Service differentiation with features (Nov’11)

Q. Define service differentiation with features (Nov’11).

Service differentiation: The concept of being different is very much essential in today’s world of cut-throat competition. The difference of one product from its competitor is the revenue that it earns. Products have to be different in order to survive the competition. It is not just the domestic competition but also the competition from and in abroad, as one country produces and sells in another country while some other countries produce and sell in our country. The targeted customers have many options. Choosing among options is always based on differences, implicit and explicit. So, one must differentiate in order to attract the customer and make him/her buy the product.

Creating differentiation in one’s own product and services is a better way to avoid competition. One can offer a number of possible options in products to the customers. Every type of customer can choose a product which he/she likes. In this way, low-end, mid-end or high-end customers, all of them will have a product choose from. Common differentiations include, speed, performance, quality, responsiveness, availability, ease or integration.

All the above mentioned points are for a tangible product. But, how can we differentiate services. It is easy when the differentiation of variables is tangible as in the case of product but, difficult in case of services. If the product has not many tangible features, then adding value-added services to the product is one of the methods. This process is called service differentiation.

The main features of service differentiation:

Ease in ordering: Corporations like Dell, Baxter Healthcare and web-based services like peapod and net grocer have eased the process of placing an order. One does not have to step out of the house to buy the product.

Delivery: it is related to how well a product or a service is delivered to the customer with speed and accuracy. The best examples are again Dell, which delivers its products right at the doorstep of the customers.

Installation: it refers to the work undertaken to make the product operational at the prescribed location. Buyers of heavy equipment expect good installation service. Differentiation by installation is particularly important for companies that offer complex products such as computers and machinery.

Customer training: It refers to how the seller provides training to the buyer about the product and how to use it. General Electric supplies and installs expensive X-rays equipment in hospitals but also gives extensive training to the staff of hospitals about using the machines.

Customer consulting: It refers to the data, information systems and advising services that the seller offers to buyers. For example, the Rite aid drugstore chain’s communication program, called the Vitamin Institute provides customers with research so they can make more educated judgments and feel comfortable asking for help. On the web, Rite Aid has teamed up with drugstore.com to offer even more comprehensive health related information.

Maintenance and Repair: It refers to the post-sale services which generally include maintenance and repair services. Automobile manufacturers are often seen providing free services initially for the automobiles.

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