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Customer service as a marketing strategy
Custom As a Marketing Strategy vice
William B. Waper
Customer service in distribution is increasingly becoming a requirement for an integral part of marketing strategies for physical distribution. Customer services, many of which heretofore were considered ancillary in allowing shippers and other transportation users to differentiate productlservice oiF’/ferings, are now necessary in order o compete successfidly in {he marketplace. This trend s! xdd gain considerable momentum as prices become higher and use of discretionary brices decreases. Therefore, it is imperative for marketing and distribution managers to accurately appraise and reevaluate the role of customer services.
INTRODUCTION Industrial firms are increasingly featuring physical distribution services as a primary product component. As a result of the uncertainty due to a changing environment, the role and relevance of the customer .service mix for firms attempting to achieve specified marketing objectives is different than ever before. It is becoming imperative, as a result, to reconceptualize customer set-dices and their relationships with other activities carried out by the firm. --Addresscorrespondenceto William B. Wagner, Departmentof Marketing, Universityof Missouri, Columbia, MO 65211. Indusrriul Murkcring Mur~agemertr 10. 3 1-4 I ( 198 I ) @Elsevier North Holland, Inc., 1981 52 VanderbiltAve., New York. New York 10017
Raymond LaGarce
As various customer services to shippers become less optional, there is no longer a concern over whether service is needed but rather what level of service is most appropriate [ 11. It is the objective of this article to offer insight into how a firm can better plan its management ‘of customer services for today and for the future. Planning service must be viewed as a creative as well as technocrutic process. It is performed by individuals working in complex organizations. The performing types of planning that will become required in the 11980swill d on sound strategic thinking. The very nature of planning is becoming more strategic due to its emergence as a function of businesses characterized by a general Gas opposed to functional) management orientation. Such planning requires that greater attention be paid to the use and usefulness of market analysis. Strategic market planning has resulted from the organizational evolution of firms that have become more and more diversified as well as from an increasing concern for more effective resource allocation. Information provided in this article represents an attempt to develop a construct fiom which firms can better formulate and more properly adjust customer service offerings. The general approach tha? has been taken vides for fmt an examination of various e environmental factors that come to bear irn
consequently provide pressure for the proper adjustmer,. of the customer service offering. Further, various endogenous elements that the manager may manipulate or change have been outlined and discussed. One cannot begin to develop the proper customer service mix without some understanding of considerations such as market segments, pricing factors, promotional opportunities, and product life cycle considerations. Finally, an attempt has been made to discuss the functional synthesis as .well as need for control involved in offering a proper customer service mix. Distribution’s opportunity to have an appreciable impact on the servicing of customers has gained considerable attention in recent years [2]. As a result, there is a need to more accurately define customer service with respect to its role in physical distribution [3]. For purposes of discussion, customer service in distribution encompasses all activities involved in organization and adminis!ration of order fulfillment so customer orders are delivered completely, accurately, in good condition, in the optimal characteristic unit of use for distribution purposes, within cost constraints in the time frame required. As managers have traditionally defined customer
service in accordance to their background and position and aspects of which they are aware, the result is one where the view of customer services is fragmented [4]. This coupled with a changing distribution service environment has created considerable confusion fdr managing service-related activities 151.One such critical distribution service ‘environment that is changing is distribution service economics. DlSTRlBllTlON SERVICE ECONOMICS Market conditions influence service level determination and frequent needs for reassessment. In periods of market decline, customer service has often been an area ___-
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WILLIAld B. WAGNER
is an Associate Professor of Marketing and Business Logistics at the Ut?iversity of Missouri, Columbia. He ha:: published extensively in the area of physical distribution. He has done considerable research on the design and control of customer service systems.
RAYMOND LAGARCE is a Visiting Professor of Marketing at the School of Managemgnt at Northwestern !JniversiQ. He has published in numerous journals and his research interests are in the areas of product management, marketing management, and industrial marketing management. -_ --_ _-.
J. L. Ke!loggGraduate
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for budget cuts, especially in firms viewing it basically in terms sf cost. When a g;iven product market declines, dollar shares of market are reduced accordingly; consequently, firms either exit the market or attempt to capture remaining customers. The: nature of the primary product determines in large part the customer service mix required. For firms producing ge,neric products, more vulnerability to direct service competition exists. Most products on the market for a considerable time period are or have become undifferentiated to the degree customer service becomes the criticall factor in its success. It is interesting to view the support for and promotion of private labels that exists among various consumer groups and alliances, especially for products typically in the public’s eye, such as pharmaceuticals. This, in part, takes much away from the produ.ct differentiation that branded commodities have en,ioyed. Of course, branded merchandise can be sold at higher prices as they carry greater value in the minds of the consumer, according to a Supreme Court ruling. Nevertheless, recent government action is terms of encoura.ging as well as promoting use of generic buying in the case of pharmaceutic:als indicates a position centered on the premise that bnimd names are not worth price differentials consumers are forced to pay. To the extent value:perceived by custo:mers does not increase as rapidly as pllices, more generic: buying will result. Perceived value. on the other hand, will take .‘nto consideration the contribution of distribut,ion service to an increasing extent in theafuture. There: is a growing trend toward con-
cern for what the custo:mer receives (including service) versus the price paid. Such decoupling of price and quality necessitates a closer look at costs. D&ibution service offerings are dependent upon costs associanted with design, implementation, md control within relevant marketing programs. Yet, such costs are often disguised and extremely difficult to uncover [6]. The relevant question, however, involves determining the 11en:lof service required to provide customer satisfaction. Total costs of distribution are all-important [7]. Significant cost savings;’are, for example, possible with only a small decrease in satisfaction if reductions occur in service provided to low volume customers and ones located lang distances from points of distribution [8]. Current distribution economics involves the reality of higher costs and the corresponding need to recognize and more fully understand changing cost relationships. A case in point revolves around current energy conservation pressures that, when coupled with material shortages, make it necessary to change minimum order sizes. Un-
less order sizes are at more economical levels, lead time extensions and consolidation program acceptances cannot result. Cost savings measures were often heretofore t salable, in a surplus economy. Thereon researching various means of mainive customer service program regardcost increases should be even more bution service is often regarded in terms ntioned above, smaller firms and ones Ifit margins often reduce the extent to hen a given product’s market is potentially dangerous when competition :r service to function as a major factor in that are competitively priced, ~,a one generic in make-up. With current inflahigh levels and showing few signs of ‘ffe,rentiation of even those ;.-9ducts that and’ non-generic may dimuush signifi-
Paralleling cynpetitive pressures for services are ones advocated, inir &cl, or required by government. The movement to!&& consumerism that emerged in the 1970s has, in lz,rge part, been responsible for legislation directly influeGng distribution service. A case in point concerns itself with product recall. As a result of the Consumer Pro&ct Safety Act, product recall reyuirements are forcing many companies to develop and implement entirely new or revised systems for identification, segregation, and control of inventory and specific measures for determining accountability [9]. Moreover, ability to implement and successfully carry out reverse discrimination becclnes necessary, as does establishment of an effective communication system with other relevant distribution channel members. Regarding pricing systems, marketers are finding FTC actions have strongly affected distribution system design as well as management of distribution-related activities. Such actions have, for example, promoted F.O.B. forms of pricing. The FTC has, over the past few years, indicated the potentially discriminatory nature of delivered pricing and feared a reduction in compeution could result. Accordingly, total geographical market areas have been. and will continue to be rearranged in both size and configuration. Entire distribution systems are placed in a position requiring redesign. Firms may withdraw en+irely from certain markets. There is a growing need to alter
selected physical facilities due to the necessity of a~commodating mare transportation units handling smaller volume per unit. This, in turn, tends to impose new requirements for supply scheduling, order processing, order assembly, along with various steps in staging, routing and scheduling of final shipments. The Federal Trade Commission has also been aciive with respect to its influence on produ,ct availability and, therefore, effectiveness of distribution service. At the consumer level, the FTC has ruled, under given sets of conditions, stockouts may be ruled as a bait-and-switch tactic [lo]. Devellopment of improved communications between distribution service personnel with people employed in merchandizing may therefore be necessary. Simultaneously, the need to increase inventory availability substantiallly may emerge. Such an increase would, in effect, permeate throughout the system to each distribution component. Distribution effectiveness in servicing customem is governed to a large extent by the commodities involved and the relevant legislation. With respect to governmental actions influencing distribution of specific commodities considered dangerous or potential1 ful to the environment, for example, recent and p D.O.T. actions are noteworthy [ 11 J. Responsibiliity for each step in the transporting of hazardous materials is becoming fixed as suppliers have specific regubuions concerning material. classification, shipping paper preparation, and the like. Although overlapping in certain cases, the packager has a distinct group of regulations, as do the carriers and freight forwarders Basically, such government action iappears aimed at enforcement oafth rules and catching up with chronic violaters. Distribution of hazardous materials is going to continue to draw public attention and, as a result, service oh such goods must be carefully designed as an integral part of the product package. For example, alterations in programs governing ordlerprocessing and shipping are being demanded. Major activities related to product packaging, loading,, shipping. and receiving require substantial revision. The same holds true for shipment documentation. As number .snd extent of regulations related to trrtns ti ,n and distribution of such materials changes. SC)wit! service which accompanies them. There are many l’egal entanglements possibh? III development of distribution channels that influence m;fpketing’s efforts to provide the best cost-service f&ttictnship to its present and potential customers III?]. edge of these as well as the overall legal ~~v~~m~~t be of great assistance when the firm begins to WE&X 33
nature and scope of its demand and, in turn, segment its
markets. MARKET SEGMENTATION It only follows that &rious types of customer service that may be offered, as well as the intensity of such services, are dependent upon several factors relating to the fm, its present markets, and existing competitive structures within the marketplace. Many such factors can be placed under a general heading of market segmentation. In looking at total factors by which one can segment ihe market, we find considerations of the firm, such as size, as we!1 as market factors such as rural versus urban market concentrations. Also, industry considerations relating to the nun&er of firms competing in a specific market area can be the basis for segmentation. For analysis, we will look at three bTad areas by which a firm may segment its market. First, there are the somewhat loosely defined considerations of demographics. This consists of considerations such as size of the firm, present market share that the firm is taking, considerations of existing market structure (i.e., oligopolistic structure versus monopolistic competitive structure), whether the industry leans toward being labor intensive or capital intensive, and the general classification of a firm’s business by standardized typologies such as those offered by SIC codes. In many cases, these so-callled demographic concerns are facts of life over which an individual firm has limited control. This does not mean the firm cannot move more towards being capital intensive, or that strides won’t be made to change one’s market share. However, in the short run, size of firm and overall structure within the marketplace are fixed considerations ihat strongly impact on the types and nature of customer services that may be offered. For instance, very small firms have a difficult time providing additional customer services that involve extensive use of’ computer facilities. A second basic way of segmenting one’s markets is based upon geographical considerations. These typically involve the rural/urban dichotomy, regional considerations (east, west, north, and south), national versus mu:tinational concerns, and climatic factors that relate to geographical regional locations. Naturally, in looking at these factors, variations are found in population density, local regulations and laws, accessibilities and conditions of right-of-ways an4 road structures, as well as traffic congestion, parking, speed regulations, and variations of licensing. 34
If customer services 8ty:to be used as a potent tool in selling and overall promotional endeavors, adjustments are required from one regialn of the country to another and between countries. For instance, providing a large number of invoice copielr free of charge to shippers moving merchandise to intermational markets might be desirable. Such paperworlk is often needed because of numerous checkpoiuts and varying cultural customs requiring many copies of invoices and local approvals. Additionally, geographical considerations related to populatialn density are significant in determining whether it will be in the best interest of a tirm to offer customer services as a free or add-on charge serGce. In many instances, services can be aiffered on a relatively inexpensive Ior free basis when a heavy concentration of customers exist within the same geographical area. Also, because of a dense concentration of customers within a single area, a firm must view that area as more important to ove:rall business operations than where existing customer groups are sparse. other tustomer Services might very well relate to existing conditions witbin a geographical area such as easing presr!suresassociated with failure to meet delivery schedules due to traffic congestion or unfavorable road conditions. Such services might not be necessary in some areas but highly beneficial in others. A final way of segmenting for determination of which customer services to offer involves psychological considerations. This can further be divided into two broad areas. One involves existing attitudes prevailing against or for vstious factors, such as enKgy conservation and perceptions of pollution-whether it be noise, water, air, or sighltpollution. For sake of illustration, let’s say a firm is able to offier a customer seivice such as off-hour delivery times l(inaddition to normal ones), which allows trucks to avoid heavy traffic patterns and thus to conserve on energ!) consumption and remain on a more definable time schedule. This would create a more positive attitude toward the shipper’s (and carrie:‘s, if applicable) overall operation. Anothex broad area involvling psychological considerations is the existing buying behavior of people in the marketplace. A better understanding of how and why customers presently buy and/or use services can be vaiuable im lbetter designing ancillary customer services to make a sale. Some_simple considerations might involve examination of present usage::ratcs of services provided at ~.nadditional charge to test whether they should become an integrated part of your package of on-going customer services. Secondly, it is extremely important to recognize the level of awareness that customers possess about ser-
vices that are now being received. In tact many cmes, buyers CJC:receiving, or have available, services oj which they are not aware. It will be interesting to see if attitudes toward various services change as the awareness factor concerning these services increases. Briefly, several other considerations with respect to buyer behavior exist, including examination of real benefits that are sought separate from the specific service provided, lwhethek loyalty can be traced back to Jne’s offering of unique br varied types of customer services and, finally, whether the offering of various customer services seems to possess any price sensiuvity with respect to elasticity of demand. It might well be that there are a number of services of which shippers are desirous but for which there is no tolerance for paying. In such cases, the firm must assess the tme worth of these services in selling its total service. Each firm will have a unique group of considerations, whether demographical, geographical, or psychological, that will aid in segmenting the market so customer service offerings can be structured effectively. In the final analysis, a given service package must be effective for the relevant market(s) for which it is being aimed. This does not, however, mean service provided must always be full service. In many instances, services that are required by shippers of one size or in one geogralphical area are unnecessary or wasteful to other shippers. That is, firms must thoroughly examine various considerations on which they segment markets. To the extent possible, such examination should involve well-designed empirical research into what is needed reiative to what is desired. Then and only then can offerings of customer services be properly adjusted to better serve customers and to sell the total product. PRICING Pricing should be one of the major marketing mix considerations in designing and offering a package: of customer services. Whether customer services are viewed as an integral part of or ancillary to the primary product, costs of such services must be assigned. A major decision revolves around which, if any, customer service(s) will involve direct charges and which will be included in the base price. Almost all conceivable customer services have some dollar cost associated with them. Those requiring a great deal of expensive labor might involve costs that approach the cost involved in producing the product itself. However, there are numerous customer services that involve minimal cost yet build
goodwill and help a firm differentiate itself from competition. A customer service such as calling of a receiver of goods when a truck is within one hour of the delivery point is a service that is of low cost but greatly appreciated by both shippers and receivers. On the surface, it might appear preferable to hide customer service costs. This, however, often leads to prices that do not seem competitive and services that ane not spelled out so the shipper can see and understand what is being received. It is true that many low cost services can be absorbed without much, if any, adjustment in overall costs. However, as a general mle of thumb, when providing a customer service that does involve extensive pass-on costs, such costs should be broken out and shown directly to the shipper. In some instances, customers should be given a? option of whether they want to buy these services as ancillary to the primary product offering. Since the central theme of this article is that customer services can and should be used to sell the primary product, it is imperative that customer services not be viewed as a separate profit center consideration. If viewed correctly, use of customer services as a sales tool can take precedence over other factors. If the sales position is to be enhanced, customer services must he offered at close to a break-even add-on charge or absorbed into overhead costs of the firm. This does not preclude, however, firms from opting for the offering of customer services as a direce profit generating source. Mat must be remembered in such instances is that the buyer must be given the option as, to whether or not to purchase prolit-oriented customer services. Ancillary customer services for direct profit should be differentiated to the potential customer from services that are being absorbed into the overhead of the fm or ones being offered on purely a cost-recovery h2sis. PROMOTION The promotional strategy and mix that will be most appropriate for marketing of customer services will refleet considerations of the market, industry. and individual firm. In general, the predominant strategy will probably enteil presentation of customer services as a savings in time and/or money for a customer. This should be differentiated from the normally promoted savings in rime for shipments. What needs to be accom-
plished with such a strategy is the instilling of beliefs that customer services tihat are being provided will indeed save work and utilization of resources by the Weir+‘%
firm. l’his should be presented in the context of little or no additional cost and, when possible, savings should be depicted as being uniquely offered by the firm advertising the service. This will allow for a certain degree of total product differentiation and provide the promoter an opportunity to gain a competitive edge within the marketplace . In addition to printed advertisements that promote unique customer services, a great deal of the promotional mix should involve interpersonal communications between the firm and enterprises for which they prt;vide services. If the receiving department or dock manager can be convinced that his job will be easier by allowing additional customer services to be provided, a firm’s total product can be more easily differentiated from the eompetition’s. This would be especially true in markets that traditionally have dealt with homogeneous service offerings centered around speed and reliability. Effective interpersonal promotional devices might include direct contact by telephone, luncheon meetings, or banquets for heavy users, and personalized letters to custo’mers informing them of expanded offerings of customer services. In geqe!a<‘the appropriate approach is one dependent on individualized media as opposed to forms of broadcast media. Sales personnel should be thoroughly rrained and advised as to how to present an expanded pr:>duct offering to potential customers and established accounts Additionally, if customer services are truly unique, oysportunities to gain free publicity through local me&a exist. In the final analysis, the most significant factor in promotion of a total product approach will often be word-of-mouth communications between various customers. If the firm becomes cognizant of and attuned to such word-of-mouth feelings and attitudes, anather source of information is provided by which customer service offerings can be adjusted. Shippers who are exposed to recently added customer services should be polled and questioned about likes and diilikes of services and perceptions of the OW-all worth of a service. This will generate information to serve as the basis for future promotions of various services and/or the deletion of established ones. Shippers should become aware of the transactional marketing concepts which point to many problems occurring prior to a transactional focal point and after an exchange has occurred. These problems will impact on and are adjusted to responses of buyers and sellers in the marketplace when confronted with another exchange situation, The main idea of transactional marketing is to
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alleviate pmblems, before anldafter the transfer of goods, that interfere with future exchanges effectively taking place. It must be remembered in such a conceptual framework the point of transaction (i.e.? exchm;;p. of goods and/or title) is in effict the only point at which economic productivity is truly produced, aside from the production phase. In effect time, place, amd possession utilities are solely dependent upon a transaction occurring [13]. This oversimplified exchange process can be further highlighted by an examination of the normally expected quadrants of the process (Fig. 1). In any qua&ant, blockage (i.e., stoppage of the process for legitimate or nonlegitimate reasons) or gating (i.e., directing or constricting of flow which is detrimental to goal achievement) may occur. Flows to and from the transaction (A), between parties B and @, are represented by letters D, E, F, and. G. On the seller’s side, flow of orders back through the firm D is one major area for blockages and gating, while flow of filled (orders toward lcustomer E is another area for malfunctions. After an order is taken, ‘blockages such as failure to extend credit to the buyer or gatings of the order from reduced work because of hlolidays or strikes often impedes the process, bringing forth dissatisfaction to both buyer anld seller. Such damage to the transaction often occurs because of set policies or personal whims tbai do not give any consideration to the specific transaction. In other words, ancillary functions to the transaction often destroy what should be the focal point of the marketing effort. Through the promotional process, decision makers can ble informed about the role of vtious customer services in bringing to culmination the actual transaction procless. For example, many firms have been able to demonstrate through promotion the imperativeness of speed of delivery in making the transaction occur. However, what is being suggested is that thle emphasis be shifted from delivery time (the appropriateness of delivery time must be viewed as a minimal condition which is given) to a stressing of various customer services and their role in causing the transaction to occur [14].
FIGIIJRE 1.
In sum; an afipropriate promotional strategy might very well be decreasing the attention given to the primary service and instead developing a total str%egy formation focused around customer services that the firm feels it can use to gain a differential advantage in the marketplace. Because many customer services are new and unique, a highly personalized approach is preferable. Some print media can and should be used, but this must be done on a selective basis. PRODUCT LIFE CYCLE A firm’s physical distribution service will, to the extent it is tied to the .offering of any given produc’t, be subject to product life cycle considerations. This will encompass phases of product introduction, gmwth, maturity, and eventual decline. The literature is quite clear that, in many cases, t’negrowth phase as well as the eveutual decline of a product can be prolonged or avoided well beyond the normal anticipated cycling effect. Customer services can provide a way for firms to regain growth postures in product offerings and to avoid overall declines in business. Additionally, offering various types of customer services at different times during a year may offset seasonal fluctuations to which a firm is exposed. If this can be done, it is more feasible to operate at a constant level of productivity and therefore bette:! offset ongoing overhead costs of the firm. By looking at the generalized product life cycle and a redesigned product life cycle, it is possible to interject points at which decisions should be made about the offering of new or additional customer services (Figs’. 2 and 3) [ 151. When a firm finds itself in the later stages: of
INTRODUCTION
GROWTH
FIGURE 2.
the growth phase and substantial competition has entered the marketplace, it becomes necessary to move from primary to selective demand stimulation. This can entail attempts by the finm to differentiate itself by offering new customer services. if the firm proceeds without major adjustments and moves into a stage of maturity, more major changes may be needed at this point for what is considered a reentry into the marketplace. This often involves a totally redefined primary product, which could be nothing more than the previously offered primary product with uumerous addendums of heretofore nonexisting custoimer services. The view that :managerial decisions can alter the life cycling of a primary product has had much impact on recent attempts to redesign traditional product life cycle concepts (see Fig. 3). Under such a redesigned structure, manipulation of customer services, which is an independent vattable of lmanagerial decision makiig, leads to managerid control of the maintenance and proliferation stages of he redesigned cycle. For example, offering 1 additional material handling services in conjun .tion with the primary distribution product may help to maintain or expand a customer’s sellective demand. If, however, a firm decides to allow its primary product to slip into decline, then the firm may prolong its death or speed up its burial (either might be desirable ia given situations) through addition or deletion of various customer services. If the product life cycle is viewed as being dependent aipon decisions made by managers within the firm, in lieu of it being considered an independent factor, it can be readjusted through the offering of customer services to gain greater growth and profitability for the firm.
M,9TlJRITV
DECLINE
The generalized product life cycle 37
Zone of
Fluctuationa _#-@-+--
smln i
I I I I
l
ENTRY
(Introduction)
MAINTENANCE
(Growth)
FIGURE 3.
(Maturity)
i
*
lima
EXIT/DECLINE (Doclint
The product life cycle concept redeslgned
CUSTOMER SERVICE SYNTHESIS Effective performance of relevant customer service activities requires thorough interpretation of work by various departmental and/or divisional units. On the supply side, the fundamental relationship between customer service and materials management is clearly evidenced in shortage periods when need for an effective allocation policy becomes mandatory. Policy development should focus on customer acceptance, as buyers want and need to know bases upon which materials and products are distributed throughout the system. In addition, tight inhouse control measures are necessary for achievement of required distribution service levels within cost constraints. Firms must assign responsibility for allocation procedures and activities to specific individuals. Aliocation also demands attention to legal questiotrs that arise when discrimination is suspecred or experienced. With interest rates at all-time highs, credit policy determination becomes a critical service issue. Determination of time at which credit must be established prior to, during, or after acceptance of an order is significant and often can be determined by accepted industry standards. Still, companies must develop a rationale for their decision(s) because answers to related questious often depend on it. For example, it is valuable to know .&en orders are not to be filled for credit reasons. In addrtion, whether limits should be placed on open account orders or imposed on established accounts must be determined. There is a direct correlation between credit limit and size of account that, in turn, influences effectiveness of distribution performance. Moreover, both types and extent of service provided by distribution are closely tied to such customer credit decisions. Indiscriminate promotion of sales without proper re38
’ PROLlI~EATION
gard for costs involved and/or services required is no longer possible [ 161. With sales compensation plans increasingly based on some measure(s) of profitability (rather than revenues), a shift toward close rationalization of customers prior to acceptance is reflected. Several possible mtionalization actions exist, including (1) informing customers of the firm’s inability to supply, (2) changing order frequency,, (3) revising minimum order quantities, (4) modifying price classes, and (5) limiting special service offerings” Furthermore, nature and extent of sales efforts can be developed to parallel customer potential. Proper determination of rules for or&r acceptance requires considerable attention. Restrictions on order receiving methods must be clearly specified. In other wor&, the means (e.g., salespeople, agents, brokers) of order placement that are acceptable (as well as unacceptable) must be justified. Legal re&ictions re order acceptance Imust be thoroughly scrutinized, including ones applicaible to controlled substances, export-import rules, licensing v and patents. It is necessary to determine policy when terms of sale and purchase orders are in conflict. Firms must also go on record concerning types and extent of order infolrmation required and what, if any, authority is required for order taking (i.e., wnzther formal purchase orders are to be required, or telephone and verbal orders accepted). Also, whether order acceptance should be contingent upon the decision to require customers to order from a specific order-receiving location must be established. Jurisdictional problems existing between customer servlcc: and sales also warmnt attention. Sales personnel should, for instance., be aw,are of established guidelines concerning the nature ;md extent of their participation in activities such as the folbSwing: order processing and
status reporting; product and delivery complaints; inquiries into customer products and prospects; billing and credit; shipment tracing and expediting; merchandising service; technical support; and carrier claims. Specifically, responsibilities of sales personnel concerning determination of shipping dates or whethler standard lead times apply for customer orders must be spelled out. It must be determined whether salespeople should be permitted to determine shipping lacations or whether standard decision rules apply. Increasing cost consciousness has resulted in salespeople experiencing a restriction in authority to influence shipping patterns applicable to a given shipment. A well-designed, comprehensive statement based on relevant customer service levels must be formulated with respect to inventory. Whether inventory policy requires establishment of a scientific, effective forecasting system must be determined. Its use and usefulness is dependent on accuracy of forecasted sales figures. Overall inventory policy must be judged as to its adequacy for the type and size of company involved. Degree to which decision rules cover expected events and contingencies must also be calculated. A sound monitoring control and feedback system is needed to adjust corresponding schedules of production and inventory levels effectively, Acceptable stockout levels must be carefully set by dollar fill as well as line item fill. This is increasingly becoming a factor with greater customer demands for service reliability. With partial or compiett: stockouts, explicit expression of relevant policies is deGred. It must be decided whether the seller is going to hold the order until all items are available, make partial shipment with balance to follow or balance cancelled, make substitutions for items which are out-of-stock, cr cancel the entire order. Planning for and control of stockouts through statistical measures must be incorporated in inucntory policy. Ways and means of monitoring out-of-stock situations, on the one hand, and then providing timely, acc:urate notification of stockout to relevant customers is becoming a requirement. Furthermore, standards for sizes, shapl.:s, styles, and models of acceptalble sirbstitute materials ‘jr products must be established. In all cases, individual customer requirements must ibe irsorporated in overall inventory policy. Concerning order quantities, it is i!mportant to determine whether dollar value or unit of shipment should b2 used to set minimum order size. If a d.olhr value or unit of shipment figure is employed, it must reflect current transportation/distribution economics. As regu-
lar customer order patterns are desired, it is imperative to calculate minimum order quantities great enmgh to create a dampening effect on irregular or hand-tomouth purchasing but not so large as to con~plctely discourage such accounts from buying. The question of penalizing customers for purchasing in non-standard quantities needs to be resolved. When a penalty is imposed, its form (extra charge or lessened service, for example) and extent must be determined. Standard order quantities should be set only atter inventory pcLcy formulators have carefully checked to see if amounts can be translated easily into palletl~oads,truckloads, and carloads. Decisions must be made with respect to whether or no: the seller should retain the right to achieve optimal transport and/or warehouse space utilization through adding or taking away edcess items. In addition, adequate provisions must be made for overtlow truckloads or carloads included in inventory policy. Times for ordering must be governed by’established, well-designed rules. It is necessary to dete_pnine whether a set leadtime is realistic, given the company’s pattern of finished goods inventories. The leadtime must also be considered in terms of materialsavailability and production capacity. Inventory policy must take into account whether maximum transportationeconomies for a given set of competitive requirements are provided for by the established leadtime. All such considerationsassume the ordercycle has been carrfullycalculatedand the standard leadtime determinedcorrectly. A formal policy must be established for a firm’s liability for late deliveries. Degree to which a business is liable in instances involving time deliveriesto customm and, in particular, specific job1sites must be clearly stated prior to shipment. In addition, whether rules have been established for handling any and all chargebacks imposed for late deliveries by customlersmust be determined. Customerservice intlxactsdirectly with operationsand production. Although few tirms put product service with customer service organizationally , both often work closely together [17]. It is necessary, for example, to formally set policy reg&ing possibi.Jityof productrecall [ 181. It is necessary tc, have a sound policy statement with respect to efficienly recalling a produc‘ as required by the Consumer Procluct Safety Act. Specitlcallg. lot identification and conl;ol must allow compliance with this legislation. Also, relevant features of the Act must be fully und’erstood by all parties and customers made fully aware of obligation(s) to engage in recall activiticx. lncreasingly, as customers look to a firm’s means cf and effectiveness in dealing with recalled gocds. i~f~~la~~~~l
systems capable of handling required, recall-relatedactivities need to be properly de:signedand effectively i.mplemented. In conjunction with the product recall problem is one
tomer service must be spelled out explicitly if the service organization is to operate with maximum effectiveness. Managersof customer service must be provided adeq (late resources in terms of people and equipment to ha-Idle
.
associated with returns. Establishment of a well-defined set of rules and policies to cover all returnedgoods is useful. Equally if not more important is thz corollary need to establish a comprehensive policy for filing noncarrier claims and chargebacksas well as any subsequent issuance of credits. Distribution service effectiveritss is dependent 6n sound control measures. This includes complairt handling for cases involving both productand service-relate! customer dissatisfaction. Standardproceduresare necessary [ 191. Forms employed should always include additional space for information requireIdto explain the conditions of th_especific situation(s) in question. Authorityto handle specific complaints should be delegated to the lowest relevant manageriallevel. Customers need to know why optimal satisfaction can often best be realized through personnel who deal directly with the problem(s) on a regular basis. In addition, customers should be made aware of a complaint’s progress over time and any established procedures for moving it to higher levels of authority. When issues cannot be resolved to the customer’s satisfaction, elevating the complaint to personnel in higher managerial positions often leaves a lasting imprection on the customer regarding a firm’s commitment tc:servicirq accounts. A policy to handle small, less complicated and costly complaints must be e?rablishedto save valuable time and decrease paperwork. When complaints involving either replacementor paymentsunder $1specified dollar amount are received, means to achieve automatic, effective resolution are needed. Still, whether complaints are large or small, com~l,lexor simple, customers must be informed as to rights of appeal afforded by the firm. Experience has shown few use but many expect and even demand liuch appeal processes. Customer service requires formab organization if it is tcr be effective. Initially, a,firm’s c3mmitmtintto offering service must be defined and thori>ughlyanaiyzed. The mission of cus40
assigned tasks and must have sufficient authority to carry out functions.
CONCLWIONS There is a pressing need for firms to review and, in many instances, redevelop and tailor present customer service mixes to customer needs if a competitive differential is to be gained. This must occur in a marketplace ti&t has tradition,ally held direct functions of the primary product to be all-important. Managers responsible for providing logistical selrvices ih the future will be required to adjust their views of service offerings to customers in such a manner that such services are viewed as an integral rather than ancillary part of the primary product. Such an orientation change brings with it a host of consequences, including less variation in prices and I. ?e levels, the need to look at all dimensions of the primary product more careful1.y , a greater requirement for understanding and managing direct and indirect costs, and the requirement for a more thorough analysis of salient legal environment considerations. If today’s managers are to recognize and accurately assess the increasing importance of distribution services as an effective means to compete in the marketplace, an awareness and understanding of primary product costs can take on new dimensiona and meaning in customer acceptance and retention. The process of enlarging the primary product concept should, in turn, ansist in building strong customer loyalties as well as increasing sales. Contemporary thinking no longer permits acceptance of goods purchased with merely fast deliveries at competitive prices. To the extent customers desire and demand more cus’iomer services and are able to pay for them directly 01: indirectly, produclt planning must be changed. In essencIc[:,anything that will save time, activity, money,
or worry will help build customer loyalties and patronage. Customer services represent a nonprice competitive strategy that has become commonplace in many industries, especially those that face a lessened ability to compete purely on the basis of price. Industry now faces the prospects of a declining ability to .compete through pricing mechanisms. It only follows that a ret)inking of a firm’s customer service mix is a viable alternative for gaining market acceptance, growth, or dominance.
7. Two basic and complementary
articles concerning the total cost approrh to distribution can be found in: Flaks. Marvin, Total Cost Appr~b to Physical Distribution, Busirtess Monugemenr. pp. 55-61 (August. lW3). and LeKasbman. RaymonrJ. and Stolle. John F., The T’otal Cost An-h to Distribution, Business Horizons. pp. 33-46 (Winter IWS).
8. A classic
example of this rationale is offed ie The Case for m Customer Satisfaction, B&ess Week. pp. 82-85 (14 January, l%l).
9. For a good summarization
of the requirements of the Act. see consumer Safety Act Seen &fecting Business Actions. Commen-e ?“&a!, pp. 7-8 (June 9. 1975). PmcM
IO. Sears, FTC Settle Case on Bait and Switch. Advertising Age. p. 3 (‘March 8, 19761. il.
REFERENCES I. For a discussion on levels of customer service, see Kotler, Philip, Markering Munugcment, 4th ed., Prentice-Hall, Englewood Cliffs, NJ, 1980, pp. 451-452. 2. R-cent
attention has been given to distribution customer service in the literature. Leading tixtbooks in physical distribution and logistics are devoting increased attention to the subject: Rose, Warren, Logistics Manugenrmr, Wm. C. Brown Co. Publishers, Dubuque, IA, 1979, pp. 279307; Bowersox, Donald J., Logistical Munugement. 2nd ed., Macmillan Publishing Company, New York, 1978. pp. 264-286; Heskett, James L., Glaskowsky, Nicholas A., and Ivie, Robert M.. Business Logisrics. 2nd ed.. Ronald Press Company, New York, 1973, pp. 232-266; Ballou, Ronald H.. Business Logistics Managemen?. Prentice-Hall. Englewood Cliffs, NJ, 1973, pp. 95-107.
12. The law in this context focuses on the mutual rights of the producer and members of tbe channel once they have formed a legal miationship. For a brief but descriptive discussion of exclusive haling. exclusive territotia! distributorships, tying agreements. and dealers’ rigbts. as they relate to distribution channels, see Kotler. op. cir.. pp. 704-705. 13. LaGarce, Raymond, and Prell, Arthur E.. Transactional Marketing: An Understanding of the Industrial Marketing pR3cess. Industnol Mur&rNg Munagement 7, 54-59 (February, 1978). 14. The:e has been art emphasis on time-related standards for distribution customer service measurement in tbe past. Still. other acceptable nlcBsures exist. See Morgan. Fred W.. and Wagner. William B.. The Backorder: Role and Relevance in Distribution Service. XIP Inremationul Imvno1 of Physical Diswiburion
(Autumn,
3. For some
common problems in defining customer service standards which, as the authors point out, give insight into and underscore the difficulty ir. concept definition of customer service, see LaLonde, Bcmard J., and Zinszer. Paul H., Customer Service: Meaning and Measuremenr. National Council of Physical Distribution Management, Chi-ago, 1976, pp. 3-5.
4. Need tq organize
such customer service activities intc: a cohesive unit is becoming ‘necessary. See Wagner, Wi”iam B., Formalization of the Customer !iervice Funcuon in Dismbution. The Internntionul Jownal of Physical Distribution 7, 59-76 (Summer, 1977).
5. Sound orgimizational
structure can be of great assistance in improvement of distribution service management effectiveness. As an ever-increasing number of firms incorporate customer service in their distribution function, selection and implementarion of the proper structure is valuable. A sound analysis of iltemative approaches to organization of the distribution function in whic’n each considers customer servir as a separate subfunction can be fiaund in: LaLonde. Bernard J.. Strategies for Organizing Physical Distribution, Transportation and Distribution Management 14, 21-24
(1974).
6. See: Herron,
D:rvid P., Managing Physical Distribution vard IBusiness l:evietv. p. 122 (May-June, 1979).
and Muerials
Manugemenr.
I?. 298-30~
1978).
15. Enis, Ben, La&me. Raymond. and Prell. Anhur E.. Extcnduag the Product Life Cycle, B~csiness Horizons. pp. 46-56 (June. 1977) 16. For an interesting discussion of the relationship between dmrtbutcon service and demand. see Skepue>son. P. Ronald. and W~llett. RanaId P e Selling with Physical Distribution Service. Business Hurwn~. pp 75-85 (December. 1968). 17. Product service (often used interchangeably with technical senlcf. crro though extent of technical expertise involved vanes greatly) can trP Jrfined as service work directly ;miated with the product itself. mcludmg its adjustment, maintenance, and repair in order to assure the customer the utility reasonably expected BJ a consequence of the purcharc. ti Rewoldt. Stewart H., Scott. James D.. and Warshw. Martin R . Inrrrtiw3rd ed.. RI&& D. Irwtn. tm.. rioa ro Marker@ Mmtagutxrttt. Homewood.
IL, 1917. p. 282.
18 Kerin. Roger A.. and Harvey, Michael. Contingency Recall, MSU Business Topics. pp. 5-12 (Summer. I9
for Protit. ffar-
For a discussion, see: DeYaung. Henry G.. New D.O.T. Rutes Zetn in on Hazardous Materials, Pur&sing, pp. 31-33 (March 8. 1977).
Wagner.
William B., Managing
Customer Complaints
The Imernational Journal o]Fltwirul
1972).
Planning fcr 19751. in Dtstrt
Diswibunon. vol. 2.
IS- I3 I IJune
William B. Waper
Customer service in distribution is increasingly becoming a requirement for an integral part of marketing strategies for physical distribution. Customer services, many of which heretofore were considered ancillary in allowing shippers and other transportation users to differentiate productlservice oiF’/ferings, are now necessary in order o compete successfidly in {he marketplace. This trend s! xdd gain considerable momentum as prices become higher and use of discretionary brices decreases. Therefore, it is imperative for marketing and distribution managers to accurately appraise and reevaluate the role of customer services.
INTRODUCTION Industrial firms are increasingly featuring physical distribution services as a primary product component. As a result of the uncertainty due to a changing environment, the role and relevance of the customer .service mix for firms attempting to achieve specified marketing objectives is different than ever before. It is becoming imperative, as a result, to reconceptualize customer set-dices and their relationships with other activities carried out by the firm. --Addresscorrespondenceto William B. Wagner, Departmentof Marketing, Universityof Missouri, Columbia, MO 65211. Indusrriul Murkcring Mur~agemertr 10. 3 1-4 I ( 198 I ) @Elsevier North Holland, Inc., 1981 52 VanderbiltAve., New York. New York 10017
Raymond LaGarce
As various customer services to shippers become less optional, there is no longer a concern over whether service is needed but rather what level of service is most appropriate [ 11. It is the objective of this article to offer insight into how a firm can better plan its management ‘of customer services for today and for the future. Planning service must be viewed as a creative as well as technocrutic process. It is performed by individuals working in complex organizations. The performing types of planning that will become required in the 11980swill d on sound strategic thinking. The very nature of planning is becoming more strategic due to its emergence as a function of businesses characterized by a general Gas opposed to functional) management orientation. Such planning requires that greater attention be paid to the use and usefulness of market analysis. Strategic market planning has resulted from the organizational evolution of firms that have become more and more diversified as well as from an increasing concern for more effective resource allocation. Information provided in this article represents an attempt to develop a construct fiom which firms can better formulate and more properly adjust customer service offerings. The general approach tha? has been taken vides for fmt an examination of various e environmental factors that come to bear irn
consequently provide pressure for the proper adjustmer,. of the customer service offering. Further, various endogenous elements that the manager may manipulate or change have been outlined and discussed. One cannot begin to develop the proper customer service mix without some understanding of considerations such as market segments, pricing factors, promotional opportunities, and product life cycle considerations. Finally, an attempt has been made to discuss the functional synthesis as .well as need for control involved in offering a proper customer service mix. Distribution’s opportunity to have an appreciable impact on the servicing of customers has gained considerable attention in recent years [2]. As a result, there is a need to more accurately define customer service with respect to its role in physical distribution [3]. For purposes of discussion, customer service in distribution encompasses all activities involved in organization and adminis!ration of order fulfillment so customer orders are delivered completely, accurately, in good condition, in the optimal characteristic unit of use for distribution purposes, within cost constraints in the time frame required. As managers have traditionally defined customer
service in accordance to their background and position and aspects of which they are aware, the result is one where the view of customer services is fragmented [4]. This coupled with a changing distribution service environment has created considerable confusion fdr managing service-related activities 151.One such critical distribution service ‘environment that is changing is distribution service economics. DlSTRlBllTlON SERVICE ECONOMICS Market conditions influence service level determination and frequent needs for reassessment. In periods of market decline, customer service has often been an area ___-
--_____. ---
--_-~
WILLIAld B. WAGNER
is an Associate Professor of Marketing and Business Logistics at the Ut?iversity of Missouri, Columbia. He ha:: published extensively in the area of physical distribution. He has done considerable research on the design and control of customer service systems.
RAYMOND LAGARCE is a Visiting Professor of Marketing at the School of Managemgnt at Northwestern !JniversiQ. He has published in numerous journals and his research interests are in the areas of product management, marketing management, and industrial marketing management. -_ --_ _-.
J. L. Ke!loggGraduate
32
for budget cuts, especially in firms viewing it basically in terms sf cost. When a g;iven product market declines, dollar shares of market are reduced accordingly; consequently, firms either exit the market or attempt to capture remaining customers. The: nature of the primary product determines in large part the customer service mix required. For firms producing ge,neric products, more vulnerability to direct service competition exists. Most products on the market for a considerable time period are or have become undifferentiated to the degree customer service becomes the criticall factor in its success. It is interesting to view the support for and promotion of private labels that exists among various consumer groups and alliances, especially for products typically in the public’s eye, such as pharmaceuticals. This, in part, takes much away from the produ.ct differentiation that branded commodities have en,ioyed. Of course, branded merchandise can be sold at higher prices as they carry greater value in the minds of the consumer, according to a Supreme Court ruling. Nevertheless, recent government action is terms of encoura.ging as well as promoting use of generic buying in the case of pharmaceutic:als indicates a position centered on the premise that bnimd names are not worth price differentials consumers are forced to pay. To the extent value:perceived by custo:mers does not increase as rapidly as pllices, more generic: buying will result. Perceived value. on the other hand, will take .‘nto consideration the contribution of distribut,ion service to an increasing extent in theafuture. There: is a growing trend toward con-
cern for what the custo:mer receives (including service) versus the price paid. Such decoupling of price and quality necessitates a closer look at costs. D&ibution service offerings are dependent upon costs associanted with design, implementation, md control within relevant marketing programs. Yet, such costs are often disguised and extremely difficult to uncover [6]. The relevant question, however, involves determining the 11en:lof service required to provide customer satisfaction. Total costs of distribution are all-important [7]. Significant cost savings;’are, for example, possible with only a small decrease in satisfaction if reductions occur in service provided to low volume customers and ones located lang distances from points of distribution [8]. Current distribution economics involves the reality of higher costs and the corresponding need to recognize and more fully understand changing cost relationships. A case in point revolves around current energy conservation pressures that, when coupled with material shortages, make it necessary to change minimum order sizes. Un-
less order sizes are at more economical levels, lead time extensions and consolidation program acceptances cannot result. Cost savings measures were often heretofore t salable, in a surplus economy. Thereon researching various means of mainive customer service program regardcost increases should be even more bution service is often regarded in terms ntioned above, smaller firms and ones Ifit margins often reduce the extent to hen a given product’s market is potentially dangerous when competition :r service to function as a major factor in that are competitively priced, ~,a one generic in make-up. With current inflahigh levels and showing few signs of ‘ffe,rentiation of even those ;.-9ducts that and’ non-generic may dimuush signifi-
Paralleling cynpetitive pressures for services are ones advocated, inir &cl, or required by government. The movement to!&& consumerism that emerged in the 1970s has, in lz,rge part, been responsible for legislation directly influeGng distribution service. A case in point concerns itself with product recall. As a result of the Consumer Pro&ct Safety Act, product recall reyuirements are forcing many companies to develop and implement entirely new or revised systems for identification, segregation, and control of inventory and specific measures for determining accountability [9]. Moreover, ability to implement and successfully carry out reverse discrimination becclnes necessary, as does establishment of an effective communication system with other relevant distribution channel members. Regarding pricing systems, marketers are finding FTC actions have strongly affected distribution system design as well as management of distribution-related activities. Such actions have, for example, promoted F.O.B. forms of pricing. The FTC has, over the past few years, indicated the potentially discriminatory nature of delivered pricing and feared a reduction in compeution could result. Accordingly, total geographical market areas have been. and will continue to be rearranged in both size and configuration. Entire distribution systems are placed in a position requiring redesign. Firms may withdraw en+irely from certain markets. There is a growing need to alter
selected physical facilities due to the necessity of a~commodating mare transportation units handling smaller volume per unit. This, in turn, tends to impose new requirements for supply scheduling, order processing, order assembly, along with various steps in staging, routing and scheduling of final shipments. The Federal Trade Commission has also been aciive with respect to its influence on produ,ct availability and, therefore, effectiveness of distribution service. At the consumer level, the FTC has ruled, under given sets of conditions, stockouts may be ruled as a bait-and-switch tactic [lo]. Devellopment of improved communications between distribution service personnel with people employed in merchandizing may therefore be necessary. Simultaneously, the need to increase inventory availability substantiallly may emerge. Such an increase would, in effect, permeate throughout the system to each distribution component. Distribution effectiveness in servicing customem is governed to a large extent by the commodities involved and the relevant legislation. With respect to governmental actions influencing distribution of specific commodities considered dangerous or potential1 ful to the environment, for example, recent and p D.O.T. actions are noteworthy [ 11 J. Responsibiliity for each step in the transporting of hazardous materials is becoming fixed as suppliers have specific regubuions concerning material. classification, shipping paper preparation, and the like. Although overlapping in certain cases, the packager has a distinct group of regulations, as do the carriers and freight forwarders Basically, such government action iappears aimed at enforcement oafth rules and catching up with chronic violaters. Distribution of hazardous materials is going to continue to draw public attention and, as a result, service oh such goods must be carefully designed as an integral part of the product package. For example, alterations in programs governing ordlerprocessing and shipping are being demanded. Major activities related to product packaging, loading,, shipping. and receiving require substantial revision. The same holds true for shipment documentation. As number .snd extent of regulations related to trrtns ti ,n and distribution of such materials changes. SC)wit! service which accompanies them. There are many l’egal entanglements possibh? III development of distribution channels that influence m;fpketing’s efforts to provide the best cost-service f&ttictnship to its present and potential customers III?]. edge of these as well as the overall legal ~~v~~m~~t be of great assistance when the firm begins to WE&X 33
nature and scope of its demand and, in turn, segment its
markets. MARKET SEGMENTATION It only follows that &rious types of customer service that may be offered, as well as the intensity of such services, are dependent upon several factors relating to the fm, its present markets, and existing competitive structures within the marketplace. Many such factors can be placed under a general heading of market segmentation. In looking at total factors by which one can segment ihe market, we find considerations of the firm, such as size, as we!1 as market factors such as rural versus urban market concentrations. Also, industry considerations relating to the nun&er of firms competing in a specific market area can be the basis for segmentation. For analysis, we will look at three bTad areas by which a firm may segment its market. First, there are the somewhat loosely defined considerations of demographics. This consists of considerations such as size of the firm, present market share that the firm is taking, considerations of existing market structure (i.e., oligopolistic structure versus monopolistic competitive structure), whether the industry leans toward being labor intensive or capital intensive, and the general classification of a firm’s business by standardized typologies such as those offered by SIC codes. In many cases, these so-callled demographic concerns are facts of life over which an individual firm has limited control. This does not mean the firm cannot move more towards being capital intensive, or that strides won’t be made to change one’s market share. However, in the short run, size of firm and overall structure within the marketplace are fixed considerations ihat strongly impact on the types and nature of customer services that may be offered. For instance, very small firms have a difficult time providing additional customer services that involve extensive use of’ computer facilities. A second basic way of segmenting one’s markets is based upon geographical considerations. These typically involve the rural/urban dichotomy, regional considerations (east, west, north, and south), national versus mu:tinational concerns, and climatic factors that relate to geographical regional locations. Naturally, in looking at these factors, variations are found in population density, local regulations and laws, accessibilities and conditions of right-of-ways an4 road structures, as well as traffic congestion, parking, speed regulations, and variations of licensing. 34
If customer services 8ty:to be used as a potent tool in selling and overall promotional endeavors, adjustments are required from one regialn of the country to another and between countries. For instance, providing a large number of invoice copielr free of charge to shippers moving merchandise to intermational markets might be desirable. Such paperworlk is often needed because of numerous checkpoiuts and varying cultural customs requiring many copies of invoices and local approvals. Additionally, geographical considerations related to populatialn density are significant in determining whether it will be in the best interest of a tirm to offer customer services as a free or add-on charge serGce. In many instances, services can be aiffered on a relatively inexpensive Ior free basis when a heavy concentration of customers exist within the same geographical area. Also, because of a dense concentration of customers within a single area, a firm must view that area as more important to ove:rall business operations than where existing customer groups are sparse. other tustomer Services might very well relate to existing conditions witbin a geographical area such as easing presr!suresassociated with failure to meet delivery schedules due to traffic congestion or unfavorable road conditions. Such services might not be necessary in some areas but highly beneficial in others. A final way of segmenting for determination of which customer services to offer involves psychological considerations. This can further be divided into two broad areas. One involves existing attitudes prevailing against or for vstious factors, such as enKgy conservation and perceptions of pollution-whether it be noise, water, air, or sighltpollution. For sake of illustration, let’s say a firm is able to offier a customer seivice such as off-hour delivery times l(inaddition to normal ones), which allows trucks to avoid heavy traffic patterns and thus to conserve on energ!) consumption and remain on a more definable time schedule. This would create a more positive attitude toward the shipper’s (and carrie:‘s, if applicable) overall operation. Anothex broad area involvling psychological considerations is the existing buying behavior of people in the marketplace. A better understanding of how and why customers presently buy and/or use services can be vaiuable im lbetter designing ancillary customer services to make a sale. Some_simple considerations might involve examination of present usage::ratcs of services provided at ~.nadditional charge to test whether they should become an integrated part of your package of on-going customer services. Secondly, it is extremely important to recognize the level of awareness that customers possess about ser-
vices that are now being received. In tact many cmes, buyers CJC:receiving, or have available, services oj which they are not aware. It will be interesting to see if attitudes toward various services change as the awareness factor concerning these services increases. Briefly, several other considerations with respect to buyer behavior exist, including examination of real benefits that are sought separate from the specific service provided, lwhethek loyalty can be traced back to Jne’s offering of unique br varied types of customer services and, finally, whether the offering of various customer services seems to possess any price sensiuvity with respect to elasticity of demand. It might well be that there are a number of services of which shippers are desirous but for which there is no tolerance for paying. In such cases, the firm must assess the tme worth of these services in selling its total service. Each firm will have a unique group of considerations, whether demographical, geographical, or psychological, that will aid in segmenting the market so customer service offerings can be structured effectively. In the final analysis, a given service package must be effective for the relevant market(s) for which it is being aimed. This does not, however, mean service provided must always be full service. In many instances, services that are required by shippers of one size or in one geogralphical area are unnecessary or wasteful to other shippers. That is, firms must thoroughly examine various considerations on which they segment markets. To the extent possible, such examination should involve well-designed empirical research into what is needed reiative to what is desired. Then and only then can offerings of customer services be properly adjusted to better serve customers and to sell the total product. PRICING Pricing should be one of the major marketing mix considerations in designing and offering a package: of customer services. Whether customer services are viewed as an integral part of or ancillary to the primary product, costs of such services must be assigned. A major decision revolves around which, if any, customer service(s) will involve direct charges and which will be included in the base price. Almost all conceivable customer services have some dollar cost associated with them. Those requiring a great deal of expensive labor might involve costs that approach the cost involved in producing the product itself. However, there are numerous customer services that involve minimal cost yet build
goodwill and help a firm differentiate itself from competition. A customer service such as calling of a receiver of goods when a truck is within one hour of the delivery point is a service that is of low cost but greatly appreciated by both shippers and receivers. On the surface, it might appear preferable to hide customer service costs. This, however, often leads to prices that do not seem competitive and services that ane not spelled out so the shipper can see and understand what is being received. It is true that many low cost services can be absorbed without much, if any, adjustment in overall costs. However, as a general mle of thumb, when providing a customer service that does involve extensive pass-on costs, such costs should be broken out and shown directly to the shipper. In some instances, customers should be given a? option of whether they want to buy these services as ancillary to the primary product offering. Since the central theme of this article is that customer services can and should be used to sell the primary product, it is imperative that customer services not be viewed as a separate profit center consideration. If viewed correctly, use of customer services as a sales tool can take precedence over other factors. If the sales position is to be enhanced, customer services must he offered at close to a break-even add-on charge or absorbed into overhead costs of the firm. This does not preclude, however, firms from opting for the offering of customer services as a direce profit generating source. Mat must be remembered in such instances is that the buyer must be given the option as, to whether or not to purchase prolit-oriented customer services. Ancillary customer services for direct profit should be differentiated to the potential customer from services that are being absorbed into the overhead of the fm or ones being offered on purely a cost-recovery h2sis. PROMOTION The promotional strategy and mix that will be most appropriate for marketing of customer services will refleet considerations of the market, industry. and individual firm. In general, the predominant strategy will probably enteil presentation of customer services as a savings in time and/or money for a customer. This should be differentiated from the normally promoted savings in rime for shipments. What needs to be accom-
plished with such a strategy is the instilling of beliefs that customer services tihat are being provided will indeed save work and utilization of resources by the Weir+‘%
firm. l’his should be presented in the context of little or no additional cost and, when possible, savings should be depicted as being uniquely offered by the firm advertising the service. This will allow for a certain degree of total product differentiation and provide the promoter an opportunity to gain a competitive edge within the marketplace . In addition to printed advertisements that promote unique customer services, a great deal of the promotional mix should involve interpersonal communications between the firm and enterprises for which they prt;vide services. If the receiving department or dock manager can be convinced that his job will be easier by allowing additional customer services to be provided, a firm’s total product can be more easily differentiated from the eompetition’s. This would be especially true in markets that traditionally have dealt with homogeneous service offerings centered around speed and reliability. Effective interpersonal promotional devices might include direct contact by telephone, luncheon meetings, or banquets for heavy users, and personalized letters to custo’mers informing them of expanded offerings of customer services. In geqe!a<‘the appropriate approach is one dependent on individualized media as opposed to forms of broadcast media. Sales personnel should be thoroughly rrained and advised as to how to present an expanded pr:>duct offering to potential customers and established accounts Additionally, if customer services are truly unique, oysportunities to gain free publicity through local me&a exist. In the final analysis, the most significant factor in promotion of a total product approach will often be word-of-mouth communications between various customers. If the firm becomes cognizant of and attuned to such word-of-mouth feelings and attitudes, anather source of information is provided by which customer service offerings can be adjusted. Shippers who are exposed to recently added customer services should be polled and questioned about likes and diilikes of services and perceptions of the OW-all worth of a service. This will generate information to serve as the basis for future promotions of various services and/or the deletion of established ones. Shippers should become aware of the transactional marketing concepts which point to many problems occurring prior to a transactional focal point and after an exchange has occurred. These problems will impact on and are adjusted to responses of buyers and sellers in the marketplace when confronted with another exchange situation, The main idea of transactional marketing is to
36
alleviate pmblems, before anldafter the transfer of goods, that interfere with future exchanges effectively taking place. It must be remembered in such a conceptual framework the point of transaction (i.e.? exchm;;p. of goods and/or title) is in effict the only point at which economic productivity is truly produced, aside from the production phase. In effect time, place, amd possession utilities are solely dependent upon a transaction occurring [13]. This oversimplified exchange process can be further highlighted by an examination of the normally expected quadrants of the process (Fig. 1). In any qua&ant, blockage (i.e., stoppage of the process for legitimate or nonlegitimate reasons) or gating (i.e., directing or constricting of flow which is detrimental to goal achievement) may occur. Flows to and from the transaction (A), between parties B and @, are represented by letters D, E, F, and. G. On the seller’s side, flow of orders back through the firm D is one major area for blockages and gating, while flow of filled (orders toward lcustomer E is another area for malfunctions. After an order is taken, ‘blockages such as failure to extend credit to the buyer or gatings of the order from reduced work because of hlolidays or strikes often impedes the process, bringing forth dissatisfaction to both buyer anld seller. Such damage to the transaction often occurs because of set policies or personal whims tbai do not give any consideration to the specific transaction. In other words, ancillary functions to the transaction often destroy what should be the focal point of the marketing effort. Through the promotional process, decision makers can ble informed about the role of vtious customer services in bringing to culmination the actual transaction procless. For example, many firms have been able to demonstrate through promotion the imperativeness of speed of delivery in making the transaction occur. However, what is being suggested is that thle emphasis be shifted from delivery time (the appropriateness of delivery time must be viewed as a minimal condition which is given) to a stressing of various customer services and their role in causing the transaction to occur [14].
FIGIIJRE 1.
In sum; an afipropriate promotional strategy might very well be decreasing the attention given to the primary service and instead developing a total str%egy formation focused around customer services that the firm feels it can use to gain a differential advantage in the marketplace. Because many customer services are new and unique, a highly personalized approach is preferable. Some print media can and should be used, but this must be done on a selective basis. PRODUCT LIFE CYCLE A firm’s physical distribution service will, to the extent it is tied to the .offering of any given produc’t, be subject to product life cycle considerations. This will encompass phases of product introduction, gmwth, maturity, and eventual decline. The literature is quite clear that, in many cases, t’negrowth phase as well as the eveutual decline of a product can be prolonged or avoided well beyond the normal anticipated cycling effect. Customer services can provide a way for firms to regain growth postures in product offerings and to avoid overall declines in business. Additionally, offering various types of customer services at different times during a year may offset seasonal fluctuations to which a firm is exposed. If this can be done, it is more feasible to operate at a constant level of productivity and therefore bette:! offset ongoing overhead costs of the firm. By looking at the generalized product life cycle and a redesigned product life cycle, it is possible to interject points at which decisions should be made about the offering of new or additional customer services (Figs’. 2 and 3) [ 151. When a firm finds itself in the later stages: of
INTRODUCTION
GROWTH
FIGURE 2.
the growth phase and substantial competition has entered the marketplace, it becomes necessary to move from primary to selective demand stimulation. This can entail attempts by the finm to differentiate itself by offering new customer services. if the firm proceeds without major adjustments and moves into a stage of maturity, more major changes may be needed at this point for what is considered a reentry into the marketplace. This often involves a totally redefined primary product, which could be nothing more than the previously offered primary product with uumerous addendums of heretofore nonexisting custoimer services. The view that :managerial decisions can alter the life cycling of a primary product has had much impact on recent attempts to redesign traditional product life cycle concepts (see Fig. 3). Under such a redesigned structure, manipulation of customer services, which is an independent vattable of lmanagerial decision makiig, leads to managerid control of the maintenance and proliferation stages of he redesigned cycle. For example, offering 1 additional material handling services in conjun .tion with the primary distribution product may help to maintain or expand a customer’s sellective demand. If, however, a firm decides to allow its primary product to slip into decline, then the firm may prolong its death or speed up its burial (either might be desirable ia given situations) through addition or deletion of various customer services. If the product life cycle is viewed as being dependent aipon decisions made by managers within the firm, in lieu of it being considered an independent factor, it can be readjusted through the offering of customer services to gain greater growth and profitability for the firm.
M,9TlJRITV
DECLINE
The generalized product life cycle 37
Zone of
Fluctuationa _#-@-+--
smln i
I I I I
l
ENTRY
(Introduction)
MAINTENANCE
(Growth)
FIGURE 3.
(Maturity)
i
*
lima
EXIT/DECLINE (Doclint
The product life cycle concept redeslgned
CUSTOMER SERVICE SYNTHESIS Effective performance of relevant customer service activities requires thorough interpretation of work by various departmental and/or divisional units. On the supply side, the fundamental relationship between customer service and materials management is clearly evidenced in shortage periods when need for an effective allocation policy becomes mandatory. Policy development should focus on customer acceptance, as buyers want and need to know bases upon which materials and products are distributed throughout the system. In addition, tight inhouse control measures are necessary for achievement of required distribution service levels within cost constraints. Firms must assign responsibility for allocation procedures and activities to specific individuals. Aliocation also demands attention to legal questiotrs that arise when discrimination is suspecred or experienced. With interest rates at all-time highs, credit policy determination becomes a critical service issue. Determination of time at which credit must be established prior to, during, or after acceptance of an order is significant and often can be determined by accepted industry standards. Still, companies must develop a rationale for their decision(s) because answers to related questious often depend on it. For example, it is valuable to know .&en orders are not to be filled for credit reasons. In addrtion, whether limits should be placed on open account orders or imposed on established accounts must be determined. There is a direct correlation between credit limit and size of account that, in turn, influences effectiveness of distribution performance. Moreover, both types and extent of service provided by distribution are closely tied to such customer credit decisions. Indiscriminate promotion of sales without proper re38
’ PROLlI~EATION
gard for costs involved and/or services required is no longer possible [ 161. With sales compensation plans increasingly based on some measure(s) of profitability (rather than revenues), a shift toward close rationalization of customers prior to acceptance is reflected. Several possible mtionalization actions exist, including (1) informing customers of the firm’s inability to supply, (2) changing order frequency,, (3) revising minimum order quantities, (4) modifying price classes, and (5) limiting special service offerings” Furthermore, nature and extent of sales efforts can be developed to parallel customer potential. Proper determination of rules for or&r acceptance requires considerable attention. Restrictions on order receiving methods must be clearly specified. In other wor&, the means (e.g., salespeople, agents, brokers) of order placement that are acceptable (as well as unacceptable) must be justified. Legal re&ictions re order acceptance Imust be thoroughly scrutinized, including ones applicaible to controlled substances, export-import rules, licensing v and patents. It is necessary to determine policy when terms of sale and purchase orders are in conflict. Firms must also go on record concerning types and extent of order infolrmation required and what, if any, authority is required for order taking (i.e., wnzther formal purchase orders are to be required, or telephone and verbal orders accepted). Also, whether order acceptance should be contingent upon the decision to require customers to order from a specific order-receiving location must be established. Jurisdictional problems existing between customer servlcc: and sales also warmnt attention. Sales personnel should, for instance., be aw,are of established guidelines concerning the nature ;md extent of their participation in activities such as the folbSwing: order processing and
status reporting; product and delivery complaints; inquiries into customer products and prospects; billing and credit; shipment tracing and expediting; merchandising service; technical support; and carrier claims. Specifically, responsibilities of sales personnel concerning determination of shipping dates or whethler standard lead times apply for customer orders must be spelled out. It must be determined whether salespeople should be permitted to determine shipping lacations or whether standard decision rules apply. Increasing cost consciousness has resulted in salespeople experiencing a restriction in authority to influence shipping patterns applicable to a given shipment. A well-designed, comprehensive statement based on relevant customer service levels must be formulated with respect to inventory. Whether inventory policy requires establishment of a scientific, effective forecasting system must be determined. Its use and usefulness is dependent on accuracy of forecasted sales figures. Overall inventory policy must be judged as to its adequacy for the type and size of company involved. Degree to which decision rules cover expected events and contingencies must also be calculated. A sound monitoring control and feedback system is needed to adjust corresponding schedules of production and inventory levels effectively, Acceptable stockout levels must be carefully set by dollar fill as well as line item fill. This is increasingly becoming a factor with greater customer demands for service reliability. With partial or compiett: stockouts, explicit expression of relevant policies is deGred. It must be decided whether the seller is going to hold the order until all items are available, make partial shipment with balance to follow or balance cancelled, make substitutions for items which are out-of-stock, cr cancel the entire order. Planning for and control of stockouts through statistical measures must be incorporated in inucntory policy. Ways and means of monitoring out-of-stock situations, on the one hand, and then providing timely, acc:urate notification of stockout to relevant customers is becoming a requirement. Furthermore, standards for sizes, shapl.:s, styles, and models of acceptalble sirbstitute materials ‘jr products must be established. In all cases, individual customer requirements must ibe irsorporated in overall inventory policy. Concerning order quantities, it is i!mportant to determine whether dollar value or unit of shipment should b2 used to set minimum order size. If a d.olhr value or unit of shipment figure is employed, it must reflect current transportation/distribution economics. As regu-
lar customer order patterns are desired, it is imperative to calculate minimum order quantities great enmgh to create a dampening effect on irregular or hand-tomouth purchasing but not so large as to con~plctely discourage such accounts from buying. The question of penalizing customers for purchasing in non-standard quantities needs to be resolved. When a penalty is imposed, its form (extra charge or lessened service, for example) and extent must be determined. Standard order quantities should be set only atter inventory pcLcy formulators have carefully checked to see if amounts can be translated easily into palletl~oads,truckloads, and carloads. Decisions must be made with respect to whether or no: the seller should retain the right to achieve optimal transport and/or warehouse space utilization through adding or taking away edcess items. In addition, adequate provisions must be made for overtlow truckloads or carloads included in inventory policy. Times for ordering must be governed by’established, well-designed rules. It is necessary to dete_pnine whether a set leadtime is realistic, given the company’s pattern of finished goods inventories. The leadtime must also be considered in terms of materialsavailability and production capacity. Inventory policy must take into account whether maximum transportationeconomies for a given set of competitive requirements are provided for by the established leadtime. All such considerationsassume the ordercycle has been carrfullycalculatedand the standard leadtime determinedcorrectly. A formal policy must be established for a firm’s liability for late deliveries. Degree to which a business is liable in instances involving time deliveriesto customm and, in particular, specific job1sites must be clearly stated prior to shipment. In addition, whether rules have been established for handling any and all chargebacks imposed for late deliveries by customlersmust be determined. Customerservice intlxactsdirectly with operationsand production. Although few tirms put product service with customer service organizationally , both often work closely together [17]. It is necessary, for example, to formally set policy reg&ing possibi.Jityof productrecall [ 181. It is necessary tc, have a sound policy statement with respect to efficienly recalling a produc‘ as required by the Consumer Procluct Safety Act. Specitlcallg. lot identification and conl;ol must allow compliance with this legislation. Also, relevant features of the Act must be fully und’erstood by all parties and customers made fully aware of obligation(s) to engage in recall activiticx. lncreasingly, as customers look to a firm’s means cf and effectiveness in dealing with recalled gocds. i~f~~la~~~~l
systems capable of handling required, recall-relatedactivities need to be properly de:signedand effectively i.mplemented. In conjunction with the product recall problem is one
tomer service must be spelled out explicitly if the service organization is to operate with maximum effectiveness. Managersof customer service must be provided adeq (late resources in terms of people and equipment to ha-Idle
.
associated with returns. Establishment of a well-defined set of rules and policies to cover all returnedgoods is useful. Equally if not more important is thz corollary need to establish a comprehensive policy for filing noncarrier claims and chargebacksas well as any subsequent issuance of credits. Distribution service effectiveritss is dependent 6n sound control measures. This includes complairt handling for cases involving both productand service-relate! customer dissatisfaction. Standardproceduresare necessary [ 191. Forms employed should always include additional space for information requireIdto explain the conditions of th_especific situation(s) in question. Authorityto handle specific complaints should be delegated to the lowest relevant manageriallevel. Customers need to know why optimal satisfaction can often best be realized through personnel who deal directly with the problem(s) on a regular basis. In addition, customers should be made aware of a complaint’s progress over time and any established procedures for moving it to higher levels of authority. When issues cannot be resolved to the customer’s satisfaction, elevating the complaint to personnel in higher managerial positions often leaves a lasting imprection on the customer regarding a firm’s commitment tc:servicirq accounts. A policy to handle small, less complicated and costly complaints must be e?rablishedto save valuable time and decrease paperwork. When complaints involving either replacementor paymentsunder $1specified dollar amount are received, means to achieve automatic, effective resolution are needed. Still, whether complaints are large or small, com~l,lexor simple, customers must be informed as to rights of appeal afforded by the firm. Experience has shown few use but many expect and even demand liuch appeal processes. Customer service requires formab organization if it is tcr be effective. Initially, a,firm’s c3mmitmtintto offering service must be defined and thori>ughlyanaiyzed. The mission of cus40
assigned tasks and must have sufficient authority to carry out functions.
CONCLWIONS There is a pressing need for firms to review and, in many instances, redevelop and tailor present customer service mixes to customer needs if a competitive differential is to be gained. This must occur in a marketplace ti&t has tradition,ally held direct functions of the primary product to be all-important. Managers responsible for providing logistical selrvices ih the future will be required to adjust their views of service offerings to customers in such a manner that such services are viewed as an integral rather than ancillary part of the primary product. Such an orientation change brings with it a host of consequences, including less variation in prices and I. ?e levels, the need to look at all dimensions of the primary product more careful1.y , a greater requirement for understanding and managing direct and indirect costs, and the requirement for a more thorough analysis of salient legal environment considerations. If today’s managers are to recognize and accurately assess the increasing importance of distribution services as an effective means to compete in the marketplace, an awareness and understanding of primary product costs can take on new dimensiona and meaning in customer acceptance and retention. The process of enlarging the primary product concept should, in turn, ansist in building strong customer loyalties as well as increasing sales. Contemporary thinking no longer permits acceptance of goods purchased with merely fast deliveries at competitive prices. To the extent customers desire and demand more cus’iomer services and are able to pay for them directly 01: indirectly, produclt planning must be changed. In essencIc[:,anything that will save time, activity, money,
or worry will help build customer loyalties and patronage. Customer services represent a nonprice competitive strategy that has become commonplace in many industries, especially those that face a lessened ability to compete purely on the basis of price. Industry now faces the prospects of a declining ability to .compete through pricing mechanisms. It only follows that a ret)inking of a firm’s customer service mix is a viable alternative for gaining market acceptance, growth, or dominance.
7. Two basic and complementary
articles concerning the total cost approrh to distribution can be found in: Flaks. Marvin, Total Cost Appr~b to Physical Distribution, Busirtess Monugemenr. pp. 55-61 (August. lW3). and LeKasbman. RaymonrJ. and Stolle. John F., The T’otal Cost An-h to Distribution, Business Horizons. pp. 33-46 (Winter IWS).
8. A classic
example of this rationale is offed ie The Case for m Customer Satisfaction, B&ess Week. pp. 82-85 (14 January, l%l).
9. For a good summarization
of the requirements of the Act. see consumer Safety Act Seen &fecting Business Actions. Commen-e ?“&a!, pp. 7-8 (June 9. 1975). PmcM
IO. Sears, FTC Settle Case on Bait and Switch. Advertising Age. p. 3 (‘March 8, 19761. il.
REFERENCES I. For a discussion on levels of customer service, see Kotler, Philip, Markering Munugcment, 4th ed., Prentice-Hall, Englewood Cliffs, NJ, 1980, pp. 451-452. 2. R-cent
attention has been given to distribution customer service in the literature. Leading tixtbooks in physical distribution and logistics are devoting increased attention to the subject: Rose, Warren, Logistics Manugenrmr, Wm. C. Brown Co. Publishers, Dubuque, IA, 1979, pp. 279307; Bowersox, Donald J., Logistical Munugement. 2nd ed., Macmillan Publishing Company, New York, 1978. pp. 264-286; Heskett, James L., Glaskowsky, Nicholas A., and Ivie, Robert M.. Business Logisrics. 2nd ed.. Ronald Press Company, New York, 1973, pp. 232-266; Ballou, Ronald H.. Business Logistics Managemen?. Prentice-Hall. Englewood Cliffs, NJ, 1973, pp. 95-107.
12. The law in this context focuses on the mutual rights of the producer and members of tbe channel once they have formed a legal miationship. For a brief but descriptive discussion of exclusive haling. exclusive territotia! distributorships, tying agreements. and dealers’ rigbts. as they relate to distribution channels, see Kotler. op. cir.. pp. 704-705. 13. LaGarce, Raymond, and Prell, Arthur E.. Transactional Marketing: An Understanding of the Industrial Marketing pR3cess. Industnol Mur&rNg Munagement 7, 54-59 (February, 1978). 14. The:e has been art emphasis on time-related standards for distribution customer service measurement in tbe past. Still. other acceptable nlcBsures exist. See Morgan. Fred W.. and Wagner. William B.. The Backorder: Role and Relevance in Distribution Service. XIP Inremationul Imvno1 of Physical Diswiburion
(Autumn,
3. For some
common problems in defining customer service standards which, as the authors point out, give insight into and underscore the difficulty ir. concept definition of customer service, see LaLonde, Bcmard J., and Zinszer. Paul H., Customer Service: Meaning and Measuremenr. National Council of Physical Distribution Management, Chi-ago, 1976, pp. 3-5.
4. Need tq organize
such customer service activities intc: a cohesive unit is becoming ‘necessary. See Wagner, Wi”iam B., Formalization of the Customer !iervice Funcuon in Dismbution. The Internntionul Jownal of Physical Distribution 7, 59-76 (Summer, 1977).
5. Sound orgimizational
structure can be of great assistance in improvement of distribution service management effectiveness. As an ever-increasing number of firms incorporate customer service in their distribution function, selection and implementarion of the proper structure is valuable. A sound analysis of iltemative approaches to organization of the distribution function in whic’n each considers customer servir as a separate subfunction can be fiaund in: LaLonde. Bernard J.. Strategies for Organizing Physical Distribution, Transportation and Distribution Management 14, 21-24
(1974).
6. See: Herron,
D:rvid P., Managing Physical Distribution vard IBusiness l:evietv. p. 122 (May-June, 1979).
and Muerials
Manugemenr.
I?. 298-30~
1978).
15. Enis, Ben, La&me. Raymond. and Prell. Anhur E.. Extcnduag the Product Life Cycle, B~csiness Horizons. pp. 46-56 (June. 1977) 16. For an interesting discussion of the relationship between dmrtbutcon service and demand. see Skepue>son. P. Ronald. and W~llett. RanaId P e Selling with Physical Distribution Service. Business Hurwn~. pp 75-85 (December. 1968). 17. Product service (often used interchangeably with technical senlcf. crro though extent of technical expertise involved vanes greatly) can trP Jrfined as service work directly ;miated with the product itself. mcludmg its adjustment, maintenance, and repair in order to assure the customer the utility reasonably expected BJ a consequence of the purcharc. ti Rewoldt. Stewart H., Scott. James D.. and Warshw. Martin R . Inrrrtiw3rd ed.. RI&& D. Irwtn. tm.. rioa ro Marker@ Mmtagutxrttt. Homewood.
IL, 1917. p. 282.
18 Kerin. Roger A.. and Harvey, Michael. Contingency Recall, MSU Business Topics. pp. 5-12 (Summer. I9
for Protit. ffar-
For a discussion, see: DeYaung. Henry G.. New D.O.T. Rutes Zetn in on Hazardous Materials, Pur&sing, pp. 31-33 (March 8. 1977).
Wagner.
William B., Managing
Customer Complaints
The Imernational Journal o]Fltwirul
1972).
Planning fcr 19751. in Dtstrt
Diswibunon. vol. 2.
IS- I3 I IJune