Diffusing channels of self-service

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Entertainment, banking, telecom and retail have seen significant changes in consumer adaptation of services..

In the banking sector, the ATM is probably the most widely used service.
In the banking sector, the ATM is probably the most widely used service.

Services are basically differentiated through intangibility, inseparability, customisability and perishability. Each of these aspects is important from the viewpoint of services.

S. Ramesh Kumar

S. Swaminathan

Services are distinctively different as compared to products (even a product can be viewed as a service in an academic sense) and need to be adapted to the digital or self-service channel orientation that has become a part of many brand offerings today.

It may be interesting to analyse how consumers perceive and adopt self-service channel services with a digital interface. There are four sectors in which there have been significant changes with regard to consumer adaption of services — entertainment, banking, telecom and retail outlets. (Healthcare is another area where developments are expected in the next few years.)

Services are basically differentiated through intangibility, inseparability, customisability and perishability. Each of these aspects is important from the viewpoint of services.

When a youngster downloads the latest ringtones on his mobile, there is some customisation of the music (in accordance with his/her preference) to some extent. Also, the same consumer customises music from iTunes based on his or her preferences. Music on the move has triggered a trend and that happens without any traditional music hardware being present (including the Walkman that was fashionable not long ago). Perishability (the degree to which a service can be re-offered) may be high with regard to airline services (as the occupancy expires with the commencement of flight). But, with a Web site such as Ovi or iTunes, perishability is not an issue.

Inseparability is the degree to which the consumer and service provider need to be present for the service to work (for example, traditional cinema halls), which is no longer an issue with many entertainment options. There is also a convergence of the telecom and entertainment sectors and the mobile phone, which may be used for a variety of purposes other than just for conversations on the move. Some of them include navigation, Internet services and even money transactions (which may shortly be a reality in India).

Delivery of digital services

While entertainment seems to have undergone a radical change with regard to the category and its digitisation, the same may not hold good for retailing.

While Internet penetration is low, ordering through the Net has not caught on (except for a few categories such as airline tickets) despite a sizable segment with Internet access that can shop online. Books, images, gift items are some of the categories that have diffused well in online retailing in developed countries, and perhaps these categories hold a potential for certain segments when it comes to online retailing.

Kiosk-based preferences have not caught on even in categories such as cosmetics or footwear or optical accessories. There can be a variety of ways in which the final product can be delivered when the consumer chooses his/her preferences using a kiosk as an option. The reasons may also be associated with infrastructure facilities but even in a category such as personal care, the surface has just been scratched. is a Web site from Unilever that attempts to get the consumer involved by creating awareness about several customised answers to the queries of the customer about personal care.

A Japanese brand, Shiseido, attempted to create a kiosk that reflects how a combination of offerings (customisation) can be used by an individual consumer based on the preferences in one of the shopping malls. The majority of the consumers follow the traditional shopping model of ‘visit-touch-feel-buy.'

Perceived risks

In the banking sector several banks have introduced several technological measures that may enhance the services provided to consumers. The ATM is probably the most widely used service.

From the bank's viewpoint, the ATM works out to be much cheaper than the traditional teller-based method of dispensing cash. There are several benefits that consumers can get out of an ATM, such as requesting a cheque book or payment of bills, though the withdrawal of cash is the most preferred service for most consumers. But, adoption of such services is still a long way off.

Banks have also introduced Internet banking that offers a host of services for consumers. The perceived risk is perhaps one of the critical barriers that bank brands need to address while attempting to diffuse technology-based services.

Regardless of the positive perception of brands, consumers may be reluctant to use Internet banking.

Such a technology-based risk perception is probably also reflected in the low penetration and usage of credit and debit cards in the country. It may be worthwhile to analyse the marketing approaches that banks adopt to get more customers into such self-service channels.

Offering freebies of any kind, including some products as gifts, may not motivate consumers to use Internet banking. It may trigger a one-time usage or registration but what is needed is consistency of usage of such self-service channels. Segmentation by usage of technological banking services may provide the direction to get consumers who may be prepared to use them to move into different such self-service channels starting with ATM and moving up the value chain to Internet banking.

For example, it may be worthwhile to target the large segment of consumers — the “cash-seekers” — to get them to use the other services available in ATMs before migrating them to Internet channels.

The other segment of consumers — “ATM enhancers” — who are already using ATM for a variety of purposes such as paying utility bills, requesting a cheque book, transferring funds and recharging their mobiles, can be directed to a channel migration plan (from using the ATM to Internet banking). This readiness to use the digitalised service stems from their willingness to use the ATM to a greater extent than an average ATM consumer.

By understanding the basics of such consumer behaviour triggers, new marketing opportunities can be developed, which marketers can then use to address radical changes in the increasingly evolving and growing digital and self-service channel environment.

(Ramesh Kumar is Professor of Marketing, Indian Institute of Management, Bangalore. Swaminathan is CEO, Hansa Cequity, Mumbai.)

(This article was published in the Business Line print edition dated September 30, 2010)
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