Modern economics indicate that some new tools are necessary to present either a product or a service to potential customers in a demand-supply environment. When a business takes a product to market, whether it’s a basic commodity like beans or a highly engineered product like a digital camera, the company must make the product itself compelling and also have a workforce skilled in producing it at an attractive price. Neither of the two jobs is easily accomplished and a vast amount of management training and academic research have been devoted to these challenges.
The challenge of service-business management begins with design. It must effectively meet the needs and desires of a group of customers. In designing a service, managers must undergo an important change in perspective. Product designers focus on the characteristics that buyers will value, service designers do better if the focus is on the experiences customers want to have.
Service differentiation can be defined as providing a service poorly or with excellence.
To create a successful service offering, managers need to determine which attributes to target for excellence and which to target for inferior performance. For example, a store finds that exhibit areas and sales assistance are least valued by its customers, however, low prices and wide selection are most valued, and several other attributes rank at points in between.
Bill the customer in an acceptable way.
The classic approach to funding something of value is simply to have the customer pay for it, but often it is possible to make the payment takes less objectionable to customers. Not very often is done with à la carte pricing for the merchandise. For example a Commerce Bank is open late and on weekends — earning it high marks on extended hours — and it pays for that service by giving a half percentage point less in interest on deposits. Could it fund the extra labor hours by charging for evening and weekend visits? Perhaps, but a slightly lower interest rate is more palatable.
3. The Employee Management System
Companies often live or die on the quality of their workforces, to design a well-integrated employee management system; one must start with two simple diagnostic questions. First: What makes the employee reasonably able to achieve excellence? And what makes the employee reasonably motivated to achieve excellence?
4. The Customer Management System
The typical product-based, business buys materials and adds value to it in some particular process. The enhanced-value product is then sold to customers, who pay to receive it. In a service business, however, employees and customers are both part of the value-creation process.
Organizational survival requires that the methods leaders use to learn and to impart operational knowledge must change as fast or faster than the environmental changes that threaten viability. The focus must be to look beyond competition and market share to more fundamental questions of survival and sustainability in a turbulent and continuously changing world commerce
The most important indicator is the ability of the organization to adapt to changes in the market with enough agility to avoid extinction from a slow response or misreading of the economic factors that affected market behavior towards innovation. In order to survive in a globalized society and in a universe as a whole, we need to perceive change for what it is in the natural order of things. We need to recognize and study the techniques to become part of that natural order so that the organization survives and succeeds in any tempest of change. The harsh truth is that change is an accelerating phenomenon in the 21st century, a continuing process, which is here to stay.
The fundamental problem with bringing about organizational change is that people want things to stay exactly as they were. The crucial issue of success depends on a time and profound systemic change focusing on the challenge and the response time. Most strategic planning tends to concentrate on gaining a bigger slice of an existing pie.
Understanding the role and responsibility of the organization in the context of a dynamic environment is absolutely critical, much like a fighter plane flying at high speed around a mountainous circuit where extreme weather elements and changing direction are throwing up dramatic challenges to survival every second. The bottom line is that whether one is offering a product or a service to meet either a demand or supply niche factor analysis must be carefully considered.