Handling Customer Complaints and Managing Service Recovery

Customer complaints and service recovery are the most important things for a business, they both have potential to affect customers level of satisfaction. They also provide a chance for the customer to offer their different opinion, thereby improving the business service. As shown in Figure 12.1, when there is service failure customers elicit different responses. Due to this variation of behaviour; the business would never know what the customer is thinking without understanding customer complaint behaviours. Moreover, once the business knows what makes a customer unhappy, they need to quickly respond to the customer.

One in four customers has a problem with products purchased. If the item purchased is relatively low in price, only one in five will register a complaint (Eccles & Durand 1998). Most of the customers will not complain even though they have a problem with the product. For example, when people buy flowers from Canary Jane’s Flowers, once they get home and find the flowers are not fresh, they probably won’t go back to the shop and complain because the cost of time complaining does not seem worth it.Instead they may decide not come to the shop again. Therefore, Canary Jane’s Flowers needs to make a different plan for customers, making a complaint strategy to maximise customer satisfaction, such as recording the customer mobile phone number and make a call to them after the customer purchase. The business should always be proactive to gather information from the customer (Blazevic & Lievens 2007).

Once the business receives the complaint from customer, there are many steps to recover services. The most effective way is returning the money to the customer if there is a big problem with the product, or apologise to the customer and attempt to find out why they’re dissatisfied, thereby the business can provide adequate explanation to persuade the customer to come back again. In addition, the business should build blueprints to help the manager to go through every fail point of the service, and avoid it happening again, this is another method of service recovery.

References:

Eccles, G & Durand, P 1998, 'Complaining customers, service recovery and continuous improvement',Managing Service Quality, vol. 8, no. 1, pp. 68-71.

Blazevic, V & Lievens, A 2007, 'Managing innovation through customer coproduced knowledge in electronic services: An exploratory study', Journal of the Academy of Marketing Science, vol. 36, no. 1, pp. 138-151.

The Role of Customers Within the Organisation

The “key characteristic of a service is that it takes place at the interface with the customer”, therefore without customers the service does not exist (Maull, Geraldi & Johnston 2012). The role of the customer within a florist is to identify their needs and wants and communicate as effectively as possible to the service provider.

There is significant variance in the amount of participation that customers apply, and the optimal level may not always be reached (Gallan et al. 2012). As illustrated in Figure 11.1, a florist’s customer’s optimal level of participation is moderate. A florist like Canary Jane’s Flowers requires customer inputs for an adequate outcome but the florist still provides the range of flowers. It is not considered high participation because the client participation does not guide what flowers you buy, and customer does not co-create the outcome, like a personal trainer would.

The customer needs to be able to demonstrate the desire to search for information or a particular product, or able to create a flower arrangement order. In Canary Jane’s case the customer would either want to search for information about what they want, whether it be flowers or a gift, or have the ability to understand what type of flowers they want and order an arrangement. The employee provides product knowledge, organisation offerings and an end result; regardless if there is a sale or not.

It’s important to highlight that Canary Jane’s is a family friendly business; they sell some children toys and therefore attract a lot of adult customers with infants. Children can be stubborn and not obedient when they are told not to touch items, you can only control children to a certain extent. Due to this these customers are not able to perform their role in the service. However, Canary Jane’s have implemented a strategic method of dealing with such customers, they have put all the unbreakable and not precious items on the low height so this way the children can still touch items but there is no issue of them breaking these items.

The organisation, although a service, creates tangible aspects to support the intangible service. For instance, at Canary Jane’s Flowers they provide a business card of contact details on the gift bag with the purchase as well as a physical copy of the debit card receipt, (refer to appendix photos 11.21, 11.22, 11.23) therefore the business played their role in this encounter but if the customer does not follow through with their implicit role of storing their receipt for a reasonable period, then a resolution in order to resolve post purchase issues from the customer’s side has not been fulfilled. Since Canary Jane’s Flowers has attached their business details, it’s the customer’s implicit responsibility to contact the store if an issue arises; this is in both parties best interest. This leads into complaint behaviour and how to deal with complaints.

References: 


Maull, R, Geraldi, J & Johnston, R 2012, 'Service Supply Chains: A Customer Perspective', Journal of Supply Chain Management, vol. 48, no. 4, pp. 72-86.

Gallan, A, Jarvis, C, Brown, S & Bitner, M 2012, 'Customer positivity and participation in services: an empirical test in a health care context', Journal of the Academy of Marketing Science, vol. 41, no. 3, pp. 338-356.

The Role of Employees Within the Organisation

Employees are as vital for delivering a brand’s message as they are for delivering the business’ product or service. Their performance and satisfaction drives external service value and customer satisfaction, and their labour is as much emotional as it is operational. At Canary Jane’s Flowers, the nature of their products mean that customer relationships are particularly personal, and so the emotional labour of running the shop is increased.

The service profit chain model (see Figure 10.1) establishes the link between internal service quality and profitability, via employee and customer satisfaction (Heskett et al. 1994), the two of which are interlinked and feed from one another. In small business, the relationship between customers and employees is particularly close, and particularly important for profitability.

These relationships require emotional labour from employees, which is the performance by of expected emotions, which can be performed through changing facial expression, termed ‘surface acting’, or changing inner feelings, termed ‘deep acting’ (Grandey 2003). Deep acting is much more convincing to customers, and as such it is more desirable. Both forms of acting form part of the ‘labour’ in ‘emotional labour’, as it is mentally strenuous to maintain such a performance.

Better even that deep acting is the display of genuine emotion that aligns with the needs of an organisation, although it is much more rare and cannot be taught (Ashforth & Humphrey 1993). This has the advantage that it is not laborious, as it doesn’t involve any acting at all.

Emotional labour also includes the management of service-related conflict, and can markedly affect perceptions of service quality. Empathy, responsiveness, assurance, and reliability are all measures of how an employee connects with customers and are important factors in crafting customer satisfaction (Lee, Lee & Yoo 2000).

The application of the service profit chain to Canary Jane’s Flowers results in a somewhat simplified model; with a single owner-operator in Rebecca Stacey, employee retention stops being a consideration. Similarly, employee satisfaction, productivity, and internal service quality are merged as almost all customer service responsibilities are on one person.

Employee and customer satisfaction are also interlinked very strongly at Canary Jane’s Flowers because both parties are particularly involved in their service encounters. Ms Stacey’s emotional involvement is enhanced by her role as both floral designer and business owner, meaning she has a greater stake in business performance and ownership over the products she designs and sells. The customer’s involvement is also increased by the nature of flowers as a product, because they are so closely linked with relationships and emotion. This involvement necessitates engagement between parties on a personal level and requires a high level of emotional labour.

Typically, in service encounters with high involvement and emotional stakes, such as Canary Jane’s Flowers, deep acting is necessary. As mentioned above though, Ms Stacey has a genuine emotional stake in the business and its transactions so isn’t as affected by the emotional labour of acting. Often service employees require systems of support to help continue their acting without burn-out (Stevenson 1994).

References:

Heskett, J, Jones, T, Loveman, G, Sasser Jr., W & Schlesinger, L 1994, 'Putting the Service-Profit Chain to Work', Harvard Business Review, vol. 72, no. 2, pp. 164-170.

Grandey, A 2003, 'When "The Show Must Go On": Surface Acting and Deep Acting As Determinants of Emotional Exhaustion and Peer-Rated Service Delivery.', Academy of Management Journal, vol. 46, no. 1, pp. 86-96.

Ashforth, B & Humphrey, R 1993, 'Emotional Labor in Service Roles: The Influence of Identity.',Academy of Management Review, vol. 18, no. 1, pp. 88-115.

Lee, H, Lee, Y & Yoo, D 2000, 'The determinants of perceived service quality and its relationship with satisfaction', Journal of Services Marketing, vol. 14, no. 3, pp. 217-231.

Stevenson, J 1994, 'Employee burnout and perceived social support', Journal of Health and Human Resources Administration, vol. 16, no. 3, pp. 350-367.

Integrated Marketing Communication Strategies

The most important part of integrated marketing communication for Canary Jane’s Flowers is the communication between customers and employees. As shown in Figure 9.1 this form of communication is considered interactive marketing on the triangle and relates to delivering the promise. Canary Jane’s promise is to give customers the freshest flowers that are locally sourced and deliver exceptional service, their interactive communications plays an important role in creating consistent service to deliver this promise. Since Ms. Stacey doesn't have an advertising agent, she relies mainly on this form of communication to promote the business. She focuses more in delivering an excellent service in order to gain a good reputation and customer retention. This is evident by the review comments that have been uploaded by the customers, who have dealt with Canary Jane’s Flowers.

Interactive marketing involves having skilful and qualified frontline employees that understand what each customer requires. Canary Jane’s Flowers once had a customer who wanted to give his girlfriend a yellow flowers for Valentine's Day, the staff explained to him that yellow flowers symbolise friendship and suggested a different colour, the customer was impressed by their knowledge and went along with their suggestion. This illustrates that the staff intend to understand the customer's needs and offer the best service.

Interactive channels must be integrated to create consistent service promises. As part of advertising strategy Canary Jane’s Flowers uses social media such as Facebook. Their Facebook page is very interactive and up to date with lots of colourful pictures to appeal to the market. Canary Jane's Flowers was also featured in Frankie magazine, which is another form of unpaid advertising for the business. This proves that the staff are very active and consistent with the service provided.

Horizontal communication, also identified as lateral communication, is the passing of messages between entities and groups on the same level of an organization (Zeithaml, Bitner & Gremler 2013, p.434). Horizontal communication assists in the production of high quality exchange because it happens directly between people in the same environment, therefore it is also more efficient. Floristry is an artistry profession and fully depends on what the customers desires. Since there is only a small team of three at Canary Jane’s Flowers, horizontal communications is more significant and suitable. On the other hand, where there is an open channel between sales and operations things are more complicated (Zeithaml, Bitner & Gremler 2013, p.434). This is why Canary Jane’s Flowers communicate information through various strategies. For instance, horizontally; there is a system where all the staff uses to check for updates and also the orders. Vertically; in situations where there is a matter that requires the owner’s permission for decision making, such as a price change, then the information is sent to Ms. Stacey's email address. In addition, the rules, policies, procedures and regulations are all passed down from Ms. Stacey to all the staff members causing a downward flow of information. The communication returns upwards with the end of the day performance reports, complaints, feedback, etc. Communication can be difficult if employees do not effectively fulfill their roles.

References:

Zeithaml, V, Bitner, M & Gremler, D 2013, Services marketing, McGraw-Hill Irwin, New York.

Managing Capacity and Demand

It is very important to match demand and capacity as it would allow the organisation to maximise on profitability and utilise resources efficiently. If capacity and demand are not matched, issues can arise such as failure to smooth the peaks and valleys of demand and overuse of the capacity (Kossmann 2006, p. 39).

Failure to smooth the peaks and valleys of demands is caused by failing to match the supply to the demand (Kossmann 2006, p. 39). It could get really busy before lunch time in Canary Jane’s Flowers with up to five customers all at once. Ms. Stacey, the owner and manager, is aware that during this time and also the morning that it can get very busy so they ensure they have enough stock and staff to match for the day because of the uncertainty. In addition, seasonal changes can affect the demand. For example, weddings tend to happen a lot more in the spring and therefore this increase the demand for flowers more in comparison to winter. This means, for Canary Jane’s Flowers that they would need to increase the capacity to match the demand in spring time and reduce it in winter where it's not as busy. Another method to match the capacity and demand is shifting demand which focuses on customers and involves stretching capacity by using strategies to either attract or detract customers at certain times (Zeithaml, Bitner & Gremler 2013, p. 385). For instance, at Canary Jane’s Flowers on slow days they modify their hours of operation. On busy days such as Valentine’s Day they promote the benefits of ordering earlier than on the day to shift the demand since they know capacity will be too low. For more information on methods to shift demand please refer to Figure 8.1.

Overuse of capacity in the Canary Jane's Flowers scenario would refer to the ratio of staff to customers. Adjusting capacity focuses on the supplying side to fix the difference between capacity and demand (Zeithaml, Bitner & Gremler 2013, p. 388). Ms. Stacey usually has two florists in during the busiest days of the year, for instance Valentine’s Day and Mother’s day. To decrease demand during peak times they rely on students who are on work placements for extra hand when it is necessary. In the winter time where demand it too low employees have a holiday and Ms. Stacey would only keep one person in the store while she would drop in every now and then to give a hand if necessary. For more information on methods to adjust capacity please refer to Figure 8.2. Therefore, there isn’t much overuse in the capacity for Canary Jane’s flowers since adjusting capacity strategies are utilised effectively.

If capacity and demand aren’t matched this means there is both excess demand and business can be lost, or an excess in capacity and resources are wasted. It is very important for Canary Jane’s Flowers to understand their capacity and demand because on top of this they also need to stock the freshest flowers, not have stock sitting there for days. Therefore, capacity and demand should be recognised as an important way for Canary Jane’s to maximise on profitability. Capacity and demand levels will also be influenced by the organisation's communications.

References: 

Kossmann, M 2006, Delivering excellent service quality in aviation, Ashgate, Aldershot, England.Zeithaml, V, 

Bitner, M & Gremler, D 2013, Services marketing, McGraw-Hill Irwin, New York.

Monitoring and Researching Service Success and Failure

Monitoring and evaluating service performance is important because it allows for improvement throughout the service profit chain. Measurement and analysis allows businesses to make decisions based on data, lowering their exposure to risk and providing more predictable results (Gale 1992). Small businesses such as Canary Jane’s Flowers have less need and means to monitor performance, due to smaller sample sizes and more intimate existing knowledge of the business and customers, but such research still holds substantial value for service improvement.

It is common and natural for business operators to self-assess their performance against their past performance and objectives, but it is generally unreliable when done without structure, analysis and impartiality (Parker 2012). Canary Jane’s currently has unstructured performance measurement without formal metrics, consisting of a personal awareness of repeating customers, and reviews on external websites. The business is incidentally reviewed extremely well, with an average 4.9 star rating from 35 reviews on Facebook, Yelp, Yellow Pages, and Etsy. Reviews and ratings are currently the only impartial measurement of Canary Jane’s performance.

Measurement of returning customers is important as it is much cheaper and easier to retain customers than it is to attract new ones (Hennig-Thurau & Klee 1997). As such, customer retention rates are a very important metric to measure. Measuring retention rate is a simple calculation comparing a quantity of new customers to existing customers, but requires those two points of data. Returning and new customers can be counted simply by asking all customers if they have shopped at Canary Jane’s before, with figures stored and compared and monthly intervals to assess retention and attrition rates. A services success or failure will also be impacted by the organisations ability to manage capacity and demand.

References: 

Parker, D 2012, Service Operations Management, Edward Elgar, Cheltenham: UK, pp. 285-287.

Hennig-Thurau, T & Klee, A 1997, 'The impact of customer satisfaction and relationship quality on customer retention: A critical reassessment and model development', Psychology and Marketing, vol. 14, no. 8, pp. 737-764.

Gale, B 1992, Monitoring customer satisfaction and market-perceived quality, American Marketing Association, Chicago.

Service Quality and Service Guarantee

Service quality defines the level a customer is satisfied because it is the critical element customers use to evaluate service (Zeithaml, Bitner & Gremler 2013, p. 87). Therefore in a consumer service experience within a store, service providers must reach out to customers and listen to their desired fulfilments while also assisting their journey from enquiries, selection process, purchase process through to the possible post purchase issues. Ensuring service quality and eliminating the need for service recovery is “doing it right the first time”, this shows the business is reliable (Zeithaml, Bitner & Gremler 2013, p. 201). Canary Jane’s Flowers is a floral service combined with highly priced yet small sized gift goods, for example candles, rosedale hankies and hand creams. The higher costs of the small gift products would naturally create an implied higher service quality. “The intangibility and unpredictability of services generally cause consumers to perceive a higher risk associated with a service” (Sharma & Varghese 2013). Customers can have uncertainty and be unconfident of the service quality for particularly high priced stores, like Canary Jane’s (Sharma & Varghese 2013).

A method to reduce consumer’s uncertainty with the quality of a product is guarantees, which ensure the customer is 100% satisfied (Hart 1988). “A service guarantee is a promise by a company to compensate the customer in some way if the defined level of service delivered is not met.” (Sharma & Varghese 2013). There are several characteristics of effective guarantees that will be explained relating to Canary Jane’s Flowers and the benefits of having an effective guarantee will be illustrated. Effective guarantees should be unconditional, meaningful, easy to understand and easy to invoke (Zeithaml, Bitner & Gremler 2013, p. 202). Canary Jane’s guarantees that the flowers will last at least 4 days after buying them, this is unconditional because it “promises customer satisfaction unconditionally, without exceptions” (Hart 1988). This guarantee is meaningful because it covers the aspects of the service that is important to the customer, which is the freshness and quality of the flowers. It is also meaningful financially; a full refund or replacement is given. The guarantee is easy to understand as it is simple and pinpoints the promise (Hart 1988). A guarantee must be easy to invoke, as explained by Hart (1988) “A customer who is already dissatisfied should not have to jump through hoops to invoke a guarantee.”

“Service guarantees have been advocated as a potentially powerful weapon today in trying to differentiate between services and gain the competitive edge” (Sharma & Varghese 2013). Another benefit of service guarantees is maintaining quality (Zeithaml, Bitner & Gremler 2013, p. 204).The organisation can maintain quality as the guarantee is an indicator of what the service should provide, for instance at Canary Jane’s Flowers they guarantee same day delivery if you order before 2pm. By having this benchmark an employee knows the minimum needs that need to be met for the customer, which in this case is getting the flowers delivered to the customer on the same day. Canary Jane’s Flowers uses Murphy Alan Johns for the delivery of their orders and if for any reason there is a disruption with the process, then the staff will assist with the delivery to ensure that the guarantee is met. Small to medium enterprises often bestow less service guarantees due to less workers to help achieve promises, avoiding over promising is considered safe in the employer's eyes. The low number of apparent written and verbal guarantees from Canary Jane’s will ultimately impact the “willingness of the customer to make frequent visits” (Sharma & Varghese 2013). Ensuring the guarantees are used effectively, they will benefit the business. Canary Jane’s will increase loyal customers through the use of guarantees, which equates to profitability in the long run. Guarantees are irrelevant if the organisation does not monitor whether they are successfully delivering a quality service.

References: 

Zeithaml, V, Bitner, M & Gremler, D 2013, Services marketing, McGraw-Hill Irwin, New York.

Sharma, K & Varghese, M 2013, 'Influence of Service Guarantee on Consumer Behavior in organized retail stores', Romanian Journal of Marketing, vol. 1, pp. 10-17.

Hart, C 1988, 'The Power of Unconditional Service Guarantees', Harvard Business Review, vol. 66, no. 4, pp. 54-63.

Servicescape Strategy

Physical surrounding, also called servicescape coined by Bitner (1992) are fashioned by service organizations to facilitate the provision of service offerings to customers. According to Biggers and Pryor (1982), the elements of physical evidence help to influence perceived performance in the service encounter and also affect the perception of an experience independently of the actual outcome. The physical evidence elements are categorised into four distinct areas: package, facilitator, socialiser, and differentiator. Bitner (1992) defines it as all of the objective physical factors that can be controlled by the firm to enhance (or constrain) employee and customer actions. The first of the four areas is ‘Package’, which conveys the expectations and can also influence consumer perceptions. In regards to Canary Jane’s Flowers, the beautiful interior along with the pretty arrangements of flowers scattered around the shop make for a very appealing flower shop. The scent from the flowers, the subtle music heard in the background and the art deco beautifications all add to the overall package of the servicescape. This is very important for new customers as they need to be persuaded to come back again and again to the store.  

Facilitating the flow of the delivery service is not an easy task. The shop keeper or clerk needs to be able to provide information, carry out the ordering process and also facilitate the delivery service adequately in order to achieve a good servicescape outcome. After visiting Canary Jane’s Flowers in Hawthorn, I was immediately amazed at the vibrancy of colour and the overall presentation of the shop. At a first glance the shop is flustered with different assortments of flowers that range from small garden flowers to a bouquet (See Appendix 5.2). There is also a lot of knick-knacks displayed around the store symbolising the type of quirky style that the shop inhibits. (Aubert-Gamet 1997; Baker 1987). Baker (1987) considers servicescape as “not only a material stimulus but also a social construct containing humans who play a significant role in influencing behaviour”. At Canary Jane’s Flowers the customer and employee relationship is very friendly, together with nice gestures and a friendly greeting the overall experience was very pleasing. The customer service exceeded average expectations, even with many customers at once the store clerk was able to deliver excellent service and kindly told some customers they would be with them in a minute when it was necessary. “It is further postulated that the performance of these social factors within the servicescape can serve to either enhance or inhibit the service experience, thereby leading to the display of either approach or avoidance behaviour by customers” (Aubert-Gamet 1997; Bitner 1992).

The shop face uses a window display to entice customers to look into the store. In the window there is sometimes promotional banners associated with special days of the year such as mother’s day or Valentine’s Day. “In Babin and Attaway’s (2000, p.93) estimation, the servicescape “evokes emotions, which help to determine value, and this value motivates customers to patronize a given choice repeatedly”. The shop face itself is simple, the design is friendly with a natural colour yellow painted over the brick veneer. ‘’According to Bitner (1992), [these] controllable physical factors such as signage, furnishing, layout, colour, cleanliness, scent, music etc. can be systematically manipulated to produce desired effects in the form of a favourable disposition towards the servicescape – and by extension, the providing organization’’ (Arnould, Price & Tierney 1998). Many of these physical factors are present at Canary Jane's Flower shop, flowers themselves give off a vibrant colour array that entices consumers as well as the scent of the flowers which smells inviting. Together with other factors like colour and cleanliness the shop has the desired expectations of consumers and also influences the perceptions of customers with its package physical elements clearly evident at the flower shop. The shop window at the front of the store displays the logo on the glass and there’s a bunch of flowers lining the bottom of the window. Inside there’s a whole display of cups and other products for sale which can easily catch the eye of a passing consumer. The overall style of the shop is art deco (1950s) posters hang in one corner of the store and the floor is a black and white tile pattern. Once inside the store it is easy to tell that is no ordinary florist, every inch of the store is taken up with products that create this sense of organised chaos. As well as the flowers odour filling the small store space there are also hand creams and scented candles that fill up the room with a love aroma of jasmine, rosemary and other flowery type scents.

“Whilst accepting the importance of servicescape variables, Kotler (1973) contends that there is no ideal servicescape composition for all industries. He argues that since each market is made up of customers with varying tastes, servicescape composition should be based on (a) the target audience, (b) what that target audience is seeking from the buying experience, (c) the servicescape variables that can fortify emotional reactions sought by the buyers and (d) the ability of the servicescape to compete with the servicescape of competitors” (Kotler, 1973). Largely the servicescape of Canary Jane’s Flowers is quite simple is design and style, using the 50s art-deco theme reveals a different experience than customers are used to. The retro style that the store so beautifully represents is like stepping into a time machine and the experience is unlike what you could expect in ordinary florist shops. The experience transitions your typical perception of a florist from entrance to pre-purchase to exit and post-purchase, you come away feeling satisfied, and therefore all the elements of servicescape have an impact on the services quality.

References:

Bitner, M 1992, 'Servicescapes: The Impact of Physical Surroundings on Customers and Employees',Journal of Marketing, vol. 56, no. 2, pp. 57-71.

Baker, J 1987, 'The Role of the Environment in Marketing Services: The Consumer Perspective', in J Czepial, C Congram & J Shanahan (ed.), The Services Challenge, 1st ed, American Marketing Association, Chicago, pp. 79-84.

Aubert‐Gamet, V 1997, 'Twisting servicescapes: diversion of the physical environment in a re‐appropriation process', Int J of Service Industry Mgmt, vol. 8, no. 1, pp. 26-41.

Babin, B & Attaway, J 2000, 'Atmospheric Affect as a Tool for Creating Value and Gaining Share of Customer', Journal of Business Research, vol. 49, no. 2, pp. 91-99.

Arnould, E, Price, L & Tierney, P 1998, 'Communicative Staging of the Wilderness Servicescape', The Service Industries Journal, vol. 18, no. 3, pp. 90-115.

Kotler, P 1973, 'Atmospherics as a marketing tool', Journal of Retailing, vol. 49, no. 4, pp. 48-64.

Dynamics of Social Media in the Global Market Place

“Social Media platforms allow easy access to the target market whereby consumers become actively involved and engaged ultimately influencing customer behaviour” (Jones et al.  , 2015). 

Social media, nowadays utilises different avenues for businesses and everyday people to take advantage of.  Some of these include faster communication, marketing and data collection.  These avenues allow businesses to get access to a wider audience and even the global marketplace.  So what are the dynamics of social media and how does it play its role in determining the success or failure of a company? Well there are lots of reasons.  The cost of using social media and the risk of benefits from it.  Also, whilst communication maybe 24/7 online there are some drawbacks to using social media.  Furthermore the benefits of social media through the use of small and big data has changed the way we market our products and ultimately gain competitive advantage over one another. Change is integral to a business’s survival. If the majority of consumers want to move into an online market where they are open to all forms of social media messaging and communication then businesses need to be ready to change, adapt and apply this new technology into their everyday lives. It goes without saying “Build it, and they will come” only works in the movies. Social Media is a “build it, nurture it, engage them and they may come and stay.” – Seth Godin (Lazzaroni, 2014).

Social Media has seen a new era of marketing.  Digital marketing through the use of social media websites is rapidly becoming the new way to market on a global scale.  Although with this comes some advantages and disadvantages.  If we look at the global marketplace and how social media has shaped the online presence for most business’s we cans start to understand just how much companies are pouring their money into social media advertising.  It’s no coincidence why either, the cost comparison of running a TV ad or using Digital Marketing is huge.  “The cost of 30 second television advertisement aired at 7:30 could cost companies between $30,000 and $35,000” (Davidson, 2012).  “In comparison to social media, twitter can cost companies between $1,000 and $4,000 a month and Facebook can cost between $2,000 and $9,000 a month” (Thomas, 2012).  As we move into a more technological world more and more people are using social media.  Some statistics from the Search Engine Journal, found that 71% of organisations use Facebook and 59% of companies use Twitter as a form of marketing (SEJ, 2011).  The statistics show that as we move toward social media and the digital age, more and more social media is exploited for its diverse demographic and efficient communication pathway.  Although Facebook and twitter might be cheaper than say TV ads or even Radio ads, the real investment comes from change.  If we look back on a company and see that they have restructured and reorganised how they sell over the years, changing with trends and moving with the crown and looking at what customers want.  Then they have a much higher chance of being successful.  We live in a dynamically changing world where technology is consistently updating.  “Social media made customer review become more accessible and extensively which can Strong the power of the consumers. when customers engaged in networks of brands like agree/disagree on Facebook, or write comments on site which means social media can make company and customer relationship more close so that can also increase the customer loyalty and endorsement” (Jacqueline, 2014). 

“Folkens wrote that social media brings strategic communicators closer to their audience by utilising the human conditions of listening and responding.  He argues that social media has softened the barrier between the company and the audience” (Folkens, 2011).  Folkens wrote that social media brings strategic communicators closer to their audience by utilising the human conditions of listening and responding.  He argues that social media has softened the barrier between the company and the audience, (Folkens, 2011), making audiences feel as though they are communicating with a company that listens and takes action on their requests.  Social media has facilitated two-way communication as customers can comment on blogs or YouTube videos, like and comment on company statuses and photos on Facebook and tweet companies their feelings about their products.  Social media allows consumers to engage with companies wherever they want, whenever they want, making a company more accessible to its customers.  This means that although information is getting out there faster, there is “increased the potential for complaints and the visibility of this negative outcry” (Royse, 2011).  People can write reviews of products and can negatively affect the brand name just by writing a single bad word.  The problem arises when companies don’t realise how public there message really is, and also who is reading that message.  Another dynamic that can combat this is how fast communication is projected in real time.  If we look at social media and how fast information is getting out there we can see that PR problems can be resolved far more quickly and with less hassle than through traditional methods.  “Social media allows for strategic communication consultants to distribute their message as it happens, keeping their company’s message as up to date as possible with the concerns of their audience.  Communication in real time also allows for companies to tweak and alter their message or image to suit the current trends at that time.  Twitter and Facebook have trending sections on their sites that allow people to see what is popular at the current moment.  When a trending subject is clicked on, it takes the user to all the posts and tweets concerning that subject that is trending” (Cuce, 2014). 


As social media has grown and developed into our everyday lives we see more and more how businesses are trying to pry at our eyes, and ultimately get our attention for a second hoping that we will go out and buy their products. The everyday consumer is learning and understanding the value of these messages but mostly what we do goes unseen. When we talk about social media we think of the website and instant messaging on a global scale, but what we sometimes miss is all the data that flows from the millions upon millions of people clicking and typing there details into social websites. This data is called big data. “Nowadays companies are using smaller data which consists of focusing in on what customers want to buy and understanding their purchasing habits so they can target certain products towards them.  When consumers are faced with significant lifestyle events like having a baby, getting married, or buying a house, they are more open to changing their purchasing habits” (Revis, 2016). Data collection through the use of social media can be seen as strategic investment as it provides the company with a wealth of knowledge about their customers and their interests.

References:

Davidson, D, 2012, ‘Ten, Nine…network count down cost of prime-time spots’, The Australian, 26 March, viewed 7 May 2014, http://www.theaustralian.com.au/archive/media/ten-nine-networks-count-down-cost-of-prime-time-spots/story-fna1k39o-1226309686889

Folkens, D, 2011, 3 Ways Social Media Is Changing Public Relations, Top Rank, online marketing, blog post, viewed 7 May 2014, <http://www.toprankblog.com/2011/02/social-media-changing-pr/>

Henrikson, J. U, 2011, The Growth Of Social Media: An Infographic, SEJ Search Engine Journal, blog post, 30 August, viewed 7 May 2014, http://www.searchenginejournal.com/the-growth-of-social-media-an-infographic/32788/

Jacqueline, I 2014, social media marketing influence customer behavior, viewed 23 March, 2016, <http://www.blastmedia.com/2014/07/30/3-ways-social-media-marketing-influences-consumer-behavior/>. 

Jones, N Borgman, R & Ulusoy, E 2015, Impact of social media on small businesses.  Journal of Small Business and Enterprise Development, 22(4), 611-632. 

Lazzaroni, D 2014, ‘75 Quotes to Inspire Marketing Greatness’, Linkedin,

Revis, L 2016, ‘Social Media Trends’, The Blog, http://www.huffingtonpost.com/layla-revis/social-media-trends-2016_b_8914190.html

Royse, M, 2011, Seven Ways Social Media is Changing PR, Spin Sucks, blog post, 4 April, viewed 7 May 2014, http://spinsucks.com/social-media/seven-ways-social-media-is-changing-pr/

Microsoft Lumia - Stakeholder Analysis, Competitor analysis & Critical success factors for the industry

Stakeholder Analysis

To understand Microsoft’s vast stakeholder’s list we need to understand their mission when they first became a company. ‘To have a computer on every desktop in every home’. The enormity of this goal was the reason why Microsoft became so big. Everyone I know has used their software or typed in Word. It’s just a fact that Microsoft has a very large stakeholder base.

Microsoft sell distribute software through OEMs that pre-install our software on new PCs, servers, smartphones, and other intelligent devices that they sell to end customers. Some of the OEM’s include Acer, ASUSTek, Dell, Fujitsu, HTC, Hewlett-Packard, LG, Lenovo, NEC, Nokia, Samsung, Sony, and Toshiba. (Annual Report, 2011). “Many organisations that license our products and services through enterprise agreements transact directly with us, with sales support from solution integrators, independent software vendors, web agencies, and developers that advice organisations on licensing our products and services ("Enterprise Software Advisors"). Some of our distributors include Ingram Micro and Tech Data, and some of our largest resellers include CDW, Dell, Insight Enterprises, and Software House International. Our Microsoft Dynamics software offerings are licensed to enterprises through a global network of channel partners providing vertical solutions and specialised services. We distribute our retail packaged products primarily through independent non-exclusive distributors, authorized replicators, resellers, and retail outlets. Individual consumers obtain these products primarily through retail outlets, such as Wal-Mart and Dixons” (Annual Report, 2011).

Competitor analysis

Microsoft has many competitors, namely two big ones. Apple and Samsung. Together they have dominated the smartphone market and do not show any signs of giving up. ‘’With fierce competition in the electronics industry, Microsoft’s mobile is facing every kind of problems in development, smart-phone’s challenged from Apple and Google, also there has problems with products, research and development, marketing strategy and enterprise development strategy. Microsoft needs to plan its strategy as a “universal key” to open each locks’’ (Microsoft Corporation’s Strategy, 2015). As I mentioned before “iOS and Android, comprised 15.8% and 81% of the smartphone software market share, respectively. (‘Another Painful Reminder of Microsoft's Bungled Nokia Acquisition’ 2016). Microsoft is already at a disadvantage because of this overwhelming market dominance, and by replacing the android OS with their own windows operating system they have eliminated all the popular applications that would otherwise be fund on iOS and Android systems. “The Index revealed that 62 percent of active smartphone users have used their phone to replace other technology products including their digital camera and GPS navigation system, as well as games, the morning newspaper, photo album, letter box, catalogues and banking” (82% of Australian smartphone users are never without it, 2015).  Microsoft have limited applications on their software and have ditched Googles GPS or Maps application altogether as well as Androids contactless payment system. Apple has already implemented this into their devices so Microsoft is way behind the eight ball and need to consider some new ideas in order to gain more competitive advantage.

Critical success factors for the industry

To under the success of Microsoft we need to understand the organisation on all platforms. “In an interview with International Business Times in July 2013, Nokia vice president Bryan Biniak urged Microsoft to fix the various platform issues, such as the lack of certain key applications: "It's not just about the hardware, it's about the tools that are on the hardware. You can't sell a phone The Microsoft-Nokia Strategic Alliance Page 14 without the apps, you just can't." (Gilbert, 2013). Biniak explains that Microsoft needs not only to innovate as they have done with the continuum and other features they have added to the Lumia but also to compete with what customers want, and what they want is applications. It’s no secret that the success or failure of a product comes from brand image, price and advertising/marketing. However, there are some real key Pro’s for Microsoft in-terms of brand-image and price. They have a great looking phone that can do some really interesting and standalone stuff. However, no one really knows about it. The success doesn’t come from the advertisement of the product. “Seventy-two per cent of shoppers said they were already aware of the product they wanted to purchase in-store through their own research, rather than through advertising” (Harper, 2015). So where does Microsoft fall short? “Many have experienced the same situations as I have where you have to explicitly ask for a Windows Phone when you visit a carrier store. Windows Phones are not on display anywhere. The devices sit on shelves in the backroom, gathering dust. Just like the Microsoft Band at Best Buy, to the normal shopper Windows Phone just doesn’t exist, either. Salespeople at carrier stores have said, "No one wants them, no one is buying and they don't have any apps" (Trent, 2015). And how does Microsoft succeed in gaining market share? Well that can answered in many ways. However, I have one proposition, keep selling in bulk to businesses but tailor to an everyday customer’s needs. If Microsoft work on making the phone more consumer friendly with built in GPS and online banking Apps then people might start to consider the Lumia as an actual alternative to Apple or Samsung. Also Microsoft should consider investing in marketing to help push the products brand image so that salesmen at stores aren’t dismissing the product as an actual piece of garage. 

References:

Trent, R 2015, ‘Microsoft Band Retail Channel Suffers from Windows Phone-it is?’, Super Site for Windows, http://winsupersite.com/microsoft-band/microsoft-band-retail-channel-suffers-windows-phone-itis

Harper, J 2015, ‘Smart shoppers: online and mobile’, GoldCoast, p. 65-93.

GILBERT, D 2013, ‘Nokia: Microsoft Must Evolve to Make Windows Phone a Success’, International Business Times http://www.ibtimes.co.uk/nokia-microsoft-needs-evolve-windows-phone-succeed-494885.

‘Microsoft Corporation’s Strategy’ 2015, http://studymoose.com/microsoft-corporations-strategy-essay.

2011 Annual Report, ‘Distribution, Sales and Marketing 2011’, Financial Review, Microsoft Corporation.

‘Another Painful Reminder of Microsoft's Bungled Nokia Acquisition’ 2016 Emirates News Agency, p. 11-179.

82% of Australian smartphone users are never without it, 2015, Telecompaper Asia, 15-93.

Microsoft Lumia - SWOT Analysis by Mitchell Formica

Strengths

Microsoft is world leader of software development, holding the title as the world’s biggest supplier of computer software. “According to Steve Ballmer Microsoft Chief Executive (2013), Microsoft’s Windows occupy 91.49% sharing of the global PC operation system. Nokia has had powerful hardware design concept and abilities of manufacturing, also Nokia’s Lumia occupied approximately 82% of the market. So, acquisition of Nokia was a great record for Microsoft’s corporate strategy”.  (Microsoft Corporation’s Strategy, 2015).  See Appendix 1.1 for further details.

Weakness

Microsoft jumped into a market that was already occupied by two other large scale organisations with considerable market share. At the time most of the market shares have been taken by Apple and Android. “According to Bamburic (2013), in 2013, Window Mobile only occupied 2.9 % from the smart-phone market share, it is a bad record which compare with Apple’s 18.2 % and Android’s 74.4 %. (Bamburic, 2013).  See Appendix 1.1 for further details. Another weakness for Microsoft is that it is considerably hard to get people to change from an already existing phone with OS to a totally different format. Although everyone is most likely familiar with windows operating system it’s still not the norm to be using it on a mobile device and therefore makes for a harder substitute change option from the consumer’s point of view.

Opportunities

Following on from some weaknesses there are some opportunities for Microsoft. Whilst Android occupies a large amount of the market the loyalty from android users is considered unstable and can shift. Apple on the other hand are too expensive for some consumers offering no value option at the Lumia and Galaxy S7 level. “Window mobiles get a chance to attract those customers. Functional With the developing Information Technology, people see mobile as a necessity, and mobile phone is not just a communication tool, consumers concern about the multi-function and the brand of mobile phone” (Microsoft Corporation’s Strategy, 2015).  

Threats

Lastly we have some threats. Obviously we look to the competitors Apple and Samsung and even Google as they own Android. HTC is also a small competitor but a competitor none the less. They all are trying to gain market share and will therefore try to innovate work on new ideas and market their own brands tirelessly. See Appendix 1.1 for further details.

References:

Bamburic, M. (2013). What we know about Windows Phone 8.1 so far? [Online] Available From:http://support.techlogic.net/index.php?/News/List/Index/134. [Accessed: 28th February 2014].

‘Microsoft Corporation’s Strategy’ 2015, http://studymoose.com/microsoft-corporations-strategy-essay.