Introduction
This paper is written to analyze the current Service Delivery and Service packaging, then finding the relevance of warranty in Service. Service in more intangible in nature and consumed immediately as it performed unlike product, which is tangible and used over a period. Today warranty is granted for any Consumer durables, white goods, and technological product. This warranty provides more assurance of reliability of the product to the consumers; Many times consumers are ready to pay even extra amount to buy extended warranty. This paper analyzes the matching of warranty model with Services. Analysis is done in following topics -
Brief on Service Delivery
Importance of Service Packaging
Warranty design
Conclusion
Service Delivery
Unlike products service is mostly intangible, where tangibility can be introduced using the products. As it is intangible consumption happens simultaneously with the creation of service. Products are used over the period, so warranty gives the assurance towards the usage and consumption where firms make sure that products can be consumed smoothly at least a minimum period. This concept is getting applied in services too using the Service Quality criteria. Because firms become responsible for the delivery ultimately and consumers hold responsible the immediate delivering firm, firms need to measure the parameters for Service Quality, like Tangibility, Reliability, Responsiveness, Assurance and Empathy. These parameters can be measured by the involvement of products in service and the people behavior in delivery of service, where last three parameters are completely dependent on the people. The management group can decide the product involvements and that can be guaranteed, but the people behavior is not consistent. So the good companies spend a lot in training on their front-end service people.
So the reference becomes very important in service delivery, consumers want to check with somebody before consumption. They want to check the Service Quality personally from somebody, so "word-of-mouth" has lot of importance in Services. So the organizations want assure on the Service Quality, so many times they try to take the consumers feedback, engage in tele-marketing, where agents can talk to the consumers personally. But many often these doesn't reflect the consumer perceptions. Most of the times consumers are in a hurry to give feedback or listen to tele-marketing agent. But consumers do the research before buying any product or service; if there is no need then there is a buyer too, when they want to buy, they start the research, like if somebody has to travel then only he looks for the air-ticket; nobody looks at the deals without the need.
Reference provides the Assurance and Empathy, so the Customer is actually looking for Assurance and Empathy. Most of the time Organizations rely upon the front-end employees for the Assurance and Empathy, although in final delivery its upto the employees, how they perform, but Organizations need to enhance the Customers' perception in increase the Sales. They need to look for other ways to enhance this perception, most of the time Organization tries to enhance the perception by increasing the tangibility, but after certain point tangibility helps very marginally, the last three factors have more importance. Reliability factor is also closely associated with tangibility and Brand Image. Today the consumers are more cautious about the last three factors which dependent on the Employees' behavior.
Service Packaging
Similar to a tangible product's package, the service also wrapped within physical evidences to convey an external image of what is "inside" to consumers. Product packages are designed to portray a particular image as well as to evoke a particular sensory or emotional reaction. The physical setting of a service does the same thing through interaction of many complex stimuli. This is very much critical in forming initial impressions or setting up customer expectations - it is visual metaphor for the intangible service. The packaging role is particularly important in creating expectations for new customers and for newly established service organizations that are trying to build a particular image. The physical surroundings offer an organization the opportunity to convey an image in a way not unlike the way an individual chooses to "dress for success". The packaging role extends to the appearance of contact personnel through their uniforms or dress and other elements of their outward appearance.
Interestingly, the same care and resource expenditures given to package design in product marketing are generally not provides for services, even though the service package serves a variety of important roles. These are many exceptions to this generality, however smart companies like Starbucks, FedEx, Southwest Airlines and Marriott spend a lot of time and money relating their service design to their brand, providing their customers with strong visual metaphors and "service packaging" that conveys the brand positioning.
Southwest Airlines tried to break the image of a "flying event" as serious event to a casual event. Their crew members appear in very informal dress with friendly appearance to give a "at Home" feel to the customers and this positioning fits with their low cost "no frills" strategy.
But so far the Service Packaging is done through physical surroundings, but still there is lot of empty room to develop the packaging using the employees attitude, people presence, like the some extent done by the Medical, Legal, Educational and Entertainment services, as they are more specific people oriented.
Warranty Design
Warranty is mostly offered on the product parts, to cover the technical faults. It is applied on the materials mainly not on the service. In case of the product, any part defect may cease the product functionality and this can be pinned down easily. In case of service, since people are more oriented, its difficult to pin down the defect cause. Also since the people are involved, the behavioral aspect, group dynamics play the key role in the service delivery.
Also the customers have an expectation on the product life, they want to use the product for a minimum period, so the defect rectification can meet that expectation. Also this depends on the product category, the following table shows sample consumer products category, expectations and warranty support -
Product Category Expectation Warranty availability
FMCG Basic need NO
Consumer Durables Electro-mechanical functionality Yes
White Goods Electro-mechanical functionality Yes
Pharmaceuticals Recovery NO
Textiles Basic need NO
Cosmetics Fashion NO
Household items Basic need Partial
Automobiles Mechanical functionality Yes
Computing and Communication devices Electronic functionality Yes
From this table it's evident the warranty is offered on the electrical/electronic or mechanical items, in which case a defect part may cease the operation completely.
Warranty also depends on the price of product; warranty is no supported low priced product. Warranty is in the augmentation layer of the product, for cheaper product it's not affordable. So for the same reason for the low priced services, warranty can't be supported for the low priced services.
Conclusion
Service Providers, especially in Financial Services, Telecom Services, Travel Services or Hotel Service, have to start thinking about warranty, as competition will be cut throat. Today if your telecom call fails or get any problem in bank account because of mistake at Service Provider's side. Warranty in products evolved more through competition. If the car gets problem because of some manufacturing defect, the manufacturer has to take care of that, similarly if the network has some problem, the Telecom Service provider has to pay a penalty to customer.
How that warranty will be provided, that Service providers have to decide and figure out, but this is going to happen, as the economies depend on Services than Manufacturing or Agriculture.
Bhaskar Roy
CEO & Founder
Chikpea Inc.
www.chikpea.com
Sales & Service Exchange Portal
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