Hot Topics in Services

1. Hot Topics in Services Ruth N. BoltonProfessor of MarketingW. P. Carey Chair in Marketing Center for Service Leadership W. P Carey School of Business Arizona State University

2. Hot Topics: The Managerial Context for Academic Research A New Organization Reality • Marketing has become more complex with multiple challenges: role/value of marketing, emphasis on accountability, balancing short term bottom line orientation vs. long term brand building and organic growth, changing customer dynamics, marketing mix issues, evolving media and channel relations, etc. • This requires marketing leaders to assess and build marketing organizations with new and different skills, competencies, capabilities, processes and technology. • Vargo and Lusch (2004) have a vision of marketing at the center of the integration and coordination of the cross-functional processes of a service-dominant business model. Whereas, Hunt 2004 argues that: “Instead, it will be marketing as a general management responsibility of the top team that will play the crucial roles of (1) navigation through effective market sensing, (2) articulation of the new value proposition, and (3) orchestration by providing the essential glue that ensures a coherent whole.”

3. (1) A New Organizational Reality • “Big M” marketing is required that shows how a service organization can create, communicate and deliver value for customers by integrating and coordinating cross-functional processes to produce coherent, mutually beneficial outcomes. • It demands that we incorporate a broader set of variables. In this way, we can obtain a better understanding of how background factors or context variables moderate the effectiveness of marketing variables on business performance outcomes. models of service and relationships must be extended to incorporate a broader set of variables. By background factors, I refer to critical organizational activities that act as boundary conditions (in experimental parlance) or contingencies (in strategic parlance). • Emerging markets, marketing to the bottom of the pyramid

4. (2) The Service Brand & Service Innovation Brand Relevance: The Service Brand* • B2C and B2B marketers are challenged with addressing the importance and relevance of the brand at every touch point with customers. • Establishing value of a brand, building brand equity and relating it to profitable growth requires • new insights into customers and their interaction with brands (e.g., service experiences); • new methods/tools for measuring brand value and importance. Disciplined Innovation: Service Innovation • Service innovation is critical to achieving competitive advantage and organic growth. • Key challenge is sustaining innovation, such as through “solution selling.” Marketing leaders require a disciplined approach to put the right people, processes and capabilities in place.

5. (3) Metrics and Performance • There is intense pressure on marketing leaders to justify investment (ROMI) and connect marketing to bottom line, enterprise-wide performance. Despite considerable attention on over the last few years, marketers are seeking the right metrics, processes, tools for assessing and measuring marketing in general, as well as specific marketing programs. • How should we evaluate investments in technology, training programs, alliances (e.g., changing service suppliers) within the customer equity framework – thereby linking marketing actions to strategic evaluations of these investments (e.g., Srivastava, Shervani and Fahey 1998)? • How should marketers incorporate intangibles such as customer satisfaction, branding strategies or new product innovation into their decisions. Can we extend our treatment of these investment decisions from aggregate models of shareholder value to individual (company-specific) level models? • How should we accommodate approaches to resource allocation across organizational unit within models of customer equity approach (which typically allocate resources across customers and marketing decision variables)? • Forward looking metrics and peripheral vision

6. (4) Customer Service Experiences* • Customer choices and “clout” are increasing while marketing productivity is declining (e.g., due to fragmentation of media). Marketers must involve the customer in the marketing process and build a sense of collaboration and reciprocity with their customers (dual creation of value, co-production). All of which require new customer insights and innovative marketing strategies and tactics. • Dynamic models are required that can describe “path dependent” outcomes, whereby relationships are influenced by how the organization responds to customers, competitors and markets (and vice versa). • R&C (2006) identify “real time marketing,” “dynamic customer satisfaction” and “dynamic interaction and customization” as three topics that require additional research. They are advocating the development of dynamic models in which the customer is an active, rather than a passive participant, to whom the organization responds. • Research should intensify its study of the effects of actions by competing service organizations. This extension is especially challenging in the current economic environment which is characterized by fuzzy market boundaries that allow competition to penetrate from adjacent market spaces.

7. (5) “New” Media & Channels • Proliferation of marketing options, fragmentation of media and convergence of media and channels have altered traditional marketing mix and resource allocation strategy. • Given “new media” for reaching customers and prospects, marketers have questions about: • determining the right marketing mix • measuring the effectiveness of alternatives, especially the newest vehicles/devices (PCs via broadband, 3-GB mobile phones, iPods with video, satellite radio, in-store digital media, RFID, others) • Online versus offline behavior • Role of WOM and social networks • Societal implications