Page 208 - Encyclopedia of Business and Finance

eobf_C 7/5/06 2:57 PM Page 185

Customer Service

rency crisis occurs when a country can no longer support keting channels such as the Internet and television-
the price of its currency in foreign-exchange markets shopping networks. A growing number of organizations
under a fixed-exchange-rate system. Many such crises have are giving increased attention to customer service. Finan-
occurred in the past several decades when countries have cial institutions, hospitals, public utilities, airlines, retail
attempted to maintain a fixed exchange rate that was in stores, restaurants, manufacturers, and wholesalers are just
disequilibrium. a few of the businesses that face the problem of attracting
One alternative to a currency crisis or to continuing new customers and retaining the patronage of existing
to try to support a fixed exchange rate is to devalue uni- customers.
laterally. Currency devaluation is equivalent to currency Building long-term relationships with customers has
depreciation, except that it occurs under a fixed-exchange- been given a high priority by the majority of America’s
rate regime. The country officially lowers the price of its most successful enterprises. These companies realize that
currency in foreign-exchange markets; this is a deliberate customer satisfaction is an important key to success. Cus-
public action by a government following a fixed- tomer service can be defined as those activities that
exchange-rate policy. Revaluation is the opposite of deval- enhance or facilitate the purchase and use of the product
uation. This occurs when, under a fixed-exchange-rate or service. Today’s emphasis on customer satisfaction can
regime, there is pressure on a country’s currency to rise in
value in foreign-exchange markets. Unilaterally, that be traced to a managerial philosophy that has been
country can declare that the value of its currency in for- described as the marketing concept.
eign-exchange markets is higher than it has been in the
past. Currency revaluation is the equivalent of currency THE MARKETING CONCEPT AND
appreciation, except that it occurs under a fixed exchange CUSTOMER SERVICE
rate regime and is mandated by the government. Managed The significant increase in the desire to provide effective
exchange rates, sometimes referred to as dirty float, occur consumer service is a direct result of a shift to the market-
when a central bank or several central banks intervene in ing concept in the early 1950s. The marketing concept
a system of flexible exchange to keep the exchange rate has three major components: (1) identifying what the
from undergoing extreme changes. consumer needs and wants, (2) developing products/serv-
ices to meet those needs/wants, and (3) designing market-
SUMMARY ing plans to effectively and efficiently deliver the
A well-functioning foreign-exchange market is vital for products/services in a manner that will satisfy the cus-
worldwide trade. In a flexible-exchange-rate system, sup- tomer and the long-term objectives of the organization.
ply of and demand for a currency determine the exchange The foundation for the success of the marketing concept
rate. In a fixed-exchange rate system, a government is a business philosophy that leaves no doubt in the mind
imposes the exchange rate, and given the mandated of every employee that customer satisfaction is of primary
exchange rate, consumers determine how much of the importance. All energies are directed toward satisfying the
currency they wish to supply or demand. In a managed- consumer. The degree to which customer satisfaction is
exchange-rate system, the exchange rate is determined dependent on the quality of service varies greatly with dif-
through the markets, but the central bank will intervene ferent products/services. The service continuum (see Fig-
by buying and selling the currency in order to influence ure 1) shows the significant difference between a necktie
the price. (tangible product with little service involved) and a lawn
SEE ALSO International Trade mowing service (no tangible product).

SERVICE QUALITY
Denise Woodbury
Whether consumers patronize an organization on a con-
tinuing basis is often strongly influenced by the level and
quality of service they receive from that firm. Since this
CUSTOMER SERVICE service experience is an important determinate of future
purchase behavior, then it becomes important to examine
In the very competitive world of marketing a product or
how consumers evaluate the service provided and how a
service, what consumers will buy and when, where, and
how they will purchase it is often determined by the type, business might assess how well they deliver quality service.
level, and quality of customer service provided by compet- Research has found that consumers often evaluate the
ing marketers. This purchase determination has become quality of the service they receive based on five criteria.
even more of a strategic issue with the advent of new mar- Businesses and organizations should consider these crite-

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 185