7Ps in the Service Industry of the Kenya Railway - Case Study Example

Service product analysis Executive summary Kenya railway is a Kenyan based company whose major activity is provision of transport services around East Africa countries. A major challenge facing the company is lack of product innovation. As a result, the company faces stiff competition from other companies offering public transport. The company offers various prices which range from $34 to $65 depending with the class. Infants between the ages of 0 to 3 years are not charged. Some of the major promotions undertaken by the company are sponsoring of cultural activities and provision of discounts to foreign and local travelers. Lack of adequate financial resources due to fraud and corruption are obstacles to the provision of adequate promotional strategies. Kenya Railways is headquartered in Nairobi. Other stations include Kisumu, Mombasa and Nakuru. The company is focused at opening more branches to make its services accessible to most customers. Effective customer support is an imperative aspect that ensures people who come into contact with the services offered are properly addressed. Such people include customers and employees. The processes of a company providing services must be effective. For instance, customers should be served without wasting time and the customer care phone numbers must be working. Through physical evidence new customers are able to access adequate information which makes them make a decision to purchase the service. Some of the major recommendations to the Kenya Railway include improvement of their train coaches, expansion of its services and improvement of customer support. In addition, employees need to be motivated through various techniques including job title, improved working conditions and opportunities to improve their careers. Table of Contents Executive summary 1 Introduction 3 Product 3 Price 4 Promotion 5 Place 7 People 7 Processes 8 Physical evidences 9 Recommendations 10 Product 10 Promotion 11 People 11 Place 12 Conclusion 13 References 14 Introduction The stiff competition that has been experienced in the business arena has forced many companies to diversify their product portfolio with an aim of increasing their sales as well as profits. Some of the companies have ventured into service marketing both at the local and international market. Despite the intensive marketing strategies that have been emulated by service providing companies, a number of challenges have been experienced leading to closure of some companies or reduced profits. This paper will critically analyze the services provided by Kenya Railways Corporation (KR), a Kenyan based company that is engaged in provision of railway transport services across East Africa. Product Kenya Railways was established in 1977. The company major service is provision of transport servicers across East Africa countries which include Kenya, Uganda and Tanzania. According to Kotler et al (2006), a product can be tangible or intangible. In this regard, Kenya Railways aims at providing transport services to majority of companies that are established in the three countries. Being a landlocked country, Uganda utilizes the services of the company to transport its imports from the port of Mombasa which is located at the Kenyan coast. In addition, the company is highly beneficial to most of the Kenyans who uses as a means of transport to their working places. Despite the importance of the company as a major means of transporting imports and exports from Kenya, various challenges are facing the firm. One of the major challenge which Kenya Railways is facing is product management and product innovation Kotler et al (2006) stipulates that sales does not own customer relationship but it is the company that posses the customer relationship which it utilizes to meet its objectives. These objectives include improved public relations and product innovation in order to meet customer needs and customer satisfaction. Due to lack of adequate resources, KR Company has not realized the importance of innovation as a way of remaining competitive in the transport industry. Some of the engines that were used in 1901 when the railway arrived in Lake Victoria are still in use. With the improved technology in the transport industry, the company has failed to realize the importance of product innovation as speculated by Simon (1982). By the year 2006, most of the railway lines were in disrepair. The low speed of the train especially from Nairobi to Kisumu has forced some of the local companies to emulate other means of transport including trucks. On the other hand Makoto and Costas (2007) argue that product innovation entails either improvement of the existing product or developing a new product. The company therefore needs to improve the existing railway lines so as to create a positive customer-product relationship that is vital for the profitability of the company. Price Effective pricing of products is essential especially in the recent times when the economic downturn affected most sectors. In its efforts to attract more passengers, Kenya Railways has maintained low pricing policy. This has resulted to an increase in usage of the company services especially for the working individuals who report to Nairobi, the capital city for their duties. The table below indicates the prices offered by the company from Nairobi to Mombasa. class Price($) First class 65 First class 3-11 yrs 45 First class 0-3 yrs Free Second class 54 Second class 3-11 yrs 34 Second class 3-11 yrs Free In order to ensure the passengers are served effectively the company has introduced on line booking. This system has enabled tourists and other travelers to pay in advance and collect their tickets once they arrive in Nairobi. As argued by Kau and Wan-Yiun (2006), appropriate pricing is vital for any organization. The stiff competition has forced majority of consumers to purchase substitute goods which are affordable and of high value. Due to the high fuel prices that have engulfed most of the countries as a result of political instability in the oil producing countries, Kenya Railways has adjusted its prices with an increment of 30% in most of its routes. Considering that the trains are slower than other means of the public transport, most of the local travelers have now ceased to use the company prices as a result of the high prices. Kau and Wan-Yiun (2006), depicts companies that focus at maintaining customer loyalty and repeated purchases should emulate proper pricing mechanisms that are customer friendly and does not jeopardize the productivity of an organization. Promotion In order for any company to increase its product awareness effective promotion strategies are vital. Some of the promotional techniques include road side shows, competition, sponsoring social activities and discounts. As a result of the stiff competition that Kenya Railways has been faced with especially from the road transport companies, the organization has emulated a number of promotional strategies. For example, the company has sponsored various cultural activities a strategy that has resulted to a stronger positive relationship between the company and the customers. In addition, the company provides a scenic means of travel where passengers are able to view the attractive Tsavo National park on their way to and from Mombasa to Nairobi. Through the various competitions that the Company has launched, customers are able to win various tickets depending with the number of trips they make using the company trains. The provision of free services to the infants between the ages of 0-3 years has also been a strategy that has enhanced the use of the company services by individuals who have infants. As stipulated by Kotler et al (2006), companies should allocate more financial resources to cater for the promotional activities. As compared to other companies, Kenya Railways has not allocated enough financial resources to cater for the promotion strategies. This has primarily been attributed to the financial frauds and corruption that have been reported by the company especially from the past management teams. As argued by McCole (2003), e-marketing has been one of the major aspects that have made the company to remain competitive through proper management of resources and product marketing. In this regard, Kenya Railways has embarked on informing their customers on the changes on the prices and ticket booking through the internet. This has been possible due to the effective customer service that is maintained by the company. Tourists from other countries are now able to access and book their tickets at 55 US$ with an additional 10 US$ processing fee and 44 US$ with an additional fee of 10 US$ processing fee for the first class and second class respectively. Through online payments methods including wire transfer and credit card online, customers are able to book their journey online thus avoiding the time they take to physically visit the company branches. Place Place is an important aspect of marketing mix that organizations cannot overlook. According to Kotler et al, (2006) companies must emulate proper distribution channel in order to ensure consumer can access the products regardless of their location. In order to reduce the cost of operation and distribution costs, Kenya railway does not emulate an agent during the provision of its services. Being headquartered in Nairobi the management team is able to control all the operation of the company in other stations including Mombasa, Thika, Kisumu and Nakuru. In any of the branches, customers can easily book their tickets. In order to cater for the maintenance of their trains and the railway system, the company has its own workshop with skilled personnel. In this way, the cost associated with delegating engineering activities is avoided. The railway line pass through various major towns where large industries are located in order to serve other firms that use the services of Kenya Railway. According to Kotler et al (2006), it is essential to consider political and accessibility of labour before locating a business. The company has therefore considering expanding its network to other areas in order to tap unexploited resources and serve its customers effectively. A major challenge that the company faced was during the post election violence that occurred in Kenya in 2008. As a result of the political turmoil, most of the company assets were destroyed causing the company to cease its operations for some months. People People refer to any one who comes into contact with the products being offered by the company. They include customers and managers. According to Steinmetz, (1983) it is paramount for a company to enhance the performance of their employees through motivation. In order to ensure that its employee’s performance is enhanced, Kenya Railway embarks on training its employees through regular seminars and forums. After sales support offered by the company ensures that a value is added to the services offered by the company. Through regular updates to the tourists and local travelers through the online and notice boards, the company is able to effectively notify the users of any change. As stipulated by La and Kamdampully, (2004), it is important for firms to look regularly at the products they offer to ensure they meet the needs of their consumers. In order to streamline its services, the company involves the participation of the customers through provision of suggestion boxes in all its branches where clients are able to forward their ideas. This is an indication of the company objective to treat its people as part and parcel of the company. The company has also an effective customer service department that ensures that customers’ problems are resolved in a timely manner. Through the customer support, visitors are guided on the various services and fees payable during the booking of their journeys. In most cases customers relate the products offered with the providers of the products. It is therefore vital for a company to maintain efficient and skilled employees who will handle the customers in an effective way to avoid losing them (La and Kamdampully, 2004). The congestion that is experienced inside the Kenya Railway trains is an aspect that has been taken negatively by most of the local users. Bearing in mind the importance of the customers as argued by Steinmetz, (1983) it is necessary to improve the condition of the coaches to reduce the congestion especially during rush hours. Processes Process is one of the 7Ps that is ignored by most organization. According to (Kotler et al, 2006) process entail the behavior of service providers as well as the process of providing the service. Other aspects include waiting time, helpfulness of the support group and the usefulness of the information provided by the employees. One of the major aspects that Kenya Railway adopts is the use or speakers in all its effort which they use to update the customers on any issue affecting them. However, the delays of the trains and the long waiting time experienced especially during evenings are issues that have made some customers to look for alternative means of transport. Even though the employees are supportive to the customers some of the information given is not accurate thus creating a bad image for the company. This calls for an improvement of the customer service in order to maintain the loyalty of the existing customers. As McCole (2003) suggests firms must note that customers are interested on whether the processes are working and not how the company runs. This depicts the need to ensure efficiency and effectiveness in provision of the services. In order to ensure that tourist are well informed on the services provided by the company, Kenya Railways has provided an email and phone numbers that visitors can use to enquire about booking and the fare. Unreachable phones and recorded message which makes the customers to hold for a long time are some of the major aspects that has forced many customers to give up and look for substitute services elsewhere. Physical evidences The intangible nature of a service is an issue that makes customers to view the purchase of a service as a risky business. It is crucial for companies providing services to reduce that uncertainty by showing the customers the services they intend to buy. According to McCole, (2003) testimonial and case studies are major aspects that can be used to inform potential customers about the services. It is vital for a firm to get feedbacks from existing customers which are treated as a testimony that can be shown to new customers. Through such testimonies a customer who has not purchased a service is able to inform other people on the benefits of using the service. The provision of case studies at the reception desk of the Kenya Railways has been significant in informing foreign visitors of the services offered by the company. One of the benefits that the company has experienced as a result of maintaining the aspect of physical evidence is the customers’ confidence. Due to the adequate information that is available at the reception and on the company website foreign visitors are able to seek for the services of the company (McCole, P. (2003). Recommendations Product The provision of quality services is an aspect that cannot be overlooked by companies that aim at attaining a competitive edge. One of the major recommendations on how KR can improve its services is by increasing the number of trips it makes to major town in East Africa. For example, in order to increase its revenue the number of days the Mombasa-Nairobi train travels should be increased from three to five. This is possible if the company purchases engines with high speed in order to reduce the time taken by the Mombasa-Nairobi train. Since this is the route used by most foreign visitors, the company revenue will increase. As a result, the company will have a strong financial ground to cater for other operations including expansion of the railway line. Due to the high demand of the company services by members of the public and other companies, it is essential for the company to improve the conditions of their coaches. As mentioned earlier, the congestion in the coaches and the smoke produced by the engines are unhealthy to the passengers. As a recommendation, the company should allocate more financial resources for repairing and purchasing more coaches. Provision of more seats is also an approach that can be used by the company to reduce the congestion. Promotion The purpose of undertaking promotional activities is to create strong customer awareness as well as to generate a positive product-customer relationship. In this regard, KR should expand its promotional activities in order to capture the attention of potential customers. For example, the company should sponsor various sports in East Africa and abroad as a way of informing the potential customers of the services it provides and the attractiveness of its products. The company can also launch a competition in the internet which foreign and local visitors can participate and win tickets to visit Tsavo and Masai Mara national parks, major areas of attraction in Kenya. Through such competition both the company and the governments will benefit from foreign exchange and creation of employment. Other promotional activities which the company can emulate include environmental conservation as a way of corporate social responsibility. People The contribution of the employees is fundamental for the productivity of any organization. One of the major ways of enhancing the productivity of the employees is by motivating them. As stipulated by Weightman, (2008) the profitability of a company depends on the performance of the employees. In order to enhance the performance of the workers, it is paramount to motivate them. Some employees are motivated by an increment of their salaries while others are motivated by recognition. One of the major way KR can motivate it employees is through appreciation for an achievement. In most cases, managers fail to recognize their workers good job. Even though this does not necessarily demotivate an employee, it reduces the chance of performing well in future by such an employee. The employees should also be given a chance to develop their careers. According to the study done by Robbins and Judge (2007), employees should know the growth opportunities which exist in their company. KR should assist the internal personnel to develop their career by allowing them to attend part time courses and seminars. Due to the changing technology, KR should allow the engineers in the technical department to attend further and modern studies thus improving their skills. According to Goldthorpe et al (1968), a job title is an avenue of tapping the self-esteem of the employees. The morale and the attitude of the employees in the work places are determined by how the workers are perceived. By involving the employees in deciding the job titles, KR managers will create a sense of pride which in turn creates a feeling of motivation. Studies done by Robbins and Judge (2007) shows that good working environment makes the employees feel comfortable. As mentioned earlier the congestion in the KR coaches is detrimental to employees and passengers. It is essential to improve ventilation inside the coaches to motivate the employees and the customers using the company services. Place The traffic jam experienced in Kenyan roads can be avoided by expanding the railway network. Due to the large capacity of passengers a train can carry, it is vital for KR to create more routes in order to venture in areas where its services have not yet reached. The infrastructure system in neighboring countries especially Somali is not efficient. In this regard, the company should allocate more funds to construct railway lines which will penetrate such areas. This will not only be beneficial to the company in terms of revenue generation but it will also result to creation of more job opportunities and increased government income. Conclusion The effective adoption of the 7Ps in the service industry is major determinant of the success of both good and service industry. Due to the cut-throat competition in the service industry, firms should emulate proper pricing strategies to avoid losing customers. In addition, the quality of the service should be attractive to potential customers bearing in mind that a service is an intangible product. In order for a service to be known by the customers adequate promotional strategies should be put in place by use various avenues such as internet, bill boards, magazines, televisions and radio stations. Accessibility of a service by the customers is another aspect that companies cannot ignore. It is therefore imperative to utilize the best method of distribution that a firm will adopt. Even though use middle men increase the cost of distribution, they also assist in the distribution of a service. In most cases a service company such as KR, does not utilize middle men. Customers are hesitant when dealing with services and they usually require accurate and more information before they purchase a service. Product improvement and innovation are essential aspects which service company must emulate. In this way, the changing needs of the customers will be met by the companies. People who are associated with a service or a good are equally important in a company. They include the employees and customers. It is vital to offer customer services which will retain the loyalty of the customers and enhance repeated purchase. In the same way, motivation of the employees through training, salary increments, job titles and training are essential aspects which improves the performance of the employees thus increasing the profitability of a business entity. In order to capture the attention of potential customers, adequate and actual information should be made available to them. The information can be collected from the feedback from the existing customers. In this way, companies dealing with services will attain customer’s confidence and trust. References Goldthorpe, J.H., Lockwood, D., Bechhofer, F. and Platt, J. 1968. The Affluent Worker: Attitudes and Behaviour Cambridge: Cambridge University Press. Kau, A.-K. & Wan-Yiun Loh, E. 2006. The effects of service recovery on consumer satisfaction: a comparison between complainants and non-complainants. The Journal of Services Marketing Kotler, P., Armstrong, G., Brown, L., and Adam, S. 2006 Marketing.Prentice Hall: Pearson Education La, K. V. & Kamdampully, J. 2004. Market oriented learning and customer value enhancement through service recovery management. Managing Service Quality, 14, 390-401. McCole, P. 2003. Towards a Re-Conceptualisation of Service Failure and Service Recovery: A Consumer-Business Perspective. Irish Journal of Management, 24, 11-19. Robbins, P. Judge, A. 2007. Essentials of Organizational Behavior. Upper Saddle River, NJ: Prentice Hall Simon and Clarke. 1982. marginalism, and modern sociology: from Adam Smith to Max Weber. London: The Macmillan Press, Ltd Steinmetz, L. 1983.Nice Guys Finish Last: Management Myths and Reality. Boulder, Colorado: Horizon Publications Inc. Weightman, J. 2008. The Employee Motivation Audit: Cambridge Strategy Publications Read More