The Service Marketing Issues Affecting Jd Sports within the Sporting Retail Sector - Essay Example

An analysis the service marketing issues affecting JD SPORTS within the SPORTING retail sector BY YOU YOUR SCHOOL INFO HERE HERE TABLE OF CONTENTS 1. Introduction.............................................................................................................. 2. Literature Review..................................................................................................... 3. SWOT and PEST Analyses...................................................................................... 4. Problem Identification.............................................................................................. 5. Solutions and Recommendations.............................................................................. BIBLIOGRAPHY An analysis the service marketing issues affecting JD SPORTS within the SPORTING retail sector 1. Introduction JD Sports, founded in 1981 by John Wardle and David Makin, operates in a highly competitive and mature market which is saturated by many significant competitors. Catering to diverse markets, which includes men, women and children, JD Sports offers a variety of branded sports-oriented merchandise ranging from designer hoodies to tracksuits and sports jackets. In a market environment in which it is quite difficult to differentiate from competition, as many competitors maintain similar merchandise at competitive pricing structures, JD Sports must rely in its service marketing in order to maintain market share. It is the intangibles of the business’ operational model that provides JD Sports with its current number two position amongst competition. However, in a market environment in which services are highly homogenous amongst competition, JD Sports must emphasise quality in order to maintain a proper brand reputation and build long-term brand equity. 2. Literature Review Interaction with staff members within the organisation and the service environment (servicescape) will dictate the depth of relationship with the brand that is perceived by customers (Berry and Carbone, 2007; Grace and O’Cass 2004). This is one of the fundamental challenges for JD Sports: establishing a relevant service marketing model that will enhance long-term brand loyalty which translates into higher profitability and better opportunities for brand expansion into other product lines. Chaudhuri and Holbrook (2001) iterate that brand loyalty is the foundation of being able to establish premium pricing models and also generates essential word-of-mouth advertising needed to gain ground with important target markets. Gounaris and Vlasis (2004) iterate the benefits of achieving brand loyalty to include higher revenues, less vulnerability to a variety of different competitor-generated marketing rivalry, and favourable word-of-mouth advertising. JD Sports, however, has not been able to successfully translate its service marketing model into a viable service methodology to enhance brand loyalty. In this market, it is quite simplistic for competitors to replicate existing service models and merchandise offerings, making it an intricate process of determining an appropriate service quality standard that will not be easily replicated by competition. “A strong brand is the only asset a company maintains that cannot be copied” (Nandan 2005, p.271). Further, empirical study results illustrate that brands which focus on establishing a brand image generate more loyal customer bases (Bennett and Rundle-Thiele 2004). In this market structure, one that is dominated by mostly large-scale competitors, JD Sports must introduce innovation into its service marketing model in order to establish the brand loyalty necessary to achieve significant market gains. JD Sports does not publicly promote its exact service marketing efforts, however Boulding (1993) did find a significant positive correlation between repurchase intention stemming from consumers and willingness to recommend the business to colleagues or other peer networks. It cannot be stressed enough that JD Sports must not rely on the tangibles of product in an environment where there is little distinction between competitor product offerings. Instead, JD Sports must maintain a customer-centric service model where relationship management becomes a critical imperative to achieve market success. Truhon and McCarthy (2010, p.5) iterate that legitimate and authentic relationships are only developable over time, as a “reciprocal process” maintained through high degrees of respect and trust. JD Sports cannot negate the important inter-linkages between branding and establishing a customer-centric service model as this is the only legitimate methodology by which the organisation can achieve long-term brand loyalty. Another problem with JD Sports in establishing an appropriate brand loyalty in desired target markets is the external market influences that continue to force alterations to the existing business model. Komninos (2002) reminds the service marketer that it is quite difficult for a business to recognise the signals that a product or service is in the decline stage until revenue decreases become apparent due to drop in consumer target market demand. This is highly relevant to JD Sports in attempting to differentiate through service marketing modelling and strategy as sports merchandise is both trends-based and related to the psychologically-based characteristics of buyer markets. The product cannot, alone, speak for the integrity and quality of JD Sports when similar branded merchandise is available with a wide variety of different competitors. According to Zhang, Hong and Chan (2009) the relationship between brand and consumer attitude is largely egocentric, meaning that the consumer will always examine the relevancy of the brand to the fulfilment of a particular, inherent psychological need. A marketer cannot successfully establish these positive connections, which ultimately leads to brand loyalty if sustainable, if they do not understand market characteristics and needs. Again, this represents a significant problem for JD Sports as they must understand the dynamics of lifestyle and attitude amongst a diverse basket of largely mass-market buyers. Consumers will not make the appropriate cognitive or emotional connections to the brand without having some conception of the self included in the service marketing model. 3. SWOT and PEST Analyses Having identified the importance of establishing positive brand connections with desired target consumers and how this translates into significant value for a service marketer, identification of the influence of various internal and external market forces is required. JD Sports, as compared to its most prominent competitors, maintains several strengths in its service marketing concept that give the business sustainable competitive advantage. Firstly, JD Sports has introduced an online sales element, thereby promoting convenience as a selling feature. JD Sports was actually an innovator in this process, thus giving the business some favourable brand reputation among competing sports-oriented competitors. When a business is the first to market with a new innovation, such as the aforementioned online service model, consumers will often favour the pioneer whilst maintaining negative assessments against late movers (Gurumurthy 2008). JD Sports understands that innovation must be included in the business and operational models if the company is to successfully position itself in this mature market. Other competitors in this market were late to introduce an online service dimension to the operational model, thereby it should theoretically provide a more stable foundation for the brand loyalty needed to achieve market gains and acceptable profitability. JD Sports has also recently taken a more serious approach to aligning its mission statement to tangible service marketing practices, thereby adopting a corporate level strategy to determine the most effective service strategies that will give the business more differentiated presence amongst competitors (Verdict 2010). Widening the existing business portfolio to include development of organisational culture that is dedicated and motivated to achieving mission goals represents a transformational leadership focus that has altered the service marketing concept currently being utilised at the business. Fairholm (2009) iterates the benefits of adopting an organisational culture as reducing risks of employee change resistance in this dynamic business environment and inspiring employees using role modelling techniques to gain their loyalty and commitment to achieve strategic goals. In order to provide an effective service marketing model that will achieve brand loyalty, the interaction between staff and customer must have priority emphasis and, thus, the transformational leadership model provides the foundation for training and development according to established service marketing protocols at JD Sports. JD Sports maintains many opportunities for improving its competitive position and gaining market share. JJB Sports, a significant large competitor, has signed another CVA that allows the business to shut nearly 90 stores in the next two years (Research and Markets 2011). This gives JD Sports ample opportunity to regain market share as this equates into total consumer revenues of £84.8 million that were currently allocated to JJB Sports (Research and Markets 2011). If effective service marketing concepts are utilised, the organisation will likely witness some growth in profitability simply through these competitor store closures. Threats to the organisation include those stemming from its main competitor, Clarks, which is currently undergoing a complete overhaul of the servicescape to refurbish and attempt to reposition the business utilising aesthetics. Competitive rivalry in this market is significant and the relationship between aesthetics of the in-store experience is positively correlated with customer intention to repurchase (Boulding 1993). JD Sports focuses primarily on service and product quality as a differentiation tool, however innovative changes to the servicescape at major players casts uncertainty and risk about the sustainability of JD Sports’ existing servicescape concept. Identifying weaknesses of the JD Sports model is significantly difficult as the organisation does not publicly promote the unique service dimensions that are currently mandated under its existing sales and service models. This is likely due to the intensive competitive rivalry that exists in this market whereby promoting and publicising internal service marketing efforts would create risk in securing the intellectual property of the business; its value as related to human capital. However, Marks & Spencer is also undergoing the retail environment refurbishment much the same as Clarks, offering more square footage for like merchandise offerings and attempting to utilise creative marketing promotion to give Marks & Spencer’s footwear a distinct brand image (Research and Markets 2011). Both main competitors undergoing radical servicescape changes and restoration illustrate how easily it is for competitors in this market to replicate competitive strategies and thus create barriers to development of appropriate service marketing innovations. When examining the external forces driving changes to the service marketing concept at JD Sports, only one notable factor was identifiable. Sports merchandise, as previously identified, is a trends-focused and lifestyle-relevant product offering, therefore being subject to changes in attitudes and way of life of many target consumers in the UK. “Consumers are highly self-aware and very reflexive” and will only make repeat purchases if they feel that the brand selected can somehow contribute to their well-being or sense of self (Fournier 1998). This means that JD Sports must introduce an ego-centric methodology of service and support that will fuel better perceived connections with the brand, especially when the organisation cannot rely on the merits of product that is constantly at risk of changing consumer characteristics. 4. Problem Identification Since JD Sports and many of its main competitors do not actively promote their internal policies as it relates to service marketing, analysis of where problems exist at JD Sports required a small-scale primary research study. The research involved visitation to Clarks, JD Sports, and Marks and Spencer to examine how sports merchandise was being supported by sales staff and management. At JD Sports, there was much less emphasis on establishing immediate, social connections with consumers and exploring how merchandise could benefit the consumer or satisfy their emotional needs. At Clarks, consumers were absolutely not left to browse merchandise on their own volition which, as observed through the study, often left Clarks without making a desired sale upon completion of the service encounter. This provides ample support for the literature illustrating that there is a positive correlation between the engagement between staff and willingness to make future purchases. Herein, then, lies the problem at JD Sports in establishing the brand loyalty that is necessary to achieve market gains and provide greater market share. JD Sports does not maintain sales and service support that is willing to engage consumers effectively and establish the appropriate ego-centric relationships necessary for brand attachments to begin. Though the servicescape at JD Sports was modern and efficient, the interaction between internal staff members and the consumer were lacking depth and attempts at establishing the social-psychological connections necessary in the service encounter to achieve long-term loyalty. Marks and Spencer, though not wholly focused on a service encounter dealing with sporting merchandise, did provide an aesthetically pleasing servicescape with sales support staff willing to provide quality service with an interpersonal relationship development focus. Gabbott and Hogg (1998) confirm that the social experience between sales support staff and the servicescape are critical to ensuring that consumers make the appropriate brand connections necessary to drive loyalty. JD Sports does not seem, as compared to Marks and Spencer and Clarks, to fully understand that sociological factors associated with service quality are crucial to establishing the market gains desired by this organisation. It was previously iterated by Truhon and McCarthy (2010) that authentic relationships between the organisation and the consumer can only be established over time, starting with reciprocal acts that lead to trust. However, if qualitative observation of the organisation is any indication of the current service model being utilised by JD Sports, much must be redeveloped in the service encounter in order to maintain competitive advantage over main competitors such as Marks and Spencer and Clarks. 5. Solutions and Recommendations JD Sports should develop an appropriate market research metric in order to gauge what is driving the majority of consumer sentiment. Achievement of customer satisfaction in service marketing is critical to ensuring that positive brand connections are being made between consumer and brand. Customer satisfaction is recognised as the measure by which consumers perceive a business has exceeded their expectations (Farris et al. 2010). JD Sports does not seem to understand the sociological condition of its desired consumer markets and therefore does not incorporate the appropriate terminology and focus required of sales support members to achieve positive brand loyalty. There is clearly a need to redevelop the existing service encounter processes and train employees on effective utilisation of psychological theory to gain ground with consumers. In a market environment where clothing is non-differentiated and homogenous throughout all competitive merchandising models, JD Sports must establish a unique service encounter to stand out among competition. However, without an evaluation metric or appropriate market research into what drives the current dynamics of consumption behaviour, consumer lifestyle, and attitudes toward the JD Sports brand, it is likely the organisation will not achieve any significant gains in market share. Intensive secondary research into JD Sports did not uncover whether the organisation is utilising evaluation metrics or conducting appropriate market research, which represents a significant short-coming in establishing the appropriate systems and focus necessary to achieve brand loyalty in key market groups. The business should benchmark other successful marketing organisations that regularly engage consumers in a variety of qualitative and quantitative market research in order to develop an appropriate service model that will make positive and lasting impressions with often ego-centric target consumers. It was established that brand loyalty is necessary for a business to capitalise on the economics of gaining psychologically-based connections in desired consumer markets. JD Sports, without adequate support staff dedicated and motivated to providing excellence in the service encounter, will not be able to differentiate between homogenous product offerings in the market. Service changes, such as devoting even more investment into human capital development, can easily differentiate the business from existing competition and thereby give the brand a better name. By visiting the sales website of JD Sports, one can witness the business’ heavy reliance on the many trusted and well-known product brands being offered in-store. However, these same brands are available throughout the UK in many competitor outlets which raises questions as to the viability of how this service marketer intends to support long-term growth and consumer loyalty sustainability. Without giving more emphasis to the quality and viability of the immediate service encounter between staff and the consumer, JD Sports will be unable to establish the important brand identity necessary to excel in the minds of consumers. Where other organisations in the market often attempt to reposition, such as by changing logo or internal operational practices, JD Sports requires a radical set of changes to how staff engages the consumer and attempts to maintain relationship quality that will endure. There is little evidence of any reciprocal acts occurring, thus theoretically there would be minimal trust in the brand from many important markets. Without the establishment of trust, the ability to illustrate to consumers that the brand can provide a form of self-expansion that is associated with egocentric values and attitudes, and insert innovation into the service encounter model, JD Sports will be hard-pressed to make any measurable and lasting impression on profitable markets or gain new market attention when attempting to expand the current business model or portfolio. Bibliography Bennet, R. and Rundle-Thiele, S. (2004). Customer satisfaction should not be the only goal, Journal of Service Marketing, 18(7), pp.514-522. Berry, L.L. and Carbone, L.P. (2007). Build loyalty through experience management, Quality Progress, 40(9), pp.26-32. Boulding, W., Kalara, A., Staelin, R. and Zeithaml, V.A. (1993). A dynamic process model of service quality: From expectations to behavioural intentions, Journal of Marketing Research, 30(1), pp.7-27. Chaudhuri, A. and Holbrook, M. B. (2001). 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