercise clinics
Haircutting
Services directed at goods and other Physical possessions:
Laundry and dry cleaning
Freight transportation
Veterinary care Services directed at
people’s minds:
Education
Broadcasting
Theaters
Services directed at intangible assets:
Accounting
Securities
Banking Nature of
the Service
Tangible actions
Intangible actions
Figure 1: Lovelock (1983)
Next, (Chase & Hayes, Fall, 1991) proposed an operations-oriented framework. By this framework, service performers are grouped into four levels: loser, nonentity, professional, and leader.
The model that will be discussed is a new one which has based on the satisfaction literature in marketing. This model tries to classify organizations based on their performance. One of the most important advantages of this model is its implications in the field of marketing, operations, and human resources. With using this model, organizations can be classified to four categories. In the other words, this model is a grid for managers to diagnose weaknesses and strengths of their organization.
A NEW MODEL
After measuring perception and expectation of customer in the field of dimensions of quality in organization, managers could calculate mean of them. Mean of the dimensions (for example, according to items of SERVQUAL model offered by (Parasuraman, Zeithaml, &
Berry, 1988b)for perception and expectation, indicate in which position organization will be.
Chart 1 shows this model. There are four positions:
1 4
2 3
Perception 5
2.5
0 2.5 5 Expectation
Chart 1: A model for classification of organizations
1. 2.5< Perception < 5
Position 1 0< Expectation < 2.5
Organizations in position 1, perception of their customer is much more from their expectations.
Marketing Function specifications: These organizations raise customer expectations to new levels and continuously improve their quality. Also, these organizations usually are leader in their industry. According to Chase and Hayes in (C. Lovelock, Wirtz, & Chew, 2008), these are main leader in special segments, recognized for marketing skills; brand name of their services; conduct sophisticated analysis of relational databases as inputs to one-to-one marketing and proactive account management. From competitive appeal point of view, company’s name is synonymous with service excellence; its ability to delight customers raises expectations to levels that competitors can’t meet. Concept testing, observation, and contacts with lead customers are used in the development of new services that respond to previously unrecognized needs.
Furthermore, from competition perspective firm is well known for its service excellence. In these organizations, customers usually are delighted by delight programs that usually
their potential value to the firm, including their potential for new service occasions and their capability to inspire novelty.
Operation Function specifications: They use progressive techniques; use theory testing; use of head customers as inputs to new-service growth and have enlightened Customer Relationship Management (CRM) systems. Business experts work with technology leaders around the world to expand new applications that will create a first mover advantage. Consequently, the company can achieve at levels that competitors cannot hope to attain for a long time.
Human Resources Function specifications: Clear standard processes in the organization help employees to follow them, and this facilitates the work of them.
Top management consider quality of their employees as an important competitive advantage. There is a culture of service-oriented in the firm that has developed by human resource managers, who create a superior working environment that attracts and retain the best people. The stuff are committed in the firm’s values and aims.
Employees propose new ideas because they are involved, empowered and quick to adapt change.
2. 0 < Perception < 2.5
Position 2 0 < Expectation < 2.5
Marketing Function specifications: Organizations in position 2, meet some customer expectations and are consistent on one or two key dimensions, however they fail to be reliable in all dimensions. According to Chase and Hayes in (C.
Lovelock et al., 2008), these organizations uses mix of selling and mass communication, using simple segmentation strategy and make selective use of price discounts and promotions. They might use price discounts to try to attract new customers. Also, these institutions usually conduct and tabulate basic satisfaction surveys. Customers usually neither seek nor avoid the firm. Managers may talk about improving quality and other aims, however they fail to set clear priorities, to have a clear direction, nor gain the respect and commitment of their employees.
Operation Function specifications: From perspective of management function in principal line, they create and deliver service, focuses on standardization as key to productivity. Quality in these institutions is defined from internal perspective. Also they run each step in delivery service independently. One of their main weaknesses is that support stuff is unfamiliar with customers. They also reward for keeping costs below budget and stick to traditions.
Human Resources Function specifications: Their policy for human resources is
procedure but aren’t motivated and turnover usually is high. Managers in front line control workers.
In these organizations, although there are a lot of rooms for improvement, their position is better of organization in location 3, that have the worst features. A few organizations may compete in this way and it is difficult to tell one from the other.
3. 0 < Perception < 2.5 Position 3 2.5 < Expectation < 5
Marketing Function specifications: These firms are at the bottom. They are unsuccessful in marketing, operations, and human resource management. They are highly variable from service quality perspective, usually unsatisfactory. These firms are subservient to operations priorities. According to Chase and Hayes in (C.
Lovelock et al., 2008), role of marketing managers is limited to tactical role. In addition, advertising and promotions lack focus and no involvement in product or pricing decision. Also role of frontline managers is limited to control workers.
Customers utilize these firms for reasons other than performance. These firms have unspecified customers and serve a mass market at a minimum cost. Customers buy from them because there is usually no other option. This is the reason why these companies continue to survive.
Operation Function specifications: Operations in these organizations are reactive and cost oriented. Also, locations and schedules are unrelated to preferences of customers, who their needs usually are ignored. Backstage operations are separately from front-stage and productivity is usually undefined. In this direction, managers are punished for failing to bond within budget.
According to Rogers in (Rasli, Arshad, Talib, Ramli, & Senin, 2008), stages in the technology life-cycled can be identified based on the relative percentage of customers, to five stages. The organizations in position three are at last stage in Rogers model, who are late adopter and Rogers identified them as Laggards. They use new technology when it is necessary for survival.
problems. Then they become dissatisfied and expand a poor service attitude. This result for the organization low service quality and high employee turnover.
Because of low profit margins, the cycle repeats itself with the hiring of more low- paid employees to work in the same manner. Some service organizations can reach such low levels of staff drive that frontline workers engage in service damage rather than deliver service excellent.
The customer cycle of failure begins with emphasizing on attracting new customers. Because employees are dissatisfied, the customers become dissatisfied with employee performance.
High employee turnover means that consumers are always served by new faces, so there is no continuity. This in turn causes customers fail to be loyal to the firm. This cycle repeat it by requiring firm an ongoing search for new customers to maintain sales volume.
4. 2.5 < Perception < 5
Position 4 2.5 < Expectation < 5
Marketing Function specifications: These organizations consistently meet or exceed customer expectations across multiple dimensions. According to Chase and Robert (C. Lovelock et al., 2008), these organizations have clear positioning strategy against competition, use focused communications with distinctive appeals to clarify promises and educate customers. Their policy for pricing is based on value, and they monitor customer usage and operate loyalty programs.
Furthermore, they use a variety of research techniques to measure customer satisfaction and obtain ideas for service enhancements. Marketing managers work with operations to introduce new delivery systems. Customers look for the firm, based on its continued character for meeting customer expectations.
Operation Function specifications: In these organizations operations have a strategic role in competitive strategy. Operations managers recognize tradeoff between productivity and quality. Operations and marketing managers’ work together to introduce new delivery systems. Also they willing to outsource and monitor competing operations for ideas or threats. Service delivery in front line is driven by customer satisfaction, not tradition. Front line always willing to customize, accept new approaches and emphasis on promptness, convenience and comfortable.
From point of view supporting operations, there are clear links between backstage and front line activities. Also they consider their role as serving internal customer, who in turn serves external customers. Top managers in these organizations focus on reengineering backstage processes and avoid productivity improvement that will degrade customers’ service experience. Additionally they continually refine processes for efficiency. According to (Rogers, 1995), when a new technology is created, these organizations are early adopters,
when IT promises to enhance service for customers and provides a competitive edge, these organizations quickly approve it.
Human Resources Function specifications: Human resource managers in these organizations, invest in selective recruiting, ongoing training. They also keep close relationships to employees, promote upward mobility and try to enhance quality of working life. Consequently, employees are motivated, hard working, and allowed some discretion in choice of procedures. Top managers usually encourage staff to recommend, hence workforce offers many suggestions. Frontline managers listen to customers, coach and facilitate workers.
CONCLUSION
A new classification of organizations presented in this article, provides a tool for managers to understand position of their organization and lead their firms in order to grow up levels of service performance. This model also has implications from perspectives of marketing, operations and human resources. Managers in organizations should try to shift their organization to position 1.
REFERENCES
1. Chase, R. B., & Hayes, R. H. (Fall, 1991). Beefing up operations in service firms. Sloan Management Review.
2. Fitzsimmons, J. A., & Fitzsimmons, M. J. (1994). Service Management for Competitive Advantage. Singapore: McGraw-Hill Book Co.
3. Lovelock, C., Wirtz, J., & Chew, P. (2008). Essentials of Services Marketing.
4. Lovelock, C. H. (1983). Classifying Services to Gain Strategic Marketing Insights.
Journal of Marketing, 47.
5. Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1988b). SERVQUAL: A Multiple Item Scale for Measuring Customer Perceptions of Service Quality. Journal of Retailing, 64(1), 12-40.
6. Rasli, A., Arshad, R., Talib, N. A., Ramli, S., & Senin, A. A. (2008). Introduction to management of technology. Malaysia.
7. Rogers, E. M. (1995). Diffusion of innovations. New York: The Free Press.
8. Rust, R. T., & Oliver, R. L. (2000). Should we delight the customer? Academy of Marketing Science. Journal, 28(1), 86.
