Service and Competitive Advantage, Essay Example

Globalization has increased competition at both local and international level and it has become even more difficult to differentiate through products many of whom are now produced in countries with low labor costs and are accessible to almost everyone. As a result, developing competitive advantage is a more challenging task in order to maintain or increase profit margins and fortunately, companies can do so through services whether they are primary service providers or provide service with products they sell.

Customers now have more income and choices and as a result, higher expectations. Unlike products, services are more difficult to standardize and imitate and in this regard corporate culture can play an important role. The key is for management to reinforce the fact that corporate culture is absolutely committed to the highest quality standards when it comes to customer service. A great example in this regard is Zappos which took a loss of $1.6 million to honor orders placed over six hours during a software glitch (Fayer, 2013). The incident provided significant publicity to the company for setting an unprecedented example and it also strengthened customer loyalty.

The companies can also develop competitive advantage through service by making each customer feel important. Customers have psychological needs such as being valued for their business and they want to be treated with respect and given attention. Good customer service increases product value for them, thus, they are more likely to do business with companies that treat them with respect and care. One of the reasons behind Apple’s strong customer loyalty is that the company makes its customers feel very important (Drought, 2012).

It is now apparent that services are more difficult to imitate than products and another advantage of achieving competitive advantage through services is that they are often influenced by corporate culture which takes years to develop and also shaped by the actions of the management. Thus, companies can increase pricing power and profitability through superior customer service levels as well as greater service options.

References

Drought, M. (2012, September 11). Apple selling strategy: Treat customers like superheroes. Retrieved January 11, 2014, from http://www.businesszone.co.uk/blogs/mattdrought/sales-training-advice-natural-way/apple-selling-strategy-treat-customers-superhero

Fayer, A. (2013, May 30). 5 Things Tony Hsieh Does That You Can Do—Tomorrow. Retrieved January 11, 2014, from http://www.thedailymuse.com/career/5-things-tony-hsieh-does-that-you-can-do-tomorrow/