Service Innovation Keeps Them Coming
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Every company’s future depends on the quality of its service, according to Leonard L. Berry, Texas A&M Distinguished Professor of Marketing and M.B. Zale Chair at Mays. His new research paper, “Creating New Markets through Service Innovation,” analyzes 15 successful businesses such as Barnes & Noble and Starbucks to better understand the nature of service innovations that create new markets.
Berry says that if a company is seeking to market an innovation that really makes an impact, the company will have to create a compelling value proposition for the customer.
“It didn’t take me very long to realize that the foundation of services marketing is the quality of the service and the service from the customer’s perspective,” Berry explains. For example, Google’s rapid Web-searching innovation provides customers with a more relevant and comprehensive web-search capability than had previously existed.
He cites examples such as Starbucks’ three-minute cup of coffee, Barnes and Noble’s inviting atmosphere and large selection of books on any topic, and Netflix’s innovation of allowing customers to rent videos without the hassle of late fees or going back and forth to a video store. “Unless the customer perceives the service as of high quality,” he says, “nothing else that we call marketing is going to work.”
While marketing academics have often focused on tangible products, Berry has instead devoted his career to the study of services marketing and innovation in service quality. “I became interested in the marketing of intangible products, the marketing of performances, as opposed to the marketing strictly of goods.”
Berry says companies trying to excel in a marketplace of strict competition must offer a superior customer benefit and affordability, and be able to manage the customers’ experience.
“Quality service is a dynamic process that requires innovation,” Berry says. “Human performance is the basis of all companies’ success.”
Berry wrote the service innovation paper with fellow Mays researchers Coleman Chair in Marketing Venkatesh Shankar, assistant professors Janet T. Parish and Susan Cadwallader, and doctoral candidate Thomas Dotzel. Their paper appears in the winter 2006 MIT Sloan Management Review.
—Tiffany Tyer
