What are the factors stimulating the transformation of the service marketing environment?

(A)

GOVERNMENT POLICIES :

1.
Changes in regulations : Traditionally, many service industries were highly regulated. The
government regulated the price levels, placed geographic constraints on distribution strategies and
in some cases even defined the product attributes. In the last few years there has been a complete or
partial deregulation in several major service industries. Reduced government regulations has already
eliminated or minimized many constraints on industries like airlines, banking, insurance, healthcare,
tourism and telecommunications.
Barriers to entry by new firms have been dropped in many instances, geographic restrictions and
service delivery has been reduced, there is more freedom to compete on price and the existing firms
have been able to expand into new markets and new lines of business.
2.
Privatisation and economic liberalization : Another important action taken by the
government of many countries, has been privatization of what were once government owned
services. The term privatization was first widely used in the United Kingdom to describe the policy of
transforming government organisations into investor owned companies. Privatisation has been
moving rapidly a head in many other European countries too.
3.
New Rules to Protect Customers, Employees and the Environment : Not all regulatory
changes represent a relaxation of government rules. In many countries, steps continue to be taken
to strengthen consumer protection laws, to safeguard employees, to improve health and safety, and
to protect the environment.
4.
New agreements on trade in services : Finally national governments have long controlled
trade in both goods and services. International trade in services is being stimulated by decisions to
loosen trading restrictions through negotiations of the World Trade Organisation, and individual
countries are choosing to enter into free-trade agreements with some of their neighbours examples
include NAFTA, concluded between Canada, Mexico and the United States.
(B)

SOCIAL CHANGES :

1.
Rising Customers Expectations and Shot of Time : The Demand for Consumer Service
and the way in which people use them has been strongly influenced by a host of changes. More
people are living alone than before, and more households contain two working adults,
including telecommuters and others who work from in home offices.
2.
More Affluence : Increasing affluence gives people more disposable income, and there has
been an observed trend from purchasing new physical possessions to buying services and
experiences.
3.
Rising ownership of computers and mobile phones : A combination of changing lifestyles,
higher incomes and a declining prices for many high-technology products has meant that more
people are enjoying computers, thus enabling them to use internets to send and receive e-mail and
access websites from around the world.

4.
Increased immigration : Another important social trend has been increased immigration into
countries such as the United States, Canada and Australia. These countries are becoming much
more multi cultural to meet the needs of non-traditional segments now living within the domestic
market.
(C)

BUSINESS TRENDS :

1.
Manufacturers Add Value to Service and Sell Services : Significant changes have taken place
during the last 25 years in how business firm operate. For example service profit centres within the
manufacturing firms are transforming many well-known companies in the field such as computers,
motor vehicles and electrical and mechanical equipments. Supplementary services once designed to
help sell equipment including consultation, credit, transport and delivery, installation, training
and maintenance are now offered as profit seeking services in their own right.

2.
Marketing Emphasis by Nonprofits : Many Public and Non-Profit Organisations have forced
the business firms not only to develop more efficient operations but also to pay more attention to
customer needs and competitive activities
3.
Relaxation of Professional Association Standards : Many professional associations have
been forced by the government or legal pressures to remove or relax long-standing ban on
advertising and promotional activities. The professionals are affected by such rulings are
accountants, architects, doctors and lawyers whose practices now engage in much vigorous
competitive activity than previously.
4.
Emphasis on Productivity and Cost-Saving : The firms are pressurized to improve
productivity with increase in the price-based competition. Demands by investors for better returns
on their investments have also fuelled the search for new ways to increase profits by reducing costs
of service delivery.
5.
Quality Movement : Customers discontent with the quality of services is ongoing. In case of
manufactured products, complaints are regarding poor service at the retail point of purchase,
obtaining refunds, or getting repairs made after the sale.
Service industries such as banks, hotels, car hire firms, restaurants and telephone companies have
been criticized for failures on the technical aspects of the service.
6.
Growth of Franchising : Franchising has become widespread in many service industries, not
only for consumer services but also for business to business service It involves a licensing of
Independent entrepreneurs to produce and sell a branded service according to specified
procedures. Large franchise chains are replacing a wide array of small independent service
businesses.
7.
Innovative hiring practices : Finally, changes have occurred in service firms hiring practices.
In the recent years competition and enlightened self interest have led companies to recruit more
highly educated managers who are unwilling to question traditional ways of doing business and able
to bring new ideas from previous work experience in another industry.

(D)

ADVANCES IN INFORMATION TECHNOLOGY :

1.
Convergence of computers and telecommunications : New technologies are radically
altering the ways in which many service organisations do business with their customers as well as
what goes on behind the scenes.
2.
Digitization of Text, Graphics, Audio and Video : Digitization allows text, graphic Video and
audio to be manipulated, stored and transmitted in digital language of computers.
3.
Powerful software : Faster and most powerful software enables firms to create a rational
databases that can combine information about customers with details of their transactions and had
then to mine these databases for insights into new trends, new approaches to segmentation and
new marketing opportunities.
4.
Greater Bandwidth : Greater bandwidth, made possible by innovations such as fibre optic
cables, allows faster transmission of vast amount of information so that customers contact
personnel can interact almost instantly with a central database, no matter where they happen to be
located.
5.
Wireless networking : The creation of wireless networks and miniaturization of electronic
equipments from cellphones to laptops and scanners allows sales and personal service customers
to keep in touch while on the move.

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