Blueprinting and Service Marketing - Literature review Example

SERVICE MARKETING/BLUEPRINTING INTRODUCTION Marketing practices have been around for ages and as per Carratu (1987), they can be traced back to 7000 B.C. But as a concept and as school of study, its origin are relatively new. Marketing is nothing but a set of activities put together to sell a product profitably using the right mix of product, price, promotion and place. Till very recently, it had been existing in isolation to the wider business activity and thus businesses were not getting the response they wanted. Most of the earlier concepts in marketing are focused on profits, exchange and transactions. Thus, the experts tried to overcome these deficiencies by approaching marketing as resource-based or asset-based. Thus now, the marketing is being developed these days with focus on relationships and customer rather than the previous discussions on transactions. (Kotler 1990 ; Webster 1992). And this change of focus is redefining the domain of marketing as per Sheth, Gardener and Garett. (1988) and the marketing is returning back to pre industrial time of direct marketing in business-to-business and business-to- consumer markets. Thus the relationship marketing is increasingly becoming more and more popular with the experts and industry alike. RELATIONSHIP MARKETING Relationship marketing involves the interactions and integration of different stakeholders such as customers, suppliers and employees of the organization themselves in the organization’s developmental and marketing activities. (McKenna 1991; Shani and Chalasani 1991). Thus the increased interactions and communications within these groups result in much more closer business relationships between them and enforces cooperation instead of the intense competition and conflict among these different groups. Morgan and Hunt (1994) thus emphasized that the mutual cooperation due to usage of relationship marketing concepts leads to higher value creation and is inherently more useful and profitable to the organization. As per Sheth and Sisodia (1995), the relationship marketing helps to enhance marketing productivity by helping organizations operate with efficiency and effectiveness. There are many practices in relationship marketing practices that help organizations achieve effectiveness and these are customer retention or loyalty, efficient consumer response, and the sharing of resources between marketing partners. Thus such marketing practices thrive on close relationships between customer and supplier firms. (Copulsky and Wolf 1990; Goldberg 1988; Katz 1988). Changes in the business markets, technology and many other environmental and organizational factors have contributed to the popularity of relationship marketing practices. Some of the important ones are : (a) Rapid changes in technology leading to easier communications between customers and organizations such as the advent of internet and use of world wide web. (b) Use and adoption of TQM principles by the organizations. (c) The phenomenal growth of service industry. (d) Intense competition leading to changes in organization’s policies to focus on customer satisfaction in addition to good and reliable products. Of these, the most notable and the major driving force has been the rise of service based industry and companies. And it has been observed by the marketing experts that relationship marketing is especially useful for services industry and its marketing practices (Berry 1983; Crosby and Stephens 1987; Crosby, Evans and Cowles 1990). SERVICE MARKETING The service industry comprises of companies and organizations that offer an intangible product , an act or a performance or an experience to its customer. For example, the hospitality industry, the travel industry, or the Education and professional services such as medicine, law etc. In all these cases, the most important factor or the commonality is the experience associated with the product which is not something that can be owned by the customer. The services marketing theory is based on the experience offered by the companies and taken by the customers and like its normal product counterpart is also marked by certain important characteristics such as Intangibility (meaning it has no physical form), Heterogeneity (emphasizing the uniqueness of each experience or service encounter), Inseparability of production and customer usage (no ownership for the customer that is after the purchase, customer does not own anything), and Perishable nature ( that is the product does not exist before or after the purchase or the deal, it happens at the moment of the deal) Kotler (1994) describes the services marketing activities in the form of a Triangle with each of its corners representing the Organization, the employees responsible for giving the service and the customers. See figure 1 below. As per the figure above there are three types of services marketing activities : 1. Internal marketing activities – Which help employees to provide the services in the best possible manner. 2. External marketing activities – Which are aimed at the outside customers and provide them the details of what the customers can expect. 3. Interactive marketing activities – This is where the actual service delivery takes place. BLUEPRINTING AND SERVICE MAPPING As per Bitner, Ostrom, and Morgan (2007), the services industry have grown manifold during the last decade and now represents about 80 percent of the U.S. GDP. But the academic literature and industry in general is silent about the various strategies and innovation tools required by this business segment. And thus the innovation and improvements in services is not at par with the manufacturing and technology sectors. (Chesbrough, 2005) Since, the service companies and the services are intangible in nature, it becomes very difficult for normal principles of innovation to be used here. They are in general, a process themselves (Gronroos, 2000) meaning , a service is dynamic and is a collection of events that take place over a period of time. Thus it can be likened to a sequence of activities which allow the service to function effectively. (Johne and Storey, 1998) Thus customer evaluation and expectations become a critical factor in deciding the success or failure of the service organizations. Danaher and Mattsson (1994) suggested that the customer perceives the quality of a service by all the service encounters within a service process and not by the single steps of the process. But there are others who believe that the individual steps in the service chain are also evaluated by the customer. (Singh, 1991) Therefore, it is important to focus on the hows and whys of customer satisfaction and preferences to gain the competitive advantage in this industry and hence the service industry is waking up to the challenge of enhancing the customer experiences. (Gilmore and Pine, 1999) A very important concept and a tool for handling such requirements was given by Shostack (1984 and 1987) and this is known as service blueprinting. Thus the main feature of this tool is its focus on customers and as the name suggests they are a visual representation of the service processes and the physical entities associated with them. Since they are designed for customer’s point of view, they help in improvement and quality of other support services as well thereby providing a clear view of the complete service process design and chain. This tool was introduced in 1984 for the first time a s a part of process control techniques. It quickly gained popularity because of its inherent advantage such as its precise nature, visual presentation which is more powerful than definition, ability to identify failure points in the operating environment. (Shoestack, 1984) The service blueprinting technique has now become more precise and is more customer focused than ever before. The technique has different stages for both onstage and backstage activities and a clear line of interaction and internal interaction. (Kingman-Brundage, 1989) See figure 2 for the typical components of a service blueprint: (Source: Zeithaml, Bitner, and Gremler, 2006) There are five components in total: Customer Actions, Onstage Contact Employee Actions, Backstage Contact Employee Actions, Support Processes and Physical Evidence. Figure 2 : Components of Service Blueprint Customer actions refer to the steps taken by the customers during the complete service delivery process. And these are the central to the making of a blueprint. The onstage contact employee actions talk about the frontline or he first contact employees who are the face of any organization. They are separated from the customer by the line of interaction. Similarly the third component of the backstage contact employee actions consists of activities done by the employees who do not form a contact directly with the customer. They are separated from the onstage actions by the line of visibility. Customer is not allowed beyond this line of visibility. After that are the internal processes of the organization. Then there are the support processes that are separated from contact employees by the internal line of interaction. These activities are important for the deliverance of the service though not directly visible to the customer. And , finally there is the physical evidence for each customer action, BRITISH AIRWAYS For the purpose of this paper, we will be considering British Airway as the case example. Let us take a brief look at the organization and its internal processes. Background: British Airways is one of the world's largest international airlines, carrying about 36 million passengers worldwide annually. It is regarded as the industry-leader. And has many first to its credit. The airline has two main operating bases in London -- the Heathrow airport (the world’s biggest international airport) and Gatwick airport. It also has a cargo carrier division which carried 877,000 tonnes of cargo in 2005. It has a huge staff of around 50,000 people with a very diverse background to serve the diverse population of the world. Their cabin crew consists of ethnically different people from Japan, India, Brazil and Egypt in addition to UK. The British Airways is owned entirely by private investors - with around 240,000 shareholders, including some 50 per cent of the Company's own employees. Its fleet as of 31 December 2005 consisted of 289 aircrafts with 57 Boeing 747s, 43 Boeing 777s, 21 Boeing 767s, 13 Boeing 757s, 67 Airbus A319/320/321s, 33 Boeing 737s and 55 smaller aircraft used in the company’s regional business. (British Airways, n.d.) CURRENT STRATEGY British Airways have a very strong customer satisfaction policy and they consider the well being of their customers as extremely important and as first priority. They are in constant communication and touch with their customers through surveys and research and direct marketing techniques such as emails, brochures etc. They have launched quite a number of programs to ensure safety and well being of their customers in air, before the flight and after the flight. The food and entertainment is an important part of their service and these needs are tailored to meet the needs of our international customers. In flight, the customers re offered information on the possible problems of stiffness and the thrombosis and how o cope with them. They also have a series of sleep advice podcasts known as Dr Sleep which helps passengers to sleep. The other customer focused initiatives include the food menus prepared with considerations of cultural and religious needs of different people, availability of Multilanguage DVDs and CDs for entertainment, availability of multilingual magazines and newspapers etc. There are travel spas in some o the airports for the first class customers of long haul flights. The medical care given during flights is par excellence and is used as a benchmark worldwide. British Airways was one of the first organizations to recognize the importance of excellent customer relationship management and satisfaction as the key to their business. Over the past ten years, British Airways has transformed itself from a loss making, state-owned national carrier into a customer focused, publicly listed, and consistently profitable airline. (Moyer, 1996) All this has come about due to its continuous focus on customer satisfaction and relationship marketing. They started focusing on interactive technologies, such as e-mail and the internet to try to utilize the power of new technology in improving its interactions with customers and provide more convenience and options to customers to book online. They also started using IT technology such as Listserv tool for managing mass-distribution lists to facilitate customer relationship marketing. Through these lists or databases they inform the customers regarding their special discount schemes and offers and provide them with opportunity to use them. The new ecommerce tool has facilitated the targeted personalized campaigns, promotions and offers which has proved to be very popular with customers. (Gorse, 2001) The introduction of online booking is also a hit with customers. These days everyone is using internet and making purchases online. Especially the tickets or flight bookings are generally done online and this trend is further increasing with UK representing around 35% of the €25.2 billion European online travel market in 2005. In addition, 44 percent of UK residents who traveled abroad (by air) in 2005, did so through packaged holidays. (Prwebdirect, 2007). British airways have affiliated with Viator (It is the largest online resource for researching and booking destination activities) to provide information and booking facilities for their entertainment at the site of their destination. But even then it faces problems on account of lost baggage, flight delays and many other small things which irritate customers and might compel them to look for alternate airlines. Let us try to make a blueprint of the flight booking till the boarding of the plane procedure. Figure 3 BLUEPRINT FOR FLIGHT BOOKING AND FLIFGT TAKING SERVICE PHYSICAL EVIDENCE Ad/website Check in counter Baggage Check and handling Ground staff Employee dress Airplane CUSTOMER ACTIONS Online/telephone booking Arrive at the airport Check in Go for security check Board the plane LINE OF INTERACTION ONSTAGE CONTACT EMPLOYEE ACTIVITIES Process registration Any other help requested by the customer Take baggage Welcoming aboard Helping with seat belts, providing any other help Serving food , providing magazines , DVDs etc. LINE OF VISIBILITY BACKSTAGE EMPLOYEE ACTIVITIES Make the booking Seat and meals as per customer preference Send baggage for uploading Providing the service to the airhostesses LINE OF INTERNAL INTERACTION SUPPORT PROCESSES Reservation system Registration system Food and other entertainment system Learning Process Preparing the blueprint has been a very rewarding experience as it allows us to think creatively and find the differences in the actual service and the ideal service process. To reach this point, the underlying theories and concepts had to be thoroughly understood specifically the service industry, its various strategies, the problems associated with the delivery of a service product and the obstacles in understanding human behavior. Since service is all about the experience, it becomes very difficult to qualify it. What may work for one person may not necessarily work for others. Thus services need to be constantly updated, modified or tailored depending upon the typical situation or requirement. This is not easy when the same service is being delivered by many employees in the organization. It is very difficult to standardize their actions and reactions. For example, in the case of airlines, how the check in staff would behave when in contact with a typically abusive customer or a troubled customer will depend entirely on the person who is on the counter at that point of time and how he/she perceives the situation to be. The service blueprint can point directions on what needs to be done in a general way but cannot give specific outcomes for each situation. ANALYSIS As is seen from the figure above, The face of the airlines are its Check in counter staff, the ground staff and the in flight staff/attendants etc. These are the main employees who are in contact with the customers. Thus the customers impression of the organization as a whole will be made through the interactions with these staff. Thus the blueprint clearly shows the actions of airlines’ customers and the subsequent actions of front staff or the onstage employees and the backstage employees as a part of the service delivery process. The ultimate goal of this exercise is to understand and visually represent the entire customer service experience from the customer’s point of view. This also helps us to identify the actions above the line of visibility and how they go on to impact the customer perceptions. Therefore, we can say that service blueprinting is a highly useful innovation tool for the services industry and it can be adapted across different types of organizations and in various situations and scenarios. By creating a bluepint , any organization cab start an internal dialog on their key process factors and indicators. For example, in our case study, for the British airways, from the above figure, it can clearly be seen that for customer satisfaction the key employees are the In-flight staff, the ground staff and the check in counter staff. Now these people need to be very careful while dealing with the customers as any laxity on their part will reflect badly for the organization. Hence the service blueprinting provides a common platform for everyone from customers to the employees both onstage and backstage plus the support staff. This is a more powerful way of explaining the importance of each role to the employees, This also helps employees understand each other function much more clearly. For example, in case of british airways, if the support staff does not provide the necessary support in terms of proper information to the check in clerk (that is the booking clerk did not fill in all the required information), then the check in clerk will not be able to handle the queries of the customer well. Similarly, if the food preparation is not good, the persons/employees serving the food will bear the brunt of customer’s ire. Thus the service blueprint gives employees and managers an overview of the entire service process so as to make them fully understand their role in the overall scheme of things and in turn make them feel as an important part of the whole service chain rather than someone who is inconsequential. This feeling is more rampant for the support staff and the service blueprint can be a effective tool in thus motivation employees and make them feel as a part of the complete picture. Actually the process of creating the blueprint in itself is illuminating for the creators. As we go on to prepare a service blueprint, we are very easily able to identify the various roles and dependencies of various sub processes on each other. It is a very learning experience to understand the key employees and actions that can work in obtaining the customer satisfaction. Thus the managers and the organization is able to clearly pinpoint the areas of weaknesses and areas of improvement. Rather than unending discussion of what customer wants, the blueprint helps us to understand the actions and interactions of the customer with the organization, the points at which he/she comes in contact with the organization, and the points where he/she actually experiences the service. Thus in case of British Airways, we can clearly see that customer comes in real contact with the organization for the first time when he walks in for he check in. (This is assuming that he has booked his ticket through internet). So, his/her first impression will be formed by the actions and behavior of the check in counter staff. If the staff is courteous, friendly and ready to help, the whole organization will be deemed to be wonderful and good from the customer’s point of view. But if the first contact is not good that is his experience is not up to the mark, he will probably take this impression till the end of his trip. The overall impression of the airlines is good but there is a problem in the baggage handling area. Based on the report by Association of European Airlines between April and June 2007, British Airways mishandled 28 bags per 1,000 passengers and this below the performance by its main competitors -- Air France and Lufthansa and they were the only two European airlines that flew more passengers during the three months. (Usatoday, 2007) The second problem reported was the lack of punctuality that is only 56% of flights were on-time. (USAtoday, 2007) Thus the airlines needs to take a look at its baggage system which is also causing delays in connecting flights. SERVICE QUALITY Service blueprinting thus allows the organizations to compare their service standards with other competitors and ideal service expected by the customer. Thus they can understand the gaps between the ideal process and their own process which is not fully adequate. So this tool also helps in identifying the failure points and allow to understand their competitive positioning in the market. Thus the tool helps to map and identify the key service quality gaps in the organization. The Service quality is greatly decided and dependent on the customers. There is no definite benchmarks for it. What may appeal to one customer may not necessarily go well with other. But there are still some important factors that go a long way in ensuring customer satisfaction. For example, a courteous staff is something that all services should have and there will never be a customer who will disagree with it. Thus the quality of a service is based on the delivery process created by the organization and the customers’ perception of what they receive against what they wanted. This was defined as Functional quality (process of delivery – blue print) and Technical quality (the actual output perceived by the customer) by Gronross (2000) The gap between the service performance and the perception of its standard by the customer is known as the quality gap. And performance that satisfies the customers by being above desired service levels are said to be superior in quality while those within the expectations are said to be adequate. There are seven types of quality gaps that can be distinguished. These are : The knowledge gap which is the difference between what the customer expects and what the service delivery organization thinks he expects; The standards gap which is the difference between the quality standards of the service delivery and the organization’s perception of that standard; the Delivery gap signifies the difference between what was promised and what was delivered to the customer ; the Internal communications gap is the difference in the quality of service delivery and the quality of service as perceived by the onstage employees ; the Perceptions gap is about the difference between the quality of the service which is delivered and the quality which the customers think they have got.; the Interpretation gap signifies the difference in what the organization promised and what the customer actually thought they promised and the Service gap is the difference between what customer expected to receive and what they thought they received. Thus the service blueprinting helps to identify these quality gaps and provide the necessary insights into issues that need to be sorted out to reduce these gaps in knowledge, services and delivery etc. Moreover, it can be used effectively to map out the ideal service delivery process by constant improvement and interactions with the customers. In fact, some companies and organizations do take the help of customers to find out their perception about a particular service delivery. The suggestions and complaints forms are the tools in the same category, but they are useful if they are taken seriously by the organization. This is particularly useful and important for service industry to have customers identify the ideal service process for a given service category simply because the quality of a service is dependent upon the customer’s perception alone. 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