Redefining the First 'P' of Marketing-
Prodices (PRODuct+servICES)


By
Avanthi V.S.
Mythili A.V.N
PGDBM 2003-2005
Dhruva College of Management
Hyderabad
E-mail:
avanthivarma@rediffmail.com
 


The purpose of Business is to create a customer and it's him who creates business. So, it's very important to understand what he needs and how to impress influence him. Today customers have a plethora of products around him and how he chooses the product is the crux of it. He has too many options and most of them are just clones to each other. How to differentiate?

There was a time when customers were the die-hard fans of the brands they use and they loved them through out their life. But today customer says, " I love you only for today, If I see something better tomorrow, I switch". How to retain him?

People used to wait for months together to get their new Bajaj Chetak home. Those were the days when producers used to dictate terms and conditions to the customers. But now, times have changed. Customers are setting higher and higher performance standards and producers are striving to find out How to satisfy the customer?

These are the basic questions that every marketer must try to answer, to survive in today's environment where, customer is not only the King but is the Emperor. He should try to ensure that every activity in the organization is directed towards satisfying the customer, in order to make him delighted and thus retained.

Thus, this rapidly changing environment which is characterized by shrinking product lifecycles, thin margins, technological changes, smarter and more demanding customer has forced the organizations to design customer oriented marketing strategies. So, today's companies are moving further by innovation of new methods of tapping the customers – to survive in this highly intense competitive market.

Through the times

Marketing philosophies have undergone substantial changes since 1950's. It is interesting to know, how management attention has shifted toward customer service from other areas.

Prior to the late 1950s, competition was (and still in many product categories) focused on product specifications or features.

However, from mid 1960's through the 1970s,the experience curve concept popularized by the Boston Consulting Group focused attention on lowering costs and prices to gain dominant market share.

In the 1980s , product quality became the buzzword, culminating in the head competition. In this period, the "er" factor was most used one, to influence the customer. All the marketing strategies were focused on this kind of differentiations as Better, Faster, and Tastier etc. But most of these differences could be easily reproduced.

From the 1990s, although the focus on product specifications and cost has certainly not been eliminated, many companies are turning to serve quality and customer service issues as the path to obtaining sustainable competitive advantage. The establishment of the Internet as a legitimate channel of distribution and communication medium has exacerbated the focus on the customer service. Slowly, the focus has shifted from transaction-based activities to long-term relationship building.
 

 

BONDING

 

|
ADVANTAGE

|
PERFORMANCE DIFFERENTIATOR

|
RELEVANCE

|
PRESENCE


These are the factors for existence of a product- changing over time. In the beginning, it was just the presence of the product that was of great importance. Later, people used to buy the products, which have relevance to their needs. Then, the focus shifted to differentiation of the product from other products. Next, it was advantage that the customer gets by using that particular product, instead of using some other product. Now, the customers are buying the products that bond with them.

As a result of all this activity, today, we witness a world where customer sophistication and expectations are rising along with competitive activity and to match those expectations, the 'PRODUCT' concept has given way to 'PRODICES' concept. 

Product

Margaret Thatcher, during her childhood used to sit in her fathers vegetable store and used to observe all the customers and processes of transaction. From this experience she observed that, "If vegetables were good, the customers came back and if bad the vegetables came back and customers never came back". This simple observation of Margaret, throws light on, how important the product is. It means that to retain the customer we need to have a good product offering, that satisfies them.

The product is nothing but a means of providing a service to satisfy a need. It provides the basic service that it is made for.

Eg: Soap is used to provide a clean bath. This is basic service of the product.

The factors that constitute a product can be divided as basic, performance and delight factors. Basic factors are those that are expected by the customer, if they are absent, dissatisfaction results, but if present they merely resulting neutrality. 'Performance' factors are those where customer satisfaction alters with the level or speed of provision. 'Delighters' are not expected by customers, but result in delight if they are provided .A 'Delighter' one year becomes a 'Basic'.

Usually, performance factors are the potential source of competitive advantage and this is where, today's companies are competing and are trying to have an edge over their competitors. This is where the concept of 'PRODICES' comes into picture. First of all, let us understand how products can differentiate themselves from their competitors.

Differentiation-in terms of services

Competitive advantage as stated by Michael Porter 'is the ability of an organization to create more value on a sustainable basis, for the customer than its rivals can'.

Since, everybody is providing almost similar product now, it is almost next to impossible to create a competitive advantage. But there is always a scope for comparative advantage. We can say that, the service element of the augmented product- the characteristics, which help to distinguish a product from its competitors –is now a key factor for long-term success through comparative advantage. Rapid development in technology, which means that firms can no longer sustain a leading edge position in the market place, by technological superiority alone, has led to the development of service as a differentiator.

"Everyone has become better at developing products. In robotics, the robot itself has become sort of a commodity. One place where the companies can differentiate themselves is in the service they provide"
--Henkoff, 1994

This is still true in 2000s. Customer service is that one dimension of the product offering that is very difficult to copy because it relies heavily on execution and strong corporate service ethic, which are hard to duplicate. So, companies are tying-up services with their products to differentiate them from their competitors and thus gaining comparative advantage.

Prodices

Customer's perception of a product was that a product is just a Physical Good, but now the perception is changing with the dynamic environment, increasing competition and ever increasing customer demand. Marketers are forced to adopt a new marketing framework. The consumer today is seeking more than just a commoditised brand to base his purchase decision on. Associating a service with the product is an opportunity for the companies to tap this latent need of the consumer.

The meaning of 'PRODICES' is, offering product and services together. It is about adding services to the product offering or adding product formats to services. It helps both the businesses, which sell products and services.

For the businesses selling products, they need to take into account that they are providing the service of offering their products, as well as the services that support the product. For businesses selling services, they need to put their menu of services into product formats. They too, have product forms that go along with the outputs of their services.

In the past, services have been treated quite separately from other industries and have been attributed with 'unique' characteristics to justify such treatment. Now a days, products and services are becoming increasingly entwined and marketers are moving away from 'typical product' approach and looking at adding 'service' element to the 'product'. So the services like training, technical support and warranties are becoming critical differentiators for comparative advantage.

If we see today's product offerings, we can observe that, the levels of the product offerings are increasing and the augmented product is increasingly becoming the part of the expected product and the horizon for potential product is increasingly widening and the marketer is providing the same, as this is the only tool left with a marketer to remain competitive in the marketplace.


At the same time marketers are also providing several services which customer could not expect in the past. In this way currently marketer is providing value to the customer.

Types of services that can be offered along with the product

Why does a customer prefer a particular product? This depends on customer value i.e. what the product is worth to the customer. There are three sources of customer value,

Economic value (perceived price vs. actual price)
Functional (Prodices) and
Psychological (perception)

One of the very important functional characteristics is service and customers derive value from 3 kinds of services. They are,

Before- sales service, Time-of- sales, After-sales.

Before- sales service

Before-sales service involves providing information. Companies can provide pre-purchase services that influence the customer to buy the product. They can conduct training programs about using the product or educating about the customers about the product.

One of the examples of this kind of service is Vichy laboratories, which helps the customers to know their skin types and helps them to choose the product based on that. POND'S also creates awareness of the skin-types, skin problems and impact of climate /weather on the skin etc which are important aspects which need to be communicated before a consumer thinks of buying a variant.

Time-of- sales service

Time of sales facilitates purchase, such as reliable and fast delivery, installation and start-up and convenient financial terms. The companies can provide services like timely delivery of products, ambience of the showroom, friendliness of the employees, free delivery, credit etc.

Domino's is one of the best examples that we can give in this case. It challenges its customers by saying "delivery in 30 minutes nehi to free". This is how it differentiates itself from its competitors by emphasizing on timely delivery aspect. The new campaign of Berger Paints has a message that 'Buy Berger Paints and get your home painted free of cost'. This is a good example of a 'prodice'.

After-sales service

After-sales involves providing both routine and emergency maintenance

The post purchase phase of the process is essential for marketers to ensure that consumers are satisfied after the purchase. A company can offer post-purchase services like warranty, Guarantee, Complaint-handling. These services if delivered properly could leave a positive impression on the customers resulting in customer satisfaction. Nothing is more likely to cement a long-term customer relationship than speedy and effective reaction to problem or more apt to destroy one than a slow and bureaucratic response.

Now many consumer durable companies and automobile companies are giving guarantees and warrantees. Some of them are also offering free servicing for the first three times.

The following could be the results or means of delivering a good PRODICE.

Customer satisfaction

Customer satisfaction is the most important factor that contributes to a product's success. Usually, dissatisfaction occurs when there is a discrepancy between prior expectation and actual performance. Expectations may be created by advertising, information at the retail outlet, word of other consumers or by prior experience with similar products or services. Performance determines whether the expected outcome has been delivered by the product/service. Companies should try to narrow this gap between expected and actual performance by walking their talks.

The automobile brand Lexus highlights the value of a strong commitment to the customer service. Lexus consistently scores at or near the top of the J.D. power surveys of the automobile customer satisfaction.

CRM/relationship management

Alvin Toffler has written in his book Power Shift : " No one buys a share of Apple Computer or IBM stock because of the firm's material assets. What
counts are not the company's buildings or machines, but the contacts (relationships) and power of its marketing and sales force, the organizational capacity of its management…"

Customer Relationship management is a relationship process which a company can cultivate with its customer groups /segments in such a way that it benefits both the customer and the company.

Pond's is an interesting example in the Indian context, which reflects the efforts of the company to build a relationship with its consumers by inviting and answering their skin-related queries.

The companies will have to focus on establishing deeper relationships with the individual customer on a more personalized basis. We are likely to see a progressive movement of most of the companies towards the "Partnership" end on the Customer-relationship continuum. At present, relationship exposures of different companies with their customers go on differing from one company to another. Companies with their customers go on differing from one company to another. The levels are :

    * BASIC: Once the company sells the product, it doesn't follow-up in any way.

    * REACTIVE : The salesman sells the product and tries to encourage customers call on whenever the problems are faced.

    * ACCOUNTABLE: The salesperson himself checks with the customers to know whether the product is meeting the customers expectations and tries to improve the company's offering.

    * PRO-ACTIVE: The salesperson checks from time-to-time with the customer in search of suitable suggestions to improve the product use or to make them useful to the new products.

    * PARTNERSHIP: The company works continuously with customers to discover ways to deliver better value.

Customer loyalty and Retention

Different customer segments/ groups are interested in different dimensions of offerings. The implications of this aspect will be reflected in the planning of loyalty programmes and monitoring of satisfaction parameters. The companies should invest in their r/s with the customer their time, effort, money etc. to keep him happy and loyal. It costs 5 times more to find a new customer than to retain an old customer. Recent research suggests that brand loyalty can be enhanced if the tried product results in a high degree of satisfaction. This is because the consumer feels that the time invested in learning about the brand has had a positive outcome.

Harley Davidson, the mobike brand in US, illustrates how brand loyalty can reflect so passionately in consumers. Members of the Harley Davidson 'club' get tighter and take adventure trips on the bikes wearing special garments created by the brand. This link between brand loyalty and its display or visibility rubs off on the equity of the brand.

Customer services (both pro-active and reactive) are required to build a relationship of trust and cooperation. There should be a variety of options for the customer to contact the company in case of product failure. CISCO provides technical information concerning design. This attracts thousands of engineers to its website. Loyalty programmes, like frequent flier programmes may be useful in retaining consumers. Thus, loyalty and retention strategies formulated in a systematic manner can result in a sustained profitability.

Conclusion

In this highly competitive environment, the customer has been the focal point and all the marketing decisions have been revolving around him. The marketing strategies have been changing with the changing expectations of the customers. In this process, the old lesson of PRODUCT has given way to PRODICES, which means product + services. This gives chance to companies to present themselves, more impressively based on the services they provide along with their product. This is one of the best ways to differentiate a product from its competitors and also to improve the relationship of the company with its customers by increasing the time of interaction.

REFERENCES

    * 'Relationship Marketing: Managing Customer Focus'-Dr.Suresh K. Chadha, Indian Journal of Marketing, Vol-32, May-2002.
    * Product Management – Donald R Lehmann and Russel S. Winer.
    * www.indiainfoline.com
     


Avanthi V.S.
Mythili A.V.N
PGDBM 2003-2005
Dhruva College of Management
Hyderabad
E-mail:
avanthivarma@rediffmail.com
 

Source : E-mail February 8, 2005

 
 

 

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