Marketing and its underlying thoughts and principles have evolved over the years. The evolution over the past few decades has widened the scope of this field. Such areas as business-to-business marketing, relationship marketing, and services marketing have become common in this field. Service marketing constitutes a major sub-discipline in this field.
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Contrary to the impressions created by the name, this sub-discipline covers the marketing of both goods and services. According to Bessom and Donald (1975, p. 45), marketing of goods is a two-pronged phenomenon. It entails the promotion of durables and fast moving consumer products. On its part, service marketing entails the promotion of business-to-consumer and business-to-business services.
The current paper is written against this background. In the paper, the author conducts a case analysis focusing on the retailing sector in the UK. The clothing and footwear retail sector in this country is the case that is used in this analysis. The service marketing issues affecting this industry are critically reviewed in this paper. More specifically, the current study focuses on the competitive sector of sports apparel and footwear industry. The sports footwear sector is analysed in detail.
Introduction to Service Marketing
The concept of service marketing is relatively new in contemporary global market. According to Lovelock and Wirtz (2001, p. 99), the concept of service marketing introduces a new dominant logic in the entire marketing spectrum.
Lovelock and Wirtz (2001) describe this new development as the ‘service dominant logic’. What this means is that promotion of services shifts the focus of marketing from operand resources. Such resources include, among others, land, plants, and animals. Service marketing introduces a new element of operant resources. The new resources include knowledge and skills.
The marketing of services brings together many industries in the global market. Some of these industries include those operating in the telecommunications, health care, aviation, and professional services sectors. Others operate in the hospitality and financial services segment of the economy.
Services constitute a major source of revenue for the developed economies. For example, such economies as the UK rely more on services compared to developing economies like those in Africa. As a result of this, it is apparent that service marketing is vital not only to the success of individual businesses, but also to the growth of the entire national economy.
Service Marketing in the UK Retail Sector
An Overview of the UK Retail Sector
The service sector in the UK and other economies can be determined from various perspectives. For instance, Burt and Sparks (2003, para. 3) highlight one of these perspectives in their definition of the service sector. Burt and Sparks (2003) conceptualise this sector as the wider group of industries that remain when agriculture, mining, and manufacturing industries are removed from the equation.
Going by this definition, it is clear that the scope of the services industry in the UK includes, among others, the transport and communication industries. It also involves the provision of professional services, as well as public administration.
Other examples of service industry sectors include, as already indicated above, financial services, hospitality, healthcare, and retailing. Professional services include the provision of such products as legal and accounting aid. On its part, the hospitality sector is made up of restaurants, accommodation outlets, and ski resorts. Examples of healthcare services include eye care, dentistry, and medical practice. Finally, retailing services involves merchandising and such other endeavours (Burt & Sparks 2003).
Retailing is one of the major economic sectors in the UK. Burt and Sparks (2003) capture the significance of this sector when they analyse the number of individuals engaged actively in it. According to Burt and Sparks (2003), the sector employs an estimated 3 million people in the UK.
It also records sales of up to £221 billion per annum. In addition, more than 300,000 shops operate in this sector in the UK. Leading retailers in the country include large multinational businesses. The businesses contribute significantly to the country’s GDP. According to Burt and Sparks (2003), these multinationals are the ones that dominate the country’s retail sector. The operations of retailers in the UK range from major supercentres and hypermarkets to medium and small convenience stores.
The UK retail sector covers a broad market spectrum. Some of the strategic groupings in this sector of the economy include the clothing and footwear retail operators, food retailers, book vendors, and providers of health and beauty services. Other entrepreneurs involved in this sector are engaged in the provision of electrical and related services (Burt & Sparks 2003).
Clothing and Footwear Retail Sector in the UK
The clothing and footwear retail sector is a major contributor to the UK economy. Burt and Sparks estimate that the market value of the clothing and footwear industry is about £29-31 billion (2013). It is a very volatile sector. The growth and performance of this industry sector varies between the various retail sub-sector segments. There are various strategic clusters of operators in the UK’s clothing and footwear industry. The clusters are made up of accessories, children wear, sportswear, and casual wear among others.
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According to Bainbridge (2011), the sales made in the footwear and sports clothing industry in the UK were estimated at £4.8bn for the year 2011. The record was an 18% increase from the sales made in 2006. The role of service marketing in this sector influenced these outcomes substantially. It is noted that the different players in this sub-sector provide the consumers with a range of largely similar products.
As a result, the major determinant of the growth of the sportswear sub-sector is the quality of services offered by the various competitors. The services are supported by the kind of consumer relationship developed by the company. The marketers of sportswear products have leveraged their service offerings. The leveraging is carried out in a bid to differentiate them from their competition and attract more customers as a result.
Service marketing is highly applicable in the sportswear industry. The reason for this is that the distinction between the brands is created by the quality of services and not by the tangible products offered to the consumers. That is why service marketing is indispensable to those professionals charged with the responsibility of spurring growth in the companies associated with the manufacture and distribution of sportswear.
Opportunities and Threats facing the Sportswear Industry in the UK
Opportunities facing the industry
The sports footwear sector has witnessed significant outward and in inward movements over the last two decades. The movement has taken place with regards to the wholesaling dimension of the various types of products. The sector has seen a shift starting from wholesaling and transiting through trial shops. The movement has finally settled at the establishment of retail chain outlets (Kotler et al. 2001, p. 94). Consequently, players in the sports footwear industry benefit from the opportunities presented by these outlets.
According to Ligerakis (2004), the sports footwear industry is undergoing a major revolution today. To this end, it is noted that sports fashion is taking root in the sector. Currently, sports footwear consumers are going for the models that were dominant in the 1960s. In addition, many consumers in this sector are more concerned with the comfort and functionality aspect of their shoes.
Most of them are less concerned with the style of their footwear (Ligerakis 2004). Sports footwear companies benefit from the possibilities of increased market share and profits. All they need to do to fully exploit these opportunities is to embrace the sports fashion sense in the industry. The growing fashionability in the market segment provides the operators with the opportunity to reach out to more consumers.
The sports apparel and footwear industry is increasingly moving towards globalisation. Globalisation is especially evident in the sports footwear sector. As a result, establishing and sustaining a competitiveness edge in the industry largely relies on a global strategy. By moving towards globalisation, the sector provides the entrepreneurs with opportunities for reduced cost of goods and related factors. The investors in this sector can also exploit the numerous opportunities presented on the global platform. They can achieve this through service marketing.
Other opportunities associated with the sportswear industry in the UK include technological advancements. The advancements make it possible to develop high quality footwear. Technology also supports service marketing endeavours carried out by these companies (Vargo & Lusch 2004a).
Technological innovations enhance efficiency and increased productivity. In addition, they improve the distribution channels used by business persons in the industry. Such companies as Adidas and Nike are continually exploiting technology to improve the performance of their products on the global market. The brands are able to attract a lot of attention from consumers and increase demand in the long term (Zwan & Bhamra 2003).
An example of technological exploitation in the sports footwear industry is the development of a new brand of shoes by Adidas Company. The new shoes are capable of monitoring the walking and running patterns of the wearer (Zeithaml, Bitner & Gremler 2002). Consumers are embracing such developments and associated services. It is as a result of this that technology is regarded as an opportunity in the industry. The high-tech sports footwear helps manufacturers to remain relevant in the dynamic global market.
Lifestyle centres have become a major attraction for many shoppers in the recent past. The popularity of these centres has surpassed that of the conventional shopping malls (Wurtzel n.d). As retail outlets, these centres are opportunities that can be exploited to enhance growth in the sports footwear retail sector. Players in this sector stand to establish their dominance in the market by tapping into these retail outlets.
Threats facing the industry
One of the main threats facing the sports footwear sector is economic recession. Recessions have negative impacts on almost every sector of the economy. According to Zeithaml, Bitner & Gremler 2010), the initial economic meltdown was confined to the U.S. However, it eventually spread to other parts of the world.
The UK was one of the countries affected by this economic downturn. Some of the effects of economic recession on businesses include low sales volumes and reduced prices. Although the recession has tapered off, the future occurrence of such economic downturns remains a major threat in the industry.
Globalisation has become a necessity in the sports clothing and footwear industry. According to Zwikael and Shlomo (2007), all businesses operating in the global market have to globalise to retain their relevance. The home markets, especially for the sports clothing and footwear industry retailers, have become saturated and slow with regards to growth. Failure to globalise may lead to elimination from the market. The reason is that sustaining the domestic in operations of these companies is becoming unviable (Anderson & Mittal 2000).
The threat of new entrants is a major concern in the industry. Retailing in the sports footwear sector requires low capital investment, making it easy for new investors. In addition, the nature of competitor product lines and geographical expansions makes entry into this market a relatively easy undertaking.
According to Lusch, Vargo and O’Brien (2007), retailing, as a business, requires relatively low capital investment. Instead, what is needed is more trade offers. Such a scenario increases the opportunities for entrepreneurship among people of low means. The low entry barrier may erode the market share of dominant players in the industry.
A Comparative Analysis of Service Marketing Strategies among Major Industry Players in the UK
According to Zeithaml et al. (2010), service marketing strategies usually focuses on specific elements. The elements include the delivery of processes to consumers. It also involves delivering experiences and other forms of intangibles to the end users (Laing et al. 2002). It is very different from the delivery of physical goods and promotion of transactions in the market. What this means is that service marketing focuses on the consumer.
Operators in the sports footwear industry seek to harmonise their company functions. Such functions include marketing, selling, and operations.
Harmonising these processes facilitates the formulation and implementation of service marketing strategies. Leading sports footwear suppliers in the UK have shifted their focus from the traditional goods marketing. Such conventional marketing majored on transactions and exchange. They are now focusing more on their consumers through the use of service marketing strategies (Vargo and Lusch 2004a).
The sports apparel and footwear industry in the UK is characterised by a number of business outlets. The outlets include Adidas and Nike. Other major players include Reebok, Speedo, JD Sports, JJB, and Sports Direct. The service marketing plans adopted by these businesses vary. For example, Adidas and Nike, the dominant players, have strategies that are significantly different from those of the other companies.
Similarities between the Service Marketing Strategies Adopted by Adidas and Nike
One of the major similarities between the two companies in relation to their service marketing policies is the focus on customer service. According to Vargo and Lusch (2004b), customer service does not increase revenues for the organisation directly. On the contrary, it concentrates on addressing customer queries and complaints. The strategy provides the customers with answers and solutions as required.
Nike and Adidas have come up with a strategy where follow-ups are conducted on customers. The aim is to customise the products and services offered in a bid to meet the dynamic customer expectations. Both companies keep in touch with their consumers on social media and such other platforms. The strategy used by these two major companies also addresses the issue of technology and sustainability. The companies achieve this through customer empowerment and cultivation of loyalty (Lovelock 1994).
The service marketing plans in these companies also focuses on value-addition in the production chain (Vargo & Lusch 2004a). Innovation, research, and development are major undertakings in Nike and Adidas. Both companies enhance service delivery through quality, comfort, and customised products. Delivery of services is improved through sports footwear products that reduce or eliminate injury (Mattila 2001). In addition, the two entities improve athletic performance through maximisation of comfort (Wurtzel n.d).
Differences between the Service Marketing Strategies used in Adidas and Nike
According to Ligerakis (2004), Adidas has a marketing strategy that concentrates on developing cultural relevance for the brand. The company aims at improving the acceptability of its products not only in Europe, but also in other parts of the world. The strategy helps consumers to identify with Adidas sports footwear products through enhanced quality and support services.
Nike, on the other hand, has focused its service marketing strategy on greater adoption of new technologies. The adoption is especially notable in relation to the company’s presence on social media (Ligerakis 2004). The marketing plan aims at establishing a live link with consumers. Such a link facilitates the development of products and support services that are in line with current market demands. The service strategy employed by Nike also seeks to establish sustainable relationships with consumers in the sports footwear sector.
Nike’s Key Strategic Service Marketing Issues for the Next Five Years
Nike Inc.: Highlight
The company is a multinational corporation with origins in the USA. In spite of this, Nike has a significant presence in the UK’s sports footwear industry. The presence is facilitated by the company’s global success. It is a global leader in the sports footwear, accessories, and apparel industry (Gronroos 2007). However, in spite of its success on the global front, Nike Inc. faces several challenges in relation to strategic service marketing.
Services Design and Delivery
Services design and delivery is one of the key issues in Nike’s strategic marketing policy. According to Bainbridge (2011), delivery of quality services to customers relies on building the organisation’s tasks around consumer needs. Such a strategy closes the gap between customer expectations and the quality of product provided.
Nike is faced with the task of ensuring that its footwear products meet the quality standards that are claimed by the company. It should meet the demands of consumers. The company should realise that the main aspect of service marketing is striking a balance between serving the customer and generating revenues for the organisation (Bitner 1995). The design and delivery of services should lead to the creation of sustainable relationships with the customers.
Zeithaml et al. (2010) illustrate some of the dimensions of quality service delivery. One of the dimensions includes knowledge associated with the employees. The employees should be capable of inspiring trust and confidence among customers. The other dimension entails the ability of the product to deliver the promised services (Zeithaml et al. 2010).
Another element of service delivery is responsiveness. It involves the desire to help the customers and addressing their concerns promptly. The tangible dimension of service delivery, on the other hand, pertains to the appearance of the physical products (Zwikael & Shlomo 2007).
In the next five years, the service delivery system at Nike Inc. should strive to address all the aforementioned dimensions of quality services. The resultant service marketing strategy would ensure that the footwear retailer overcomes the various issues associated with service design and delivery. In the long term, the plan would lead to sustainable profitability for the organisation.
Over the next five years, Nike Inc. can address the issue of service delivery and design with the help of other service marketing strategies. The strategies include the realignment of human resource aspects. To this end, the company should focus on hiring, rewarding, and training of employees based on the delivery of excellent services (Wurtzel n.d). In addition, the company can increase its adoption of technological innovations. Such a strategy will promote the online presence of the company.
Communication, Demand, and Capacity Synchronisation
In addition to the element of service quality and design, Nike Inc. faces other issues that affect its performance. For example, the company has to address concerns over customer communication, demand, and capacity synchronisation.
The company may provide high quality services, but fail to meet consumer expectations. Such a failure may result from a breakdown in communication between the company and the customers (Bessom & Donald 1975). To address this problem, the company should fill the gap between the services delivered and consumer expectations. Failure to achieve this synchronisation would lead to a poor and an ineffective service marketing strategy for the organisation.
Nike Inc. can use a number of service marketing policies to resolve this key issue over the next five years. For example, the company can develop internal communication mechanisms aimed at avoiding making unrealistic promises to customers (Hogg, Laing, & Winkelman 2003). Pricing the products appropriately based on their level of service delivery also facilitates the synchronisation process.
An appropriate service marketing plan resolves other issues related to communication, demand, and capacity. The company’s brand image, which is reinforced through promotion campaigns, harmonises the perceptions associated with given brand (Varey 1995). The logo used by Nike Inc. is unique. It enhances the image of the brand and reduces the communication gap between the consumers and the company.
Relationship between Nike’s Key Issue of Service Design and Delivery and Theoretical Principles of Service Marketing
As indicated earlier, the element of service design and delivery is critical to the success of Nike’s service marketing plans. It is a fact that service marketing focuses more on service oriented business processes. However, the concept is also relevant in products oriented processes. Services can be the primary source of business for a given business organisation. In some cases, they can be used to support the generation and distribution of core business products (Zwan & Bhamra 2003).
The marketing perspective adopted by Nike Inc. entails the promotion of services supporting sports footwear products offered by the company. As such, the element of services design and delivery in relation to Nike’s products is relatively complex. According to Zeithaml et al. (2010), the four major Ps of marketing address the issue of service marketing only partially.
Due to this, the additional Ps of processes, people, and physical evidence are needed. Solving the problem of services design and delivery in relation to Nike’s business operations requires the combination of all these theoretical aspects of service marketing. As far as retailing of sports footwear products is concerned, there is close link between production and consumption of services and products. The customer is at the centre of the footwear retailer’s business operations.
It is hard to distinguish between service marketing and traditional products marketing. The distinction is especially difficult in situations where the promotion of services m takes place in relation to tangible products. Services marketing plans usually focus on the experiences of consumers.
Businesses involved in the offering of products undertake service marketing at some point in their operations. The reason is that the production and delivery of tangibles entail the utilisation of intangible services.
For instance, the distribution of physical products calls for customer service policies to address consumer needs. Delivering experiences and processes to end users is a complicated undertaking. The success of this undertaking is determining by a number of factors.
The current study focused on service marketing with regards to the retail sports footwear sector in the UK. It was found the competitiveness of the country’s sporting apparel and footwear industry relies a lot on service marketing. Establishing customer loyalty is a necessity in this industry. The loyalty is developed through the provision of high quality products, which helps in sustaining a company’s market share.
Customers demand to get value for their money. As a result, footwear companies in the UK find it important to inform the consumers about the value offered by their products. Communicating the value of the products is determined to a large extent by the nature of service marketing policies adopted. It is one of the reasons why promotion of services has become a major aspect of marketing in today’s global market.
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