ASSIGNMENT MKT306_PHAM THI THUY TRAM_E1600574

Introduction
Nowadays, the transformation of modern economies into predominantly service-based economies
is happening on a global scale. While services are not new, the scale and complexity of globally
dispersed services are growing rapidly. These transformations are enabled by–and often dependent
on–information technologies and are fueled by processes of globalization. Because the competition
among companies that provide same or similar goods is becoming fierce more and more, therefore
competing in services added is also necessary in order to attract and retain customers. In the era of
4.0 technology, Internet development and interactive connection among users have provided a very
useful tool for businesses to enhance the service offered and increase the satisfaction level of the
customers. This essay is going to clarify how the Information technology affects the three stages
of service consumption and make clear by providing some concepts and arguments from many
reliable sources (reports, journals, books…). Moreover, IKEA Company will be focused by the
writer as an example of business operation providing excellent services to customers via
Information technology. On the other hand, this essay is going to make a comparison between
IKEA and Vietnamese local furniture providers (like Viet Tien, DAFUCO, Lam Hoang Phat…)
in order to express poor services of furniture companies in Vietnam and give out the learning
outcomes that these companies can enhance.
IKEA was started in Sweden by Ingvar Kamprad, who pioneered the idea of self-assembly
furniture in handy packs. His vision of “ a better, more beautiful, everyday like for the many led
to a wide range of home furnishings, of good function and style, at low prices, for mass consumer
markets”. In 2017, the company net profit was 2.5 billion EUR, the number of website visit was
2.1 billion and the number of catalogue & store apps was 137 million. (IKEA Yearly Summary
FY17, 2017) This number shows how IKEA understand the importance of using information
technology in providing high service quality to customers and getting frequent relationship with
them.

Important literature reviews of definition used

Perceived Service Quality
“Service Quality has been described as a form of attitude, related but not equivalent to satisfaction
that results from the comparison of expectations with performance” (Bolton & James, 1991). In
today business, “delivering quality service is considered an essential strategy for success and
survival in today's competitive environment” (Dawkins, P.M & Reichheld, F.F., 1990). According
to (A. Parasuraman, Valarie A. Zeithaml, & Leonard L. Berry, 1985), there are 3 main
characteristics of services – intangibility, heterogeneity, and inseparability. However, according
to (Harsh V. Verma, 2009), intangibility, variability, inseparability and perishability are the 4
important characteristics of services.
(Bonner, P. G. & Nelson, R. , 1985) pointed out that “the customer's perception of service quality
is often different from the producer's evaluation”. (Jacoby, J. & J. Olson, 1985) supported this
difference by introducing 2 separate concepts of quality: actual (objective) quality and perceived
(subjective) quality. They proposed that perceived quality is more closely tied to sales performance
and therefore merits more attention. In his book Commit to Quality, Townsend also makes a
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distinction between “quality in perception” and “quality in fact”. (Zeithaml, V.A., 1988) defined
perceived quality as “a consumer's judgment about the overall excellence or superiority of a
product”. Given that the word “product” as used today encompasses both goods and services,
perceived service quality can be defined as the consumer's judgment of the overall superiority of
a service. Perceived service quality can be operationalized using a multi-attribute scale to measure
customer perceptions of various attributes of service quality (Grönroos, C. , 1984), (A.
Parasuraman, Valarie A. Zeithaml, & Leonard L. Berry, 1985)

Information Technology
IT is viewed as a collective term for a wide range of software, hardware, telecommunications and
information management techniques, applications and devices (Leavitt, H. & Whisler, T., 1985)
(Porter, M. J. & Millar V. E., 1985) (Willcocks, L., 1996). The focus is on IT as the answer to
business problems, on how IT supports and changes business operations, rather than a focus on
the technological aspects of IT (Sethi, V. & King, W., 1994) (Zuboff, S., 1988). Ultimately we
should not be looking at the technology itself, or at IT spend, but on better management of IT and
improved IT skills in order to reap the benefits from IT (Mooney, J. G., Gurbaxani, V., & Kraemer,
K. L., 1995)
The sheer range of systems and software that can be classed as IT usage in marketing is extensive
(Holtham, C. , 1994) (Leverick, Littler D., Wilson, D., & Bruce, M. , 1997). (McDonald, M.,
Hewson, W., & Wilson, H. , 1999) provided a framework, which shows that IT applications can
be utilized across all marketing operations. IT could, according to some authors, fundamentally
change marketing. “It creates new ways to configure businesses, organize companies, serve
customers, and has profound effects on the structure, strategy and competitive dynamics of
industries” (Butler P., et al., 1997) contend that IT effects will be widespread and encompass
changes to the structure and organization of marketing. (Venkatesh, A., 1998) is of the view that
there will be a radical new marketing era courtesy of IT, with the emergence of cyberspace or the
networked world, changing how marketing is practiced, leaving marketers with no foundation
stones to rely on.

The Three-Stage Model of Service Consumption

According to the three-stage model of service consumption, consumers go through 3 major stages
when they consume services: the pre-purchase stage, the service encounter stage and the post-
purchase stage (Lovelock C. & Wirtz J., 2004) (Tsiotsou, R.H. & Wirtz, J., 2012). This approach
is helpful because it assists academics in developing a clear research focus and direction, and
managers in setting objectives and shaping consumer behavior in a targeted manner, and therefore
facilitates efficient resources allocation (James F. Engel, Roger D. Blackwell, & Paul W. Miniard,
2003) (Hensley, R. L. & Sulek, J., 2007). Research has been conducted on all 3 stage to examine
their major determinants, influences (direct and indirect), processes and outcomes. During each
stage, supplementary services including facilitating and enhancing services are added to increase
the customer satisfaction by taking advantage of the information technology development.

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Information technology in service quality

In Pre-purchase Stage
According to the notion of planned purchase behavior, once consumers recognize a need or
problem they are motivated to search for solutions to satisfy that need or resolve that problem. The
information obtained in the pre-purchase stage has a significant impact on consumers’ purchase
decisions (Joseph W Alba & J Wesley Hutchinson, 1987) (Konus Umut, Peter C. Verhoef, & Scott
A. Neslin, 2008) (Mattila, A.S. & J. Wirtz, 2002).
Information search
Consumer information search in services is more extensive than in goods (Joseph W. Alba & J.
Wesley Hutchinson, 2000) (Mattila, A.S. & J. Wirtz, 2002) due to the uncertainty and perceived
risks associated with a purchase decision. Both uncertainty and perceived risk are considered to be
higher in services due to their intangible nature and variability (Bansal, H. S. & Voyer, P. A., 2000)
(MURRAY, K.B. & SCHLACTER, J.L., 1990) and because of the high degree of price uncertainty
due to service firm’s revenue management strategies (Kimes, S. E. & Wirtz, J., 2003) . Historically
for furniture companies, the customer tends to go directly to the outlet stores to buy home furniture
because they want to make sure about the long term quality, materials, colors… However, IKEA
is one of the first furniture company that focuses on developing the website for customers in order
to search and preview the product as well as the price before going to the store. (Saraswati, 2018)
proved that” there are 8 driving factors of consumer to purchase furniture online on IKEA
Indonesia’s website: Enjoyment, Perceived Risk, Efficiency, Service & Merchandise Quality, Ease
of Navigation, Price Attractiveness, Flexibility and Reliability”. IKEA are also very successful
when showing different daily story on the web page that customers usually have and convincing
them what IKEA family can help. In addition, through the consultation, the company can track the
cookies of customers’ interest and provide customized advice for their decision. IKEA and
DAFUCO make its customers be clear about all information about the product without going to
the stores and thus increases the service quality. When compared with IKEA, other local furniture
companies in Vietnam fail and often ignore the essence of developing an own website and selling
online. They have the habit of selling in large number and selling to existing loyal customers.
Therefore there is almost no chance for local furniture companies to increase customers’ awareness
and sell abroad.
Alternatives evaluation
During the search process, consumers form their consideration set, learn about the service
attributes they should consider and form expectations of how firms in the consideration set perform
on those attributes (Lovelock C. & Wirtz J., 2004). Multi-attribute models have been widely used
to stimulate consumer decision making. According to these models, consumers use service
attributes (quality, price, convenience…) that are important to them to evaluate and compare
alternative offerings of firms in their consideration. Each attribute is weighted according to its
importance. When the customers want to search for any product, they can click on the product
category and find which kind of furniture they want. Then the result will show several types of
furniture for specific purposes and according to each purpose, many options for color, materials,
and prices… will appear for customer evaluation. Sometimes shopping in the store does not make

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sure that the consumers are able to evaluate a thousand of product options at the same time, thus
this is why they would prefer making the evaluation at home before going to the outlet and the
satisfaction level can also increase. This process is also a limitation for Vietnamese furniture
companies as compared to IKEA because they do not have website for customers to get in and
make comparison among products, prices, colors…

In Service Encounter Stage

The Service Encounter stage involves consumer interactions with the service firm. In this stage,
consumers co-create experiences and value, and co-produce a service while evaluating the service
experience. Service encounters are complex processes where consumer interactions and
surrounding environmental factors form consumers’ expectations (Coye, 2004), satisfaction,
loyalty, repurchase intentions and word-of-mouth behavior (Bitner, M. J., S. W. Brown, & M. L.
Meuter , 2000). The service encounter is generally considered a service delivery process, often
involving a sequence of related events occurring at different points in time.
Low contact model
Low-contact services involve little, physical contact between consumers and service providers.
Instead, contact takes place at arm’s length through electronic or physical distribution channels. In
practice, many high-contact and medium-contact services are becoming low-contact services as
part of a fast-growing trend whereby convenience plays an increasingly important role in consumer
choice (Lovelock C. & Wirtz J., 2004). At IKEA, the company allows self-services – allows
consumers to produce a service independent of direct service employee involvement (Curran, J.M.,
M.K. Brady, & G.T.M. Hult, 2000) - when offering the electronic funds transfer (Internet banking)
and credit card handling. IKEA developed an automatic order-taking systems that allows the
customers to place an order directly on the website and then send the confirmation email to the
customers whenever the purchase is finished. This technology helps the customers to save
shopping time but still purchase high quality products. In addition, self-service encounters benefit
the service providers by providing them with direct and immediate feedback from their consumers,
improving service design, developing consumer loyalty and reducing costs. Moreover, what makes
IKEA becomes different is the RFID technology that allows the customers to track their delivery
to see all the actions happened from inventory to in-door delivery. (Alleleyn, 2016). By typing the
product code into the web page, they know where their goods are and measure the time arriving.
This technology enhances the company service quality by providing trusts and well-organized
delivery process. Tracking goods is firstly used in several delivery services, still not happen in
furniture industry in Vietnam. Therefore, if this technology can be developed deeply in delivery
services in Vietnam, selling furniture online will become more popular.
The servuction system: Service production and Delivery
The servuction model focuses on various types of interactions that take place in a service encounter
and together create the consumer’s service experience. The servuction system consists of a
technical core invisible to the customer and the service delivery system visible to and experienced
by the consumers (Finsterwalder & Volker G. Kuppelwieser, 2011). The servuction system
includes all the interactions that together make up a typical consumer experience in a high-contact
service. Consumers interact with the service environment, service employees and even other

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consumers present during the service encounter. Each type of interaction can either creates value
or destroy value. In the front stage, IKEA focuses on the way they arrange and demonstrate their
product in the large space so that the customers can easily compare each other. A very special
thing in IKEA is that they arrange and decorate space by space such as the kitchen, dining room,
living room… with relevant furniture and post some designing samples on the web page so as to
advise the customers to decorate their own homes. Also, there are many friendly and caring
employees standing 24/7 at every store corner and online to support in need and even they provide
at-home assembly service for the customers. IKEA has a strong promise that they are caring for
goods purchased by customers therefore they very focus on installation, cleaning, packaging and
delivery on time. These factors make the customers feel very satisfied with the service received
and want to become loyal members of IKEA family. For the backstage, IKEA announce the 365
return policy on the website in case the customers are not totally satisfied with their IKEA purchase
and they always handle special complaints or suggestions from the customers. In addition, the
company announces that they ensures the annual labor quality, working conditions, employee’s
satisfaction and does not accept children labor as the suppliers or sub-contractors. In fact, other
furniture companies in Vietnam still cannot adapt all of these online services for customers because
limitations in technology and low intention to focus on providing extra services. Therefore when
IKEA penetrates into Vietnamese market, these businesses will face difficulties and start to
change.

In Post-encounter Stage
The last stage of service consumption is the post-encounter stage and involves consumer’s
behavioral and attitudinal responses to the service experience. Consumer satisfaction and
perceived service quality have dominated the research agenda at this stage of the service
consumption process due to their association with business performance (Brady, M. K. &
Robertson, C. J., 2001). However, consumers who are satisfied and have high perceptions of
service quality do not necessarily return to the same service provider or buy their service again
(Keiningham,.L. & Vavra, T. , 2001). As a result, there has recently been a shift in the consumer
research agenda toward other important post-purchase outcomes, such as perceived service value,
consumer delight, consumer reactions to service failures and consumer responses to service
recovery. One of the most important task to do after the customer purchase is the evaluation of
service performance. Understanding the important of service evaluation, IKEA always send survey
email to the customers to evaluate the product, quality, service satisfaction and adjust immediately
all mistakes if the customers complaint about. To collect structured customers’ feedback, IKEA
conducts market research through the “Brand Capital” survey - a tool to improve and monitor the
implementation of the IKEA concept and to measure customer satisfaction in each market. The
survey is conducted once a year. In addition, we monitor how satisfied customers are with their
local IKEA store through the annual “Customer Satisfaction Index” (CSI) survey. The survey
provides an international benchmark for the stores, and ensures that customer satisfaction issues
are regularly addressed. For Vietnamese furniture companies in specific and for businesses in
Vietnam in general, taking care actions of the customers after the purchase and analyzing the
satisfaction level to upgrade service are usually weak and even not focused. The reason is because
of high cost and time consuming, however customer retention somehow is much more important

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than attracting customers. For the furniture industry, gaining customer loyalty is not only depended
on the product quality, but also on how the businesses express their care and understand about the
customers.

Conclusion
Taking advantage of the Information technology development to upgrade the customer experience
and satisfaction level is one of the successful business methods nowadays. IKEA pioneered that
trend of service provided to the customers and became one of the best service providers in world
self-assembly furniture industry. IKEA’s success for today is a long and smart process of
development and innovation in providing services to the customers, therefore this learning
outcome should be well studied and adapted by Vietnamese company in today competitive market.
However, the companies should be aware of several difficulties and challenges faced by services
offered through Internet and other communication technology such as the high costs required for
investing and maintenance, training and tutoring customers and employees or the 4.0 service
competition among different corporation.

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