Competitive advantage Sony Essay

1 Introduction Nowadays it has become more and more important for organizations, such as Sony, to differentiate themselves from their competitors by enhancing the way their customers perceive and experience their brand and products. This has become more crucial for the success of Sony due to the fact that the demands and expectations of customers have changed. Today’s market is not only looking at the direct benefits of purchasing a product but also at the added benefits that come with it. More and more competitors of Sony have  changed the way they interact with their customers in order to gain and maintain competitive advantage (Sony, n.d.). This paper will explore the possibilities for Sony to increase sales by drawing attention to the experience of customers using their products. 2 Research problem statement In order to stay competitive, Sony needs to find new ways to enhance customer experience of their products. This entails emphasizing on the whole offering of the organization including, of course, the quality of customer care and product features, but also creative advertising, packaging, ease of use, and reliability (Meyer & Schwager, 2007). At the moment, Sony is facing heavy competition in all their market segments. According to Gianforte (2012), nowadays an organization cannot only successfully compete based on their products/services and price alone. Customer experience has become the new critical differentiator that a successful business should be based up on. This customer experience can have an influence on the buying intention through the following process: Satisfaction Howard (1977, 1983, in: Fornell & Johnson, 1991) found that a positive customer experience leads to high levels of customer satisfaction. According to Olsen, Wilcox & Olsson (2005), consumer satisfaction is a global evaluation or a state of feeling towards a product or service. According to Giese and Cote (2000), satisfaction consists of three general components, namely: – The consumer satisfaction is an emotional or cognitive response. – The response is associated with a particular focus, expectations, product and consumption experience. – The response happens in a particular time Trust With regard to satisfaction brand trust plays an important role in satisfaction in developing a customer base committed to the brand. Trust is a key variable in the development of an enduring desire to maintain a relationship in the long term (Morgan and Hunt, 1994, in: Delgado-Balester, Munuera-Alà ©man). Seybold (2001) adds that trust grows from every experience customers have with a product and service. Bowers, Richardson & Swan (1998) agree with the statement that a positive customer experience can be created  by building trust with them. Brand trust can be created by sending out credible and expert messages. Also, adding a trust appeal to messages (for example â€Å"You can trust on the fact that we do our job well†) increases brand reliability, leads to a more positive attitude towards the brand and increases purchasing intention (Hornikx, 2002). Paul, Schneider and White (1998) found that when customers are satisfied thus have positive perceptions of an organization, they are likely to remain a customer of that organization. In line with this statement Espejel, Fandos & Flavian (2004) and Howard (1977, in: Fornell & Johnson, 1991) found that a higher satisfaction leads to greater levels of loyalty and buying intention of the service or product. This is also confirmed by Gentile et al. (2007) who state that when customers have a positive customer experience, an emotional tie will be created between a firm’s brand and its customers, which in turn enhances customer loyalty. Loyalty European researchers studying during the 1970s business-to-business marketing discovered that suppliers who formed close working relationships with their customers tended to have better customers. Better refers to the fact that the customers were more loyal to the organization. Also, the customers evaluated the suppliers higher. Subsequent research found that loyal customers are more profitable to a firm. The profitability is thought to be generated by reduced servicing costs, less price sensitivity, increased spending, and the recommendations passed on to other potential customers. To strengthen relationships with their customers, and bond them to an organization, most organizations are interested in loyalty programs (Dowling & Uncles, 1997). Buying intention Loyalty is a crucial factor when it comes to buying intention. Light (1994, in: Palumbo & Herbig, 2000) states that building brand loyalty will endure profitable growth as well as sales volume. The positive effect of loyalty on sales is also emphasized by Bowen and Chen (2001). Their research shows that loyal customers increase sales by purchasing a wider variety of the products and by making more frequent purchases. Relation between customer experience and buying intention When taking an overview at the literature mentioned above, a relation between the several factors can be noticed. Literature teaches that a positive customer experience leads to a higher satisfaction. This in turn increases the brand trust. This trust simultaneously affects the loyalty of customers in a brand. In the end this loyalty results in an increase in buying intention. 2.1 Purpose of research Based on the importance of the customer experience and its influence on the buying intention the general purpose of this research is to get an insight in the important determinants of this experience. In order to investigate what determinants Sony should particularly focus on, in the following sections the main research question and the sub-questions are defined. After the questions there will be a review of the relevant literature on the topic of customer experience. Thereafter an explanation of the methods used will be given, followed by the analysis and the conclusion. Based on these conclusion there will be given an advice to the management. 3 Research question Based on the problem statement, the following main research question is proposed: In what way can Sony adjust their communication strategy to improve the costumer experience in order to increase sales? The main question can be answered due answering the following sub-questions: What is meant by â€Å"customer experience† and what are its determinants? Which determinants are of most importance determining the costumer experience? 4 Proposed literature In order to answer the main research question it is of importance for Sony to exactly know what is meant by â€Å"customer experience† and what the determinants of the experience are. This can be found through a literature study. After that they can investigate which determinants are of most importance according to the customers of Sony. In literature several definitions on the concept of ‘customer experience’ have been mentioned. According to Berry, Carbone and Haekel (2002) customers always have an experience whenever they purchase a product or service from a company. Meyer and Schwager (2007) state that customer experience is â€Å"the internal and subjective response customers have to any direct or indirect contact with a company. Direct contact generally occurs in the course of purchase, use, and service and is usually initiated by the customer. Indirect contact most often involves unplanned encounters with representatives of a company’s products, services or brands and takes the form of word-of-mouth recommendations or criticisms, advertising, news reports, reviews and so forth†(in: Verhoef, Lemon, Parasuraman, Roggeveen, Tsiros & Schlesinger, 2009, p. 32). Gentile, Spiller and Noci (2007) on the other hand, use a different definition of customer experience, namely: customer experience â€Å"originates from a set of interactions between a customer and a product, a company, or part of its organization, which provoke a reaction†. This experience is strictly personal and implies customer’s involvement at different levels; on a rational, emotional, sensorial, physical or spiritual level. Verhoef et al. (2009) also state that the experience factor plays an increasingly important role in determining the success of a company’s offering because of the competition in the global. Therefore, organizations need to manage the customer experience in order to improve the company’s success. In order to aggregate a positive customer experience, it is crucial that Sony is aware of the influences on this experience. When looking at determinants of customer experience in literature, the conceptual model by Verhoef et. al (2009) provides an overview of all the factors that have an influence on one’s customer experience. The model can be found in appendix A. Based on the abovementioned model the determinants of costumer experience are: social environment, service interface, retail atmosphere, assortment, price, customer experiences in alternative channels, retail brand, past customer experience. Current research will focus on these determinants and therefore the constructs will represent these determinants. These constructs  can be found in appendix B. Situation moderators and consumer moderators will not be included, because the organization can not influence these factors. 5 Methods and techniques In order to answer the main research question a complete overview of the most important determinants of costumer experience by the Dutch Sony customers is needed. This overview will be accomplished by a thorough questionnaire amongst the Dutch customers. Based on the answers of this questionnaire a focus group will follow in order to indicate the factors which can be improved so a higher customer experience is created. Questionnaire The constructs of the questionnaire are based on the determinants of customer experience by Verhoef et al. (2009), the constructs can be found in appendix A. They are used because their causal effect on customer experience is proven in literature. The questionnaire will be sent to Sony customers as well as non-Sony costumers (details see appendix C). Appendix D shows the questionnaire sent to the respondents. The questions of the questionnaire are linked to the constructs, this linkage can be found in appendix E. After receiving the answers the questionnaire will be analyzed, this process can be found in appendix C. The results of these questionnaire indicate which determinants have the most influence on the consumer experience of the Dutch (Sony) customers. Focus groups The focus groups with a number of twelve respondents per group will consist of six Sony costumers and six non Sony costumers. A detailed overview of the target group and focus groups can be found in appendix C. The content of the sessions will be based on the results of the questionnaire, which will show the determinants that have the most influence on customer experience. The group of people will discuss what they find convenient subjects with regard to these constructs. Based on these subject there can be analyzed which things Sony has to adjust within its communication strategy so the strategy will match the customer’s optimal customer experience. 6 Analysis In order to answer the main research question one must first answer the second sub-question. This question covers the determinants that are of most importance concerning the customer experience. The answers to the questionnaire will provide the information for answering the sub-question. Questionnaire The first analysis is oriented at determining the average scores of each question and eventually for each construct. Appendices F till L show the average score of every question, displayed per construct. These scores are distracted from the scale, reaching from 1 till 5, with 2.5 as the mean of the scale. Questions concerning the social environment show above mean scores, with a 3.6 as the minimum. This means that the social environment is a very important determinant of customer experience. Service interface also has very high scores. With an average of 4.3 the highest scored question of this construct states that customers agree with the fact the co-customization adds value to products. The role of the retail atmosphere seems to be of less influence on the customer experience. The average scores of these question are significantly lower, with 5 out of 10 questions scoring below the mean of the scale. Questions within the assortment and past experiences construct have a score far above the mean. While the questions concerning both retail brand and price mostly score below mean. Next to the average scores of the questions appendix M shows the average score per construct. One can see from the bar chart there are four out of seven constructs that score far above the mean, and three constructs that score about the mean. Therefore there will be concluded that these four constructs (social environment, service interface, assortment and past experiences) are the determinants that are of most importance determining the costumer experience. Focus groups Following to the questionnaire are the focus groups. During these sessions the customers discussed about each of the highly important constructs: social environment, service interface, assortment and past experiences. Certain subjects came up during these discussions, these subjects were labeled, see appendix N. During the focus groups it was found that the past experience mostly concerned the service interface (e.g. the service  personnel) and the assortment (e.g. quality of the product). An important label that was mentioned was the trust that derives from positive past experience, which makes them willing to buy more of Sony. Besides the service interface and the assortment the customers within the focus groups also discussed about the social environment. Reviews and the opinions of other with regard to the experience of a product are seen as important influencers. 7 Conclusion and advice to the management This research is conducted in order to investigate in what way Sony can adjust their communication strategy to improve the costumer experience in order to increase sales. Therefore there is already stated what the definition of customer experience is and what its determinants are. The results of the questionnaire and focus groups show that there are four determinants that are of most influence with regard to the customer experience. Two of these components can be influenced by Sony, namely the service interface and the assortment. The other two constructs, social environment and past experience, are in turn influenced by these components and can not be directly influenced. With regard to the service interface it is of importance that the personnel of Sony meets the requirements that the customers find of importance: kind, helpful, advising and knowledge. These characteristics are perceived to be very important when it comes to a pleasant experience within the store. In addition to the social experience, logically another important factor is the assortment of Sony. The quality and the variety of this assortment is of great importance. The social experience, through service interface, and the practical experience, through the assortment, are both constructs that can be influenced by Sony. The construct past experience can not be influenced by Sony, because of the fact that the experience is already in the past, nevertheless Sony can improve their current service interface and assortment. In that way customers’ past experiences for the future will be positive. In line with  Morgan and Hunt (1994) and Seybold (2001) there was found that positive experiences with the brand creates trust with the customer. These positive past experience will therefore create trust in Sony, which will lead to remaining buying intentions. With regard to social environment the importance of the experience of others and online reviews was noted. Sony can only influence these factors by providing good services (service interface) and products (assortment), so people will evaluate these products and services positive. Based on these conclusions the advices for the management are: Develop a training program for all of the employees: they have to meet certain requirements with regard their knowledge about the products of Sony and to the way they provide their services. After implementing the program make sure that the customers also know of the training, so they know they can trust the advice of the skilled personnel within the store. This can be mentioned at posters, commercials etc. (e.g. on a poster: â€Å"Feel free to visit our store for questions or advice, we keep ourselves up-to-date especially for you!†) Make sure that all the communication expressions emphasize the quality of the products and to enhance the quality of these products customers can be asked to give their opinion about the product on the Sony website. Through this system the chance will increase that a big part of the online reviews will be given at the Sony site. In this situation the communication department of Sony can quickly detect negative reactions on which they can respond to solve the problem. All the visitors of the review will so experience the involvement of Sony, which creates sympathy. Send good quality products to influential people that make movies on YouTube and ask them to review the product. Make clear that you want them to give their honest opinion, and that they also mention that to their viewers. 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Last retrieved on December 12th, 2012, from: http://www.sony.net/