'Companies don't invest in understanding what customers really want'

Dr A Parasuraman is a professor and holder of the James W McLamore Chair in Marketing at the University of Miami. He has been rated as one of the 50 top world-wide "gurus" of marketing by the UK-based Chartered Institute of Marketing.

He specialises in technology and services marketing and has developed models on service-quality measurement and improvement and tools to measure customers' "technology readiness" (when they are willing to accept new technology or tech-based products), and explained a technology readiness-based segmentation of customers and its marketing implications.

Parasuraman has authored several books on services marketing and technology, the latest being Techno-Ready Marketing. He was in Mumbai recently to address a where he explained the ServQual approach to measuring service quality "" which begins by measuring the gap between perceived and actual service quality on the basis of various parameters like reliability, back-end structure and so on.

Parasuraman spoke with The Strategist on the need for mapping technology-readiness in all sectors of the economy.

Are the tools for mapping technology-readiness of markets and quality of service restricted to the services sector?

IT and banking are two sectors that have recognised the need for these tools. But they're relevant to other sectors like consumer products also, in fact, wherever there is need for customer interaction.

Nowadays, even if you are manufacturing industrial or traditional products like fast-moving consumer products, you have to deal with the issue of technology because your contact with your customers is going to be through some form of technology.

Globally, how prevalent is the practice of mapping technology-readiness across sectors?

Techno-readiness is a very new concept even in the US. We've been doing some benchmarking studies over the years to see technology-readiness mapping exercises across sectors. Some companies have started to look at technology-related issues with respect to serving their customers.

Leading examples are AmericaOnline (internet service provider), CapitalOne (a finance and banking institution) and Sally May (a lending institution).

How savvy are Indian companies when it comes to knowing their customers' technology-readiness levels?

I guess Indian companies have not warmed up to the concept. I am not aware of any company mapping techno-readiness of customers.

Companies often make mistakes while introducing technology that the customer does not accept. What goes wrong?

Discomfort and insecurity are the two main inhibitors for technology. Broadly, companies go wrong in clubbing all the customers for their new technology product into one category.

Actually, there are various types of customers who will buy your product for various needs at various points of time in the product lifecycle.

Companies don't recognise these new waves of customers. For instance, there are "explorers" and "pioneers", who lap up your product easily. However, after they have adopted the product, there's a lull in sales.

What should companies do?

One thing that can be done is to avoid hyping the product in the initial phase itself. Hype intimidates customers who aren't explorers.

The explorers don't need persuasion so they will buy anyway. But by positioning as a basic product, companies can attract customers who are intimidated by new technology, in the long term.

However, companies are actually doing the opposite. Blinded by the initial success of their new "state-of-the-art" product, they actually promote it even more aggressively.

For example, in Europe, many cell phone manufacturers keep coming up with sophisticated gadgets like personal digital assistants (PDAs) and so on with a lot of bells and whistles "" really complicated technology.

Initially, they take off. Then after a while, sales taper. Obviously, companies have a lot of homework to do in identifying the new waves of customers that will emerge at different points of time.

Another way of approaching this issue could be by introducing basic products initially. Then, upgrade the customers to higher levels of technology, phase by phase.

Like in the cell phone industry, the hi-tech models with in-built cameras and so on, appeal to the highly technology-ready segment of explorers and pioneers.

In the same market, companies can also have lower-end basic models to tap the lower technology-ready segments. But this doesn't apply to companies who want to be positioned as cutting-edge technology providers.

What are the common mistakes that companies make in implementing ServQual and gauging the technology-readiness of their markets?

Broadly, the most common mistake is that most companies don't really invest in understanding what customers really want and whether they will accept their new offering "" whether product, technology or service.

This is because they are essentially supply-centric and inwardly-focused. The second mistake they make is misallocation of resources, based on assumptions about customer expectations.