How to Maintain Competitive Edge in Service Industry

In the present times, doing business has become an extremely competitive game. This is true not only for the product industry but to the service industries as well. In case of service industry, the competition to be at the top and be the market leader is tougher simply because of the fact that service is all about intangibles unlike the product industry that sells a tangible product.

In a bid to grow and tap the market, the service companies in all sectors be it the hospitality, airlines or banks, all have been investing heavily into technology and bringing in standardization of service process and delivery operations. If you look at the marketing and sales channels adopted by the service industry, they tend to follow the same as product industry. Over a period of time, there is a very high chance that the service companies start looking at their business in the same way that the product companies do and the core service delivery part of their business might get sidelined.

When you go to a hotel, you are definitely taken in by the décor, their systems and procedures etc. However what makes you enjoy your stay and revisit the hotel or the restaurant has to do with your experience that you enjoy. A lot of other factors like the personal touch, quality of customized service, the attitude of the people serving as well as the efficiency and quality of service come into the picture. Therefore if the hotel s were to have the right processes and miss out on its personalized service aspect, it would fail to build customer loyalty, little realizing where it is going wrong.

Take the case of management consulting companies. No matter when tangible processes and tools they use to engineer their solutions, it is the consultants depth of experience and the knowledge that holds the key to the success of their solution. In such a case, if the company relies on its technology and tools to promote or market themselves, it does not attract the attention of a client who is looking for a solution.

What we are simply trying to say here is that, the service companies should realize that it is the core service intangibles that make the service offering and gives the service companies the competitive advantage and over a period of time, this point should not be lost sight of. The service continuum that is pursued by each of the service companies may be different. For example, two restaurants selling pizzas may pursue different service goals. One might focus on home delivery service and the other might focus on fastest delivery. The way that each company would need to pursue their respective core service goal would be different. The restaurant that wants to pursue the ‘home delivery segment’ would probably set up a separate order and delivery counters for home delivery. The packaging and the menu might be different for this section from that offered at the restaurant. The second company pursuing fastest delivery would put in place a time based order to delivery process and customize its menu as well as the delivery process to suit this goal.

Today all of the banks are heavily investing on technology and offering internet based services to the customers. So when the customers are able to use similar systems and obtain the same standard of services, which bank would they choose to bank with?. Obviously, the customers will look at the value addition that the bank is giving to its customers and choose to go with one whom he finds more beneficial. The value additions can come in the form of account management, expert advice, availability of umbrella products like investment options, insurance etc under one roof.

Banking sector in the current scenario gives us the perfect example to study how the service companies need to focus on their intangible services and not on the tangible service delivery systems to make a difference in the market.


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