Service Guarantee: A Concept for Competitive Advantage

Abstract

Technological and organisational innovations have not only contributed to the growth of service sector enterprises, but substantially increased their economic importance. This rapid growth in services has confronted service organisations with new and critical challenges. In this competitive marketplace - fragmented, fast-changing and quality-conscious, -it is customer focus that has effectively assumed the centre stage in the strategic management decisions of leading service organisations. Service superiority through the customer - supplier relationship has become a prerequisite for survival in today’s competitive environment. It is thus imperative that service managers develop customer focus: that they think and act pro-actively, continuously regenerating systems and approaches to create superior value for the customer. In any business encounter, one side of the transaction is always being asked to assume all, or more risk, than the other. It may be expressed explicitly, implicitly, or may be done unconsciously. The perceived risk model illustrates customer uncertainty in evaluating a product or service in relation to the available alternatives. According to the perceived risk model, buyers are motivated by a desire to reduce the amount of perceived risk.