Analyzing Customer Service Needs

Analyzing Customer Service Needs

Like most marketing decisions, designing a channel begins with the customer. Marketing channels are viewed as customer value deli'oery systems in which each channel member adds value for the customer Thus designing the distribution channel starts wilii finding out what values consumers in various target segments

want from the channel.' 1 Do customers want to buy from nearby locations or are

they willing to travel to more centralized locations? Would they rather buy in person or over the phone or through the mail? Do they want immediate delivery or are they willing to waitV Do they value breadth of assortment or do they prefer specialization? Do customers want many add­on services (delivery, credit, repairs, installation) or will they obtain these elsewhere? The more decentralized the channel, the faster the delivery and the greater the assortment provided. Additionally, the more add­on services supplied, the greater the channel's service level.

Generally, customer service is determined by the interaction of all these factors that affect the process of making the product or service available to the customer. Companies that recognize these needs must then build channel Generally, customer service is determined by the interaction of all these factors that affect the process of making the product or service available to the customer. Companies that recognize these needs must then build channel

Chapter 2] Managing Marketing Channels

strategies that will serve them better than the competition. Consider the distrib­ ution channel service needs of business computer­system buyers:

The delivery of service might include such things as demonstration of the product before the sale or provision of long­term warranties and flexible

financing. After the sale, there might be training programmes for using the equipment and a programme to install and repair it. Customers might

appreciate 'loancrs' while their equipment is being repaired or receiving

technical advice over a telephone: hot line. For the individual buyer, purchasing a personal computer for the first time,

channel service must be more sensitive to the consumer's relative ignorance of, 'shyness' with and discomfort about PC technology. The novice computer user needs adviee not only on what PC (the hardware) to buy, but also on the range of software to do the tasks he or she requires. This group of buyers also needs help on how to set up the equipment, load the software and learn to use the 'new toy'.

Providing the fastest delivery, the greatest assortment and the most compre­ hensive services may not be possible or praetical. As in the case of servicing the PC buyer, providing a high level of personal service, in addition to warranties,

maintenance and after­sales support, does not come cheap. A morning's training on a new graphics package can cost up to several hundred pounds. The company

and its channel members may not have the resources or skills needed to provide all the desired services. Also, providing higher levels of service results not only in higher costs for the channel, but also in higher prices for consumers. The

company must balance consumer service needs against the feasibility and costs of meeting these needs as well as customer price preferences. Customers frequently

make trade­offs between service quality and other purchase dimensions, such as price. The success of off­price and discount retailers, such as Germany's Aldi and Lidl, the British Kwik Save and Superdrug and the Dutch Makro, shows that consumers arc often willing to accept lower service levels if this means lower prices. Makro, for example, has expanded outside its key European markets and boasts a successful operation in the Thai market. In Japan, where consumers are

noted for their obsession with and preparedness to pay for quality, no­frills

discount houses, too, are gaining in popularity.

Moreover, the success of one company depends not just on its own actions, but on how well its entire channel competes with the channels of other com­ panies. This idea is based on the notion that the unit of competition is not the individual company or organization in the channel, but the entire channel system

or supply chain." 1 For example, Marks & Spencer imposes rigorous quality control on its suppliers, which it relies on to maintain its own quality reputation in food retailing. Similarly, Toyota is just one link in a customer value delivery system

that includes thousands of dealers worldwide. Even if Toyota makes the best cars in the world, it will lose out to Ford, General Motors. BMW and Nissan if these competitors have superior dealer networks. Equally, the best Toyota dealer in the world cannot do well if Toyota supplies inferior cars. And Toyota cannot supply superior quality and reliable ears if its suppliers fail to maintain their own quality standards for parts and components that go into Toyota cars. The company has to design an integrated marketing channel system that will deliver superior value to

its customers.