Building On Services Characteristics To Develop Successful


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Building On Services Characteristics To Develop Successful

  1. 1. Journal of Marketing Management, 2001, 17, 645-669 Leslie de Chernatony1 Building on Services’ and Characteristics to Develop Susan Segal-Horn 2 Successful Services Brands Little has been published about services brands, even though we are in a services economy. The literature shows services have unique characteristics, but their implications for brand building have not been explored. To understand how to develop and sustain successful services brands with their unique characteristics, we undertook in depth interviews with 28 leading Birmingham University brand consultants. They have brand Business School categorisations, which provide rich inspirations for services brand strategies. Ways of CBS, University of Kent circumventing the problems of intangibility and heterogeneous quality were elicited and opportunities for relationship building were identified. Services branding, unlike product branding, is more about internal consistency, places more emphasis on managing the total services brand experience and is more about social processes. It stresses the need for accepting the brand inside and outside the organisation. Introduction The services sector accounts for approximately two thirds of GDP in developed economies (Lovelock, Vandermerwe and Lewis 1999), yet only 23% of the world’s top 60 brands are services brands (Clifton and Maughan 2000). While there are models to help managers develop product based brands (e.g. Aaker 1996), there is little on services brands. A further reason for such few successful services brands is that a central theme in the literature continues to be the dichotomy between products and services (e.g. 1 Correspondence: Leslie de Chernatony Professor of Brand Marketing, Birmingham University Business School, The University of Birmingham, Winterbourne, 58 Edgbaston Park Road, Edgbaston, Birmingham, B15 2RT, Tel: Int. Code: +44 121 414 2299, Fax: Int. Code: +44 121 414 7791, e-mail: 2Professor of International Strategy, CBS, University of Kent, Canterbury CT2 7PE, Tel: Int. Code: +44 1227 827405, Fax: Int. Code: +44 1227 761187, e-mail: S. L. Segal- ISSN1472-1376/2001/07-800645+24 £4.00/0 ©Westburn Publishers Ltd.
  2. 2. 646 Leslie de Chernatony and Susan Segal-Horn Cunningham, Young and Lee 1997), with little about implications for services branding. This paper is concerned with understanding how to capitalise on knowledge about the unique characteristics of services to develop successful services brands. We do not seek to refine the categorisation of products versus services, but rather how knowledge about the unique characteristics giving rise to the dichotomy can be used to develop services brands. As such the paper opens by addressing the classical differences between products and services. It then reviews the limited literature about services branding then draws on this to argue the need for a services branding model indicating the importance of staff as brand builders. We undertook in-depth interviews with 28 services brands consultants, asking them about any differences they saw between product and services brands to get at the core issue of how this can be used to grow services brands. By integrating their insights with the literature we seek to draw inferences about developing successful services brands. Literature Review Product-services Dichotomy Implications for Services Branding The debate about the product-services dichotomy continues (Blankson and Kalafatis 1999). Much attention has involved strengthening a theoretical case that services are conceptually different from products (Murray and Schlater 1990) and a series of characteristics unique to services have been reported. These include intangibility, inseparability of production and consumption, heterogeneity of quality and perishability (Rathmell 1966; Shostack 1977; Grönroos 1978; Bateson 1995). As these characteristics are discussed in detail in the literature, it may be helpful to consider a few implications for services brands. One way of overcoming the problem of intangibility, as McDonald’s exemplifies, is through the importance of the company as a brand, reinforced by a well presented corporate identity to evoke clear functional and emotional values (Diefenbach 1992). Rather than regarding inseparability of production and consumption as a challenge it can be interpreted as an opportunity (Norman and Ramirez 1994; Onkvisit and Shaw 1989) to regard consumers as co-producers of value and thus be able to tailor the brand to their needs. An approach to reducing heterogeneous quality is to recruit staff whose values align with the brand (Kunde 2000) then reinforce these values through organisational artefacts (Schein 1984) and frequent training (Lovelock, Vandermerwe and Lewis 1999). The issue of perishability affects brands in sectors such as pensions where brands are bought in advance of the benefit. However, the threat of competitors’ enticements before the
  3. 3. Building on Services’ Characteristics 647 brand matures can be countered by building favourable reputations (Fombrun 1996). The literature further questions whether there are pure products or pure services (Shostack 1977; Grönroos 1978), or simply offerings on a continuum (Rathmell 1966). This suggests brands have a greater or lesser services component. Levitt’s (1981) work supports this, as he argues customers don’t buy products or services, but rather clusters of value expectations. These clusters are an amalgam of tangible and intangible components, cf. the functional and emotional values in the case of brands. Although the classic characteristics indicate the need for a different approach executing a services branding strategy, they do not suggest that the concept of a brand as a cluster of functional and emotional values is different between product and services sectors. Indeed earlier research (de Chernatony and Dall’Olmo Riley 1999) found empirical support for branding principles being the same at the conceptual level; it is in the execution that differences emerged. The unique characteristics of services have been much discussed. The purpose of this paper is not to revisit these service characteristics per se but to explore their implications for branding. In particular we argue the case for a separate model for services branding as distinct from product brands. We would agree that much of the argument may come back to the idea that services brands are intangible – in fact all brands are intangible. However, the point is that services brands represent something that is intangible, while product brands represent something tangible. We recognise that elements of the ‘unique’ characteristics of services organisations are also present in product organisations. Indeed this questioning of an absolute product-service divide forms part of the analysis of spectrum-based categorisations of brands discussed later in this paper. One of the most obvious ways of challenging the uniqueness of particular service characteristics is with regard to the characteristic of intangibility. It is clear that most supposedly intangible service organisations also involve large elements of tangible resources as well. An airline cannot function without major tangibles such as the planes, check-in desks, plastic trays for meals, and so on; similarly for hotels, schools and restaurants. There are therefore very few pure services. In terms of our argument for a separate services branding model however, this misses the point. The relevance of intangibility in service organisations is not the proportion of intangibles to tangibles required to provide the service. It is instead about the way that good customer service is achieved and how the expectations of the brand promise are fulfilled. For a service organisation this occurs through another key characteristic of services: the inseparability of production and consumption. Delivery of the services brand is about the
  4. 4. 648 Leslie de Chernatony and Susan Segal-Horn experience of the customer at the interface with the service provider, commonly described as the ‘service encounter’ (Bowen, Chase and Cummings 1990). The service encounter is dependent upon the attitudes and motivation of the service organisation’s staff, irrespective of the balance between tangible and intangible resources in the specific service organisation. Services brands therefore depend critically upon the understanding of, and commitment to, the brand and the brand values by the staff of the service organisation and the process by which the service organisation achieves this. For example, friendly, helpful and well-informed staff are the embodiment of the airline, bank or hotel brand in the experience of the customer. It is this living embodiment and enactment of the brand that a model of service branding must capture. Services Branding Literature: Shifting the Focus to Internal Branding The previous section implied services branding needs to be more attentive to internal issues than is the case with product branding. A review of the limited literature on services brands reinforces this. An increasingly common interpretation of “brand” which applies to services considers a brand as a promise (e.g. Berry 2000; Ward, Light and Goldstine 1999; Mistry 1998; Ambler and Styles 1996). For example, Ambler and Styles (1996) define a brand as “the promise of the bundle of attributes that someone buys ….. the attributes that make up a brand may be real or illusory, rational or emotional, tangible or invisible” (p.10). Thus the global branding of The Body Shop promises personal care products which have not been tested on animals. This again reinforces the conceptual similarity of brands in product and services sectors as clusters of functional and emotional values. However, if a promise is to be appreciated, the expectation and the perceived delivery must match. An appreciation of the executional difference between services and product brands is crucial here. Some marketers, interpreting services brands as promises, draw heavily on the classical product branding model and focus predominantly on consumers, raising expectations through advertising. Less emphasis is placed on internal communication, ensuring staff understand the brand’s promise and can consistently deliver this. British Airways was very aware of the importance of internal communication with such a globally dispersed workforce facing an even more competitive environment with the growth of budget carriers. Attentive to the need for staff to understand the brand’s promise, they have put considerable resources into internal communication programmes. Given the change of Chief Executive in 2000, it remains to be seen how effective this internal campaign was. The services brand promise gap can be narrowed by minimising four company gaps (Zeithaml and Bitner 1996). Provider gap 1, not knowing
  5. 5. Building on Services’ Characteristics 649 what consumers expect, can be reduced through greater understanding of consumers and provider gap 2, not selecting the right service design standards, can be minimised through stronger service leadership and better defined standards. The impact of provider gap 3, not delivering to service standards, can be lessened by redesigned service delivery systems and more appropriate human resources policies, while provider gap 4, not matching performance to promises, can be reduced through not over promising and having more effective internal communications. Executing a services branding strategy is different because successful services brands do not focus just on consumers, but rather on stakeholders, especially staff (Denby-Jones 1995). Classical product branding assumes an internal value delivery system, internally quality controlled and unseen by consumers. By contrast the value delivery system for services brands is externally visible, involves consumers as active participants and is subject to quality variability. This problem can be turned into an opportunity. As Grönroos (1990) explained, consumers’ perceptions of services quality consists of what they get (technical outcome) and how they get it (process). In some sectors, particularly financial services, branding activity concentrated on the technical outcome and differentiation is sparse (Farnfield 1999). Other services organisations, for example the telephone and internet banking subsidiary of HSBC Bank, First Direct, deliberately focused on recruiting staff whose values concur with the desired organisational culture and who are committed to behaving in a way associated with the brand promise. In its formative years, this strategy of majoring on a once unique staffing policy helped the growth of First Direct. This emphasis on the process results in services brands being more about the way things are done internally (Free 1999), encouraging a culture whereby staff recognise how they should interact with consumers, providing a basis for sustainable differentiation. Levitt (1976) proposed greater industrialisation of services processes, by replacing human activities with technology and thus reducing the heterogeneity of quality problem. An example of this would be McDonald’s where technology takes precedence over employees and the service process is designed to give little discretion to employees’ behaviour (Kunde 2000). Managers can use services blueprints (Shostack 1987), to assess where technology can replace routine human tasks. Free (1999) argued against the wholesale replacement of staff by technology, believing that competitive advantage can be gained by releasing staff from routine tasks to concentrate on non-routine problems. A mechanistic approach can demotivate good staff and attract employees unable to respond to atypical consumer requests. By contrast, a humanistic perspective focuses on appropriate culture. As Kotter and Heskett (1992) reported, there is a likelihood of better performance
  6. 6. 650 Leslie de Chernatony and Susan Segal-Horn where staff are aware of, and aligned with, their organisations’ values. Successful services brands, such as Disney, have clear values (Jones 1999), which consumers and staff understand. Comprehending these values, and the implications for their roles, reduces employee stress and increases commitment to delivering the service brand (Heskett 1987). Successful services brands depend on good internal communication programmes (Cleaver 1999) enabling greater consistency of delivering, regardless of consumers’ points of contact (Camp 1996). Singapore Airlines is a good example of this, using frequent internal communication programmes to keep staff informed and encouraging cabin crew to learn the names and special needs of business and first class passengers, enabling staff to deliver their brand’s promise. Recruiting staff with the right values, and having well designed induction and training programmes creates greater commitment, which is an important component in services brands (Thomson, de Chernatony, Arganbright and Khan 1999; Farnfield 1999). Southwest Airlines was able to establish itself against entrenched competitors by adopting these policies enabling it to have the competitive advantage of committed staff. Understanding corporate culture and heritage, as for example Virgin, helps managers identify principles that give the brand a genuine basis for a consumer valued positioning (Camp 1999). The challenge is ensuring this attitude is evident at every point of contact. Distinctiveness for a product brand is often derived from consumer market research, but for services brands often only category values emerge (Camp 1999) rather than unique brand values (de Chernatony and Harris 2000). Understanding an organisation’s principles is one way to devise a credible cluster of unique brand values. The Co-operative Bank majors on its century old founding value of social responsibility rather than the category value of security, much used by other competing banks. The Body Shop, the international personal care products retailer, ascribes part of its early success to its unique value of respecting the environment, rather than the category value of beauty employed in many competitors’ strategies. Experience enables consumers to understand services brands, encouraging the formation of relationships (Cleaver 1999). Strong brands have respected consumer relationships (Aaker 1996), for example the genuine warmth at Marriott, the international hotels group, has helped strengthen this brand. The absence of strong services brands, particularly in financial services (Camp 1996), indicates these relationships are underdeveloped compared to product brands (Fournier 1998). The fact that consumers do not switch banks is not an indication of a loyal relationship, but of inertia (Jones 1999). One of the more common routes for consumers to form relationships with
  7. 7. Building on Services’ Characteristics 651 brands is through advertising building a personality for the brand (Fournier 1998). However, because of the more dominant impact from consumers interacting with staff in services brands, consumers’ relationships with the brand come both from advertising and the behaviour of staff. By recruiting staff whose values align with those of the services brand, their behaviour should encourage consumers to develop a relationship with the brand that is reinforced by the brand’s advertising. Research Aim and Method In view of the limited research on services brands we sought to go beyond the services-product dichotomy and understand how services brands can be developed through knowledge of the inherent characteristics of services. As such we asked “What do you see as being the difference between services brands and product brands, if any?” in a series of in-depth interviews to get at the core of how these characteristics can be used to develop service brands. We focused on senior consultants advising clients globally about services branding, since they are at the forefront of application, have gained considerable knowledge and experience and are influencing tomorrow’s services branding agenda. Our research was exploratory in nature, seeking to appreciate consultants’ views within their frames of reference, without imposing our preconceptions. The most appropriate method was in-depth interviews (Goodyear 1996; Gilmore and Carson 1996). We identified consultancies based in the UK in branding, advertising, design, marketing/management and market research respected for their branding expertise. We either wrote to the Chairman/Managing Director where we did not know the name of the most senior services branding consultant, or approached consultants directly. Consultancies were selected for their high profile in the services branding press, frequent presence at branding conferences, books or papers written, or expert recommendation. We also interviewed a management journalist respected for his visionary ideas about brand management. Of these 28 interviews (typically Chairman, Managing Directors or Directors), our sample consisted of 10 consultants in advertising, 5 in brand consultancies, 5 in design, 4 in marketing/management consultancies, 3 in market research agencies and a management journalist. All the consultancies, and thus the interviews, were in the UK. The conceptual issues this paper explores have not generally been treated in the services literature as culturally specific. The literature review cites work that has been published in Europe and the USA and these tended to arrive at similar conclusions, e.g. Grönroos (1978) and Shostack (1977). In view of this we felt it appropriate to conduct the interviews in UK.
  8. 8. 652 Leslie de Chernatony and Susan Segal-Horn The in-depth interviews were recorded, then transcribed. Respondents were encouraged to talk as much, or as little as they wished, only probing to seek clarification and to explore in detail their comments. Content analysis (Krippendorff 1980) was conducted independently by both authors. Within the context of the aims stated above, and following Miles and Huberman’s (1994) framework, we noted patterns and themes in the data, drew links with previous literature and added categories for new themes. We then compared our analyses relative to the aims, and the coefficient of agreement was calculated at 89%. Inter-research differences were resolved through discussion and reference back to the transcriptions as suggested by Miles and Huberman (1994). Findings Alternative Ways of Categorising Brands Our literature review, which found little on services branding and the inappropriateness of the classical product branding model in services, was confirmed by several respondents. Opening comments included: “It’s good you are doing this study because it’s amazing how little work has been done on services branding” (Advertising Consultant 6); “There is no reason to think there is just one model of branding, and the issue in my mind is that the packaged goods model of branding doesn’t apply to all businesses” (management journalist). Everyone was asked “What do you see as being the difference between services and product brands if any?” While all 28 spoke about differences, a minority (9) did not see a clear-cut divide (cf. Shostack 1977). Four remarked that a brand is a brand, regardless of its form, summarised by Market Research Consultant 1 as, “the difference is between service and product, forget the brand bit”. They regarded brands as clusters of values, or associations in consumers’ minds, which emerge regardless of form (cf. Levitt 1981) and it was more important to define benefits rather than form. Marketing Consultant 2 argued that both services brands and product brands are a “bundle of representational and functional characteristics, it’s the process of branding which is different”. Useful ways of categorising brands were given, which provide insights about developing services brands. We explore these in terms of categorisations based on either a spectrum or differences of kind. A reason for these variations came from Brand Consultant 2 who observed that “the whole area of services branding is so much newer and there is not an established model in the same way as FMCG has its own models”. Spectrum Based Categorisations Concurring with the earlier literature review noting the absence of a pure products-services divide but rather a continuum, several consultants talked
  9. 9. Building on Services’ Characteristics 653 about a spectrum. For example “It seems clear that we have an ecology of brands …. and we don’t know yet how to tell the difference between the big cat and the gazelle, and that’s because there’s a spectrum” (management journalist). Those who argued for a brands spectrum, mentioned a variety of dimensions. One spectrum distinguished between services brands where consumers have high contact and a deep experience, scaling down to brands with which consumers have a low frequency of contact and a superficial experience. In the former case majoring on the experience should help the brand grow, while in the latter case the quality of contact is more fundamental. Given the problems banks are having trying to establish themselves as brands, Advertising Consultant 1 interestingly regarded banks falling in the low contact, superficial experience domain. A common theme was categorising brands according to the extent to which they involved consumers in an experience. In a product centred brand, values are more controlled by the manufacturer. For experiential brands, values depend on interactions between consumers and staff, resulting in a less easily definable cluster of values, albeit recruiting staff whose values align with the brand’s values can reduce inconsistencies. A different spectrum was based on duration of consumption. At one extreme are brands instantly consumed at the point of delivery, for example restaurants, while at the opposite end are brands consumed over a considerable time, for example education or health care. Regular staff training helps face the challenge of ensuring consistency over time. Co-operative Disney High Bank The Body Shop Emphasis on representational values Kwik-Fit Low IKEA Low High Emphasis on functional values Figure 1. Representational vs Functional Matrix
  10. 10. 654 Leslie de Chernatony and Susan Segal-Horn Marketing Consultant 2 used the two dimensional matrix in figure 1. This categorised brands by the extent to which they stressed functional and representational (emotional) values. Knowing where the brand currently resides and where it should be provides a basis for developing suitable strategies by changing the emphasis of the two dimensions on the brand (cf. de Chernatony 1993). In another matrix, shown in figure 2, the vertical plane assessed the degree to which economies of scale could be achieved by standardising repetitive human tasks, whilst the horizontal plane gauged the degree to which services brand interactions with consumers result in committed relationships. For airlines typically there is high standardisation, in the context of airports and airplanes, and low personalisation, resulting in little commitment to the relationship. By contrast, a personal trainer cannot standardise actions with clients and there is a committed relationship. This suggests brands predominantly emerge in sectors which offer scope for achieving economies of scale through industrialising repetitive human tasks. For example, there is no national brand of home plumbers in the UK, since the task range is varied and consumer interaction high. High Airline Scope for economies of scale by standardising repetitive tasks Low Personal Trainer Low High Committed relationships Figure 2. Economies of Scale vs Relationship Matrix A third spectrum was based on the time it takes consumers to form a preference. Whereas product brands tend to evoke preferences within short periods of time, services brands are experiences assessed over longer periods. In conclusion, some consultants had devised branding typologies that had
  11. 11. Building on Services’ Characteristics 655 gone beyond the services-product divide. These were based on spectrums which characterised brands and also provided guidance about services brand strategies. The matrices were unique to each consultancy, reflecting their proprietary philosophy about brands and their creativity. Successful brands are unique offerings (de Chernatony and McDonald 1998) and the variety of categorisations facilitated consultants’ abilities to differentiate their brands. Differences of Kind Rather than Degree Seven consultants had categorisations that abhorred a spectrum. As Brand Consultant 2 said “one of the dangers of talking about services brands and using the same language as product brands is an assumption that they’re differences of degree, whereas actually they’re differences of kind”. He argued that some brands (usually product brands) are serial, one-off relationships existing only for short periods as the brand is repeat purchased, while other brands (usually services brands) result in a long-term relationship, where once consumers have bought the brand, they do not need to review their purchase decision. Consumers are forced to review their decisions to buy Kit-Kats whenever they become hungry, while with a bank’s current account, they are not forced to review their decisions each time they undertake financial transactions. This has implications for the classic attitude-behaviour link. For product brands, e.g. Kit-Kat, changing the chocolate thickness coating could affect someone’s attitude, leading to a change in purchasing behaviour. By contrast, because changing banks involves effort, a worsening bank service may unfavourably alter consumers’ attitudes, but not purchasing behaviour. While there is a cause and effect linkage between attitude and behaviour in product brands, this might be less so in services brands. Product Environment Brand's central idea Communication Staff Behaviour Figure 3. Manifestation of Brand’s Central Idea (after Wolff Olins 1995)
  12. 12. 656 Leslie de Chernatony and Susan Segal-Horn Another perspective, shown in figure 3, emerged from Wolff Olin’s (1995) model whereby a brand’s central idea is manifest through four media; product (dominates for BMW), environment (dominant for Harrods), staff behaviour (dominant for the police) and communication (creative advertising). This suggests product-services differences are less important than which media dominates. To demonstrate this, Design Consultant 1 spoke about the way some global management consultants are stressing communication as the basis of a consistent services brand. Yet client satisfaction depends on the consultant they work with, which implies staff behaviour as the more relevant medium. An advertising agency saw brands as a blending of product and services elements, questioning the dichotomy (cf. Levitt 1981). They define a brand as “an organising principle which is transmitted out to the public and this determines how a company organises itself and the services it provides” (cf. Free 1999). Their philosophy is based on two types of brands – conviction and convention brands. Conviction brands are based on “you can’t expect people to tell you what your business is capable of or what the future will be”. Therefore, they strive to envision new futures and make brave leaps with branding ideas. By contrast, convention brands are incrementally pushed forward, based on short term consumer desires (cf. Hamel and Prahalad 1994). The agency’s philosophy encourages managers to back novel ideas, bravely challenging existing practices. Talking about product vs services brands does not encourage bold creative brand developments. A good example of a conviction brand is the Orange mobile telephone, which challenged the existing brands through the novel brand vision of “A wirefree future in which you can call people, not places and where everyone will benefit from technology”. At the time this was particularly poignant since competitors were confusing people about technology. (Valance 1997). Two brand consultants had conceptualisations that related to what both referred to as the brand’s “centre of gravity”. Talking about product vs services brands did not give any implications about how to develop a brand, while the idea of the brand having a centre of gravity leads to ideas about brand development. A brand’s centre of gravity is “the tangible symbol, the icon of the brand” (Brand Consultant 2): for the Automobile Association, the UK roadside recovery service, it’s the yellow roadside vans and for KFC, the global fast food chain, it’s the portrait of Colonel Sanders. Services brand building necessitates understanding consumers’ interactions with the brand, identifying from their perspectives the benefits from the services relationship, building a service delivery system to satisfy these benefits, then projecting them through a visible manifestation. Brand Consultant 1 demonstrated “where is the brand’s centre of gravity?”
  13. 13. Building on Services’ Characteristics 657 with a three component brand model triangle shown in figure 4. For him, a brand represents a proposition plus a personality. The brand can be characterised by “its centre of gravity that sits somewhere within this framework”. Thus American Express is more about how the cardholder feels, and this originally emanated from the exclusivity of the card. Who's it from Personality What I get What I feel Proposition Figure 4. The Brand Proposition – Personality Triangle A final categorisation related to brands as promises (cf. Ward, Light and Goldstine 1999; Ambler and Styles 1996), and brand management as promise management. Four consultants explicitly, and one implicitly, mentioned this. Market Research Consultant 1 conceived brands as the summation of promised claims, “that which is fed to them by the advertisers” plus experiences (cf. narrowing the services brand promise gap (Zeithaml and Bitner 1996)). She considered “Tesco is successful because they made pledges about customer service and delivered these, while Sainsbury only advertised them”. Design Consultant 5 saw “a service brand is more to do with the description of a promise as opposed to the product brand which is more of the actual item that resides in your hand”. Several emphasised “what is so difficult about services brands is delivering that promise is really complicated”. Advertising Consultant 9 conceptualised a services brand as the sum of a tangible component, “the seats, food, leg room” in an aircraft plus an intangible component, “all the personal interactions along the way from the check in” (cf. Levitt 1981) and the integrating system enabling communication between employees, thereby facilitating all of them consistently delivering the promise, as displayed in figure 5. Both product and services brands integrate these components, but services brands could be differentiated from product brands by the effectiveness of integrating systems. Advertising Consultant 3 related unfulfilled services promises to a branding iceberg. As shown in figure 6, he pictured brands as icebergs, the value adding process of which are either below the water, invisible to
  14. 14. 658 Leslie de Chernatony and Susan Segal-Horn consumers (product brands) or above the water and highly visible (services brands). The problem is “services firms have grown over time therefore the systems are not what you’d design now”. The result is “systems are not all aligned” and better systems and integration are needed Integrating systems Services Brand Tangibles Intangibles Figure 5. Integrating the 3 Components of a Services Brand Value adding systems Value adding systems Figure 6. The Product and Services Branding Icebergs Several inferences can be drawn about successful services brands from these consultants’ comments. Both product brands (Fournier 1998), and services brands need well managed relationships. Unfortunately some services organisations are complacent in their relationship management, incorrectly
  15. 15. Building on Services’ Characteristics 659 thinking that as consumers do not review their brand choice decisions, they are satisfied. Being reliant on high exit barriers is not a sustainable services branding strategy since some competitors can absorb the short term costs helping consumers switch brands, knowing that offering better service should lead to longer term profitability. Successful services brands are not disadvantaged by their intangible characteristic. They have the opportunity of conveying their benefits through four media and by devising suitable symbols strongly associated with the brand’s benefits, an integrated communications strategy can contribute to success. Successful services brands reflect a firm’s principles and have a clear vision about a long term future they wish to bring about. Successful services brands do not just raise expectations through advertising, but also restructure their value delivery processes using up to date systems that integrate all staff and facilitate a greater likelihood of promises being met. Classical and New Characteristics of Services Brands When talking about the unique characteristics of services brands as a springboard for implications about developing successful services brands, virtually all consultants drew on the classical characteristics earlier reviewed (e.g. Lovelock et al. 1999; Rust et al. 1996). The two classical themes most discussed were the intangibility and heterogeneous quality characteristics. However, another category of relationship characteristics also emerged, leading to a new insight about services brands as a social process. Others have recently indicated the importance of social processes (Dall’Olmo Riley and de Chernatony 2000; Gummesson 1999). Comments, then inferences, from these three characteristics will be considered. Intangibility Characteristics Seventeen consultants spoke about services brands being different from product brands due to their intangibility, e.g. “There is a lack of physical reality about them” (Advertising Consultant 6). Simply saying that services brands are intangible achieves little, as this is widely known. Brand Consultant 2 summarised, “you can say they are abstract and that’s naive”. The challenge consultants have faced is defining the services brand’s values, then finding ways to represent these, for example through symbols. One way to overcome this problem is to “create a picture of what the brand stands for” (Advertising Consultant 5). This requires effective communication and “a centre of gravity around which a relationship can take place”. For example, the Goldfish credit card represented a major innovation in financial services. Through the use of bold colours and using a domestic pet to reinforce home essentials, Goldfish created a bright, friendly picture to brighten the usual dullness of financial services branding.
  16. 16. 660 Leslie de Chernatony and Susan Segal-Horn Communicating brand benefits is not just a case of “differentiating on the basis of function or feature, but also on image and attitude of mind” (Brand Consultant 5). This is more of a challenge for services brands which depend both on advertising, to communicate their values, and staff to represent the corporate persona, enacting the values in their interactions with consumers, thereby reinforcing the brand values at every point of contact. Many successful brands circumvent the intangibility problem through physical evidence (Zeithaml and Bitner 1996). This is difficult, since if for example the brand promise is happiness, while some communicate it through “smile programmes” (Gummesson 1999), this emotional labour (Hochschild 1983) takes its toll on employees. Careful recruitment, regular training and providing coping strategies (e.g. frequent breaks) support communication via the physical evidence of staff. As Western economies become experience economies (Pine and Gilmore 1998), the problem of intangibility may be surmounted since consumers can “experience the service and so develop their views of the brand values and brand qualities from the people delivering them” (Brand Consultant 3). This introduces the problem of variable quality, due to differences between staff, as will shortly be addressed. Thus there needs to be a shift from focusing on the promise, to the process by which consumers will experience the promise, especially when “the outcomes are quite often very intangible until the final moment of delivery, which can be many years after a purchase” (Market Research Consultant 2). Indeed some service brands, e.g. pensions and insurance, cannot be evaluated until long into the future. Relationship marketing provides one way of meeting this challenge, as will be discussed later, through regular contact with consumers and building trust in the brand’s ability to deliver its promise (Gummesson 1999). Inferences may therefore be drawn about developing successful services brands. Successful brands overcome the intangibility characteristic through several strategies. Once the brand’s values are defined these can be linked to a symbol, or logo, to create a picture around which knowledgeable and committed staff can build relationships with consumers. Through authentically delivering a brand’s values, a positive image should result in consumers’ minds. Consumers’ recall of the services brand’s benefits should be aided not only by cues from inanimate physical evidence, e.g. uniforms, but also by employees’ behaviour. Heterogeneity of Quality Virtually everyone made reference to internal consistency issues. This is because “You’re dependent on people…. and it takes only one person to have a bad day for the entire brand delivery and experience to be fractured” (Marketing Consultant 3). However, “not all tend to be inconsistent” (Advertising
  17. 17. Building on Services’ Characteristics 661 Consultant 6) and “McDonald’s have made it a key part of their whole offering to have consistency” (Advertising Consultant 9). None spoke in Levitt’s (1976) mechanistic terms about control systems to industrialise service delivery. Instead they recognised the need to blueprint the service delivery process, having a flowchart of both activities and interactions (Shostack 1987), to understand and co-ordinate activities. As Marketing Consultant 4 noted, “you’ve got to concentrate on the end to end customer experience, from the moment they become aware of something”, and then “you have to co-ordinate different departments and often large numbers of people working in different areas and get them to behave in a way that’s consistent” (Advertising Consultant 3), in addition to having “systems that support those people” (Advertising Consultant 9). Several ways were suggested for encouraging consistent behaviour. Thomson et al. (1999) argue that consistent staff behaviour depends on the extent to which they understand and are willing to enact their brand’s values. Experts’ comments reinforced this. For example, “it requires the person the customer is talking to, to understand the promise and what the promise means to the customer, and then they need to be trained to deliver the promise” (Advertising Consultant 3). The literature indicated that gaining staff commitment depends on the organisational culture (Schneider 1980), as well as ensuring employee satisfaction (Heskett 1987). As Design Consultant 1 observed “it’s all about ……. attitude in terms of delivering what they have to sell”. Adopting a more humanistic approach to internally managing the brand was seen as important since “if people are nice and do a good enough job, you will forgive an awful lot of other imperfections” (Advertising Consultant 9) and “individual staff’s belief in what they are trying to achieve is the most important difference, not the service delivery mechanisms” (Design Consultant 2). Thus while experts recognised that “a service brand is offered by a person in a particular place, at a particular time and is surrounded by factors that aren’t under the control of the organisation” (Brand Consultant 1), there is a need for both systems development and staff development, focusing on appropriate cultural behaviours (cf. Kotter and Heskett 1992). This echoes Grönroos’ (1990) argument that service quality is dependent on what customers receive and how they receive it, and the consultant’s views “it’s a balance between…what the technology is delivering to you and how the person is delivering it” (Brand Consultant 1). Involving staff much more in the brand, as First Direct had done (Piercy 1999), and enabling them to recognise the numerous “points of contact customers have” (Brand Consultant 2), encourage more consistent quality. We draw several inferences about successful services brands from these comments. Consistency in services brands comes from well designed service delivery processes that co-ordinate a total service experience across all points
  18. 18. 662 Leslie de Chernatony and Susan Segal-Horn of contact, combined with social processes within a supportive organisational culture. Internal communication is important in enabling staff to understand the brand’s promise, and continual training should help them consistently deliver the brand. Careful recruitment and attention to engendering an appropriate culture can encourage the commitment of staff to the brand, satisfaction in employees’ daily tasks and, as a result, a genuine behavioural style which continually reflects the brand’s desired values. Relationship Issues There have been numerous changes in the services sector as a result of deregulation and technology (e.g. Zeithaml and Bitner 1996), notably in financial services (Taylor 1999). The move to more branded services and a shift away from intermediaries to direct selling has led to consumer uncertainty as they are not “used to using brands to make decisions” (Brand Consultant 5). Not only are consumers “under educated and unconfident purchasers of branded services” (Brand Consultant 5), but “there’s so much choice these days and people don’t have the time to pursue the whole fixture” (Design Consultant 1). As a result consumers “are looking for brands they recognise and trust” (Design Consultant 1) and firms need to “concentrate much more on relationships with consumers” (Marketing Consultant 2), (cf. Parasuraman et al. 1994), since a respectful relationship minimises consumers’ needs to undertake information search into competing brands. Services organisations have some way to go for their brands to be effective relationship builders since “there is a much greater degree of inertia with services brands” (Brand Consultant 4) because firms have “created a greater hurdle for brand users to switch. That’s true for brands in financial services” (Brand Consultant 2). While consumers expect to have a greater dialogue with service providers, the challenge is to “accommodate me as an individual, without making me feel I’m being mass processed in what is a mass market brand” (Market Research Consultant 2). This challenge was described by the management journalist as shifting from a “remote manipulations market type of model to a sense and respond model of marketing”. One response is, as Advertising Consultant 7 suggested, to regard consumers as active co-producers of services brands (cf. Norman and Ramirez 1994). Integrating consumers into the branding process necessitates educating consumers, rewarding their contributions and managing the customer mix (Zeithaml and Bitner 1996). Several saw the attractions of nurturing consumers’ relationships with brands being that consumers can tailor the brands to their needs making them “very stretchable” (Design Consultant 3). Therein lies the positioning challenge, as the service brand must have a clear positioning, yet because of consumers’ involvement, the functional benefits might vary between individuals. Services brand
  19. 19. Building on Services’ Characteristics 663 positioning may focus more on the way the relationship could help consumers achieve functional satisfaction. The inferences from these comments are that successful services brands build relationships between their brands and consumers based on greater consumer dialogue through consumer-staff interactions and take more care over integrating consumers into their brand delivery processes. Services brands are more likely to succeed if organisations work with staff to build consumers’ trust through genuine, rather than superficially enacted, relationships. As a consequence of high exit barriers, managers of successful brands monitor their services brands not through loyalty, but through the quality of consumer-brand relationships. Effective use of databases facilitates tailoring of the brand’s relationship with consumers, within the guidelines of the brand’s values. Discussion and Managerial Implications While there is a notable literature about the product-services dichotomy, we need to move beyond this when developing services brands. Consultants have capitalised on knowledge of services characteristics to devise innovative ideas for building and sustaining services brands. The brief services branding literature and consultants’ comments indicate that while the concept of the brand is common between product and services sectors, the execution of the services brand’s strategy is different. The same external orientation is common between the two sectors, identifying market opportunities then developing and supporting suitable brand positionings with unique personalities. However, in addition, an internal perspective is needed for services brands. This entails recruiting employees whose values will support the brand, enabling them to understand the brand promise, training them to deliver the promise, engendering a culture to reinforce a style of behaviour congruent with the brand promise and encouraging a consistent relationship with consumers through staff who are committed to delivering the brand promise. In services branding, the brand has to be accepted as much inside the organisation as it is outside the organisation. Trying to find ways of overcoming the intangible characteristic is but one issue, however services brands appear to thrive because of an emphasis on internal consistency and management of the services experience across all points of interaction. Adopting the classical product brand model is inappropriate for services since it does not have a balanced internal and external orientation and it overlooks the importance of social processes. Attempting to develop services brands solely on the basis of the dichotomy provides only part of the services branding picture. Unlike product branding, services branding involves interactions with a broader
  20. 20. 664 Leslie de Chernatony and Susan Segal-Horn group of stakeholders, of which staff are an important part. More of the value adding processes are visible to consumers of services brands and they have more points of contact with services providers. As such, unlike product branding, greater emphasis is needed to ensure a consistency of perceptions about the services brands’ functional and emotional values across all points of contact. The brand’s values are perceived not just from the advertising claims and functional performance, but also by the way consumers and staff interact. A variety of categorisation themes were unearthed which provide an inspiration for brand strategy. Some agencies had spent time refining their ideas and their services brand consulting was couched within their brand conceptualisations. While the majority of experts referred to the traditionally cited differences between products and services, i.e. intangibility and heterogeneous quality, they suggested ways of circumventing these problems, and also indicated an opportunity for growing services brands as relationship builders. The intangibility problem necessitates managers working harder to describe their services brand’s benefits. The visual power of the “centre of gravity” offers the opportunity for a services brand’s values to be conveyed through an icon, for example the insurance company Direct Line’s use of the red telephone in all its advertisements. The experience-based economy (Pine and Gilmore 1998) emphasises helping consumers both to visualise and anticipate the brand experience. Brands such as the Rainforest Café encourage consumers to use all their sensations to experience the brand. There is an opportunity to communicate not just the benefits but also the processes consumers will be involved in when they co-produce services brands. From a systems perspective there was encouragement for using service blueprints to understand and improve the service delivery process, along with co-ordination and support systems enabling staff to understand the brand promise and communicate with each other. Managers need to re- evaluate operational procedures to ensure regular training and support services keep pace with changing consumer needs. From an organisational perspective there is a need for a culture which is aligned with the services brand’s desired values and which encourages staff to behave in the desired way. Managers should also consider ways of increasing employee satisfaction in their brand delivery role (e.g. celebration of good behaviour). Strong services brands (e.g. Disney, McDonalds) have long enacted such internal procedures. Managers should consider opportunities from their organisational culture to enable staff to act in a manner which strengthens consumers’ relationships with the services brand. Consumers are likely to welcome efforts to build
  21. 21. Building on Services’ Characteristics 665 stronger ties and have greater trust in brands. This will require greater dialogue and more responsiveness to changing consumer needs. Conclusions Little has been published about services branding. We sought to advance knowledge by going beyond the product-services dichotomy. While this was a useful starting point, alternative categorisations exist for services brands strategy. Classical branding models were developed in the product sector (e.g. Aaker 1996). They emphasise developing, then communicating, a cluster of functional and emotional values to consumers. We believe it is inappropriate to directly employ the classical models in the services sector. Staff play an important role in services branding, influencing brand quality and brand values through the interactions they have with consumers. In services branding the external (market) bias of the classical branding model needs rebalancing with an internal (organisational) perspective. Prior to services brands being promoted to consumers, consideration must be given to internal issues. Staff need to understand their brand’s unique benefits, be trained to play their part delivering this, and be backed by systems to facilitate communication between them. Managers need to encourage a culture which is aligned with their brand’s values, encouraging behaviour which supports the brand. Once these internal issues are addressed, it is then appropriate to promote externally the services brand’s benefits, focusing on the management of the total services branding experience. There are opportunities for increasing services brands’ equity through placing more emphasis on employees’ roles in building consumers’ relationships with the brand. Consumers have difficulty understanding the service promise, but can evaluate a relationship, which ultimately should result in trust and rapid decision making. Services brands can differentiate themselves through the relationships they offer and responsiveness to changing needs. Future research is needed to evaluate whether successful services brands are being managed in a way consistent with the ideas we have put forward. We plan to undertake further research to see whether high performing services brands can be discriminated from low performing ones according to the insights advanced in this paper. Acknowledgements We would like to acknowledge with thanks the help of Sajid Khan who assisted with interviewing
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  25. 25. Building on Services’ Characteristics 669 Taylor, Bernard (1999), “The Darwinian shakeout in financial services”, Long Range Planning, Vol. 32, No. 1, pp. 58-64 Thomson, Kevin, de Chernatony, Leslie, Arganbright, Lorrie and Khan, Sajid, (1999), “The buy-in benchmark: how staff understanding and commitment impact brand and business performance”, Journal of Marketing Management, Vol. 15, No. 8, pp. 819-835 Valance, Charles (1997) “How two years of advertising created twelve by value” In: Advertising Works 9 (Ed.) Duckworth, Gary, Henley on Thames: NTC Publications Ward, Scott, Light, Larry and Goldstine, Jonathan (1999), “What high-tech managers need to know about brands”, Harvard Business Review, July- August, pp. 85-95 Zeithaml, Valerie and Bitner, Mary-Jo (1996), Services Marketing, New York: McGraw Hill. About the Authors Leslie de Chernatony is Professor of Brand Marketing and Director of the Centre for Research in Brand Marketing at The Birmingham University Business School. With a doctorate in brand management he has a substantial number of publications in American and European journals and is a regular presenter at international conferences. He has several books on brand marketing, the most recent of which is From Brand Vision to Brand Evaluation, published by Butterworth-Heinemann. He was Visiting Professor at Madrid Business School and currently Visiting Professor at Thammasat University, Bangkok. A Fellow of the Chartered Institute of Marketing he acts as an international consultant to organisations seeking more effective brand strategies. Susan Segal-Horn is Professor of International Strategy at Canterbury Business School (CBS), University of Kent. Before joining CBS in 1999, she was Director of the International Strategy Research Unit and also Head of the Centre for Strategy and Policy at the Open University Business School. Susan had previously worked for several years in the Strategy Group at Cranfield School of Management. Susan has published three books and more than 60 academic articles and professional papers in the fields of strategic management and international strategy. Her articles have appeared in such journals as the Journal of Marketing Management, the Journal of Global Marketing, the European Management Journal and Strategy and Leadership.