current issues literature review full report
TRANSCRIPT
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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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).
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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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