Investigate Tesco in Taiwan by Flower of Service and

Augment offering service Models

Advisor: James Stanworth

Department of Business Administration

National Changhua University of Education

Students: Jay, OA

Department of Business Administration

National Changhua University of Education

Abstract:

Through “Flower of service” and Service package model, these two just offer us an overall concept. They couldn’t tell us what happen in the procedure. If we can describe more detail in the procedure, then we can ask customer if this service is enough or how this service work. “Flower of service”, a way looks at the service. “Augmented Service offering”, help us observe what happen in the service process.Here, we hope to use “Augmented Service Offering” (1.) to describe what services they offer, and (2.) to explore how these services work and augment their basic service package. Besides, we offer an observation way to help us describe their service.Tesco is a world-class food retailer. They grow rapidly, in 2000, Tesco opened its first hypermarket in Taiwan, and planned that there will be 22 stores in Taiwan. They are very famous in UK. So, we chose Tesco in Taichung as our research sample to see their service. The result reveals they should improve somewhere. If it is enough in Asia, they don’t do it. But, that is another research question. So, we still give them some suggestion.

Keyword: Tesco, Hypermarket, Service designing

JamesNoteAn investigation of TESCOYou could add TESCO and NCUE logos to the cover.

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JamesNoteThey are number one retailer in UK in terms of sales.

JamesNoteSomewhere is too general. In business people want to keep it precise....they should improve on specific aspects of their service.

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Content

I. Introduction ..............................................................4 1.1 Background: ....................................................................................................4 1.2 Objective: .........................................................................................................4 1. To describe what services they offer. .............................................................4 2. To explore how these services work and augment their basic service package. .................................................................................................................4

II. Literature: .................................................................5 2.1 Tesco: ...............................................................................................................5

2.2 The service package:.......................................................................................62.3 The Augmented Service Offering: ..................................................................6 2.4 The concept of Flower of Service: ..................................................................6 2.5 Flower of service Combines with Augment service offering:........................7

III.Mythology: ................................................................9 3.1 Setting:.............................................................................................................9

3.1.1 What was the research setting? .........................................................9 3.1.2 Why did you choose that particular setting?....................................9 3.1.3 What ethical issues were raised by the study, and how were these addressed? ....................................................................................................9

3.2 Observation: ....................................................................................................9 3.2.1 Recording possibilities ........................................................................9 3.2.2 We want to observe/ collect information about:...............................9 3.2.3 Audit the service:...............................................................................10

3.3 Participants: ..................................................................................................10 3.3.1 What were their characteristics? .....................................................11

3.4 Materials: ......................................................................................................11 3.3.1 What tests/scales/interview/ or observation schedules/questionnaires were used? .......................................................11

3.3 Data resource: ...............................................................................................11

IV. ..........................................................................Result:

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4.1 Service Flowers: ...........................................................................................12 4.2 Augmented Service Offering:......................................................................12

4.2.2Accessibility: .......................................................................................12 4.2.2 Interaction: ........................................................................................13 4.2.3 Customer participation: ...................................................................14

4.3 Our first-time observation result: ..............................................................14

V. Conclusion:..............................................................15

VI.Reference:................................................................16

I. Introduction

1.1 Background:

Comparing to the physical good, service embraces a huge diversity of activities which include intangible inputs and outputs. One of the key to evaluate service-quality is service design. According to “Service package model”`, it describes service as a package or bundle of different services (Edvardsoon, B. 1996). The package is divided into two main categories: the main service and auxiliary service. It is a simple way to list the nature parts of any serve. Lovelock offers “Flower of service”, it was a way to look at Core and supplementary services and help us have insights into service (1992). Quality is often the most important resource of competitiveness. Through “Flower of service” and Service package model, these two just offer us an overall concept. They couldn’t tell us what happen in the procedure, ex. How many parking spaces do the company should have? Sometimes we lost the opportunity is due to no parking spaces. If we can describe more detail, then we can ask customer if this service is enough or how this service work. Tesco is the leading food retailer of UK. They think Tesco is a simple enterprise, it means they keep every thing simple. And their objective is to keep customer satisfy. Tesco’s chef Trry Lee in 1989, make an objective, “Simple do your best” and “Listen to your customer”. This helps Tesco become the head of food retailer.

1.2 Objective:

“Flower of service”, a way looks at the service. “Augmented Service offering”, help us observe what happen in the service process. This perspective directs our attention to value the quality (Ruyter, Wetzels et al. 1997). While these models differ in detail, we hope to combine these two models to offer a well one. In Taiwan, Tesco win a local Gold prize for high quality of service customer. But sometimes, high quality means high cost. So, we are interested in how they delivered their services to customers and what steps can they augment during delivering it. So, our objectives are as follows:

1. To describe what services they offer.

2. To explore how these services work and augment their basic service package.

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II. Literature:

2.1 Tesco:

In 1998, Tesco became the leading food retailer, the most admired retailer in the Financial Times annual survey and the most admired company in the UK. In 2006, their net profit has reached two hundred fifty million pounds. Tesco is a world-class food retailer. It distributed over the world. When they go global, they not only face a new environment but also new competitors, like Wal-Mart, Carrefour, Ahold and Auchan. In recent years, they expand their market to South Korea, Malaysia, Tailand and Taiwan, etc rapidly. Terry Leahy, the Chief Executive since 1997, he said on April 25th, Tesco will plan to open one hundred thirty new small convenient stores and branch stores in foreign Market. They are growing very rapidly. This also brings challenge for their management. Leahy ever said that “A new style for a new era in Tesco’s development”. The traditional saying in retailing is that” the customer is always right”. Tesco’s post-1993 revival has been founded on getting back in touch with customers and putting them first. Leahy calls it, “investing in the shopping trip”(Kelly 2000). Tesco in Taiwan: A few years ago, the executive of Tesco thought Taiwan still have big enough market to invest in. Tesco launched its Asian business through the acquisition of the Lotus chain in Thailand in 1998. And in 2000, Tesco opened its first hypermarket in Taiwan, and planned that there will be 22 stores in Taiwan. They think physical facility is necessary, but it is easy to imitate. Ex, when Tesco prepared barrows for customers, Carrefour follows it immediately. Hence, they think the key is foundation managers’ ability. In store, the decision was worked by them. As far as Top manager, their work is to create a cheerful environment. “Every little Help”, they hope their customer tell them their expectation for “Every Little Help’ shopping and know from their staff what is important to them. The way thy work is how they deliver “Every Little Helps” to make Tesco a better place to shop and work in. Under this good condition, it will let staff feel very comfortable and then improved their service quality. Such a good competitiveness like this, it is hard to imitate by other competitors(李盈錫 2003). But now, the news reported that Carrefour and Tesco want to Trade Stores in Central Europe, Taiwan. (chinesenewsnet.com).David Orchard-Smith, the CEO of Tesco in Taiwan pointed: The Tesco in Taichung in Hsin Tien is combined the shopping center with hypermarket to operate. Not only for Taichung city by the planning of the newest operation model, but also provided an

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international shopping environment for customers. He also pointed: Based on the local-principles of globalization consistency of Tesco, the Hsin Tien store also take local strategies not only in goods content and the management of supply chain, but also on recruiting, even more practicable adequately.

2.2 The service package:

According to the service package model, the service is described as a bundle of different services, tangibles and intangibles. Here, it divided into main categories: the main service or core service (de Brentani and Ragot 1996). Bur, for managerial reasons, it is necessary to distinguish between three groups of services(Edvardsson and Olsson 1996):

Core-service Facilitating services (and goods) Supporting services(and goods)

The core service is the qualification of the company on the market. Facilitating services are mandatory. If they are left out, the service package collapses. And supporting services are the resources of competitiveness. It will help companies increase value for customers.

2.3 The Augmented Service Offering:

What does buyer-seller happen in the service process? It differs from situation to situation. Here, there are three basic elements which from a managerial point of view constitute the process(Gronroos 2000).

Accessibility of the service. Interaction with the service organization. Customer participation.

These elements are combined with the Service package and form an Augmented Service Offering. In these elements, they also only focus on one thing, increasing the customers’ benefits.

2.4 The concept of Flower of Service:

Facilitating and Enhancing Supplementary Services There are potentially dozens of different supplementary services, but almost all of them can be classified into one of the following eight clusters. We have listed them as either facilitating or enhancing supplementary services(Lovelock, Wirtz et al. 2005)

Facilitating Services Enhancing Service

* Information * Consultation

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* Order taking * Hospitality

* Billing * Safekeeping

* Payment * Exceptions

These eight clusters are displayed as petals surrounding the center of a

flower---which we call the Flower of Service. We have shown them clockwise in the sequence in which they are often likely to be encountered by customers.

Information: To obtain full value from any good or service, customers need relevant information.

Order Taking: Once customers are ready to buy, a key supplementary element comes into play---accepting applications, orders, and reservations.

Billing: Billing is common to almost services(unless the service is provided free of charge).

Payment: In most cases, a bill requires the customers to take action on payment and such action may be very slow in coming.

Consultation: A simple response to customers’ questions(or printed information that anticipates their needs).

Hospitality: Hospitality-related services should, ideally, reflect pleasure at meeting new customers and greeting old ones when they return.

Safekeeping: While visiting a service site, customers often want assistance with their personal possessions.

Exceptions: Exceptions involve supplementary services that fall outside the routine of normal service delivery. There are several different types of exceptions:

Special requests: There are many circumstances when a customer may request service that requires a departure from normal operating procedures.

Problem solving: Situations arise when normal service delivery (or product performance) fails to run smoothly as a result of accidents, delays, equipment failures, or customers experiencing difficulty in using the product.

Handling of complaints/suggestions/compliments: This activity requires well-defined procedures.

Restitution: Many customers expect to be compensated for serious performance failures.

2.5 Flower of service Combines with Augment service offering:

Lovelock offers a new way to look at the service. It depends on the service

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package’s concept. He classifies the service bundle into clusters but depend on the three elements which are core service, facilitating and supporting. It makes the service more concrete. If we use it to explain what happen in Service process by Flower of Service, it will be more helpful. Next, we will discuss that how do we compose of these two models. Before we discuss that how do we compose of Augmented Model and Flower of Service Model, we should have some concepts. Service offering is Dynamic: Services are processes the service. The service exists as long as the production process goes on. In the context of services, such a perspective directs our attention to value as being related to the experience of the service delivery process rather than the acquisition of a certain object or outcome (Ruyter, Wetzels et al. 1997). So, the Dynamic Model offers a framework which has seven steps as follows:

Assessment of customer benefits sought. Defining overall features of an augmented service offering.

Defining a service concept which guides the development of the service offering.

Developing the core service and facilitating and supporting services and goods of the basic service package.

Planning the accessibility, interaction and customer participation elements of the augmented service offering.

Planning supportive marketing communication. Preparing the organization for producing the desired customer benefits in

the service processes. And then, when we have these basic concept and clusters, they will help look at an Augment service offering as the Figure1.

Service of Flowers

Augment service offering

Service Working items

Figure.1

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III. Mythology:

3.1 Setting:

3.1.1 What was the research setting?

We want to investigate the service of Tesco and describe how delivered their services to customers and what steps they can augment during delivering it.

3.1.2 Why did you choose that particular setting?

In Taiwan, there have many homogenous hypermarkets like as Carrefour and RT-Mart…and so on. And their operation model almost similar, therefore, service quality is often the most important resource of competitiveness. Tesco in Taiwan just only five shop at current, but their profit and customers more than Carrefour and RT-Mart. So based this reason we want to investigate the service of Tesco.

3.1.3 What ethical issues were raised by the study, and how were these addressed?

Because we want everyone can realize our report we wrote easily, we took some pictures of Tesco’s layout. But according to Tesco’s policy, we can’t do this without permission.

3.2 Observation:

3.2.1 Recording possibilities

Taking pictures

Notes – pen and note book

3.2.2 We want to observe/ collect information about:

Layout (floor –plan / store plan) ‘map’

Staff contact (Our experience)

- Questions – e.g. looking for a product

- Check-out

- Customer service centre (leaving a bag; questions; exchange)

- Watch and listen and see and note other customers’ experiences

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3.2.3 Audit the service:

Accessibility

- No. and skills of staff (observe e.g. wait times at check-out)

- Opening hours… / time taken to perform service

- Location – describe…main road/small road/easy to drive in…

- Physical facility – signs/notices/ease of getting in and getting to where I want to be)

- Printed information – accessable?

- IT for customers? For suppliers

- Other customers – no. and knowledge?

- Payment – cash/credit card etc.?

Interaction

- Employees’ behavior and what they say (welcome to you)

-Physical and technical equipments, filling forms for application, member card, price check machine, cash machine, weighing machine, trolley

-Interation with systems, waiting for checking out, exchange their goods.

-With customer, when they check out how do they express the price clearly and correctly.

Customer participation

-Customer knowledgeable, do they know what they want?, do they know the brand?

-Are customers willing to put their bag in the box.

-Are they easy to find goods they want to buy?

3.3 Participants:

We choose one shop of Tesco located in Taichung Hsin Tien. It is because in middle of Taiwan there is only one Tesco and it’s near our school. Undoubtedly, we choose this one.

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3.3.1 What were their characteristics?

The Tesco in Taichung Hsin Tien is a shopping center with 2 underground levels and 3 upper floors. The ground and first floors contains shops with bulk sell products. The business are of this shopping center is around 6,744 square meter. Car parks are located on 3rd floor and the roof of the building. The main shopping mall is located in underground level 1.There are around 70 branded shops in the mall, as well as food court, restaurants and the only Nike direct outlet in the region which provided features of once-off shopping, family entertainment and multi-functional shopping environment to customers.

3.4 Materials:

3.4.1 What tests/scales/interview/ or observation schedules/questionnaires were used?

Step1:

We set a mission that we will buy a 100 watt light bulb for our supervisor. And we will disguise as customers to buy 60 watt light bulb and return back our wrong product to customer center and exchange with right it in order to test their service how they delivered.

Step2: Buying the 60 watt light bulb and we waited nearly half hour. Then we went to the customer center to inquiry whether we can return back the product we bought wrong for exchanging the right one.

Step3: After checked the invoice of our product, the clerk return money to us and then told us we can repurchase again if we need.

3.5 Data resource:

The key words we use Tesco、特意購、Hypermarket、Service Designing

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IV. Result:

4.1 Service Flowers:

Information They will delivery their DM to every member of an association.

Order taking You just only order goods on the shop.

Payment You can use credit card or cash payment.

Bill They will give your invoice of the product you buy after payment.

Consultation

If you have urgent situation to deal with, you can go to the customer service center or asking their staffs to help. On the other hand, if you just only give them some suggestions, you can fill the survey they offer.

Safekeeping They will put the caution signboard in some special situation such as wet floor、hand-elevator is moving…etc.

Hospitality The staff always smile and are patient with customers no matter

your coming or leaving.

Exception

If you buy expensive and huge goods such like air condition、washing machine、television…and so on. They offer free delivery to your home. Besides, in delicatessen and fruit area, you can taste the

food they offer freely on the demonstration.

4.2 Augmented Service Offering:

4.2.2Accessibility:

Accessibility

Core It is located near the main road and high way. There are many free parking spaces. It is 24hr.

Information: There are boards on which has information about products

where it is.

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They have boards to tell customer how to test the product. There are two TVs teaching you how to cook. It has explanation handed on the storing-cabinet.

Billing: There are a lot of counters.

Consultation: Service center in the entrance. There are a few staff to help customer to search for goods. The staff knows where every goods are.

Safe Keeping:

There are many boards telling you to keep the danger away.

When you take the elevator, the board reveal don’t let your head and hand out.

They have cabinet which you can put your bag.

Exception:

When you forgot to close your car light, they have someone to find it and broadcast in the market every five minutes until you close it.

They have a children stage. Sometimes, there are performances here.

4.2.2 Interaction:

Interaction

Safe keeping The storage is easy to use it. Just following the index and you can handle it.

Information

The promoting staff, they are introducing the product, even though there is no one here and they always smile.

Some boards on which the explanation are small and some are hard to find it like their layouts.

The TV is above the cooked food. Customers can stand there and watch it.

Customers can see the instructions of the storage locker and it is easy to follow.

Billing Customers should wait for the counter within five minutes.

Consultation They always put their hand on the back, when customers

inquire the product’s information. The “Price Machine” is easy to use it but, few customers

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JamesNoteTESCO aimed for less that five minutes and often it was in the 2-3 minutes range. In fact they recognise that there was too much resource (staff) used to make this happen.

use it. When you have problem with your product. The staff in the

service center helps you and gives your money back without question. Besides, they will copy your invoice as evidence.

When you ask the staff where the product you want is, he use his finger and say, “Over there”.

Hospitality When they transport the goods to somewhere through you,

they will say “Excuse me” and then pass slowly.

Exception The broadcast seems not clear. The staff should repeat

again and again.

4.2.3 Customer participation:

Customer participation

Core Do they know how to park in their park?

Billing Customers should wait for the counter within five minutes.

Consultation

Do they know what their problem is with the electric product?

Do they know what their need is?

Safe Keeping Customers seem willing to put their bag into the cabinet.

Exception Do parents know the performance grogram of the children

stage? If they broadcast, do customers listen to it very clearly?

4.3 Our first-time observation result:

Accessibility Interaction Customer participating

Core N/A Information N/A Order-taking N/A N/A N/A Billing Payment N/A N/A N/A

JamesNoteIn this case if you try and number of times you will find a variation. They should take you to the product.

Consultation Hospitality N/A N/A Safe-keeping Excepting

V. Conclusion:

Here, this research uses Service offering Model and Flower of services to see Tesco’s services. Through this processing, we find what they want to offer to customers by Flowers. And then, by Service offering Model, we see where they offer the service, how were their interactions (system vs. customers, staff vs. customers, etc.) and customers can get it or not. We wish this research can be generalized to the other service research. Here are some suggestions for this research method. Every time, when you observe the service, you can record on a table. This table helps you mark what you have noticed and what you haven’t. It’s helpful for your next visit. Basically, we think one designed service should exist with accessibility, interaction, participants. So, like Table.1, we still have many points haven’t found. We can focus on these points at further visit or through interview with manager. But, we can discuss why it is hard to discover. If we find it hardly, maybe it’s the same to customers. This is also an important issue that we need to emphasize. Another one suggestion is to combine with the Blue-Print. By service offering model concept, blue print can find the failure point more easily.

The result reveals Tesco still has to improve their services. But, if it is enough for Asia, why do they to do it? That is another question for further research. So depending on this research, we have some suggestions for Tesco:

According to our experiment, they just return the money to us. Why didn’t they change a new one for us? The goods should begin from Tesco to customers. If the customer was very hurry, they got the money and went away. Tesco lost an opportunity to sell.

The cooked food area doesn’t reveal how to get the price. If customers got it and went to check in the account directly, this would let them fell embarrassed. Or they won’t buy it due to they don’t know to get the price.

The board which teaches customer how to test the bolt should be clearer. It is dangerous when they use it without a clear direction.

There should be employee paying attention in some area. Like, Bicycle area, when someone tests it, the staff should avoid accidents.

JamesNoteGood addition. ***However it is very important that this should clearly connect with the findings. Some of the points you raise here (are valid) but should be connected with the findings.

JamesNoteThe method may be generalisable. However it is more doubtful if the findings are/could be (however that is not the explicit aim in this case).

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JamesNoteYes - keeping structured notes on observation is important. As you say here, not only notes on the data but you need notes about the method.

JamesNoteThis is not clear.

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JamesInserted Textconsistently

JamesInserted Textfor

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JamesNoteThe service blue-print may well be a tool that is used next or to work on service improvement plans.

VI. Reference:

de Brentani, U. and E. Ragot (1996). "Developing New Business-to-Business Services: What Factors Impact Performance?" Industrial Marketing Management 25(6): pp.517-530.

Edvardsson, B. and J. Olsson (1996). "Key concepts for New Service Development." The Service Industries Journal 16(2): pp. 140-164. Gronroos, C. (2000). Service Management and Marketing, John wiley Sons Inc. Kelly, J. (2000). Every Little Helps-An Interview with Terry Leahy, CEO, Tesco. Long Range Planning. 33: pp.430-439. Lovelock, C., J. Wirtz, et al. (2005). Services Marketing in Asia, Prentice Hall. Ruyter, K. d., M. Wetzels, et al. (1997). "The dynamics of the service delivery process: A value-based approach." Intern.J. of Research in Marketing 14: pp. 231-243. 李盈錫 (2003). 量販店之經營型態與行銷組合之研究. 企業管理學系, 中原大學. 碩士生: 109-119.