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Battling the Paradoxical Relationship Between “Touch and Tech” in Frontline by: Karren Quinio 10371070 MKT6308 Current Issues in Marketing Assignment 1 Literature Review 06/04/2016

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Battling the Paradoxical Relationship Between “Touch and Tech”

in Frontline

                   by:  Karren  Quinio  10371070  MKT6308  Current  Issues  in  Marketing    Assignment  1  Literature  Review    

06/04/2016

  1  

Table of Contents

 

1.  Introduction  .................................................................................................................  2  

2. Technology Infusion and Current Marketing Models  .................................................  3  

3. The Current Issues: Causes and Implications  ..............................................................  5  

4. The Good Side of Frontline Technology Infusion in Retail  ..........................................  6  

5. Technology as Both a Barrier and Benefit in Frontline Service Encounters  ...............  7  

6. It is not a Question of Touch or Tech – Viewpoint and Suggested Solution  .................  9  

7. Highlighting the Role of the Employees in Service Encounter  ...................................  10  

8. Conclusion  ..................................................................................................................  12  

References  ......................................................................................................................  13    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Battling the Paradoxical Relationship between “Touch and Tech” in Frontline

1. Introduction  

The article entitled The Evolution of Marketing emphasized the importance of marketing in

business nowadays (Kumar, 2015). From an aspect of the producer-consumer or seller buyer-

relationship usually pertaining to the movement of excess production to its end consumer,

marketing transformed its definition and significance not just in business but in society in

general (Kumar, 2015) especially with the popularity of Corporate Social Responsibility.

Satisfying or delighting an extended set of stakeholders, from customers to the society, the

environment and the world as a whole, was the response of marketers to the needs of the soul

for sustainability (Webster Jr. & Lusch, 2013). Barbu (2013) like many others stressed the

essentiality of new technology, in this evolution. Just by watching and reading the trends in

marketing one can infer that the significance of technology to marketing nowadays is mostly

linked to data collection to better facilitate matching of products to the correct market in B2C

marketing or marketing the data itself in B2B marketing. This resulted to the popularity of

big data, data analytics and digital marketing (Stone & Woodcock, 2014). I call this

“backroom” marketing.

The other side of marketing for me is frontline where high customer contact normally

happens in the retail and service environment until the emergence of self-service technology

(SST). Even without referring to the literature yet, just by observation, the role of retail store

also has evolved and has now become a good venue to showcase the technology level of the

company through digital gadgets, wide 3d monitor screens, virtual mirrors and wi-fi

capabilities, to cite some, in addition to being a place to sell a product or provide a unique

customer service from employees. This is what this paper will talk about -- the effects of

technology infusion in frontline retail and service. It is a current issue in marketing because

with the increasing channels of marketing as a by-product of big data, the limited resource,

which is the marketing budget has to be allocated more to which marketing tool better

contributes to the bottom line and the higher purpose of marketing. This is related to what

Fanning (2014) has stated as one of the goals of marketing: to minimise the cost as

percentage of sales. This is also a response to the call for marketers to be more aware of the

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numbers, statistics-wise (proper use of data) and financial-wise (cost minimisation) to fulfil

the new role of marketing in business integration (Kumar, 2015).

In Australia, the two major players in grocery retailing have invested in technology by

increasing self-serve checkouts to replace the traditional checkout counters and significantly

cut down costs on staff salaries (Tonkin, 2016). Another significance of retail technology in

Australian stores is the trend in trying to provide new shopping experience to keep customers

in the shops despite their busy lifestyles. The movement of supermarkets from suburban areas

to closer to CBDs due to population growth can be a factor to this potential use of retail

technology (Tonkin, 2016). If other retailers in Australia can copy this trend for self-service

technology and frontline technology infusion to create a new shopping experience is what

this paper will try to answer.

2. Technology Infusion and Current Marketing Models

The effects of frontline technology infusion will be analysed using the premise of the Circle

of Satisfaction. According to the model created by Fanning (2014) a quality product is

perceived by customer as a product with value to them and the more that a customer is

satisfied with the product value through experience, the more that a customer will trust the

product, show loyalty through repeat purchase, thus, increasing his customer lifetime value

(CLV) to the company. That will ultimately lead to increased profitability to the company

(Fanning, 2014).

                                                                                                                                                                                                                                             SOURCE:    Fanning,  2014  

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Also, a good model that is used is Holt’s taxonomy of consumer behaviour which explained

that the purpose of consumption can either be hedonic or utilitarian and the structure can be

consuming an object or consuming the interaction (interpersonal). Combining purpose and

structure, Holt (1995) came up with four- dimensional typology called consuming as

experience (“involves emotional or physical pleasure”), consuming as integration (assimilates

consumption with self for “richer experience”), consuming as play (“interacts with others”)

and consuming as classification (“delineates associations with others”) (M. M. MacCarthy,

personal communication, August 22, 2015).

                                                                                                                                                                                                                                                                             SOURCE:  Holt,  1995  

If only for the functional benefit of products and if only all consumers have low involvement

with them then in my opinion there will be very minimal argument against the use of

technology in frontline retail and service as it can be more cost and time efficient for both the

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customer and the organisation. But because more than physical needs, consumers are aiming

to satisfy higher needs pertaining to their psychological needs best described by Holt (1995)

as consuming as experience, social needs (Holt’s consuming as play) and esteem needs

(Holt’s consuming as integration and classification), companies need to exert conscious effort

in combining technology with humanic factors in a social interaction set-up of retail stores.

3. The Current Issues: Causes and Implications

Two major retailing trends identified in module 5 of current issues in marketing are retail

technology and retaining retail staff (H. C. Cripps, personal communication, March 23,

2016). When one says retail technology, one of the first things that will come to mind is a

self-checkout counter, which translates to the seemingly paradoxical relationship between

technology and people components in the stores. In Australia, the two biggest supermarkets

are still receiving criticisms from customers about their increasing self-checkout counters and

the lost personal touch in their grocery shopping (Law, 2015 & Hatch, 2015) but Tonkin

(2016), as mentioned earlier, reported that it was cost and time efficient for both the customer

and the company. However, SST is not part of the key success factors he identified for the

supermarkets and grocery stores industry. His list includes ability to control stock on hand,

attractive product presentation, experienced workforce, proximity to key markets and

availability of car parking (Tonkin, 2016). In the United States, Ikea removed its self-

checkout lanes after customers piled up because they did not know how to use the scanning

and payment terminals (Mullins, 2012).

The cause of the criticisms on losing personal touch in the Australian supermarkets and the

failure of Ikea’s SST in the U.S. can be linked to Holt’s taxonomy’s consuming as experience

and consuming as play. Consumers will only continue to go to either Coles or Woolworths if

they experience pleasure while shopping. But they experienced the opposite when SST was

introduced. They felt sorry instead for the employees who lost their jobs because the

machines replaced them (Law, 2015 & Hatch, 2015). Also, it would not be a very pleasurable

experience for customers if every time they would use the self-checkout counter the noise

that would say “unexpected item in the bagging area” would annoy them. In Ikea’s case, on

the other hand, shoppers experienced cognitive dissonance, which is also not a pleasurable

experience because using the machines in the self-checkout lanes was a deviation from the

normal “script” that they followed every time they would pay when they go shopping. The

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cases of SST in Australian supermarkets and Ikea in the U.S. are nonconformities to Holt’s

consuming as play. As stated earlier, one of the reasons why people consume is to interact

with others. Consumers who are highly social might not really like the idea of removing the

“personal touch” in shopping.

The more obvious cost implication to business of introducing SST is due to shop theft.

British survey found $3 billion worth of stolen items from supermarkets annually while

Australian retail experts say pilfering cost for Coles and Woolworths could be as much as

$2.9 billion annually (Carter, 2014). Marketing implications include customer dissatisfaction,

negative brand image, as others may take it as against Corporate Social Responsibility (CSR)

to lay-off employees and replace them with machines, and thus negative word of mouth

(WOM) and e-WOM.

4. The Good Side of Frontline Technology Infusion in Retail  

Here Holt’s taxonomy is used again to analyse the potential positive effects of frontline

technology to encourage buying behaviour but this time using consuming as integration

(assimilates consumption with self for “richer experience”) and consuming as classification

(“delineates associations with other”) (M. M. MacCarthy, personal communication, August

22, 2015). Even with the seemingly budding competition between online and offline channels

in retail, Blazquez (2014) still gives importance to stores as the main venue for employee-

customer interaction. For her, the role of stores as a channel of retail is built on the need for

instant gratification and multi-sensory stimuli to affect perception and thus consumer

behaviour, which is consistent to Holt’s consuming as integration. Blazquez (2014) gathered

classic work of Kotler (1972) about atmospherics (intentionally organising the store space in

such a way that subconsciously tells customers to buy) and newer studies of Baker, Grewal

and Parasuraman (2009); and Puccinelli, Goodstein, Grewal, Price, Raghubir and Stewart

(2009) mentioning ways to influence consumer behaviour through different cues like design,

social cues (floor staff and people looking or buying) and ambient cues (e.g. technology

infusion like ipads and virtual mirrors). In the Consumer Buying Decision Process, this is

situational influence under personal influences (other two are psychological and social

influences) (Simkin, 2000). She then referred to Drapers (2012), Rosenblum and Rowen

(2012), and Euromonitor International (2009) in saying that technology can be an attraction

and can promote engagement in shopping and thus must be used to meet customer

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expectations (Blazquez, 2014). Also, as much as frontline technology became a novelty in

merchandise layout it serves another purpose of integrating experience between channels

through click-and-collect services and fashion industry’s interactive fitting rooms that

connect with social networks (Blazquez, 2014). However, relevance and added value to the

customers are still the criteria in adopting new technology in retail (Blazquez, 2014).

The result of this quantitative survey of 439 fashion consumers in the UK by Blazquez (2014)

is also consistent with Holt’s consuming as classification. Clothing or fashion in general is

used for self-branding and people who wear “fashionable” clothes are classified as trendy or

cool. Thus, by association, going to retail outlets with technology that has multisensory,

fantasy and emotive effects can rub on these consumer’s trendy or cool preferences.

Based on IBISWorld’s clothing retailing report, this result can be applied in Australia as one

of the key success factors identified for the industry is to keep up with trends to improve

CLV of fashion-conscious customers (Magner, 2016).

5. Technology as Both a Barrier and Benefit in Frontline Service Encounters  

The premise used by Gielbelhausen, Robinson, Sirianni and Brady (2014) that service

encounters are social interactions is likewise consistent to Holt’s consuming as play. They

studied the secondary data from hotel industry’s J.D. Power Guest Satisfaction Index (GSI)

and first-hand data from a controlled experiment. In service encounter as in any social

interaction, the presence of rapport is of utmost important. “Customer rapport” is defined as

“customer’s perception of having an enjoyable interaction with a service provider employee,

characterised by a personal connection between the two interactants” (Gremler and Gwinner

2000, p. 92). The literature recognises the importance of using both nonverbal cues such as

smiling and eye contact and verbal communication such as knowledge sharing in rapport

building (Gielbelhausen et al., 2014). As confirmed by the succeeding studies of Gremler and

Gwinner (2008), Hennig-Thurau, Thorsten, Groth Paul and Gremler (2006), its importance in

service encounter is related to its positive effect to the goals of customer satisfaction and

loyalty which convert to the long-term success of customer-firm relationships (Gielbelhausen

et al., 2014). It is also the presence of rapport between the customer and the employee that

determines whether technology is a barrier or a benefit in the service encounter

(Gielbelhausen et al., 2014). The findings of their study suggest that the use of technology in

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the form of point-of-sale terminals, tablets and kiosks becomes an interpersonal barrier when

customer cannot respond to the employee rapport-building efforts because he is paying his

full attention to a self-check in for example. Technology becomes beneficial in the service

encounter when the employee is not engaging in rapport building because it allows the

customer to avoid the unpleasant service interaction (Gielbelhausen et al., 2014).

Gielbelhausen et al. (2014) also used the Role and Script Theories to explain the effect of

frontline technology infusion to this service encounter as form of social interaction. It was

mentioned that in the service encounter, customer and employees assume roles and customer

evaluates his experience based on a script which are normative standards dictated by his

previous experiences. When customer thinks that there is a violation in the script from both

ends, he will feel psychological discomfort (Gielbelhausen et al., 2014). Technology is like a

third wheel in the employee-customer interaction in this case. Customer feels that when he

pays attention to the frontline technology, he feels that he is not fulfilling his role in the script

of being able to reciprocate to the employee according to the normative standard. On the

other hand, if the violation from the script is from the employee’s end (e.g. if the employee is

not very accommodating), frontline technology serves as an escape for the customer to avoid

the negative encounter and maintain his good mood, decreasing psychological discomfort

(Gielbelhausen et al., 2014).

Gielbelhausen et al. (2014) talked about the following implications of their study: 1.) As

independent factors, both building employee-customer rapport and technology infusion have

positive effect in service encounter and thus, customer experience, but can have negative

effects when combined together. Considering this, the authors suggest that further research be

done on seamless integration of frontline technology with high-rapport service encounters by

evaluating specific strategies to do so. 2.) Frontline technology infusion can also be used as a

strategy to offset touch point weaknesses and other negative branding as it can have the same

buffering effects as brand personality, commitment, brand equity and relationship type.

Per IBISWorld, one of the key success factors in the Hotels and Resorts Industry in Australia

is access to multiskilled and flexible workforce and it has no mention in technology

(Williams, 2016). This is why this analysis is relevant to Australian market.

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6. It is not a Question of Touch or Tech – Viewpoint and Suggested Solution  

So far there is no found hard and fast rule in the literature about the use of frontline

technology. However, what is apparent in the mentioned reports by IBISWorld in the three

previous sections is that having skilled employees is almost always on the list of industry key

success factors. Only in the clothing retail industry was it not mentioned. This is consistent to

what the discussed literature about fashion retail is implying. Technology infusion in fashion

retail can facilitate positive consumer behaviour from the fashion-conscious market because

technology is seen as trendy like the market. In my opinion the potential of further frontline

technology infusion in fashion retail is higher than the other two industries discussed.

IBISWorld reports stress the criticality of the internal marketing of retail and service

industries which involve having employees with the right qualities to represent the company

during face-to-face encounters with customers as each customer-employee interaction is a

make or break of customer experience. One of the responsibilities of marketing in B2C is

relationship management to ensure all processes are customer-centric (Vargo & Lusch,

2004). The learning in the literature is both people and technology should serve the purpose

of coming to the store be it consuming as experience, consuming as integration, consuming as

play or consuming as classification or combination of reasons. It is not an either or

decision—touch or tech, because both are important. It is more of how do marketers combine

them in a social interaction bearing in mind that in Australia having the right people in

frontline is still one of the key success factors. Salomann, Duos, Kolbe and Brenner (2007)

suggests that it does not have to be a choice between high-touch or high-tech in service, a

balance can be achieved as proven by UBS and Swiss Re. Two recommended ways to

achieve the balance are: 1.) To convince them of the value added of the self-service option

both to them and the company (e.g. Swisscom by introducing ‘eBill’ platform saves cost for

every paperless invoice at the same time customers who opted to use the self-service gained

knowledge on how to better monitor their expenses through graphic analysis tools provided

to them in the platform.) 2.) Self-service should just supplement not replace personal

assistance in service (e.g. the visibility of ground personal assistance in Lufthansa’s self-

check-in terminals) (Gielbelhausen et al., 2014).

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7. Highlighting the Role of the Employees in Service Encounter  

Having worked for over ten years in a combination of customer service and retail, I agree to

what both the industry reports and literature say are the key success factors. Thus, I choose to

highlight the role of the employees in service encounter because I consider giving the best

possible experience of face-to-face employee-customer encounter essential in every industry.

Further through the literature, two studies put emphasis on the key role of employees’

emotional intelligence in the frontline social interaction. First, Delcourt, Gremler, van Riel

and Birgelen (2013) used the description of high-contact services in the classic articles of

Kellogg and Chase (1995); and Parasuraman, Zeithaml and Berry (1985), saying that in this

type of customer-employee interaction, intimacy, the extent of content-rich information, long

interaction times, and sometimes, intense emotions are present. Delcourt et al. (2013)

recognise the importance of facilitating high-quality interactions in this type of service and

referring to Cartwright and Pappas (2008) acknowledge the key role of employee’s emotional

competence (EEC) in delivering the said high-quality encounter with the customers. They

eliminated the biased result of previous studies using employee-reported or supervisor-

reported measures of EEC by means of customer-perceived EEC (Delcourt et al., 2013). The

findings of their quantitative study using a sample of 247 students and using hairstyling as the

high-contact service confirmed their hypothesis. They concluded that EEC has direct and

positive relationship to both customer satisfaction and loyalty and it is rapport, defined by

Gremler and Gwinner (2000, p. 92) that links this relationship.

To demonstrate their findings:

EEC measured by SEA (self-emotion appraisal or the employee’s ability to

understand and express emotions) + OEA (others’ emotion appraisal or the

employee’s ability to perceive and understand the emotions of others) + ROE

(regulation of emotion or the employee’s ability to regulate his or her own emotions)

+ UOE (use of emotion or the employee’s ability to make use of his or her own

emotions) à rapport à customer satisfaction and loyalty (Delcourt et al., 2013)

Thus, managers of high-contact services should hire emotionally competent employees if

they aim for development of rapport, customer satisfaction and loyalty (Delcourt et al., 2013).

Furthermore, they suggested that service managers can consider scientifically validated

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training programs of Emotional Competence for existing employees relying on the findings

of researches in psychology by Kotsou, Gregoire, Nelis and Mikolajczak (2011); and Nelis,

Quoidbach, Mikolajczak and Hansenne (2009) that it can be taught, learned and improved.

In the second study found, Barnes, Ponder and Dugar (2011) worked on the premise that

providing customer delight has beneficial effects on service firms. Giving importance to

customer delight or ultimate customer satisfaction is being argued because by the concept of

CLV some customers are not worthy of the limited resources allocated to delight them

(Barnes et al., 2011). In other words, sometimes the ROI does not cover the cost of

investment (cost to satisfy or delight the customer). Barnes et al. (2011) cited the works of

Arnold, Reynolds, Ponder and Lueg (2005); Barnes, Beauchamp and Webster (2010);

Berman (2005); and Keiningham and Vavra (2001) to justify the significance of customer

delight because it creates emotional bonds, stronger memories, higher levels of loyalty,

commitment, willingness to pay, and word of mouth. They then classified the factors that

lead to customer delight into cognitive and affective. Cognitive route to customer delight uses

employee effort, employee skills, core product and service recovery while the affective route

focuses on enhancing self-esteem or maximising hedonic benefits during employee-customer

interaction through factors like friendliness and courtesy (Barnes et al., 2011). Berry, Wall

and Carbone (2006) call this factors allowing the firm to “cultivate emotional connectivity”

with the customer as humanic factors (Barnes et al., 2011). They used qualitative Critical

Incident Technique (CIT) methodology, a qualitative study that eliminates the weakness of

previous researches of limited sampling (Barnes et al., 2011). Using customer’s perspective

in the service environment, Barnes et al. (2011) determined which of the factors best routes to

customer delight. Based on the results of their study, employee affect and employee effort

more than employee skills produces delight from the customer. One important point that

Barnes et al. (2011) pointed out is the difference between retail and service environment in

defining which lead to customer delight. Core product can be a route to customer delight in

retail whereas employee factors usually determine both affective and cognitive routes to

delight in service environment (Barnes et al., 2011). This is consistent to both the industry

reports and literature discussed earlier. It also relates back to the allocation of limited budget

to the selection and training the best employees in service (Barnes et al., 2011).

  12  

8. Conclusion  

Although this report focused to only three industries requiring face-to-face interaction with

customers, a limited number for frontline retail and service, the Australian industry reports

confirm what the literature says. Thus, even though the studies in the reviewed literature are

mostly done in Europe, the findings are good considerations for Australian setting.

The major finding is that the paradox between “touch” or “tech” is not true. Both are essential

now in business and are facilitating the evolving role of marketing in it. “Touch” is there

from the conception of marketing because what is marketing without the people involve in

the exchange. Technology asserted its importance when marketers realise the need for a more

efficient way of data collection and integration aside from virtual reality and augmented

reality. As independent factors, “touch” and “tech” lead to better results. However, at one

point of their convergence, that is frontline retail and service, a balance is needed so that they

supplement each other for a better customer experience. When the relationship between

“touch” and “tech” is challenged in a service interaction, the “touch” element has to surface

because it is a social interaction. The employee has to exhibit his emotional competence to

gain customer satisfaction and loyalty. This will ultimately translate to profits for the

company.

Thus, the task of seamlessly integrating “touch” and “tech” requires a lot of effort for

marketers. Training to improve human skills for a better customer experience requires budget

for internal marketing. On the other hand, technology infusion involves huge capital

requirement. To achieve a good balance requires a critical study to know what combination

gives the best ROI. Bearing in mind externalities such as economic and demographic factors,

marketers should always be guided by company’s vision, mission and values, must have a

marketing strategy to reach marketing and business objectives that is specific, measurable,

attainable, relevant and time-bound.

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