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4 Oct 2010

Best Service or Best Price: Which Reigns Supreme?

In the article, “Are You Being Served?”, in the September 6, 2010 issue of The New Yorker, the author James Surowiecki cites a survey of more than three hundred big companies from a few years ago in which “eighty per cent described themselves as delivering ‘superior’ service, but consumers put that figure at just eight per cent.”

Yet, one of the assumptions implied in the article is that quality service matters to the customer, or at minimum it should. Yes, in an open-ended request, customers would say that is does. However, how much are they willing to pay for it? Furthermore, will they actually pay for it when the opportunity arises? The article did cite some companies providing good service for low cost; however, it could only offer up luxury businesses as examples of where good service could support a cost premium. Of course, in these cases we have to factor in the emotional effects of buying something that conveys status; here, branding is vital.

In the end, there might not be an objective answer to the question. It depends upon many factors such as the consumer, the market, the competition, the product, the brand and the buying experience itself. For example, the article never concerned itself with product quality. Perhaps some consumers are willing to tolerate poor service if the product is top-notch. That becomes an issue of value which is subjective and thus emotional.

The unresolved question implied by the study was, “Why do customers tolerate such a discrepancy and not move to another provider?” However, the author overwhelmingly focused on why businesses don’t provide quality service and didn’t explore this intuitive phenomenon.

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