TOTAL SERVICE TO CUSTOMERS
A customer rarely buys merely a physical product.. Other attributes of the transaction often include delivery, credit terms, discounts & freebies, repair service, operating instructions, conspicuous consumption, psychological experience of purchasing and the like. Many services involve no physical product at all. The crucial question is what combination of attributes will have high synergistic value for the customers we serve.
IBM, for instance, has found a winning combination. Its products are well designed and of high quality. But so are the products of several of its competitors.
In addition, IBM provides
1. Salesman who understand the customerâ€™s problems and how IBM equipment can help solve them.
2. Fast, dependable repair service.
The synergistic effect of the three attributes is a service of high value to many customers.
Each niche calls for its own combination of services. For example, Chock Full oâ€™ Nuts expanded its restaurant chain on the basis of three attributes: good-quality food, cleanliness, and fast service. This combination appealed to a particular group of customers. A very limited selection, crowded space, and lack of frills did not matter. However, if any one of the three characteristics slips at an outlet the synergistic effect is lost.
Fuller Use of Existing Resources
Synergistic effects are possible in any phase of company operations. One possibility is that present activities include a â€œcapabilityâ€? that cane be applied to additional uses. Thus, US, Japan and West European watch companies have undertaken the manufacture of tiny gyroscopes and electronic components for spacecraft because they already possessed technical skill in the production of miniature, precision products. They adopted this strategy on the premise that they could make both watches and components for spacecraft with less effort than could separate firms devoted to only one line of products.
The original concept of General Foods Corporation sought a similar synergistic effect in marketing. Here, the basic capability was marketing prepared foods. By having the same sales organization handle several product lines, a larger and more effective sales effort could be providedâ€”and / or the selling cost per product line could be reduced. Clearly, the combined sales activity was more powerful than separate sales efforts for each product line would have been.