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CUSTOMER SERVICE: DIFFERENTIATION ON THE SUPPLEMENTARY ASPECTS
by Sudhir H. Kalé, Ph.D.*

Frederick W. Smith, Jr., invented the concept of overnight package delivery with the founding of Federal Express in 1971. The company thought it had a unique service that would thrive in a then protected market. However, much to Smith's chagrin, the airfreight industry was deregulated in 1978 and several competitors stormed into the market and quickly established themselves by performing the core activities of the airfreight industry-pickup, overnight transportation, and next-day delivery-just as well as Federal Express, at a fraction of the price. FedEx soon realized that it had to rethink its definition of service if it wanted to continue being the market leader and charging a premium price. After considerable thought, the company defined service as "All actions and reactions that customers perceive they have purchased."

This definition underscores the concept that the service offering comprises of a bundle of activities consisting of the core product, e.g., transporting packages and delivering them to the addressee before a predetermined time, plus a cluster of supplementary services like offering information, supplying labels and packaging materials, taking phone orders, resolving occasional problems, and tracing missing packages. Christopher Lovelock, a services marketing guru--suggests that managers in the service industry need to first identify the various service actions and interactions, classify them into core and supplementary service elements, and then determine how well their organization is performing on each one--so as to get a better understanding of their competitive advantage.

Such a classification of service offerings is of immense benefit to casino operators. With maturing of the industry as a whole, gambling entertainment, the core product of casinos, has become a commodity. With riverboat gaming, gaming on reservations, and restricted gaming in parts of almost every state in the Union, Americans can now gain access to the core gaming product with unprecedented ease. In order to gain and preserve competitive advantage, casinos urgently need to emphasize performance on supplementary aspects of the service offering. As Ted Levitt, another marketing guru, observed almost three decades ago, "It is not so much the basic, generic central thing we are selling that counts, but the whole cluster of satisfactions with which we surround it."

So what is that 'cluster of satisfactions' when it comes to casinos? We first need to address this question in order to have a better grasp of the supplementary service elements in the context of the casino industry. The case of a typical casino has been depicted in Figure 1. As can be seen from the figure, the core service element of a casino is to offer gambling entertainment via machines, table games, sports betting, and keno. Gambling being the raison d'être of casinos, every full-fledged casino offers this core with little variation in quality across competitors. For a typical Las Vegas customer, there is little difference in satisfaction when it comes to the core -- whether she gambles at Aladdin or whether she goes next door to Paris for a punt. The 'supplementary service elements' is where one would expect to find considerable differences across Aladdin and Paris. In the figure below, these supplementary service elements have been classified according to the benefit they provide to prospective customers. Such customer-driven classification is the key to sustaining competitive advantage.


Figure 1: Core and Supplementary Services Offered By a Typical Casino




Core: Gaming constitutes the core of the casino service offering. The providers of this core service include dealers, pit bosses, floor supervisors, and floor change personnel. The courtesy, efficiency, empathy, and responsiveness of providers will determine the quality of the core element of casino service. At the very minimum, the core element needs to be of a quality that is uniform and consistent across shifts and providers.

Supplementary Service Elements: There are ten main clusters of supplementary services that a typical casino provides. While most of these services are mandatory, a casino can offer other discretionary services, which would enhance its competitive advantage. The supplementary services normally offered include hospitality, payment, billing, consultation, order taking, safekeeping, security, transportation, exceptions, and order getting. Several different departments may be providing an array of services under each cluster. Our intent here is to classify these supplementary services from the customer's perspective.

1. Hospitality is mainly provided by the hotel and F & B side of the casino. Casino hosts would also be involved in the hospitality function.

2. Payment would be the domain of the cashier or the casino cage. Exchanging foreign currency and cashing of customer checks would be included under payment.

3. Billing would be a function performed by the wait staff in restaurants and by the checkout clerk in the hotel.

4. Consultation would involve offering advice on where to eat, which shows to see, and which other attractions to visit. This would be the job of the concierge and, in some cases, the casino host.

5. Order taking would be performed by restaurant wait staff as well as telephone operators involved in making hotel and show bookings.

6. Safekeeping involves taking care of customer vehicles, baggage, as well as valuables. Parking lot attendants, bellboys, the lost property office, and those in charge of safe deposit boxes would be involved in the safekeeping function.

7. Security would primarily be the responsibility of the security staff. Security would also be a factor in handling markers and conducting credit card transactions.

8. Transportation will be performed by limousine drivers as well as external agencies involved in getting customers from one place to another. These could be public transport agencies, monorail operators, and companies with which the casino has a contract for the transportation of guests.

9. Exceptions, as the name suggests, would be a function of 'hotline engineers,' those involved in fixing TVs, air-conditioning, heaters, slot machines, and so on.

10. Finally, order getting would be the critical function performed by those proactively involved in getting guests to the casino. Agents, casino hosts, and others involved in the casino's loyalty programs would be performing the order getting function.

The identification of these supplementary clusters helps management better understand its roles from a 'customer benefits purchased' standpoint. It aids in an executive's appreciation of the service offering from an augmented product perspective. Lynn Shostack, a services marketing researcher, argues that the core and supplementary elements of a service are not unlike chemical formulations: a change in one element often alters the nature of the whole entity.

French researchers Eiglier and Langeard echo Shostack's analysis. Their conclusions contain insights that casino operators need to internalise:

  • The performance of each service cluster affects the perceived quality of all others; all the supplementary services contribute to overall quality.

  • Market research is needed to determine how a customer's overall satisfaction level is split between the core and the supplementary or peripheral

    Date Posted: 07-Apr-2002

    *Sudhir H. Kalé, Ph.D. is Associate Professor of Marketing and Head of the Marketing Department at Bond University’s School of Business. A consummate punter and an eclectic scholar, Sudhir has published extensively on issues relating to gaming, marketing, management, psychology, and spirituality. He acts as a consultant and trainer to several global organizations across a wide spectrum of industries. To contact Sudhir, write to Sudhir_Kale@Bond.edu.au or fax to (61)7-55951160.

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