Across the private and public sectors, it is becoming harder for organisations to get away with providing standard, ‘one-size-fits-all’ services that change little from year to year. Some of the changes may be cosmetic - that is, done to give the illusion of improvement.
However, the underlying trend of increasing expectations is still one which most managers in most organisations need to be aware of, so that they consider:
Making changes in response to customers will affect many areas within an organisation, and it is not something that only its marketing department needs to concern itself with - if indeed it has a marketing department.
Obviously, the level of impact on the organisation will depend on the nature of the change. However, even minor changes to products can affect a number of departments and processes.
Adding a new flavour to a line of tinned soups will affect, at the very least, the production department, the purchasing department and the marketing department. Other more fundamental changes could affect the whole organisation.
Customers are now expecting quite different things from organisations. Some customers are looking for an organisation that can make the chore of washing clothes redundant. This is only one of the activities that customers are increasingly trying to ‘outsource’, in other words find someone else to do.
Other activities such as cleaning, keeping track of finances, home maintenance, shopping and the general running of people's lives can be done by someone else. Not everyone will want this, or be able to afford it, but it is a growing trend, which organisations such as Unilever need to be aware of. If it wants to become part of this change, all the parts of the organisation will have to be involved.
Let us consider exactly what parts of Unilever will be affected. We start by considering the product, but we define this as the provision of clean clothes, rather than as soap powder. The product could change from a tangible good to a cleaning service. We use the marketing mix framework of the four Cs:
If we apply this framework to the Unilever product we can see that all four areas will be altered if Unilever seeks to provide clean clothes ready to wear, rather than to sell soap powder. The product will change from a tangible good, to a service.
The customers will have to pay for the price of the service, which is likely to be very different from the cost of buying soap powder. Also, the cost will involve an element of risk, as giving your clothes to someone else to wash and iron requires that you trust them. Unilever will have to think about how to set a price for the service and how to win the trust of its customers.
Before, customers went to a shop to buy soap powder; how will Unilever make the new service available? Will customers deliver and collect the clothes somewhere, or will Unilever do this? Will the service be available only on weekdays or at weekends as well? How can it be tailored to suit people who are out at work all day?
Communicating with customers can be done through advertising in the same way as for soap powder, but it will be necessary to try to build the sort of relationship with customers that cannot be done through advertising alone.
Unilever will have to consider who will communicate with the customers and how they will get to know them, and get responses from them. All of Unilever's other operations will also be altered. Different kinds of employees with different skills will be needed. They will need different kinds of training and development. Revenue streams will be altered. Capital investment is likely to be low and labour input high, as a service will be provided rather than a tangible good.
The service will be custom-made when a customer wants it, rather than standardised and produced in advance. One-to-one relationships will need to be built with its customers. Cost structures will be different, and the infrastructure will revolve not around efficient factories but around local outlets.
Of course, Unilever does not need to make all these changes at once; in fact, it is unlikely to be able to, but if it chooses to look at customers' requirements in these terms, the impact will be felt throughout the organisation.
This was an extreme example, and it is only one possible response that Unilever could make to its customers’ changing needs. However, even fairly straightforward responses to customers' requirements can have far-reaching effects.
A change to respond to the new expectations of its customers can be felt throughout an organisation. This emphasises the need for quality management systems that look at all of a company's processes. One is a vicious circle, the other a virtuous or positive circle. The importance of quality management can be seen in both.
The vicious circle shows the danger of cutting back on the level of quality, while the virtuous circle shows the benefit that an organisation can gain by implementing quality management systems that are felt throughout it.
The circles suggest that an organisation’s best response to customers’ changing needs is to meet them through changes to products and internal processes, and to implement quality management systems that will ensure everyone in the organisation understands how they contribute to its final product.
If an organisation does not do this, it is likely that, although it may achieve marginal savings in the short term, the combined effect of irritated customers and dissatisfied staff will lead to higher costs in the longer term. These higher costs will be made up of the cost of recruiting new staff when existing staff leave, the cost of recruiting new customers when existing and potentially loyal customers leave, and the cost of putting right products which are of inadequate quality or do not provide solutions to customers’ problems.
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