How Changes in Technology Can Affect Service Organizations - Assignment Example

How Changes in Technology Can Affect Service Organizations and Their s Introduction The 20th century has witnessed a dramatic metamorphosis within the services marketing industry. The change was enabled by information technology development and resulted in both transformation from tangible product businesses into service businesses and convergence of product and service industries. This has become possible due to effective customer data capture and customer relationship management enabled by high-tech environment. Service quality is essential for survival of service businesses, whereas high service quality is directly related to skillful technology management. In the modern era of technology it often turns out, that an organization that manages its computer data base the most efficient way is the leading one in high quality customer service. Technology introduces both major problems and major opportunities. In general, technology can be broadly defined as a kind of system of knowledge-based activities employed in the conversion of an input into a useful output. (D'Souza, 1995) The influence of technology on service positioning, service design, service delivery and quality, customer satisfaction can hardly be overestimated. Service Quality, Customer Satisfaction and High-Tech Environment The very essence of service provision type of business results in significant influence of high-tech environment on both quality of service provided and level of customer satisfaction. Services are produced and consumed simultaneously; therefore, customers often personally contact the provider of the service, thus opening an opportunity for an inter-personal relationship. (Lovelock, 2001) Going even further then this, service industry involves multiple service encounters over a period of time, thus require an ongoing relationship with the consumer (auto repair) or an ongoing membership (banking, insurance systems). (Lovelock, 2001) Excellence in service delivery is largely dependent on interpersonal relationships with customer either on a short-term or on a long-term basis, whereas in recent years many processes that used to be manual now are mechanized. This shifts the dependence of customer satisfaction and service quality on workforce quality to the dependence on quality of technology management. All five dimensions of service quality outlined in a journal article by Subhash C. Kundu and Jay A. Vora (2004): reliability, responsiveness, assurance, empathy, and tangibles are directly correlated with technology management. The quality improvement movement that has been so popular within the last few years is mainly driven by technological innovations. Over years technology began to outweigh all other factors that traditionally have been major constitutes of service quality. Eventually the result might be that a service company, that is able to adjust to technological innovations and successfully implement them in service provision, will be the leading in the industry. It is stated far and wide, that the corporate success in the 21st century will largely depend on a company's ability to leverage feedback and to establish an ongoing dialogue with the consumer as a consequence. Technology will provide a basis for enduring customer relations that will be based on trust and commitment. (Rosello, 1997) Lovelock (2001) introduced the idea of the four quadrants of service types three of which emphasize the relationship with the individual when delivering a service: services directed at people's bodies, physical possessions, and intangible assets. The final quadrant, quadrant 3, represents services directed at people's minds (education, radio, television) and in this case most of the times relationship is often with the organization instead of a usual individualistic approach. Technological innovation by bringing in new channels of product delivery makes this idea questionable. (Prescott, 2003) It should be emphasized, that the categorizing offered by Lovelock is actually much more complex. In this case the quadrant 4, intangible assets, even though must be an example of relationship with an individual, actually is a relationship with the organization itself - traveling industry. Exploitation of the new technologies, particularly e-commerce technologies, used by travel industries mot only open great opportunities, but also change the role of the traveling agent. (Gasson, S. 2003) American Airlines were the first ones to integrate the first airline computerized reservation system. The results of a very expensive innovation were shocking: numerous lawsuits were filed by other airline agencies, as the American Airlines had an unfair competitive advantage. Travel agents still played an important part in the process of booking a flight, but since then and on the quality of service provided improved greatly due to computerized reservation systems. The issue took place in the mid 70th, now any airline company will not be able to gain a share in the market without such a system. (Gasson, S. 2003) Product Positioning and High-Tech Environment Service characteristics introduced by Lovelock and Wirtz (2004): inseparability, intangibility, and heterogeneity are especially relevant when it comes to speaking about product positioning in terms of high-tech environment. Various conversation technologies: chat rooms, instant messages, that have become an indivisible part of a well-established service business owning a web-site are building communities among visitors thus contributing to establishment of inter-personal relationship and professional product positioning making customers come back to use this service over and over again. (Muhammad, 1999) Incorporating technological solutions may deliver mechanisms that delight a customer. (Lovelock & Wirtz, 2004). A service business must be maximizing its virtual 'touch-point' appeal, and must develop its virtual management tools (and metrics) set. Positioning concept is relatively new, it dates back only to the 70th, however, it has been significantly changed with the impact of technology. PR efforts have always been an effective communication tool mainly due to the lack of control over what is printed. (Marken, 1997) The new high tech era involves implementation of various technologies: pretty much everything from computer-telephony integration (CTI) to data warehousing and internet in order to stimulate the flow of information within and out of the organization. (Rosello, 1997) The high-tech environment has taken place of uncontrolled press releases as means for successful PR programs, as internet is still far less controlled then the press. Advertisement through a website for high involvement services proved to an indivisible part of the promotion strategy of any company. Audience searching for high involvement products is ready to devote time and efforts in order to make a reliable final decision. Thus customers are influenced through a central route by strong, product-related arguments without additional costs involved for the company when providing the needed information and targeting the audience. (Dahlen, 2003) This is idea is particularly evident when it comes to speaking about services provided by traveling agencies, as the type of product provided by them is both high involvement and rather functional then expressive. These services are evaluated in terms of their functional strengths and features, thus consumers need detailed information only a professionally designed web site can provide at a reasonable cost with the highest quality. (Dahlen, 2003) Service Delivery and High-Tech Environment The appearance of the new Internet culture resulted in formation of the new channel of service delivery, new customer expectations and behavior. Customers demand immediate fulfillment when using the majority of services online, this resulted in the innovation of a specially designed term - transactional customer. (Rotella, 2001) This results in new business opportunities when servicing a transactional customer. One of examples of the recently established markets that serve the needs of a transactional customer is the music market online. Using programming technologies born from advanced Web development, web designers are building complicated and efficient applications for music services online, which integrate all aspects of a customer's relationship, open all delivery channels for financial product distribution, and create new opportunities to market a specific customer. Certainly, this opportunity appeared only due to the wide spread acceptance of Internet that influences the whole world and shifts the integration processes all over the world a few steps closer to complete globalization. However, the spread of Internet also imposes significant difficulties for the music industry. A recent study conducted by Aron M Levin, Mary Convay Dato-on, and Kenneth Rhee (2004) has proven that music down-loaders have little concern about ethically questionable acts. They not only essentially differ from those who do not down load music online, but also firmly believe, that downloading files does not imply any harm done to the company. The results of the study show a need for re-thinking the marketing distribution strategy of the music industry. Service Design and High-Tech Environment The value-generation process may be described as consisting of three stages: the input stage, this is the stage when the appropriate factors of production are assembled; the transaction stage, at this stage the factors of production are used to create the services; and, finally, the output stage, where the service is delivered and consumed by the customer. (McColl-Kennedy, 2003) Until the very recent years the impact of technology was mainly considered only at the transactional stage. However, this concept should be rethought, as technology influences on all stages of the value-generated process and should definitely be emphasized when discussing the service design. High-tech era by introducing the concept of service delivery via Internet determined the way the service design delivered in this way should be managed. The case becomes even more complicated, as services are intangible and web sites are more homogenous rather the heterogeneous. In such way, the service design concept is brought down to established long term customer relationships thus decreasing the production cycle. (Elliott, 1991) At this stage interactive technologies come into play. Even though non-interactive technologies are not that simple as compared to interactive technologies, failures occur much more frequent. Two major factors can be subdivided: the first one is the nature of metrics used by the service provider and the customer, as when they are in different formats - the combined usage of them could be too complicated to be real; the second factor is that the amplification of attenuation of technological contributions may take place: hostility between the customer and the service provider could easily result in deteriorating service outcomes. (D'Souza, 1995) So, when it comes to speaking about the service design and the impact of technology on this field of marketing concepts, the service design eventually becomes an indivisible part of the usual communication process that occurs when delivering the service. Some scholars argue, that the opportunities for creativity offered by Internet result in stimulation of pornography in music. (Tschmuck, P. 2003) The author argues that pornography is the key aspect in production of music, whereas companies in the industry consider themselves to be artists. Thus, technological innovation leads to questioning ethical standards when establishing design patterns as part of promotion strategy. Conclusion It is very difficult to talk about the effects that new technologies have on service organizations and consumers, as it is very difficult to distinguish one single field in order to examine the differences that occur. The era of technology implies not only the change on a marketing or managerial level; this is a global trend, which changes the very tastes of consumers in essence. The spheres of influence include not simply preference of consumers to one side or the other, but a change in technology results in a different choice of a color by a common customer: the interdependence should be emphasized when making some analysis or conclusions. Another presupposition that should be kept in mind, when making estimates about the future is the relativity of the presuppositions made. The reason is that we have witnessed dramatic changes that have global impact on all spheres of human life that could hardly be predicted and had happened within a very short period of time. Thus, in reality, it is very difficult to state any types of predictions about the future of technology, as things will hardly happen the way it was predicted. The only presupposition that is worthy of being made is that the society is ready to accept innovations more then ever, society perceives benefits associated with technological innovations positively, in such way, this confirms that the process of technological development will only speed up changing surrounding environment more and more. (Lee, 2003) References Dahlen, M., Rasch, A., & Rosengren, S. (2003). Love at First Site A Study of Website Advertising Effectiveness. 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(2003) How Creative Are the Creative Industries A Case of Music Industry. Journal of Arts Management, Law, and Society, 33(2), 70. Retrieved November 12, 2005, from Edith Cowan University multiple database. Read More