Retail & Services: Singapore Airlines (SIA)
Introduction
The service industry is considered as one of the most vulnerable industry. This is because of the fact that the consumers are connected in direct manner towards the company through the service employees. Therefore, it is important for service companies to focus on the different aspects that can affect the behavior of the consumers, particularly their perceived quality and satisfaction. Perceived risk is considered as the subjective assessment of the chance of injury or even loss from a given product or service (Dowling, 2005). Due to that, it can be said that the perceived risk is considered as an important factor in the process of determining how much time and effort people will put into in their decision-making (Morgan & Summers, 2005). Because of that, it is important to include the aspect of planning for the different tasks and activities that must be done in case of service failure. This is because, few if any companies manage to deliver services of expected quality all the time, which result to negative disconfirmation of expectations of perception of inequity. Thus, companies may respond to the service-failure independent of customer reactions or as a direct function of customer complaint. Service recovery pertains on the actions that companies takes to seek out dissatisfaction and as a response to poor service quality, particularly with the issue of service failure (Andreassen, 2000).
Background of the Company
Singapore Airlines (SIA) is considered as one of the most respected travel brands in the world. The company has one of the youngest fleet in the air in the world, a network spanning five continents. The success of SIA can be rooted back on May 1, 1947, when the Malaysian Airways Limited Airspeed Consul took off from the Kallang Airport of Singapore on the first three schedule flights a week to Kuala Lumpur, Ipoh and Penang. Over the next two decades, the Airline has steadily acquired more planes. There were more additions of the DC-4 Skymaster, Vickers Viscount, Lockheed Super Constellation, Bristol Britannia, Comet IV and the Fokker F27. Due to SIA’s more than 60 years experience, it had established a total network span of 101 destinations in 43 countries (Singapore Airlines).
How SIA Reduced Perceived Risk
Perceived risk is the beliefs of the consumers about the potential negative consequences of the product or service which strongly affect their decision about buying or availing products or services. It pertains on the anxieties felt due to the uncertainty of the consumers regarding the outcomes of a purchase, but believed that there may be negative consequences (Kerin, Hartley, & Rudelius, 2003). In the case of service industry, particularly the sector of airlines, it can be said the perceived risk is high because of the fact that the life of the consumers, together with their family and properties will be at risk during air travel. Because of that, the airline companies are facing different challenges in order to lessen the negative impact of perceived risk towards the decision of the consumers in availing their services, at the same time, maintain their position in the market.
In the case of SIA, the company is focusing on different operational and marketing strategy which helps them to lessen the perceived risk by the consumers. Primarily, the company is focusing on advanced technologies, particularly in their fleet. As a matter of fact, the company established many first in the past: they put the largest aircraft in the service. In addition the company has one of the youngest, most modern and comfortable fleet in the world (Singapore Airlines). Aside from that, the company is using advanced communication facilities in order to ensure that all of the company’s flights are based on the proper procedure, thus ensuring the safety of the passenger.
In addition, because SIA believe that the Human Resource or the employees are the most important resource in the service industry, the company focuses on managing and controlling their people. The company focuses on recruiting bright and dynamic individuals, train them with a budget exceeding $125 billion yearly in order to reach the highest standards of professional and personal competence (Singapore Airlines). Employing the best employees, particularly the staffs who are directly connected to the passenger such as the stewardesses and receptionists can help to lessen the perceived risk because customers will be at ease and relax about the knowledge and skills of the airline staffs, particularly regarding the pilots and assistant pilots who are directly responsible to the safety of their travel.
Service Recovery of SIA
Business recovery strategy has a dramatic impact to the revenue and profitability of any company. Thus, just like different companies in the service industry, SIA focuses on recovery strategy in order to maintain their good relationship with the customers.
The company uses the model of Zemke, which focus on 6 steps in quality service recovery (Osborne, 2003). Figure 1 shows the components of a quality service recovery process which is being applied in SIA.
Figure SEQ Figure \* ARABIC 1 Recovery Process (Osborne, 2003)
The company continues to set the industry standards in customer service. The service recovery procedure of the company focuses on a model which is outlined in much of the service literature, which includes a strategic focus on the customers. It adopts a total company approach to service excellence, continuous bench marketing and incremental improvements to the system (Recovering from Service Failure, 2006). Above all, the company is also active in maintaining and updating their customer feedback systems which help to support and encourage holistic perspective by which all the employees and staff look at all processes all the time in an effort to recognize areas that are in needs of improvement (Recovering from Service Failure, 2006).
Due to that, the company enables to focus on the different problems that might arise in the future, therefore help the company, particularly the upper management to plan for any possible solution regarding the problem. By doing this, SAI maintain its brand image to its possible and loyal customers therefore help the company to maintain its position in the market.
Conclusion
This paper had been able to show the relationship between the service industry, particularly the airline sector and the perceived risk, at the same time, focuses on how service recovery process can help to reduce and improve customers-company relationship.
Generally, it is important for service industry players to focus on the different strategies and activities that will help them to lessen the perceived risk which is vital factors in the buying decisions of employees. It is important to focus on the innovation and human resource of the company. By integrating advanced technology, particularly in the aspect of communication, it can help consumers to relax about their safety. This is evident in different large airline companies in the world, particularly SIA. The fact that the company uses young and advance fleet models motivates the customers to avail of the service without thinking about their safety in the air.
In connection, it is also important to focus on hiring, training and retaining knowledgeable and skilled workers, particularly those service employees which involved the stewardesses, pilots and receptionists. It is important for them to be informed about the different activities and aspect about the company, because it adds up confident, if they can answer any inquiry from the customers.
Therefore, it is important for any company to focus on implementing service recovery, which will be used in case of service failure. In the case of SIA, the company uses intensive communication between the customers and the management, in order to know their customers’ needs and demands, which will be included in decision-making process.
Bibliography
Andreassen, T. W. (2000). Antecedents to Satisfaction with Service Recovery. European Journal of Marketing , 34(1/2), 156-175.
Dowling, G. (2005). The Art and Science of Marketing: Marketing for Marketing Managers. Oxford University Press.
Kerin, R., Hartley, S. W., & Rudelius, W. (2003). Marketing: The Core. McGraw Hill Professional.
Morgan, M. J., & Summers, J. (2005). Sports Marketing. Thomson Learning Nelson.
Osborne, L. (2003). Resolving Patient Complaints: A Step-by-Step to Effective Service Recovery. Jones & Bartlett Publishers.
Recovering from Service Failure. (2006). Strategic Direction , 22(6), 37 - 39.
Singapore Airlines. (n.d.). Creation of Singapore Airlines. Retrieved June 19, 2009, from SIA: http://www.singaporeair.com/
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