The Importance of Service Encounter on Business

MARKETING101

The Importance of Service Encounter on Business

Felita Wangsa - 42671280

Words: 1851

A TABLE OF CONTENTS

1. Introduction.....................................................................2

2. The Importance of Solution Selling.........................................3

3. The Role of Service Encounters for A Successful Marketing...........5

4. Factors Affecting Service Encounter.......................................9

5. Reference List................................................................10

INTRODUCTION

Traditionally, innovation programs by companies always involved product development. Each company will pay more attention on their own goods and services and how to sell more than their competitors. They will do different marketing campaign to promote their goods without actually putting themselves in customer's perspective of needs. However, this traditional framework is heavily challenged due to the intense competition and the increasing complexity of customer needs. This changes itself has resulted to declining profitability. Customer rarely purchase a products or features or benefits for the sake of purchasing, instead they are looking for a 'solution'.

This reason influences more capital goods companies in diverse industries to shift their value propositions to offer customer solutions. (Tuli et al, 2007; Wise & Baumgartner, 2009) Companies, instead of focusing themselves on creating new products and different ways of selling, is required to be active on bringing up customer problems and offering solutions through customized bundle of goods. With this, as though sales might not be the first obvious result, helps to build goodwill, trust and relationship with customers.

THE IMPORTANCE OF SOLUTION SELLING

Traditionally, companies in different industry sector heavily rely on new product development frameworks. Usually the businesses main strategy will be to launch their own idea of a 'successful' product into the markets as the designing and development process is done (McGrath et al., 1992). However, the recent year, according to Paiola et al. (2103), there had been rapid transitional flows of material and money, decreasing of the product life-cycle, the constant need for extensive integration of technologies and growingly sophisticated customer. In which this has led the market to face a globalized technology-driven competition. Therefore, most businesses are currently adjusting themselves into a 'solution' focused business model; with hopes to counter-effect the phenomenon. (Shepherd and Ahmed, 2000, 100).

The competition had also causes the market an additional task to support their existing products and its product development capability, while at the same time expecting the markets to present a service that will enable to resolve customer's particular business-'solution', without requiring and additional technological need.

The selling style of 'solution selling' itself is a similar approach to 'need-creating selling'. The later was popularized around 1970 to 1980. However, while the 'need-creating selling' focuses on creating a potential need for their products or services even when there is no apparent needs, 'solution-selling' is about putting manufacturer's mind from the customer's perspective. The attention of company's business is shifting from selling their particular products or services to evaluation of customer problems and needs. The question to be asked is what does majority of the market needs; and the set of products or services needed by the customers to that will improve the quality of their life. While at the same time, this purchase shall please their compelling reason to buy.

Solutions, according to Sahwey (2006, 369) "is an integrated combination of products and services customized for a set of customers that allows customers to achieve better outcome than the sum of the individual components."

Tuli, et al, 2007 emphasized three points from this definition. 'Solution' has to incorporate both of products and services. The goods or services in a 'solution' may be modified, selected or designed in order to address a customer specific requirements. Last, the good or service has to be able to be integrated into set of goods and services.

To understand 'solution' better, John McMillan brings up an example of drills, holes and fixing. When customer purchase drill bits and utilize them to create a hole, what the customer really wanted is the hole. However, the analysis continues to why does he want to create the hole? While most cases will response 'he wants to place a screw through it', however the idea of your business can be stretched out to that selling ways of fixing.

This framework of 'solution selling' is about analyzing a more efficient solution and the alternative products to customer's business compare their current product. Businesses that are able to see the opportunity of development products will be able to capture the target customers.

Continuing from the above example, businesses through an extended market research are able to find that the they're using holes for a mere percentage of their fixing needs while other ways for the rest. If you have satisfied them as a customer, then the most reasonable scenario is they will most likely be more than happy to purchase more of other fixing solutions from you. Through the understanding of a customer's need, you will be able to provide value and win customers.

Also, as being discussed by Lane and Piercy, 2004, 'solutions' may benefit companies through the increasing value being delivered to buyers. From this, a barrier to competitors is