Research Korner: Singapore Airlines

Chapter 1 1.    INTRODUCTION This chapter provides the background of shipping industry, supply chain management, general marketing, service marketing, E-marketing, E-customer relationship management; supply chain management and discussion about its impacts on and implication for service marketing. This chapter will end with the objectives of study and the outlines of the dissertation.           BACKGROUND Nowadays, liner shipping industry has been developed maturely in the world.  Numerous liner shipping companies can be found everywhere over the world.  The competition therefore is severe amongst those liner shipping carriers.  The management of those liner shipping companies thus has to improve and enhance its competitive position in the liner shipping industry. The objectives of marketing are to allocate resources to the product, price, promotion, and place components of the marketing mix in a manner that will lead to the greatest long-run profits.  How the management of liner shipping company allocates resources to the components of the marketing mix, therefore, will determine the market shares and profitability of the company. This project report is to evaluate the effectiveness of marketing strategies by means of E-marketing for the liner shipping companies and also undertakes a questionnaire survey which is to find out what factors are used by the shippers in choosing liner shipping company. This project report also undertakes a case study of “Maersk Sealand” (TUwww.maersksealand.comUT) on its Asia-Europe line, which will thoroughly analyse marketing strategies of the company on its Asia-Europe trades.         E-Marketing “Electronic marketing” is the transfer of goods or services from seller to buyer that involves one or more electronic methods or media. (Ngai, 2003 p24) It is important that the databases must tailor made for someone in terms of security, personalization, privacy, 24/7, 365 days available for information transactions.           Characteristics of Marketing Success in the market place depends not only on an ability to identify customer wants and needs but also upon an ability to be able to satisfy those wants and needs better than competitors are able to do. This implies that organizations need to look for ways of achieving a differential advantage in the eyes of the customer. The differential advantage is often achieved through the product or service itself but sometimes it may be achieved through other elements of marketing (Proctor 2000). To achieve the customer wants, a company needs to know the characteristics of marketing. The next part focuses on the characteristics of marketing. It will discuss each capability of marketing.           GENERAL MARKETING Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with other. (Kotler, 2005, p5) it is imperative that extra human resources have to deploy to contact the potential customers face-to-face and very time consuming. 1.3.2 SERVICE MARKETING Services are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. (Kotler, 2005, p220)  For example, banking, hotel, airlines and home repair services. It is important that there must have the after sales support and customer service then. Being the service it is of paramount importance to get the positioning right. Service is intangible, inseparable, perishable and cannot be owned. Therefore, the quality and experience though not physically lasting will last in the memories and experiences of the customer, the establishment of how to ensure the best, most effective and efficient positioning strategy is crucial for different services marketing.   1.4 STATEMENT ABOUT E-MARKETING OBJECTIVES The “E-marketing” plans are aiming at accomplishing multiple objects such as increase sales revenue, reduce costs, achieve branding goals, improve databases, achieve customer relationship management goals and improve supply chain. (Strauss et al. 2003)   1.5         E-MARKETING QUALITY ASPECTS (Cox and Dale, 2002) have been developed a conceptual model for assessing how a Website meets the needs of customers. The study has identified quality aspects to be judged in four categories. Each category relates to a different part of the web site experience and serves to enhance customer satisfaction to the extent that the customers will return. E-marketing strategy leverages new technology to get more-effective ways of selling a business's product to existing or new customers. Given that Web technology makes many new marketing initiatives technologically and economically viable, strategists must identify which particular initiatives will work for their company. A new framework can pinpoint the business and customer contexts in which a given idea is most likely to bring value to the customer and reward to the business. Perceived product differentiation captures the strategic marketing context of a business (Brynjolfsson & Urban 2001).E-marketing makes sure that information would be available for business. E- Marketing is used to provide messages for services that cannot be provided in online business transactions. In implementing E-marketing companies has to first consider how the business will be affected by such activity. In implementing e- marketing companies has to first consider ethical issues that may be affected by the change. Such ethical consideration can be the effect of actions to the employees well being and the lost of personal communication between the company and the clients. These considerations should be the first ones to be solved before any implementation of e-marketing techniques for better results for the company. E marketing quality will be measured through the effect it does on the firm. The e-marketing system will only be deemed as to be of high quality once it produces a firm that can compete well even in cyberspace. Through the case study application there will be further understanding of what can be done so that the E-marketing quality will be measured. The case study application will give an example of how e-marketing has changed the firm. It will show what capabilities E-marketing has and how it applies to the firm. In other words, the functionality of e-marketing is not only just the website but also can provide the followings in particulars:    1.5.1             Ease of use (the design of the Websites) The key quality factors reflect the usability of the Website during customer navigation and aim reducing customer frustration. The basic nature of the Website means that the communication with the customer enabling the use of text, graphics and animation. Guidance through the Website is done by means of links and searches. If the design is poor quality, customers will not be able to navigate pages to find what they are looking for and unlikely to make the transactions.   1.5.2 Customer confidence It is meaning that how the customers feel when visiting a Website in terms of accessibility, speed, reliability and customer service. Definitely, customers need to know that they can contact a company if problems occur and preferably interact with a company employee either via e-mail, telephone or by instant messaging on line. The use of FAQ must satisfy the customers and deter them from using customer service.   1.5.3     On-line resources It is referring to the products and services offering by the Website and focusing on the Website’s ability to provide enough information for customers to make the correct choice and be able to purchase on-line. If the customers are making on-line purchase, products need to be showed and described sufficiently for customers making the choices. Once selected and ordered, confirmation details and delivery expectation should be communicated clearly and quickly to the customer and where possible, they should have the means to keep track of their order online. Others refer the feedback mechanism during the transaction process and afterwards, which allows the customer to be kept informed of their order. For example, amazon.com (TUwww.amazon.comUT)   1.5.4     Relationship services It is an added-value to the customer experience by building a relationship with them or by offering extra services and information. It is meaning that the Website can establish a relationship with the customer through customization, frequent buyer incentives and through offering service that add value. (Kotler 2005) For example, Nike “Just Do it”.   1.5.5 E-CRM Implementation of “e-CRM” has resulted in increase competitiveness for many companies as witnessed by higher revenues and lower operational costs. Managing customer relationship effectively and efficiently boosts customer satisfaction and retention rates (Freeland, 2003 p153). E-CRM applications help organizations assess customer loyalty and profitability on measures such repeat purchases, money spent and longevity. E-CRM was developed on the basis that customers vary in the needs, preferences, buying behaviour, and price sensitivity. Therefore, by understanding customer drivers and customer profitability, companies better tailor their offerings to maximize the overall value of their customer portfolio. Reichheld (1996) has documented that a 5 percent increase in customer retention resulted in an increase in average customer lifetime value of between 35 percent and 95 percent, leading to significant improvements in company profitability.   1.6         SUPPLY CHAIN The supply chain is known as a system of resources that are involved in the movement of products from a company towards its clients. The activities that pertain to the supply chain transform raw materials, natural resources and its components into a finished product that is delivered or sold to a client.  The development of supply chain offer both opportunities and threats to shipping industry, the ocean carriers, freight forwarders and third party logistics service providers.   1.7.1 WHAT IS SUPPLY CHAIN? From the operational perspectives, supply chain consists of material handling and sourcing, products manufacturing, distribution and collection, vendor management, storage and warehousing, processing like packaging, labelling and re-labelling etc. In the foregoing, ocean carriers have played an important role for carriage of goods in the transportation sectors. From more strategic operational perspectives, the definition from the Council of Logistics Management is:      Supply chain management is the systematic, strategic coordination  of the traditional business functions and the tactics across these business functions within a particular company and across business within the supply chain for the purposes of improving the long term performance of the individual companies and the supply chain as a whole. Source: The Council of Logistics Management (1991)   1.7.2 CHARACTERISTICS OF SHIPPING INDUSTRY The shipping industry like other industries has its own characteristics. The characteristics of that industry is derived into three major disciplines namely commercial, operations & logistics and finance aspect which are aligning with the supply chain management. They are closely linking together and lacking any one the business cannot be succeeded. The shipping carriers provide the mega supply chain management to all the traders, freight forwarders and its service coverage mostly over all sectors over the world. Since the shippers shipping cargo, they are eagerly to know the status of the cargo and therefore the set up of E-marketing platform is a sound tool for them to have the track and trace the where-about the cargo without barrier at where the place is by means of internet. The details description of each discipline namely commercial, operations/logistics and finance is detailing in process highlights, scope as an appendix one. 1.8         OBJECTIVES OF THE STUDY “E-marketing” constitutes an aspect of electronic commerce that encompasses the areas of information management, customer service, public relations as well as sales (Strauss et al. 2003).  The popularity “e-marketing” flourished with the widespread use of the Internet in homes. Berell 1995 and Ammeen 1999 stated that more than one-third of the consumers with computer and Internet connections in their homes would use the Internet to purchase items they find on the product and services sites. E-marketing previously emerged as a channel for sharing product information to potential customers so that both sellers and buyers are enjoying the mutual benefits. Schlueter 1998 stated that companies offering advertising space would become common place coupled with the offer of a wide-array of products and services. Overall, returns on investments have grown even if bottom line has declined. This sort of e-marketing is likely developed to become the foundation of contemporary economic environment.    Dreze & Zufryden 1998, Kalyanam & McIntyre 1999 stated that with the wide access to this sales channel, companies only needed to engage in online advertising to make their sites easy to find or access coupled with the development of websites able to entice and convince potential customers to make actual purchases. It is predicted that the customers can find their favorites through online shopping to prevent rush shopping after working hours. Gattuso 1994; Bowman 1997 stated that after a consumer had entered the site, it is the design and content of the site that determines the company’s achievement of cost-efficiency. It is likely that the company will know-how their preferences and no need to conduct a deep survey.  A consideration of e-marketing holds a number of benefits such as a wide market reach coupled with the reduction of cost (Strauss et al. 2003).  However, there are also limitations such as the development of complexities in the firm-consumer relationship because of the difficulty in navigating the site or searching for specific information that the customer needs in decision-making. Security issues on the part of the business especially with the proliferation of viruses and hackers as well as on the part of consumers who are not willing to share account information online also intervene as considerations in the actual e-marketing endeavors.   Benefits, limitations and security issues intervening in e-marketing means there is more this business activity beyond the promise of cost reduction and wide market reach. It is fitting to investigate e-marketing quality relative to the actual experiences of firms engaged in e-commerce. The purpose of this research is to be in associated with the “bench mark” of Maersk Sealand who is the market leader in shipping industry (TUwww.maersksealand.comUT) and “branding” for example: a touch point model for airline company- the entire interaction cycle between the customer and the brand is structured into four different stages, i.e. pre-sales phase, sales phase, post-sales phase and retention phase,  it enables companies to manage a focused and actionable approach. It helps companies to optimize their resources by aligning brand promise and brand delivery. Source: VentureRepublic. In shipping industry by means of E-marketing concept to comply with “perception of E-marketing quality” is an important tool for service marketing of its valued-customers. The objectives will focus on the necessary problems and objectives that should be clarified in order to gather the intended information and also be able to derive specific information that are not limited by the previous questions. The aims and objectives of the study include <li class="MsoNormal" style="color: navy; line-height: 200%; text-autospace: ideograph-numeric"> Determine the situation in the shipping industry</li> <li class="MsoNormal" style="color: navy; line-height: 200%; text-autospace: ideograph-numeric"> Identify what are the characteristics of a good shipping company.</li> <li class="MsoNormal" style="color: navy; line-height: 200%; text-autospace: ideograph-numeric"> Determine the impact of marketing strategies to shipping companies.</li> <li class="MsoNormal" style="color: navy; line-height: 200%; text-autospace: ideograph-numeric"> Know more about the company Maersk Sealand</li> <li class="MsoNormal" style="color: navy; line-height: 200%; text-autospace: ideograph-numeric"> To be associated with the bench mark of Maersk Sealand who is the market leader in shipping industry.</li> 1.9         OUTLINE OF DISSERTATION Chapter two is a literature review of E-marketing, E-CRM about impacts on and implications for service marketing. Chapter three is to introduce a conceptual framework of marketing. Chapter four is the methodology describing and motivating methodology used in the project report. Chapter five is to analyze the findings of the questionnaires survey and to find out what factors will affect shippers in choosing liner shipping company. Chapter six is to identify and evaluate the marketing strategies of Maersk Sealand on its Asia-Europe lines. Chapter seven is a conclusion as well as give recommendations one the marketing strategy of Maersk Sealand. Chapter Two: Literature review This section of the study primarily focuses on the different researches and other literatures that focused on several aspects that will help with the progression of this study. The literatures presented will come from books, journals, and reports that are deemed to be helpful in the advancement of awareness concerning the subject. Literature on e-marketing covers the business environment of companies engaged in e-marketing; the benefits, limitations and security issues arising in e-marketing,  the impact of these on the engagement of industries on e-marketing; and E-customer relationship management.   2.1. Consumer Perceptions of E-Marketing Quality The perceptions and attitudes of consumers on e-marketing is a major factor that influences actual purchasing behavior. To study the perceptions of consumers on e-marketing quality, Jarvenpaa and Todd (1997) developed a model for consumer perceptions on internet shopping. Based on the model, there are a number of indicators of consumer perception categorized under the four classifications: 1) product value; 2) shopping experience; 3) service quality of the site; and 4) perceptions of risk in online shopping. Through the consideration of these factors, a business firm engaged in e-marketing will learn the perception of its target consumers over the quality of its website and e-marketing strategy reflected on the sales performance of the firm. In a different study conducted by Vellido, Lisboa and Meehan (2000), he identified nine factors linked to consumer perception of e-marketing. Out of these nine factors, risk perceptions has been identified in the study as the greatest factor determining the perception of consumers towards online shopping that directly translates into actual purchase. This means that the major differentiating factor of the people actually engaged in online shopping and the people preferring not to make online purchases is their perception of the risk involved in e-marketing. Other significant factors include control of shopping process, convenience of the shopping experience, affordability of products and services offered online, customer service, and accessibility and utility of the shopping website.   In another study conducted by Jarvenpaa, Tractinsky and Vitale (2000), they tested a model of consumer attitude towards particular online stores based on the assumption that the reputation and size of the online store influence consumer trust towards the retailer. Results of the study showed that trust level had positive links with consumer attitudes to the online store and negative relationship with perceptions of risk towards engagement in online shopping. This means that the perception of consumers on the trustworthiness of the store based on its reputation and size determines the propensity of consumers to make actual purchase on the company website.  Thus, in the study many factors explain the factors that determine or influence the perceptions of consumers over the quality of the firm’s e-marketing activity. As the environment changes, consumers become more concerned about the effect of the changes thus their choices are altered according to the effect of the changes. . The changing behavior of a client forces a company to think about better means of providing service to this clients and maintaining their relationship with the clients. 2.2. Business models find link to e-marketing An effective competitive strategy gives a company an easier chance of attaining its goal. A company that is wiling to use a competitive strategy must create changes in technologies. One change is the use of technologies such as E-marketing. E-marketing can be linked to different business models. 2.2.1 Merchant model The merchant model is web marketing of wholesalers or retailers of goods and services. The benefits of this model include increased demand for goods and services through an entry into the global market, potentially lower the costs of promotion and sales, 24/7 ordering and customer service and one-to-one custom marketing for example: Amazon.com.(TUwww.amazon.comUT). Willing consumers can call toll-free members, send e-mail messages, or Fill out online “form “to order merchandize or request further information. These customers contact can be used to develop a highly targeted and individualized direct marketing effort, starting with a simple presence and slowly building as the internet proves its worth. (Ainscough T.L. and Mckett M.G. pp 45) 2.2.2 Auction model The auction model web implementation of bidding mechanisms through multimedia presentation of goods and services. It is criticized that the communication techniques currently used in the online auction industry is primarily on unicast technology. Unicast based online auctions suffer from unbearable delay of the communication between the auctioneer and bidders. (Wu, Wang and Teng p54) 2.2.3 Manufacturer model The manufacturer model uses the web to compress the distribution channel rather than use of intermediaries to get you products and services to market; you go direct to the customer via web. For example Dell computer uses this model to sell the personal computer directly to the customers via their web site. Also, about 50 percent of dell’s sales are web-enabled. (TUwww.dell.comUT) accessed 3/10/2007 2.2.4 Advertising model Like a traditional broadcaster or new media business model, the web advertising model provides content and services such as email, chat, forums, auctions) supported by banner ads or other forms of online adverting and some other called portal like AOL, Yahoo.(TUwww.bluemountain.comUT) accessed 3/10/2007 2.2.5 Logistics model The business uses the internet to help other businesses manage logistics functions such as electronic payments, ordering systems and shipping services in operating under logistics model. This technology platform can provide the real time track and trace of the container or cargo status for example Procter and Gamble. It is imperative that to integrate the supply chain, reducing inventory, transaction and communication costs and also increasing customer satisfaction and loyalty. In the past, the above-named processes were traditionally done by face-to-face contact and hence it would have been wasting of human resources particularly for the marketing teams and needing time for the businesses successfully gained. Notwithstanding, most of the people are having the computer and the usage of internet is very popular for everyone and create a new trend of communication between the companies and customers. For example, many things such as answering customers’ questions, solving the customers’ problem, and selling additional products to the customers can be computerized. And the new trend is call for 24 hours accessibility. The internet can provide the consistent, comprehensive customers and products information. It is most importantly that the distance death the customers can access to Websites anytime and anywhere. 2.3. Business Environment in E-Marketing One significant model is “business-to-business” (B2B) that refers to companies engaged in business transaction with other companies (Bussler 2003) for example IBM and Hewlett Packard.  Another important model is “business-to-consumer” (B2C) that pertains to the direct selling of companies to end-consumers (TMilutinović 2003) T for example:       Amazon.com. (TUwww.amazon.comUT) at the onset of e-marketing, B2C first emerged as a more common business mode to be followed by the more complex system of B2B (Malala 2003). Still another important model is “peer-to-peer” (P2P) that pertains to individual’s exchange of products or services among themselves such as file sharing of music (Miller 2001). Apart from these business models, there are various internet formats for selection by business firms (Fiore 2000). Levy & Weitz (1998) stated that name-your-price e-marketing allowed consumers to set a price for a product or service, set their price range for goods, or search for products and services within their price range. It is likely that the more flexibility being given to customers target according to their preferences and demanding and affording price. Peppers & Rogers (1997) stated that find-best-price e-marketing that allowed consumers to compare the prices of different online retail companies for the same product or services. It is the current situation allowing the customers to compare the same products and price online and no need to have the physical shopping. Seybold (1998) stated the format is the bid-to-buy format that allows consumers to compete with each other for the purchase of goods advertised on the retail sites. The existence of these different e-marketing formats provides options to consumers but this also makes the process more complex.   2.4.  Benefits & Limitations in E-Marketing “E-marketing” has a number of benefits, with some connected to the other. Sharipo & Varian (1999) stated that the first benefit of e-marketing was information sharing, which allowed companies to provide a wide range of information they expect consumers to need in decision-making over final purchases. It will be the new tendency for the companies to use E-marketing for promotion while the customers can find their choices through electronic means. Szymanski, Bharadwaj & Varadarajan (1993) and Underhill (2000) stated that the second benefit was convenience to both businesses and consumers because of a marketing channel that defies time or distance constraints. This channel can provide the mutual benefits for both companies and customers as long as there is the readiness of personal computer which can be done anywhere over the world. Hagel & Armstrong (1997) stated that the third benefit was cost reduction for both companies and customers due to the savings incurred by business firms in traditional advertising and promotions and consumers in traveling to retail stores.  It is likely that the engagement of celebrity and TV advertising and different types of promotion for example road show can be saved tremendously.  Fourth benefit is wide market expansion opportunities for business firms to expand into the international market without engaging in joint venture or mergers (Kalb 2002). Fifth benefit is overall efficiency experienced by business firms, especially in monitoring their operations and performance because of easy organization, sharing and analysis of information from its e-marketing operations. This is also linked to the higher degree of accountability for the benefit of advertisers because of easy tracking of results. (Strauss et al. 2003)Although, e-marketing offer these benefits to consumers and the Internet has gained immense popularity, sales through e-marketing has not achieved a similar level of attractiveness as expected (Mahajan, Srinivasan & Wind 2002). This is expressed through the greater investments directed towards traditional advertising and promotional activities relative to online advertising pegged at 5 percent. The lower levels of home Internet use in developing countries also lessen the potential of e-marketing in the international market. (Kalb 2002). In developing countries, m-commerce is becoming the new trend and very popular because of the cost of the device. Mobile phone is much cheaper than a computer. In developed countries, youth are more likely to accept m-commerce too.E-marketing also has a number of limitations mostly related to the application of e-marketing tools. First is the level of accessibility of the site to consumers with limited knowledge or experience of internet surfing and site navigation that disable willing consumers from selecting products and making purchases (Underhill 2000). Hagel and Armstrong (1997) stated that the limited sensory experience for consumers because of their inability to sample food products and clothes to aid in decision-making for the final purchase. It is likely that there will be a success for these physical products because the customers need the physical touch and feel before purchase. Fourth limitation is the difficulty of providing customer service online relative to face-to-face customer service, where the personnel and customer can easily understand the issue and arrive at a solution amenable to both parties (Strauss et al. 2003). (Blackwell et al. 2000) stated that fifth was the issue arising in payment methods since payments because of the sensitivity of account information that people were not willing to provide online without being given any strong security assurances from the company. There will be the impact of security concerns for people because there is the money transaction and they are intentionally unwilling to do so.  Although these limitations exist in the application of e-marketing, the limited sensory experience has been off-set by the common offer for companies for easy return policy (Kalb 2002). Companies are trying to keep-up with these limitations by considering potential solutions to these limitations for example amzon.com has provided this facility for the customers in terms of refunding and replacement for dislike of the books have been purchased.  2.5. Security Issues in E-Marketing Companies and consumers are both concerned over security issues, especially the maintenance of the privacy of consumers when they use their personal information online. This was spurred by the news that a number of e-marketing companies are selling the personal information of their customers without the consent of the latter. (Blackwell et al. 2000) stated that these companies had placed confidentiality clauses in their sites. Consumer information, helpful to the marketing strategy of many companies had become a market commodity. This resulted to the hesitation on the part of consumers to make online purchases because of the fear of their accounts being hacked or being barraged with calls from sales companies (Bulkeley 2001). As a solution, encryption has been greatly utilized by online companies. Encryption transforms information into a crypt that cannot be easily accessed except through authorization managed by a program. However, greater protection involves higher cost so that in the long run the cost minimization may be at a level that is higher that originally expected when this issues has not yet been considered. (Blackwell et al. 2000) Another new trend like Digital signatures, RSA SecurID, verified by Visa, biometric verification is a feature for unique identification of individual people and seems to be the most stable, successfully encoded for rapid and accurate recognition which make internet transitions become more and more secure and users-friendly. (Connolly 2006). Security is an issue in E-marketing because of the influx of various technologies that can know and gather the information from someone using only the internet. 2.6.   E-Marketing & Industries    E-marketing has strongly impacted the retail, music and banking industries. In the case of the music industry, online purchases have become commonplace but this has resulted to uncontrolled file sharing and piracy. The music industry is currently developing ways of securing revenue generation by relying on the differentiation of music downloaded from the sites of music companies and from unauthorized file sharing websites. (Hall 2002) For example UPS who is the courier for parcel and cargo delivery by air service and having the similarity of shipping industry and has its own Website (TUwww.ups.comUT) and can provide the track and trace of cargoes status and when it can be arrived to the destination. The functionality of Website can provide the real time information so that the customers are able to inform the buyers immediately.   Digital Rights Management (DRM) is a kind of technology used to limit the use of software, music, movies or other digital data. This generally relies on some interaction between the media and the system that plays it and as the technical basis for solution to enterprise security problems requiring persistent protection. However, the technical weakness in enterprise DRM is especially regarding authentication and authorization which can be addressed with relatively simple mechanisms. (Sebes & Stamp 2007)  For those websites that sell music/video (eg. Apple Inc.) is mainly employed this technology in their website to protect the digital files. However, Apple has announced that EMI Music launches DRM-free music on 2 April 2007. This action generate a side-effect: other music labels may now feel pressure to join EMI in dropping DRM through iTunes which is changing the whole business environment. With regard to the retail industry, the rise in product and service websites resulted to the ability of small, medium and large companies to offer their products to greater market segments. This resulted to the enhanced vibrancy of the retail industry due to a wider distribution channel.  Dreze & Zufryden (1998) stated that the advertising industry had also grown through online advertisements because of the increasing shift from traditional to online advertising so that spending on online advertising and promotions had not started to surpass radio advertising. The new trend of advertising industry is using the traditional media together with internet. For example, a short advertisement is played in television with an open-end story with a web-link at the end which can attract the audience to browse their websites for more details.   2.7. Evaluation of ECRM Concept ECRM is basically consisting of three components namely data management, operational management, knowledge-based management which is not “static” but “dynamic”. (Feinberg, Kadam, Hokama & Kim 2002)   2.7.1 Data Management Data management is the mainframe among those three areas as mentioned in evaluation of ECRM concept which is the foundation like the building. In most industries, the analysis drives action. The analysis can help the organization to generate sales volume and market shares by knowing the customers’ “perception” and “buying behavior” etc. (Reuvelta 2003, p 223) By so doing, the highly effective customer base can support the organization to identify the risks and opportunities among the customers and making the solid business decisions by implementing the strategy and executing most effective marketing campaigns. Data management is including data collection (for example, customer data transformation, customer knowledge discovery and capturing all relevant customer information), data analysis (for example, “data mining” (Kumar et al. 2006, p 191), and customer value assessment)   2.7.1.1 Customer data transformation It involves extracting and transforming all the raw data from both internal and external databases, to build the common platform for storing all the organizational details and ensure the people who need them can be accessible. Furthermore, the organization has to enhance the customer information through integration from various sources for example the geographic, life styles which is helpful to get the complete image of customers for historical perspective over time. (Kumar et al. 2006)It is believed that this is ECRM starting point to collect customer relevant information. Furthermore, without the customer relevant data, ECRM cannot be conducted. In providing service company’s need to have a service system that can give guidance to the company in making sure that proper service can be given to clients.  The service system will serve as a way for customer data transformation to occur. 2.7.1.2 Customer Knowledge Discovery By enhancing the system and converting the data into usable information for the customers and predicting the future prospects. It is the useful tools for the marketers to understand the customers better by the existing data. (Kumar et al. 2006) It could be implemented smoothly if the data is sustained consistency, accurate and timely updated.   2.7.1.3 Capturing relevant information   Even though different departments alongside the organization may need different formats, it is still needed to integrate the databases into standardization and same format for ensuring the consistency of customer information. Particularly, it is needed to incorporate the external source into the company databases to aware the competitive situation for example how the competitors’ data dealing with the company’s customers, data communities with common interest. (Kumar et al. 2006)It is simply to say that this is the aim at integrating the data into one common platform for people who wanted the information. For example, the traditional banking was selling the unique service to its customers such as saving deposit, mortgage and bills etc and nowadays because the environment changed, most of the banks are focusing financial products likely that huge investment on stocks, hedge funds, insurance etc, which is required to closely communicate with its customers resulting ECRM is the potential tools for this purpose. And, ECRM is an integration of all data into one common platform which is able to prevent repetition of information, facilitate better analysis for customers, no need to find the information alongside the departments and no inconsistent of information.(Freeland 2003). Any information that will be acquired by a company needs to be relevant and useful so that the goals of gathering the information will be a success.   2.7.1.4 Data Mining Data mining is “the extraction of hidden predictive information from large databases is a powerful new technology with great potential to help companies focus on the most important information in their data warehouses.” (TUwww.thearling.comUT)  It is realized that data mining can be enhanced gap analysis into three portions – acquisition, sales and retention gap. Acquisition gap – it can make use of customer profiling to find out the standard characteristics of customers and enhance comprehensive understandings by applying the Cluster Analysis and Pattern Analysis to segregate the customers and forecast whether or not the people can become the real customers. It is the good tools for the marketers to go in the right direction for the sales target, reducing the running costs and increasing the sales probability. (Evans et al. 2004 p261-263) For example, American Express has used the above analysis to detect the potential customers. Sales gap can make use of Basket Analysis to comprehend the customers buying behavior and find out which products the customers will purchase simultaneously. The other tool is using the Sequence Discovery to forecast which particulars products the customers will buy after purchasing a product. The data mining is the effective decision to determine products combination, promotion, inventory control and how to place the products on the specific location within the outlets. This approach is able to evaluate the sales activities effective or not.    For Example, Wal-Mart has applied very much on the Basket Analysis to define and optimize the layout in their shopping malls. Retention gap – to analyze why the existing customers have been switching to the competitors and also identify who customers will possibly go to somewhere and decide the methodologies to prevent the occurrence. The Neural Network is the systematic tool to assist the organization to analyze and sort out the loyalty of customers according to the past sales record and their behavior. (Evans et al. 2004 p271) For example, University Of Alabama has used the data mining system (SAS Enterprise Miner) from the enrollment records and standard freshmen surveys to recognize students who might have problems and take steps to prevent the leaving of students. Then, the University can reproduce the problem students and providing personalizes one-to-one contact to retain their stay. (SAS, 2006)   2.7.1.5 Customer Value Assessment Adapted Pareto’s rule 80/20 which stated that the organization gaining the major profit from 20 percent of the loyalty customers and is helpful to manage the profitable customers effectively. (Evans et al. 2004). It is realized that ECRM is the basic philosophy to enhance the identification of the most profitable customers. For example, The Dell Triangle has categorized the customers into several layers as per ECRM philosophy. As like platinum customers there will be customized all the services, having their own home pages and replication of their internet site.  Source: Dell Computer   2.7.2 Operational Management The existing databases information is addressing three main areas of functionality such as the customer intelligence for the frontline staff, effective campaign management and customer life cycle management. Basically, the key users are the management team for the strategic planning, marketing department for the campaign execution and frontline staff for customer services. It is believed that the operation management through ECRM can speed up the response to the customers and up to their satisfaction and its internet based CRM has three general areas: (1) presales information (corporate and product); (2) e-commerce services; and (3) post-sales support. (Feinberg, Kadam, Hokama & Kim 2002)  For example, Dell computer has different communication channels for its valued customers through telephone, fax and internet etc. Dell computer is using interactive internet for day-to-day customer service.   2.7.3 Knowledge-based Management It is providing the organization for the entire training support and particularly designing for individual employee for increasing the productivity. It is the tailor-made training course and through internet to detect the employees performances. It is helpful to determine every employee diligence for allocation of resources, the employees will know-know to facilitate the knowledge of the products and market situations. (Evanschitzky, Ahlert, Blaich & Kenning 2007) It is recognized that this approach is helping the organization to familiar with the customers’ perception and providing the suitable service through the internal training processes. For example, CSL Hong Kong has used this program to enhance the customers’ relationship to increase the sales and loyalty.   2.7.4 Usage of Internet When applying ECRM, most of the direct marketers are likely to post the advisement on the various web-sites for promotion. However, the outcome is lag far behind the expectation of both organization and the customers. The reason is that the organization has wrongly utilized the functionality of internet.  The internet provides great opportunities for those who know how to use it well. It is better that the organization should add the value on advertisement such as immediate head news. Another example, the homepage of the organization is clumsy and no value-added functions provide to retain the target audiences. To the best practices, direct marketers should add some value-added functions on the internet of company’s homepage such as Amazon has book comments; icoke.hk is having the buddy – buddy platform for making friends and Mushare providing online games.   2.7.5 Contribution of ECRM to an organization with its customers Consumption patterns changes over time, there is a time that a product is a success but after some time this product loses its popularity. As new products are made people find a need for new products. The change in consumption patterns forces businesses to use technologies to satisfy its clients. ECRM is one of the technologies that assist businesses in dealing with clients. 2.7.5.1 Removal of intermediaries In the past, many organizations have neglected the ultimate consumer by focusing on their immediate customer, an intermediary for examples auto makers focusing on the dealers, pharmaceuticals on doctors and pharmacists, airlines on travel agents. With the disintermediation of many of these intermediaries, ECRM is the key. (Law, Leung & Wong 2004) As for the customers, enable an extra benefits in exchange of personal information, having special offers tailor-made to their interests, an easy and private way of shopping, 24 hours and 7 days a week shopping through internet, telephone and use of electronic payment, widening accessibility and greater product choice, and easily comparing information and products with other providers.    2.7.5.2 Personalization ECRM assists in mending a company’s relationship with the clients. “ECRM” is enabling an interactive one to one relationship, tailor-made customer’s individual interest with effect of loyalty. (Ball, Coelho & Vilares 2006) Thus, it enables greater accuracy when forecasting behavior and budgeting. Today’s marketing is encircling diverse range of needs, wants and aspirations and therefore a personalized and tailor-made communications is crucial. The continuity pressure for greater accuracy and accountability reinforces the role of direct marketing. For example, many web-sites (My Yahoo) start to become customer driven. It is meaning that customer can design the layout of web-sites by themselves to suit their needs.  2.8. Evaluation of ECRM Practices An effective service strategy helps the company to have a good relationship with their clients. In doing this every aspect of the business can be checked before the strategies can be used for success in the firm. The service strategies will depend on the situation in the environment and the different barriers that may hinder the delivery of an effective strategy. The service strategy may go into waste if there are still certain barriers and environmental condition left unsolved since the effect of the strategy may not be felt by clients. Service strategies such as ECRM have its own issues. The following will evaluate the ECRM practices.   2.8.1 Huge Investment of ECRM There are three ways to implement ECRM namely developing software in house, buying licensed ECRM software and outsourcing creation of software. Developing software in house – it means the organization to develop the ECRM on his own, including pay for software development, R & D, hardware and maintenance etc. (Kumar et al. 2006) It is believed that the above is only applicable to the big organization that is having monies for the investment and not suit for small-medium enterprises. However, if the organization is affordable for the high initial investment and has a full gear of professionalism staff the result is positive. For example, Oriental Overseas Container Line has developed the ECRM in shipping and logistic channels for a number of years and it proved that both the staff and customers are able to communicate promptly and effectively such as cargo tracing / tracking.(TUwww.oocl.comUT)   Buying licensed “ECRM” software – it means that to buy the software from the service provider, in general, it is sold as a block and required high licensing costs. (Kumar et al. 2006) It is needed to deploy IT resources to do the maintenance and integrate the software into the existing system to suit for the alteration of environment and needs. In practice, the difficulty of maintenance and integration of the system is high. For example, I am working in Zim Integrated Shipping Service Limited who had brought the IQSHIP system including ECRM functionality from the outsider four years ago, and now, the system is still needed to enhance the integration and maintenance across the organization zones over the world.  Outsourcing a managed service – the service provider providing software, hardware and after sales services. (Kumar et al. 2006) It is not suggested to use this approach even though the initial cost is less expensive comparing to the above two options, if the outsourcing provider has been collapsed there will be no back end support. The risk is very high.   2.8.2 Privacy According to ECRM concept, it is focusing on the integration of data from internal and external sources, and data analysis to locate the potential / profitable customers. Even though it is workable technically, the direct marketer will encounter the legal restriction on the use of the data. It is particularly in the United States. Justice Brandeis’ definition of being “let alone” no longer adequately defines the concept of privacy in the 21PstP Century Cyber Age. The modern definition of privacy therefore needs to also include ‘the right to control our personal information, even after we disclose it to others (TUhttp://www.cdt.org/privacy/guide/start/UT). Therefore, contemporary definition privacy also needs to include the concept of personal data protection in which an individual has the right to control the flow and access of information and data related to his/her personal details.   In Hong Kong, in the absence of a clearly defined legal right, privacy must be looked at in the context of the Data Protection (Privacy) Ordinance which offers data privacy protection, as opposed to personal privacy protection. Hence, personal privacy per se, is not covered by legislative provisions in Personal Data (Privacy) Ordinance. Hong Kong’s Data Protection (Privacy) Ordinance is based on a similar 1984 UK act, which is turn was based on European data protection convention. However, a leak of a client’s personal data caused by the organization’s lax security may easily give rise to civil claims for compensation and criminal prosecution.  For example, according to Telecommunication Act of 1996 without the customer permission, the telecommunication company cannot explore his data to get the customer back if he leaves and cannot use data from one product to sell other products. (Weiss 2003 p11-12)   2.8.3 Difficulties of Data Integration and Transformation Nowadays, the merging and acquisition of company is very popular for the development and increase the competitive advantages. Its advantages can enter the overseas market more effective, enlarge the marketing shares and build up the customers, reduce the costs and etc. Nonetheless, once it is done, it is difficult to transform all the data consistency because of different formats and languages. (Themistocleous & Corbitt 2006) For example, the merger of telecommunication, if two companies are maintaining to use the different systems and data storage warehouse, during the transitional period, (no linkage between two independent system), when the top management needs the data for the customers, it is required to extract two reports and manually to do the integration and rather decrease the efficiency.   2.8.4 Difficulties of Data Analysis There are two main difficulties in data analysis – reliability of data and the gap between the statistical theories and reality. (Madu 2005) For example, when doing the web mining, the organization will record down the customer activities on the web (the number of times they hit the items and the time spent on the particular homepage), if the users clicked inadvertently and did other things when opening the homepage (stay on the homepage not because of interest) the data could not reflect the real situation. This resulted in incorrect analysis and ended with abuse marketing strategies.  There are always multiple assumptions when carrying out the statistical test, however, the reality always could not meet those assumptions. For example, when doing the regression analysis to check whether two factors are co-related, the data must be linear. Nonetheless, the linear data is rare in real circumstances. 2.9 Summary As the environment changes, consumers become more concerned about the effect of the changes thus their choices are altered according to the effect of the changes. The changing behavior of a client forces a company to think about better means of providing service to this clients and maintaining their relationship with the clients. Companies integrate business processes and technologies to their operations to meet the changing demand of clients. The literature part concentrated on the different technologies used and their benefits and disadvantages. Based from the literature review research questions has been formulated.   2.10 Research question The study will try to answer the following questions:  <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> How do technological changes and changes in strategies help shipping companies?</li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> Will the abovementioned technologies or strategies prove beneficial to the shipping companies? </li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> How do clients of shipping business relate and respond to the changes in technologies?</li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> Can the issues that were discussed earlier affect the perception of the clients towards the shipping companies?</li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> Do the clients think that the changes in the shipping companies can affect the client’s outlook towards a shipping company?</li> Chapter three 3.1. INTRODUCTION This chapter reviews places most emphasis on the marketing of services.  Maritime freight transport operators are in the international service sector, as distinct from a multinational company engaged in manufacturing production or consumer goods.  Hence, in this project, we need to concentrate on services marketing rather than product marketing.  This chapter aims to provide conceptual frameworks for services marketing. 3.1 MARKETING AND SERVICE 3.1.1.2 UDefinition of Marketing Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. (Bennett, 1988) Christopher and McDonald (1991) defined marketing as the process of matching the resources of the business with identified customer needs.  In other words, marketing is concerned with customer satisfaction and with the focusing of the organization’s resources to ensure that the customer is satisfied. Kotler (1997) defines marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others. Marketing however is not selling, neither it is advertising, although these are important parts of marketing.  Marketing is the performance of activities which seek to accomplish a firm’s objectives by anticipating customer needs and directing a flow of need satisfying products and services from producer to customer.  It is clear that services marketing are just as important as product marketing.   3.1.1.3 UDefinition of ServiceU The combination of superior technology and superior employees with a service orientation will contribute to achieving sustainable competitive advantage. It also quickly becomes evident that they need suppliers who have a similar and compatible culture. Thus, there are two strong themes in any discussion of creating superior customer value at a sustainable profit and this includes a customer-focus imperative and a service orientation (Aharoni & Nachum 2000).Services include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser. (Quinn, Baruch and Paquette, 1987) A contemporary definition of service is provided by Kotler and Armstrong (1991), a service is an activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.  Its production may or may not be tied to a physical product .Shostack (1977) developed a refined version of the original continuum in terms of tangibility and intangibility: business product – service classifications (Figure 3-1) and it remains a valuable perspective for understanding the nature of services.  The essence of the continuum is that tangibility decreases as one move from left to right.  Note that freight is well towards the right on the figure. Figure 3-1 A continuum of tangibility and intangibility: business product-service classifications For example, air passengers are essentially buying the transportation service.  They arrive at their destinations without anything tangible to show for their purchase.  In addition, transport of goods or passengers by sea is also essentially a service.  Its production is associated with physical products not least the ship itself.   3.1.1.4 UCharacteristics of Services It is necessary to understand the distinguishing characteristics of services.  Zeithaml (1985) identified that services have four basic characteristics: 1.    Intangibility 2.    Heterogeneity 3.    Inseparability 4.    Perishability Table 3-1 lists these four characteristics and their marketing implications Table 3-1 Service characteristics and marketing implications Service Features Resulting Implications Intangibility Services cannot be: 2       Inventoried 3       Patented 4       Displayed or communicated 5       Pricing is difficult Heterogeneity Service delivery and customer satisfaction depend on employee actions. Service quality depends on many uncontrollable factors. There is no sure knowledge that the service delivered matches what was planned and promoted. Inseparability Customers participate in and affect the transaction. Customers affect each other. Employees affect the service outcome. Decentralization may be essential. Mass production is difficult. Perishability Services cannot be returned or resold. Source: Zeithaml, V.A., Parasuraman, A. and Berry, L.L., (1985), “Problems and strategies in services marketing”, Journal of Marketing, Vol. 49, Spring, pp.33-46.   Intangibility stems from the fact that services are performances.  They can be seen or touched. They cannot be owned by a certain individual.  For example health care services are actions performed by providers.  These services cannot actually be seen and touched by the patient.  Besides, services are normally produced at the same time they are consumed.  In fact, a doctor cannot provide a service without the involvement of a patient. Perishability refers that services cannot be stored, saved, or resold.  Unoccupied seats on an airline flight cannot be stored for use on another flight that is booked to capacity.  Finally, because services are performances, frequently produced by humans, they are susceptible to heterogeneity. 3.1.2 MARKET SEGMENTATION Markets made up of individuals with diverse product needs are called heterogeneous markets.  Not everyone wants the same type of car or clothes.  Some individuals want a car that is economical; some see a car as a status symbol.  For such heterogeneous markets, the market segmentation approach is appropriate. Market segmentation is the process of aggregating customers with similar wants, needs, preferences, or buying behavior.  Market targeting involves evaluating the attractiveness of the segments and selecting ones the firm will serve (Zeithaml, 1996).  Segmentation is equally important for services as for product markets.   3.1.2.1 The Process for Market Segmentation in Services Kotler (1991) states that the process of target marketing has three distinct stages. Stage one is market segmentation; stage two is market targeting for products and services – the customers find physical products that allow little variation like chicken, steel and salt and similarly the customers are looking for services on the attributes in terms of consistency, durability, reliability and reparability; and stage three is market positioning.  Figure 3-2 illustrates the stages involved in segmenting and targeting services. At the first stage, the organization tries different segmentation variables to see which give the best segmentation opportunities, such as geographic and personal characteristics. At the stage of market targeting, the organization has to evaluate each market segment's attractiveness and selects one or more of the market segments to enter.   Once the organization has decided what segments to enter, it must decide on its market positioning.  This is the process of setting the competitive positioning for the product and creating a detailed marketing mix. Lanning and Michaels (1988) states that the formula segmentation, targeting, positioning (STP) is the essence of strategic marketing.   Figure 3-2 Steps in market segmentation, targeting, and positioning 3.1.2.2 SERVICES MARKETING MIX The concept of the marketing mix was given prominence by Borden (1965). Kotler (1997) states that marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. Borden initially identified 12 elements of the marketing mix of manufacturers, although these were later simplified by a number of authors.  McCarthy (1960) reduced the marketing mix to four elements – the familiar four Ps of Product, Price, Promotion and Place.  However, Booms and Bitner (1981) and Christopher (1991) expanded the mix for services.  They add the additional elements of People and Process.  3.1.2.3 UProduct/Service A product is anything that can be offered to a market to satisfy a want or need. A product can be a good, a service, or an idea. It must be something that is tangible and can be described using the five senses.  The product variable is the aspect of the marketing mix that deals with researching consumers’ product wants and designing a product with the desired characteristics.  It also involves the creation or alteration of packages and brand names and may include decisions about guarantees and repair services.  (Dibb, 1994) Services are intangible, inseparable, perishable and cannot be owned. Therefore, the quality and experiences of the customer, the thorough research is to be established how to ensure the best, most effective and efficient positioning strategy. In other words, the E-marketing is the prestige platform to provide the online service to all customers when they need to the status of cargo through the services given and also E-CRM can maintain the relationship with them in order to create the loyalty without switching to the other competitors.   3.1.2.4 UPrice The price variable relates to activities associated with establishing pricing policies and determining product prices.  Price is a critical component of the marketing mix because consumers are concerned about the value obtained in an exchange. (Dibb, 1994)  Christopher (1991) suggests that the customer buys a ‘package’ of benefits and the price ought to reflect the value of the total package.  Price can have not only a big impact on a company’s marketing strategy in the long term but can also help to differentiate the product or service from those of competitors. In line with the “Porter’s Generic Strategy” (Cateora et al 1996),"Maersk Sealand” (TUwww.maersksealand.comUT) is the market leader throughout the shipping industry and hence the price will be higher than the competitors but with guarantee of service without delay of shipment and aligning with the just in time philosophy (supply chain management).  E-marketing is an important tool for the customers accessing on the websites to have an insight of prices comparison between the service providers.   3.1.2.5 UPlace/Distribution Palmer (1994) states that place decisions refer to the ease of access that potential customers have to a service.  They can therefore involve physical location decisions, decisions about which intermediaries to use in making a service accessible to a consumer and non-locational decisions which are used to make services available. Christopher (1991) also suggests that the company must keep an open mind about distribution channels.  It should evaluate its existing channels on a regular basis, and not be afraid of investigating or experimenting with new ones. Maersk Sealand is the biggest shipping company compared with the competitors, she provides all kind of services to all sectors over the world and providing the total logistics services for example not only the port to port but also door to door survives. E-marketing provides a prestige platform which allows the customers to perform check and trace of the product flows and what is the status of the cargo whereabouts. 3.1.2.6 UPromotion Christopher (1991) points out that the promotion element is concerned with how to communicate with customers and potential customers. Dibb (1994) states that the promotion variable relates to activities used to inform one or more groups of people about an organization and its products.  Promotion can be aimed at increasing public awareness of an organization and of new or existing products. Kotler (1994) states that the marketing communications mix (also called the promotion mix) consist of five major modes of communication: 1. Advertising 2. Sales promotion 3. Public relations 4. Personal selling 5. Direct marketing Apart from the above, Maersk Sealand is having a pioneer E-marketing platform so that each and every customer can assess to its website to arrange the shipment which need not to show up to make the booking and all can be done via the websites.   3.1.2.7 UPeople Zeithaml (1996) defines people as all human actors who play a part in service delivery and thus influence the buyer’s perceptions; namely, the firm’s personnel, the customer, and other customers in the service environment. In service businesses the quality of the service is inseparable from the quality of the service provider.    Services marketers also need to be concerned with service quality, which means (in labor-intensive situations) special attention to employee quality and performance.  Marketers need to be concerned with internal, not just external, marketing. Maersk Sealand is focusing the service quality and so all the staff have been diligently trained to fulfill all the customers need and wants and answer the questions in a more professional ways by which the branding and image of the company has been acknowledged ahead in the shipping industry.   3.1.2.8 UProcess Palmer (1994) mentions that the process of production is usually of little concern to the consumer of manufactured goods, but it is often critical to the consumer of ‘high-contact’ services who can be seen as a co-producer of the service. Zeithaml (1996) refers to process as the actual procedures, mechanisms, and flow of activities by which the service is delivered. However, the actual steps that are followed in the delivery of the service including the environment where the service is delivered will also provide customers with evidence on which to judge the service. Maersk Sealand key to success is to ensure all the processes are simple and clear across all branches and countries to avoid confusion and at the same time to build on the strength promotion.   3.1.2.9 UPhysical Evidence Because services are intangible, customers are searching for evidence of service in every interaction they have with an organization. As Zeithaml and Bitner (1996) state, physical evidence cues provide excellent opportunities for the firm to send consistent and strong messages regarding the organization’s purpose, the intended market segments and the nature of the service. Physical evidence refers to the environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance of the service.  Tangible physical evidence includes brochures, business cards, report formats and equipment.   3.1.3 SERVICE QUALITY One of the most important aspects of services marketing in particular is service quality.  Crosby (1984) defined quality as ‘conforming to requirements’.  This implies that firms have to establish requirements and specifications.  Once these are established, the quality goal of the various functions of a firm is to comply strictly with these specifications. Zeithaml (1996) defined service quality as the delivery of excellent or superior service relative to customer expectations.   3.1.3.1 UModel of Service Quality To enhance knowledge of service quality and encourage investigation of the key issues, Parasuraman, Zeithaml, and Berry (1985) formulated a service quality model that highlights requirements for delivering high service quality and also points out the difficulties in ensuring high-quality service for all consumers in all situations. This service quality model is shown in Figure 3-3.  It identifies five gaps. Figure 3-3 Service Quality Model Source: A. Parasuraman, V. A. Zeithaml, and L. L. Berry (1985) “A conceptual Model of Service Quality and Its Implications for Future Research”, Journal of Marketing, p.44   The model of service quality identifies five gaps that cause unsuccessful service delivery (Parasuraman, Zeithaml, and Berry, 1985): <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Gap 1 between consumer expectations and management perception: Management does not always perceive correctly what consumers want.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Gap 2 between management perception and service quality specifications: Management might correctly perceive the consumers’ wants but not set a specified performance standard.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Gap 3 between service quality specifications and service delivery: The personnel might be poorly trained or incapable of or unwilling to meet the standard.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Gap 4 between service delivery and external communications: there may be dissatisfaction with a service due to the excessively heightened expectations developed through the service provider’s communications efforts.  Consumer expectations are affected by statements made by company representative and ads.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Gap 5 between perceived service and expected service: This gap occurs as a result of one or more of the previous gaps.  Consumers perceive actual service delivery does not match their initial expectations.</li> The service quality model can still applicable in the e-marketing world by means of five dimensions. Table 3-2: Dimensions of Internet service quality Dimensions Descriptions Performance How well does an online marketer accomplish the set of tasks that customers expect it to perform? Performance includes delivery fulfillment and transactions efficiency Access To what extent does an online marketer provides a wide variety of products from all over the world? Access includes variety and universality Security To what extent does an online marketer foster perceptions of trust, assurance, and freedom from risk? Security concerns comprise financial as well as non-financial issues. Sensation To what extent does an internet service provider pay attention to aesthetic aspects of the online shopping experience? Some people prefer internet shopping because they need not to deal with the salesperson. Information What is the nature of information provided by an online marketer? Information includes quantity and credibility considerations. Source: Trochia & Janda (2003), “How do consumers evaluate Internet retail service quality?” 3.1.3.2 U Service Quality Dimensions Parasuraman, Zeithaml, and Berry (1988) have found that consumers consider five dimensions in their assessments of service quality.  These are defined as - <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Reliability: The ability to perform the promised service dependably and accurately.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Responsiveness: The willingness to help customers and provide prompt service.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Assurance: Employees’ knowledge and courtesy and their ability to inspire trust and confidence.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Empathy:  The provision of caring, individualized attention to customers.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Tangibles: The appearance of physical facilities, equipment, personnel and communication materials.</li> </ul> Reliability however has been consistently shown to be the most important determinant of service quality.  Reliability means that the company delivers on its promises.  Reliability is also one of the key determinants of high service quality in shipping and liner shipping in particular.   3.1.4 SERVICES MARKETING TRIANGLE There are various types of marketing that must be successfully carried out for a service firm to succeed. The services marketing the triangle are critical for successful services marketing management.  The services marketing triangle is shown in Figure 3-4. The triangle shows the interrelationships between three key constituents: customers, employees and company. Where internal marketing is towards employees; external marketing is towards customers and interactive marketing is between employees and customers. Gronroos (1984) has argued that service marketing requires not only external marketing but also internal and interactive marketing. 3.1.4.1 UExternal Marketing Kotler (1997) describes external marketing as the normal work done by the company to prepare, price, distribute, and promote the service to customers. Zeithaml (1996) describes the external marketing efforts that the firm engages in to set up its customers’ expectations and make promises to customers regarding what is to be delivered.  Zeithaml also points out that anything that communicates to the customer before service delivery can be viewed as part of this external marketing function. For example, New World First Bus Services Limited, the bus company in Hong Kong, supports the environmental protection so it operates with the most environmental-friendly bus fleet, which installs the latest environmental-friendly engines-Euro II, to ensure that the smoke emissions are minimized. Also, it actively participates in HK’s green activities and in alliance with Green Power to support local green activities.  It therefore won the First Runner-up in the Environmental Marketing Award from the Asia Pacific Marketing Federation (First Bus Newsletter, 8 April 2000).    3.1.4.2 U  Internal Marketing The aim of internal marketing is to enable employees to keep the promises that have been made to customers.  This can be done through training, motivating and appropriately rewarding employees.  Employee satisfaction and customer satisfaction are inextricably linked.  (Zeithaml, 1996) Berry (1986) has argued that the most important contribution the marketing department can make is to be ‘exceptionally clever in getting everyone else in the organization to practice marketing’. For example, a bus company can provide regular training courses for its drivers.  The drivers would receive defensive driving skills and customer service training. Besides, the salary of the employees is competitive and the medical insurance and other benefit is offered.  It can motivate the staff and increase their sense of belonging.   3.1.4.3 U Interactive marketing The interactive marketing means that the firm’s employees interact directly with customers; here the actual service delivery takes place.  Unless service employees are able and willing to deliver customer satisfaction through interactive marketing the company cannot keep its promises made through external marketing and the triangle will collapse.  (Zeithaml, 1996) For example, bus drivers should wear the uniform and keep smiling when they are on duty. To handle the unexpected traffic and keep contact with drivers, all buses should be equipped with two-ways radios for communication between the operations control centre and the buses.   3.1.4.4 Internet and E-Business Applications The advent of information technology can build up the relationship between carriers and customers. The carrier’s own websites offering an e-business solution by providing the electronic environment that enables all cargo transactions to be done i.e. price quotation, cargo booking, container tracking and bill of lading printing etc. It is enhancing the carrier’s transparency and visibility. The real time and accurate information sharing and exchange are key concern of the service marketing for both the carrier and customers. It will increase the efficiency and smoothing the shipping processes. It is clear that the e-commerce solution will provide the reliable services and lower the transaction costs. The internet has created an impact to almost everything in this world. It changed the way business operates; it also created changes in the way people do their work in the organization. Although it is believed that internet is being used by individuals to gain power and prestige, it cannot be ignored that the internet made sure that services can be done on a faster time.   The benefits of internet for customers include: Ø It saves administrative costs like documentation handling. Ø It is used as web access for all shipment in transit. ØIt is an alternative way of communication between parties either by fax or phone. ØIt enabled the real time and accurate information. ØIt improved the service control and reliability and close monitor the carrier’s performance. ØIt reduced the human error.   The benefit for the carrier includes: -          Automation of customer service for the whole shipping processes. It is enabling to increase the customer service level. -          Enhancing productivity and reducing human error. -          24/7 (24 hours a day, 7 days a week) web availability, the carrier achieving immediate electronic commerce presence. -          Linking with customers’ requirements a thousand away all over the world. 3.1.5  CONCLUSION This chapter has reviewed services marketing and the similarities and differences between services and product marketing.  Services are intangible dominant products that cannot be physically possessed.  There are four distinguishing characteristics between services and products marketing: intangibility, heterogeneity, inseparability, and perishability.  Each characteristic requires certain strategies and poses challenges.  In addition, the traditional marketing mix ‘4 Ps’ (product, price, promotion and place) is augmented for services through the addition of 3 Ps (people, process and physical evidence).  Furthermore, service marketing strategy requires not only for external marketing but also for internal and interactive marketing.  However, marketing does not work when it is merely a department, it works only when all employees appreciate their impact on customer satisfaction.  All the company departments should therefore be co-coordinated. Traditionally marketing is an off-line contact between customers while E-marketing can provide 24/7 online contact which can help to eliminate costs of promotion and human resources. We have reviewed the literature on marketing with particular reference to services marketing.  This report now moves on to chapter four which will give a methodology of this research report. Chapter four: Research Methodology 4.1. Introduction This chapter presents and discusses the methodology used in this research project. The project is centered on the case study of “Maersk Sealand” (TUwww.maersksealand.comUT). The methodology includes the analysis of both primary and secondary data and discusses below. In order to undertake a qualitative case study of “Maersk Sealand” (TUwww.maersksealand.comUT), a questionnaire would be conducted to collect certain amount specific information. Primary data was obtained from a questionnaire survey.   4.2. Research Methodology Investigating perceptions of e-marketing quality involves the use of the survey method in data collection. Survey method comprises works in “the derivation of descriptive” (McGivern, 2006, p54) and “non-experimental data” (McGivern, 2006, p101-102) covering a specific phenomenon. This method is appropriate in studies seeking to determine and assess the characteristics and direction of “influence of a variable” (Sekaran, 2003, p87) or “a number of variables to other variables” (Sekaran, 2003, p.94) intervening in the study. “Survey method” (McGivern, 2006, p255-256) supports the collection of accurate, unbiased, and generalized data. In using this method the advantages should exceed the disadvantages. First, the method is able to establish relationships between the variables but not the relational direction. This issue may be addressed in the study by the application of both “quantitative” (McGivern, 2006, p57-58) and “qualitative approaches” (Sekaran, 2006, p220) in data collection and analysis. Second, the reliance of the survey method on self-reported information indicating dependence on the truthfulness of respondents opening the risk of getting unreliable data. The risk is met through carefully developed data collection tools. Third, the time-consumer research planning required by the method coincides with the time allowance for the completion of the research. (Salant & Dillman 1994) The sample size is 100 customers and more participants are feasible.   The research will make use of the descriptive method for the study. Descriptive research tries to explore the cause of a particular event or situation. It also wants to present facts concerning the nature and status of a situation, as it exists at the time of the study (Creswell 1994).  The descriptive approach is quicker and more practical in terms of financing (Potter 1996) Moreover, this method will allow for a flexible approach, thus, when important new issues, probabilities, and questions come up during the duration of the study, a further investigation and confirmation may be allowed. This research is partly based on quantitative research method so as to permit a flexible approach. The choice and design of methods are constantly modified during data gathering based on continuing analysis. This will give way for creation of an investigation of important new issues, concerns, probabilities and questions as they arose. In addition, this study also employed partly qualitative research method, since this research intends to find theories that would explain the relationship of one variable with another variable through qualitative elements in research.   4.3. Data Collection Survey will be conducted through the collection of primary data and its survey by means of questionnaire [See Appendix] that involves both “Likert-scale” (McGivern, 2006, p319) and open-ended questions to maximize information collection. And, definitely, in this research project, the secondary data both internal and external sources) would be collected and applied in doing the literature review as well as the case study.  The survey method will be facilitated through the use of survey forms and questionnaires. This will include inquiries on the general characteristics of respondents. It will also feature inquiries regarding the ideas of the respondents regarding e-marketing, shipping and the case study. The survey method’s advantage is a written proof of how the data were gathered from the clients. This method also takes lesser effort since the researchers don’t have to talk to the respondents one by one.  The disadvantage of the survey method is it will not be useful in determining whether a respondent is being truthful. Unlike interviews where there is face to face communication, surveys can be done without even seeing the respondents. Some of the respondents may just fabricate what they put in the survey/questionnaire form.   4.3.1 Classification of data There are two generic classifications of data; they are primary and secondary data. The primary source of data will come from surveys that will be conducted with the help of the respondents. The primary data frequently gives the detailed definitions of terms and statistical units used in the survey. The primary source of data will give actual responses from various people who encounter different kinds of things.  The primary source of data will provide answers not found in written documents or other written source of information. The secondary source of data will come from researches done by the organization, previous studies and surveys. Acquiring secondary data are more convenient to use because they are already condensed and organized. Moreover, analysis and interpretation are done more easily.   4.3.1.1 Secondary data             Secondary data are data that were developed for some purpose other than helping to solve the problem at hand.  Secondary data can be gathered quickly and inexpensively, compared to primary data (Tull and Hawkins, 1993). In shipping industry, there is a yearly annual report highlighting the top twenty carriers in terms of twenty-footer equivalent unit and vessels deployment which can classify the ranking in the trades. Secondary data consists of internal and external sources.  Internal sources are generated by the organisation itself.  External sources are generated by sources outside the organisation including data produced by the government and publishers of directories, newspapers, periodicals and research reports (Lancaster and Massingham, 1999).In this research project, secondary data (both internal and external sources) would be used. The internal sources was collected from “Maersk Sealand”(TUwww.maersksealand.comUT),it includes company annual report and press release.  The external sources was collected primarily from the library of  Hong Kong Polytechnic University, the external sources include specific textbooks, journal articles, newspapers, business magazine and official statistics. 4.3.1.2 Primary data Primary data are collected especially to address a specific research objective (Aaker, Kumar and Day, 1998).  Generally primary data collection methods include: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Survey research</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Depth interviews</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Observation</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Experimentation</li> </ul> In this research report, primary data would be collected by the questionnaire technique. A 2-page questionnaire was designed.  It tries to collect information what factors are important to shippers in choosing a liner shipping company. The survey is focused on finding answers that has relationship with the research question. The survey would dig dipper into the ideas of the clients pertaining to how they like to be served by the shipping company.  The survey mixed different styles of questioning.  The questionnaire included three styles of questioning that is closed multiple choice questions, rating scales questions, and open-end questions.  Closed multiple choice question allows respondents relatively easy to answer.  Rating scales question can reflects a progression of feeling.  Open-end question provides a range and depth of information. The questionnaire would be distributed by mail, web, fax, and telephone.  These methods have the attraction of low cost, because it is cheaper to mail and fax a questionnaire to the people than to send someone to interview him.   By using e-mail and fax techniques, moreover, the questionnaires could be delivered at greater speed, and cost-savings benefit could also be gained.  4.3.1.3 Sampling In this survey, an approach of random sampling would be used.  Every member of population has an equal probability of choice.  The 100 companies which include trading firm, import and export firm, freight forwarder, and Logistics Company were selected randomly from the “Hong Kong Shipping Gazette” (TUwww.shippinggazette.comUT) and Yellow Pages of telephone directory.  The 50 of the companies were sent a 5-page questionnaire by the mail, these 50 potential respondents were mailed a cover letter explaining the purpose of the survey and a postage-paid return envelope; the 10 of the companies were sent the questionnaires by the facsimile; 20 companies via web and the 20 of the companies were interviewed by the telephone. The 35 questionnaires however were completed and returned, the response rate is 35%.  The 20 completed and returned questionnaires were obtained by the telephone; the 11 completed and returned questionnaires were obtained by the mail; and the 4 completed and returned questionnaires were obtained by the facsimile.   4.3.2 DATA ANALYSIS In this research project, the collected data were analysed by the Excel, which allowed that the collected data could be calculated more accurate. The next chapter will analyse the collected data from the questionnaire survey. Chapter 5 Presentation of survey findings After data collection the next thing to be done is to present the data to prepare for its analysis. It is important that the research output be presented in an organized, coherent and understandable manner so that those who will read the research can propose important decisions about the results of the study. The participant’s responses will give the necessary information to find a logical solution for the study’s problem; it can also assist in providing a reachable recommendation and course of action. Such responses will be represented by figures or graph to make it clear and to achieve greater understanding. This chapter intends to discuss the information acquired from the survey and interview done for the research. A total of 38 usable questionnaires were returned resulting in a 38 per cent overall response rate. The 16 completed and returned questionnaires were obtained by the telephone; the 18 completed and returned questionnaires were obtained by the mail; and the 4 completed and returned questionnaires were obtained by the facsimile. The results will be analyzed on who amongst the participants agree or disagree on a certain issue that has something to do with the study. After this part summary then analysis of the results will be done as well as a concluding part of the study and recommendations for the company or the industry, The response rates of the survey respondents were shown as below: (1) Export shippers 78% (2) Import shippers 11% (3) Freight forwarders 11% The Percentage of Using Liner Shipping Company In this question the respondents were asked regarding whether or not their company uses a liner shipping company to carry its products to its various destinations. The returned questionnaires showed that all survey respondents engaged a liner shipping company to carry their products. Export destination of the company In this question, the respondents relayed about the areas the company exports to. The researcher specified three areas in the world the respondents can choose from, the areas specified were Asia, Europe and America. These areas were chosen because of them being more familiar to the respondents and because these areas have countries where shipping is an important mode. 39% of the respondents said that their company exports to Europe. 34% of the respondents stated that their company exports to the Area of America. 26% of the respondents answered that their company exports to the Asian area. The Percentage of export and import The figure shows the percentage of the imports from Europe and exports to Europe. 89% of the survey respondents exported their goods from Asia to European countries, whereas only 11% of the survey respondents imported the goods from Europe. The Percentage of the different types of goods In this survey, it can be found that 24% of the survey respondents are toy manufacturers. The watch manufacturers and garment manufacturers are 9% and 23% respectively.  The food manufacturers are 11% and the footwear manufacturers are 20%. The other articles are 13% other than foregoing cargoes nature.  The percentage of the peak seasons of export and import The findings found that 43% of the survey respondents thought that during August to October is the peak seasons of exporting and import.   17% of the respondents believe that the January to March is the peak season for imports and exports. 14% of the respondents believe that April to June is the peak season for imports and exports. 9% of the respondents have an idea that the peak season for imports and exports falls in December or July. 8% of the respondents believe that November is the peak month for exports and imports. Overall mean scores and standard deviation of selection factors Factors Overall mean score Standard deviation (1)   Reputation of carrier 4 1.09 (2)   Carrier’s loss or damage history 4 1.15 (3)   On-time deliveries 4 1.17 (4)   Frequency of sales calls you personally receive from sales representative of carrier 3 1.74 (5)   Competitive rates 4 1.24 (6)   Cash discounts for early payment or prepayment 3 1.95 (7)   Prompt response to competitive  bid quotations (contract discounts) 4 1.54 (8)   Promotional gifts (calculators, calendars,etc) 2 1.81 (9)   Prompt action on complaints related to carrier’s service 3 1.49 (10)        Service on the website were accurately presented 4 1.48 (11)        Service shown on the website were what the company delivers 4 11.77 (12)        Service delivered was what you expected 4 1.17 (13)        There are diverse service selection on the site 3 1.36 (14)        Online questions and concerns are answered immediately 4 1.41 (15) Company answers are responsive to the questions and issues you raised   4 1.46 (16) Website is accessible and navigable 3 1.10 (17) Website has sufficient information value 4 1.07 (18) Transactions are easily completed 4 1.34 (19) Website offers sufficient security features 3 1.54 (20) Website has sufficient privacy features 3 1.76 Note: overall mean score: 7 = highest importance; 1 = lowest importance The findings found that the number one most important service factor for the liner shipping company was service on the website were what the company delivers, this mean response is 5 (7 = highest importance).  Additionally, the level of importance for carrier’s loss or damage history received a mean response of 4 from the survey respondents.  The level of importance for competitive rates and “cash discounts” received a mean response of 4 and 3 respectively. Finally, the least important service factor for the carrier was promotional gifts.  Overall mean rate of engaging liner shipping companies Liner shipping companies Overall mean rate <li class="MsoNormal" style="text-align: center"> Maersk Sealand</li> 47.22% <li class="MsoNormal" style="text-align: center"> APL</li> 36.09% <li class="MsoNormal" style="text-align: center"> OOCL</li> 30.58% <li class="MsoNormal" style="text-align: center"> P & O Nedlloyd</li> 22.50% <li class="MsoNormal" style="text-align: center"> NYK Line</li> 21.07% The survey respondents were asked to indicate the percent that each liner shipping company currently represents of their requirements. In this part the respondents were asked to indicate the percent that each liner shipping company currently represents of their requirements as well as the percent that they would prefer to give each liner shipping company under ideal conditions in the future. The respondents were reminded that The totals should add to 100% Overall mean rates for each of the selection liner shipping companies are ranked in order from largest amount to smallest amount. In the survey, it can be found that the number one most engaged shipping line by the shippers is Maersk Sealand, the level of the engaging rate was 47.22%.  Besides, the second most engaged liner shipping company is APL, the level of the engaging rate was 36.09%.  Additionally, the engaging rates of P & O Nedlloyd and OOCL were 22.50% and 30.58% respectively.  Finally, the level of engaging NYK Line was 21.07%. Overall mean scores and standard deviation of the satisfaction level Liner shipping companies Overall mean score Standard deviation <li class="MsoNormal" style="text-align: justify"> Maersk Sealand</li> 5.28 1.2382 <li class="MsoNormal" style="text-align: justify"> P & O Nedlloyd</li> 5.00 0.7385 <li class="MsoNormal" style="text-align: justify"> APL</li> 4.89 0.8089 <li class="MsoNormal" style="text-align: justify"> OOCL</li> 4.75 0.5951 <li class="MsoNormal" style="text-align: justify"> NYK Line</li> 3.89 1.1967 Note: overall mean score: 7 = excellent; 1 = poor The survey respondents were asked to express their level of satisfaction with the above five liner shipping companies based on a 7-point scale.  The overall mean scores for each of the liner shipping companies are ranked in order from the best performance to the worst performance. The findings found that the shipping company Maersk Sealand was ranked as first, the mean score was 5.28. Additionally, the mean score of P & O Nedlloyd was 5.00; it was very close to Maersk.  Furthermore, the mean score of APL and OOCL were 4.89 and 4.75 respectively.  However, only NYK Line’s service performance was below average, its score was 3.89. The relationship between the satisfaction score and the engaged level of the shipping company It can be found that the higher satisfaction score the higher level of use of a shipping company.  It means that the shippers would like to largely use the shipping company as long as it is able to satisfy their needs mostly.  In this case, Maersk Sealand got 5.28 mean satisfaction score.  The respondents felt that Maersk is able to satisfy their needs mostly; Maersk therefore got a largest engaged level 50% by the shippers.  Elements of Satisfaction Factors <li class="MsoNormal" style="text-align: justify"> Reliability</li> <li class="MsoNormal" style="text-align: justify"> Shipment security</li> <li class="MsoNormal" style="text-align: justify"> Customer service</li> <li class="MsoNormal" style="text-align: justify"> Promotional gifts</li> <li class="MsoNormal" style="text-align: justify"> Rates</li> <li class="MsoNormal" style="text-align: justify"> Discount</li> <li class="MsoNormal" style="text-align: justify"> Frequency of deliveries</li> In this part the respondents were asked to evaluate their level of satisfaction to the company in accordance with the elements of satisfaction factors. The elements of satisfaction include factors such as reliability; shipment security; customer service; promotional gifts; rates; discount and frequency of deliveries. Each of the survey respondents were asked to evaluate their level of satisfaction with the liner shipping companies based on a 10-point scale.  Overall mean scores for each of the selection factors are ranked in order from the most satisfaction to the least satisfaction. By the first two elements: reliability and shipment security. Maersk Sealand and OOCL were ranked as the first and the second respectively.  It can be found that Maersk could best satisfy the shippers in terms of transit time reliability, shipment safety. OOCL customer services were ranked the top one among the carriers.  By the element of promotional gifts, P &O Nedlloyd and OOCL were ranked as the first and the second respectively.  Furthermore, all five carriers were ranked same in terms of best satisfying the shippers by offering the most competitive rates.  Besides, all carriers were the same in terms of best satisfying the shippers by offering attractive discounts.  Finally, OOCL and NYK were ranked as the first in which the shippers were satisfied with their frequency of deliveries. Overall speaking, OOCL performance is better than other shipping lines around 9 – 10 percent. In other words, it is the potential company to be ranked to the top as long as reorganizes the marketing strategies or enriches the value-added essences for example technology competes with the other carriers. Overall mean scores and standard deviation of satisfaction level in different liner shipping company Reliability Shipment security Customer service Promotional gifts Rates Discount Frequency of deliveries     Maersk 8/ 1.99 Maersk 8/ 1.66 OOCL 7/ 1.44 P &O 6/ 1.69 OOCL 6/ 1.60 NYK 6/ 1.98 OOCL 7/ 1.22 OOCL 7/ 1.25   OOCL 7/ 1.08   APL 6/ 1.63   OOCL 5.5/ 1.60   NYK 6/ 1.23   OOCL 6/ 1.69   NYK 7/ 1.70   P & O 6/ 1.83   P & O 6/ 1.76   Maersk 6/ 1.96   Maersk 5/ 2.20   Maersk 6/ 1.73   APL 6/ 2.21   P & O 6/ 2.00   APL 6/ 1.44      APL 6/ 1.76   P & O 6/ 1.68   APL 5/ 2.41   P & O 6/ 1.79   P & O 6/ 2.20   Maersk 6/ 1.94   NYK 6/ 1.48   NYK 6/ 1.57   NYK 6/ 1.54   NYK 5/ 1.89   APL 6/ 1.49   Maersk 6/ 2.00   APL 6/ 1.66     The percentage of other important factors for the shipping companies The survey respondents were asked any other factors are important influences on their choice of liner shipping company. The findings show that 20 % of the survey respondents thought that the other factor which is an important influence on their choice of carrier is consignee’s instruction.  Such situation usually appears on the contracts which is subject to the shipment term of Free on Board (FOB).  Under the term of FOB, the consignee must make arrangements with a shipping company for transport of goods by sea to their own premises from the named port of shipment. 14% of the respondents would consider the traceability of the shipping company on their choice of shipping company.   Besides, scheduling flexibility was the third most important factor for the shippers on their choice of carrier; it was counted by 14% of the respondents.  Furthermore, 6% of the respondents would consider the carrier’s efficiency, and just 3 % of the respondents would consider the location of the carrier on their choice of carrier.  However, 42% of the respondents had no comment on this question. The percentage of the characteristics of the ideal carrier The researchers placed in this part five characteristics that can identify ideal businesses, this five characteristics will be the ones the respondents can choose from in terms of what they believe are the ideal characteristics of a shipping firm. The characteristics the respondents can chose from includes on time delivery, excellent customer service, lower rates, good reputation and large shipping network. If the respondents cannot find any characteristics that suite to their belief of an ideal company, they can just write no comment. The findings found that 31% of the survey respondents thought that the ideal shipping companies should have a characteristic of on-time deliveries.  The transit time should be reliable and consistent.  More than a quarter of the respondents (27%) deemed that the ideal shipping companies should provide excellent customer service.  Additionally, a fifth of the respondents considered that the ideal shipping companies should offer competitive rates (lower rates).  Furthermore, 12% of the respondents thought that the ideal shipping companies should have good reputation.  However, a minority of the respondents (4%) thought that the ideal shipping companies should have a large service networks throughout the world. Chapter Six: The case study of Maersk Sealand 6.1. INTRODUCTION In this chapter, Maersk Sealand is a company selected for the case study, because it is considered to be a global container ocean carrier.  This chapter will examine how marketing strategy for the Maersk Sealand is performed on its Asia-Europe trade.  It will analyze the services marketing triangle in Maersk Sealand, and also examine and evaluate the services marketing mix on the Asia-Europe trade of Maersk Sealand.  The aims of this chapter are to examine and evaluate the marketing strategy of Maersk Sealand on its Asia-Europe trade. This chapter is made because it can benefit the shipping industry and the company Maersk Sealand. This chapter will benefit the industry in terms of providing information on the capabilities and capacities of the company, and in the process knowing what can be done by the other companies to emulate the achievements of Maersk Sealand.   This chapter will provide Maersk Sealand an opportunity to determine the criticism on their marketing strategies. This case study has to be taken because this will give a better picture of the Maersk Sealand and its marketing strategy, this in turn will provide some idea of what makes Maersk Sealand the beloved company by the clients as what was discussed in the 6th question. This case study will be used to describe how Maersk Sealand gained its position as the company that gave the clients a high level of satisfaction as proven by the 7th question. 6.2 THE HISTORY AND BACKGROUND OF MAERSK SEALAND There is a growing concentration of ownership and capacity in container shipping. By 2001 the top 20 container lines accounted for 83 per cent of vessel capacity. Alliances and mergers are an important part of the trend, but it is being reinforced by the dynamic internal growth of some lines. Maersk has become the industry leader through its merger with Sealand, but the parent firm, the privately owned A.P. Moller of Denmark, has been very aggressive in expanding services and capacity. Maersk-Sealand, the world's largest container shipper, is mainly based at Port Elizabeth. Although this company's decision in 1999 to maintain New York as its east coast hub partly reflected the perception that the port is now cost-competitive with other Atlantic ports, it also acknowledged Port Elizabeth's continuing growth potential (Pinder & Slack 2004).    The Maersk Sealand is a subsidiary company of the A.P. Moller Group to provide a liner shipping service.  The Maersk Sealand is a global leader in the liner shipping service.  The table 6-1 shows top ten world liner carriers as at 1991 – 2007. A predecessor of Maersk Sealand was called Maersk.  Since A.P. Moller acquired the international liner business of Sealand Service Incorporation in July 1999, the name of Maersk changed to Maersk Sealand (Maersk Sealand Press Release, December 1999).  A.P. Moller employs over 25,000 people and has 325 offices in more than 125 countries worldwide.  The headquarters of A.P. Moller are located in Copenhagen.  The philosophy of Maersk Sealand is Quality, Service and Reliability. Maersk Sealand provides ten trades in their overall scope.  These include: ·         Asia to Europe trade ·         Africa trade ·         Trans-Atlantic trade ·         Australasia trade ·         Central America and Caribbean trade ·         Far East and Middle East trade ·         Intra-Asia trade ·         Intra-Europe trade ·         South America trade ·         Trans-Pacific trade Table 6-1 Top 10 World Carriers (as at 1991 – 2007) 6.3 The Services Marketing Triangle in Maersk Sealand Service situation is best shown by the services marketing triangle. The triangle is shown in Figure 6-1.  This shows the interrelationships between three key constituents: customers, employees and the company. Whereas internal marketing is towards employees, external marketing is towards customers and interactive marketing is between employees and customers. Figure 6-1 Services Marketing Triangle Source: Adapted from Philip Kotler (1997) Marketing Management: Analysis, Planning, Implementation and Control, p.473   The marketing strategies that Maersk Sealand uses in internal, external and interactive marketing are discussed as follows. 6.3.1     UInternal Marketing 6.3.1.1Employee Training and Education             The Maersk Sealand provides a unique education program to its trainees, which is called “A Maersk International Shipping Education (M.I.S.E.)”.  This two-year M.I.S.E. program not only provides the trainees theoretical knowledge but also practical skills.  Table 5-2 illustrates the combination of theoretical educations on M.I.S.E.  The aims of this education are to prepare its trainees to meet future challenges and assignments.  Also the trainees are needed to strive to maintain Maersk Sealand’s position as a globally leading shipping company.   Such training program provides the company to have employees that can compete in the global market. Table 6-2 Maersk International Shipping Education Source: TUwww.maersksealand.comUT   6.3.1.2Staff Communications             An internal staff newsletter is provided every  quarter.  Maersk Sealand regularly prints out and provides the internal newsletter to its staff, which is called “Blue Star”.  Aside from internal newsletter, there is an intranet available allowing the staff to know what is going on in the company and let the staff exchange opionions.   Criticism:             The internal marketing of Maersk Sealand is very good. It allows staff to know what is happening in the company by providing a staff newsletter. With its unique training courses, it can motivate staff and increase their sense of belonging. This internal marketing strategies should be a factor in improving the relationship of the company with its employees and not be the cause of discernment. The internal marketing of Maersk Sealand can still be improved by having a stronger customer relations group that will ensure better business deals with clients and it will assist in removing some of the problems and difficulties encountered by the company towards the clients. 6.3.2     UExternal MarketingU 6.3.2.1Establish Social Image In 2007, Maersk Sealand awarded the “Container Shipping Line of the Year 16PthP November, 2007 award (Maersk Press Release, October 2007).  This is organised by Lloyd’s List Maritime Asia.  In addition, Maersk Sealand is ranked as fourth amongst the “World’s most respected transport companies” in 2007.  This result is illustrated in table 6-3.  Maersk Sealand is the only shipping company which has been ranked amongst transportation companies in this survey carried out by Financial Times and PricewaterhouseCoopers.  This award however can support Maersk Sealand to give its customers more confidence as well as positve social image. To establish an respectable image means that the company has contributed well to the society and it has allowed itself to commit lesser acts that violate the society’s trust.   Table 6-3 Company Rankings 2007 (World’s most respected transport companies) Rank 2001 Company Country 1 UPS US 2 Federal Express US 3 Lufthansa Germany 4 AP Moller (Maersk Sealand) Denmark 5 Singapore Airlines Singapore 6 British Airways UK 7 Deutsche Post Germany   Source: Financial Times, December 2007 Criticism: Maersk Sealand is ranked as fourth amongst the “World’s most respected transport companies” and it is the only shipping company ranked in such suvery.  Besides, Maersk Sealand won the award of “Best Main Line Operator”. It shows that Maersk Sealand is successful in its service performance and build up the positive image to the public.  The company should make sure that this identity will be maintained for more years to come.   6.3.3     UInteractive Marketing The interactive marketing means that the Maersk Sealand’s staff interacts directly with customers; here the actual service delivery takes place.  However, the services marketing triangle will collapse if its staff are not willing to deliver customer satisfaction through interactive marketing.  In order words, the organization cannot keep its promises made through external marketing.  Maersk Sealand therefore has to provide good training and good benefits to its employees in order to increase their sense of belonging. By doing these, the employees would be more motivated and willing to provide a better customer service. Cutomers are encouraged to visit Maersk local websites for more information about the global coverage and world-class service offerings. Furtehrmore, if the customers have any questions, they can use Maersk media enquiry form or send an email to the commuication department (TUfrpcom@maersk.comUT). By means of electronic channels, the company and the customers can facilitate the exchange of information in the quicker ways. Criticism: It is quite difficult to control employees’ performance, Maersk Sealand at least provide the potential methods and seek to ensure its service commitment.  The interactive marketing tactic appears to be good and it can help to achieve the company goals in both internal and external marketing.   On the other hand the interactive marketing  tactic can be the cause of problems for the company if there are instances of failure for the interactive marketing strategy. This strategy may experience crashes and it will disrupt the delivery of services.   6.4 The Services Marketing Mix on Asia-Europe Trade OF MAERSK Sealand Maersk Sealand can adopt services marketing mix strategies to implement its marketing objectives in the target market.  The decisions and activities related to the services marketing mix variables that Maersk Sealand have adopted are as follows:   6.4.1     UProduct/Service The product of Maersk Sealand on its Asia-Europe trade involves the actual vessel and the trade routes.  The Asia-Europe trades of Maersk Sealand consist of eight strings which are illustrated in Table 6-4.  Maersk Sealand places 36 of their 260 mother vessels on its Asia-Europe trades, which are illustrated in Appendix C.  Thus it could avoid insufficient space by providing a plenty of capacity.  These Asia-Europe trades are provided weekly, featuring extensive coverage of North, Central and South East Asia as well as a whole of Europe.  Table 6-4 Asia/Europe/Asia Trades   Name of string TUFar East Europe - AE1 - EastboundUT TUFar East Europe - AE1 - WestboundUT TUFar East/Europe - AE5 - EastboundUT TUFar East/Europe - AE5 - WestboundUT TUFar East/Europe/Red Sea - AE2 - EastboundUT TUFar East/Europe/Red Sea - AE2 - WestboundUT TUIndian Sub./Mid. East/Europe - AE3 - EastboundUT TUIndian Sub./Mid. East/Europe - AE3 - WestboundUT     Source: TUwww.maersksealand.comUT Information technology is also important to Maersk Sealand to satisfy its shippers’ requirement.  Maersk Sealand provides its shippers with quick and easy real time tracking services by using its online tracking system.  Shippers therefore can track cargo movements at any time at any place.  Traceability is a key factor to the shippers in choosing liner shipping company.   6.4.2     UPrice Maersk Sealand is adopting a strategy of differential pricing.  This is a price strategy whereby products or services are priced according to their differential specification.  In Maersk Sealand, the different container types and different loading ports attract various tariff levels.  The charges details are illustrated in Appendix D.  Besides this differential pricing strategy, Maersk Sealand also adopts a cost orientated pricing strategy.  Price will be assessed on direct cost embracing the operating cost of the voyage including fuel, stores, port dues and stores.  In 1999, Maersk Sealand implemented an interim fuel participation factor surcharge of US$26/20’ and US$52/40’ container.  This was due to increased oil prices during the recent months (Maersk Sealand Press Release, August 1999).  However, the basic tariff must cover direct costs and make a major contribution to indirect costs; the reduced tariff should at least cover direct costs if possible.   6.4.3     UPromotion Maersk Sealand regularly advertises its new development and new information in the shipping gazettes, journals and magazines such as the Hong Kong Shipping Gazette.  The advertisement allows Maersk Sealand to promote and establish a strong image to the potential customers.  Maersk Sealand also advertises itself through its web page, which shows the company concern and care about the shippers’ needs and provides its new information to the shippers.  Maersk Sealand has however developed a new site design to increase user-friendliness and imporove functionality, thereby facilitating online business transactions (Maersk Sealand Press Release, Jan 2001).  In addition, Maersk Sealand would engage the sales representatives to promote its new service lines and also to maintain its relationship with the existing customers.   6.4.4     UPlace/Distribution Channel Place refers to the distribution channel of the service that is the trade route and its location for availability.  The Asia-Europe trades of Maersk Sealand consist of four different routes which are illustrated in the Table 5-5.  Appendix E illustrates the route maps of Asia-Europe trades.  In addition, Maersk Sealand at least has 30 offices in Europe and has 25 offices in Asia located in different countries.  Maersk Sealand however has the extensive services networks throughout Europe and Asia.   In addition, Maersk Sealand engages freight forwarders like Maersk Logistics as an intermediary to remove the direct contact with the market.  Consequently by using the direct sales force a more flexible marketing strategy can be adopted and more empathy developed between the carrier and the shippers.   Table 6-5 Asia-Europe Trades – Four Routes Asia-Europe Trades Westbound Eastbound Far East Europe AE1 Kobe, Japan to Le Harve, France Le Harve, France to Kobe, Japan Far East/Europe AE5 Long Beach, US to Bremerhaven, Germany Bremerhaven, Germany to Long Beach, US Far East/Europe/Red Sea AE2 Busan, South Korea to Antwerp, Belgium Antwerp, Belgium to Busan, South Korea Indian Sub./Mid. East/Europe  AE3  Bombay, India to Salalah Salalah to Bombay, India Source: Maersk Sealand Web Page   6.4.5     UPeople This element of services marketing mix consists of Maersk Sealand’s employees and its shippers.  Human resources however are an important element in shipping.  Maersk Sealand has been providing its staff with a unique education program which involves theoretical knowledge and practical skills in order to motivate them to realize the company’s objectives.  Likewise the shipper conducting business in a competitive market must have a strong empathy with the carrier to maximize the benefit in value-added terms which the shipping service offers.   6.4.6     UProcess This basically involves logistics that is the supply and delivery chain from the exporter to the importer.  It requires close liaison between the shipper and the carrier to ensure maximum benefits are realized.  Masersk Sealand has a unique information technology system program which is called “MODS”.  The process of MODS is illustrated in Appendix F.  However, by using MODS, a lot of paper work can be reduced, because it operates on a computer to computer basis.  Therefore, the procedures of booking can be simplified by using MODS system.  The time of transaction can also be reduced.   6.4.7     UPhysical Evidence This refers to any tangible components that facilitate performance of communication of the service since the shipping service is intangible.  The vessels of Maersk Sealand are the physical evidence.  Maersk Sealand totally operates 36 vessels on its Asia-Europe trades.  Appendix G shows the specification of these vessels.  Maersk Sealand has the biggest container vessel in the world.  It is called ‘S-type’ vessel.  ‘Sovereign Maersk’ is one of the S-type vessels, which is operated on the Asia-Europe trades.  She is capable of carrying over 6,600 containers and has a cruising speed of 24.6 knots.  To satisfy a demand on its lines, in 2000, Maersk Sealand ordered two 6,600 TEU vessels from Lindoe shipyard in Demark.  The orders signal Maersk Sealand’s continued commitment to offer customers new, safe and environmentally friendly transport options (Maersk Sealand Press Release, March 2000).   6.5 CONCLUSION This chapter has examined the marketing strategies of Maersk Sealand on its Asia-Europe trades.  Maersk Sealand makes good use of all services marketing mix variables in its strategies.  The overall performance of Maersk Sealand in its marketing strategies and tactics appear to be good.  In the internal marketing, Maersk Sealand effectively performs the strategies to motivate its staff by providing the unique education program.  In its external marketing, Maersk Sealand has built up a better social image towards its potential shippers.  In its interactive marketing, it is quite difficult to control the performance of staff.  This is due to the derived nature of demand for transport service. The internal marketing of Maersk Sealand can still be improved by having a stronger customer relations group that will assist in removing some of the difficulties encountered by the company towards the clients. The company should make sure that this identity will be maintained for more years to come. This chapter provided Maersk Sealand an opportunity to determine the criticism on their marketing strategies. The case study helped the researchers prove through the case study that Maersk Sealand is the bench mark in its industry. It was proven through the image the company has towards its clients. Chapter seven: Conclusions and Recommendations 7.1 Analysis of findings Based from the response in the first question, liner shipping is a major form of transportation for the companies to carry their products from one place to another.  The respondents stated that they rather use liner shipping as a means for their product to be transported. The empathic reply of the respondents on this question proves that their trust and confidence on liner shipping is high compared to other means of transporting their products. On the next question a part of the respondents stated that their company exports to Europe, some of them exports to the Area of America, a group of the respondents answered that their company exports to the Asian area.  The businesses the respondents belong include companies that have different choices in what area they intend to send their product.  The question on the areas the company exports to reflect the imbalance of trade on the route. Trade on the route can produce a different kind of export and import demand. It affects the percentage of import and export and the perception of what areas the company will deliver its products.    On the next question a part of the survey respondents are toy manufacturers, other respondents are manufacturers and garment manufacturers are. Some of the survey respondents are food manufacturers and there are also respondents that are footwear manufacturers.  The major exporters in Hong Kong are toy and garment manufacturers.  This is due to the fact that toys are a low value goods and the risk of transporting such product is low. The toy manufacturers have fewer worries in transporting their products because in the event these products are damaged, the wasted expenditures will not be too high. The toy manufacturers would prefer to carry their goods by sea because sea transport is relatively cheaper than other transport modes such as air.  The manufacturers therefore can reduce their carriage cost as far as possible. In the next question the respondents were asked regarding the months they consider as peak seasons. The findings showed that a considerable part of the survey respondents thought that August to October is their peak seasons of exporting and import. Some of the respondents believed that. For others January to March is the peak season for imports and exports. Another group of respondents believe that April to June is the peak season for imports and exports. A smaller group of the respondents have an idea that the peak season for imports and exports falls in December or July. The least number of respondents believe that November is the peak month for exports and imports. This result was due to Christmas and New Year periods.    During Christmas and New Year periods, the demands of goods would be substantially increased; the manufacturers thus have to meet these sudden huge demands during Christmas and New Year periods.  The respondents associated the holiday season as the time where there is an influx of orders for import and export thus it will be busy months for them. Those respondents that have other choices on the peak season used other holidays or other instances wherein there is the increase on the demand of their service.  In the event of peak periods the liner shipping companies have to provide sufficient spaces and increase the frequency of sailing for meeting these sudden and huge demands.  The next question focused on the important service factors. The findings found that the number one most important service factor for the liner shipping company was service on the website were what the company delivers, the level of importance for carrier’s loss or damage history received a considerable amount of response from the respondents.  The level of importance for competitive rates and cash discounts received a lower response rate compared to the level of importance for carrier’s loss or damage history. The least important service factor for the carrier was promotional gifts. For the respondents the service of the shipping company’s website is very important, much important than any promotional gifts or the like.  The respondents think that the website should offer sufficient security and privacy features on particular service factor than on other factors like personal sales calls and promotional gifts.  Therefore, a liner shipping company should utilize their resources to assure high levels of satisfaction with the factors receiving the highest importance ratings.  However each carrier will undoubtedly have their own specific nuances that must be considered when incorporating these findings into their specific transportation strategy.   The sixth question focused on what liner shipping company the respondents made business with. In this survey, it can be found that the number one most engaged shipping line by the shippers is Maersk Sealand. The second most engaged liner shipping company is APL. The services of P & O Nedlloyd and OOCL were also used by the respondents but the respondents who avail of their services is lower compared to the first two companies. The level of the respondents engaging in the services of NYK Line was the lowest compared to the other companies. The survey respondents were then asked to express their level of satisfaction with the above mentioned liner shipping companies. The findings found that the shipping company Maersk Sealand was ranked as first. Maersk is perceived as the one that provides the best performance to the shippers. P & O Nedlloyd was the liner shipping company that had a rating close to Maersk. The third and fourth in ranking in terms of the level of satisfaction of the respondents was APL and OOCL.  Only NYK Line’s service performance was below average. This part of the study shows that can that there is a correlation between the amount of engagement of shipping company and the services performance of the shipping company.  The shippers would prefer to engage a shipping company which provides the best services to them. Services performance is important to the shipping company to capture new customers and retain its old customers.    The higher satisfaction score, the higher level of use of a shipping company.  It means that the shippers would like to largely use the shipping company as long as it is able to satisfy their needs mostly.  In this case, Maersk Sealand got the highest satisfaction score.  The respondents felt that Maersk is able to satisfy their needs mostly; Maersk therefore got a largest engaged level by the shippers.   This shows that Maersk is successful in making sure that their service performance is noticeable to its clients and it can attract clients to make use of their services. Maersk’s service strategy works better than the others; this gives them different kinds of benefits.  In the eighth question the survey respondents were asked to evaluate their level of satisfaction with the liner shipping companies. By the first two elements of the level of satisfaction: reliability and shipment security. Maersk Sealand and OOCL were ranked as the first and the second respectively.  It was then determined that Maersk could best satisfy the shippers in terms of transit time reliability, shipment safety. In the customer services element OOCL was ranked the top one among the carriers.  By the element of promotional gifts, P &O Nedlloyd and OOCL were ranked as the first and the second respectively.  Furthermore, all five carriers were ranked same in terms of best satisfying the shippers by offering the most competitive rates.  Besides, all carriers were the same in terms of best satisfying the shippers by offering attractive discounts.  Finally, OOCL and NYK were ranked as the first in which the shippers were satisfied with their frequency of deliveries.   Generally speaking, the performance of OOCL performance is better than the other shipping lines and it has the potential to be top ranked but it has to make sure first that it reorganizes it’s the marketing strategies or it enriches the value-added essences that can include technology that can compete with the other carriers. On the ninth question the respondents were asked about any other factors that for them are important influences on their choice of liner shipping company. The findings show that a substantial group of survey respondents thought that the other factor which is an important influence on their choice of carrier is consignee’s instruction.  Such situation usually appears on the contracts which is subject to the shipment term of Free on Board (FOB).  Under the term of FOB, the consignee must make arrangements with a shipping company for transport of goods by sea to their own premises from the named port of shipment. In addition, the consignee should notify the consignor of the day and time delivery is required at the named port of shipment.  A group of the respondents would consider the traceability of the shipping company on their choice of shipping company. Scheduling flexibility was the third most important factor for the shippers on their choice of carrier. A small group of the respondents would consider the carrier’s efficiency, and the lowest group of the respondents would consider the location of the carrier on their choice of carrier. It should be noted though that largest group of the respondents had no comment on this question. Those who answered no comment may have no more idea on the other factors that for them are important influences on their choice of liner shipping company. This group of respondents can also be satisfied with the above mentioned influences or elements.   In the tenth question the survey respondents were asked the characteristics of their ideal liner shipping company. The findings found that a big group of the survey respondents thought that the ideal shipping companies should have a characteristic of on-time deliveries.   For them the transit time should be reliable and consistent. This will enable the shippers to not fall behind their planned schedules and make appropriate changes on the initial problems. This kind of respondents values their time too much. More than a quarter of the respondents deemed that the ideal shipping companies should provide excellent customer service. This group of respondents looks on customer service as an important factor that will entice them to go for a company’s service.  Additionally, a fifth of the respondents considered that the ideal shipping companies should offer competitive rates or most probably lower rates. This group of clients believes that the shipping company they will consider includes those companies who offer either competitive or lower rates. A smaller group of the respondents thought that the ideal shipping companies should have good reputation. Reputation can describe or show how a company will provide its service.   A minority of the respondents thought that the ideal shipping companies should have large service networks throughout the world. The respondents think that before they can consider a shipping company they must first know if the company has a considerable service network. The respondents have different ideas on what they perceive as an ideal shipping company, each idea can be attributed to the kind of business the respondent belongs to.   7.2 Conclusion The nature of the shipping industry is also changing, dictated to a large extent by the increased pace in all aspects of manufacturing and supporting logistic services. Having products on a ship traveling months en route may mean the products may become obsolete by the time they arrive at the destination. The need to reduce the time needed in the logistics chain has become an important factor in the competition. The approach to overcoming this increasingly difficult environment has to be a systems approach, with emphasis on greater seamless integration (Hanley 2003). Increasingly, it is recognized that shipping services comprise a system, and to stay ahead, the mechanics of that system must be understood and the correct strategies adopted to ensure that the infrastructures developed can cope with those mechanics. Thus, it is important to understand some of the changes taking place and how they are affecting the mechanics of the system (Hanley 2003).   The sea-based port solves the urban dilemma: it does not use scarce urban land; it does not build on the shore front or in coastal waters; it avoids the need to dredge; and it is purpose-built for maximum efficiency. How different a concept this is from those of previous centuries when ports existed as major urban infrastructures and served the additional purpose of offering promenades to city dwellers in search of open space (Hanley 2003). The type and the nature of mobility change significantly in a globalized economy. The flows of raw materials and of finished products are largely supplanted by the mobility of semi-finished and intermediate products. The phenomenon of globalization has successfully affirmed itself in recent decades because mobility has been freed from geographical and territorial barriers. In the field of transportation there is a need to modify the concept of mobility, which can no longer be suitably conceived in terms of a few isolated port centers or terrestrial nodes, but must be seen as creating a diffuse network of connections directed at making the whole territory accessible at uniform costs (Lerda 2002).In the same way, globalization also assists in the decentralization of production: large firms concentrated in a few industrialized areas leave space for smaller firms and segments of large multinational organizations that produce semi-finished goods, generally assembled in the proximity of the final consumption markets (Lerda 2002). Shipping is an alternative method for businesses to transfer the different supplies, products and goods they have to other countries. Various companies use shipping as a transformation method because it costs less and it is more accessible to them. The shipping industry makes sure that transfer of products using bodies of water will be successful. The shipping industry provides additional means for business to transport their products when the products cannot be easily transported. There are different concerns for the future of the shipping industry. The industry might or might not live for a longer time depending on the various factors and situations in the environment.     Ports contribute well to the economy of a country. It helps a country market its product to various countries and it provides additional income sources for a country. Ports provide assistance to countries by being a mode of transportation for a country to introduce their products to other countries. Ports also lessen unemployment in a country. Ports provide alternative sources of employment for people in a country. Those who  have proper education can work for office position or any high ranking position in the port sector while those who lack education can work as laborers or bag carriers The shipping industry has learned to cope with the advancements in technology; it considered using technologies that can provide a better performance for the firms belonging to such industry. Shipping businesses considered e-marketing because of its ability to do create a generally positive change to the business.  All estimates concerning the growth of e-commerce and e-marketing have one thing in common. They point to phenomenal growth over a very short period of time. Categories such as cars or flowers ordered over the Internet and delivered physically may be included in wider estimates. Companies that adapt and exploit the new opportunities will gain competitive advantage and others will be left behind. On a larger scale, existing indications show a widening gap between developing and developed economies in terms of competitiveness in this area. The absence of important and far-reaching policies in the developing economies could lead to the loss of existing industry and failure to attract new industries. This would mean a reduction in employment and tax revenue, with obvious negative consequences for overall economic performance in these countries (Karake-Shalhoub 2002).   In order to create the right environment to assist and to promote widespread use of information and communication technologies (ICTs), a number of areas need to be addressed: the provision of adequate telecommunications infrastructure; procedures to promote the development of e-commerce and business prospects; the placement of appropriate enabling measures to smooth the progress and development of, and access to applications using ICTs; adoption of legislative arrangements to support those enabling measures; development of electronic delivery methods for public services; and a variety of support activities (Karake-Shalhoub 2002). Many of the developments related to the information or knowledge society, such as Internet growth and the emergence of e-commerce, have arisen only over the last five or six years. The nature of these developments and the speed with which they occur impose new demands on the ability of government departments to keep abreast of them and to seek to influence and respond to them. The sheer pace of development and the absolute necessity to respond rapidly mean that additional resources are required in key areas if people are to deal adequately with the range of issues identified and help accomplish the objective of any country being a key player in the information or knowledge society (Karake-Shalhoub 2002).   Just as the internal combustion engine and jet engine have radically changed people's lives, the Internet is beginning to do the same. In the short time of its existence the Internet has greatly affected business and society. The Internet’s evolution and future development are set to continue. The Internet has fundamentally changed business activity. The buying and selling of products and services, market making, the forging of relationships between companies and customers or between two or more organizations; all these activities are increasingly being digitized (Eckersley, Harris & Jackson 2001).  Although the success of these efforts is not guaranteed, the business landscape is now truly digitized. Some types of e-Commerce are not likely to succeed. The digital technology that enables e-Commerce is progressing and will continue to offer companies opportunities for further changing their business activities. Firms looking to remain competitive in the e-Business arena have to be prepared to reorganize and restructure themselves more or less continuously. If the restructuring of traditional businesses really is so central to their development of successful e-Business strategies, it is essential to understand how to manage change effectively in order to sustain competitive advantage (Eckersley, Harris & Jackson 2001).   While there are undoubtedly many firms that have an established tradition of successful inter-organizational networking, Internet developments have made such initiatives increasingly central to e-Business strategy. One of the first challenges companies face when attempting to embrace e-Business and its corresponding technologies is how to move from being a physical or bricks and mortar organization to being a digital or virtual organization (Eckersley, Harris & Jackson 2001).  It is here that a company encounters its first problem, which is one of technology. The particular difficulty relates to the attempt to evolve their legacy systems to an infrastructure that will support e-Business. Few businesses find themselves in the position where they can throw away the old and introduce new, customized computer systems. Legacy systems often perform essential activities upon which daily business processes depend (Eckersley, Harris & Jackson 2001).    E-marketing is something that is constantly evolving. As time goes by E-marketing is changing its different techniques in providing service to the clients and in making business transactions be done in the shortest time possible. Companies can determine which elements of e-marketing are core to their business strategy and often keep these elements from becoming commoditized. Most companies may find some low-value processes to be potential candidates for commoditized e-commerce solutions. Many hardware and software packages have come into the market recently to help with the transition and maintenance of e-marketing. However, companies should not rely on these purchases for their e-marketing solution. Businesses with significant e-marketing aspirations must continually reevaluate the efficacy even of previously implemented e-marketing solutions (Epstein 2004).   They must determine whether or not newer e- marketing solutions might better fit the firm's e-marketing strategy and whether or not the company might be better served by an in-house replacement for the commoditized solution. Without such considerations, companies run the risk that commoditized solutions will dictate their business structure, by limitations in design. Some have argued that the short-term advantages afforded by technological advances and unique uses of technology are not worthwhile, as they can easily be copied at a lower cost at a later time. However, such short-term advantages are often important for market positioning (Epstein 2004).Although other companies may be able to mimic such advantages, waiting for the technology to reach an acceptable price level permits the first mover the opportunity to further establish itself with its customers, thereby turning a short-term advantage into a longer-term customer base. The long-term advantages afforded by unique uses of e-commerce are less dependent on finding uses of technology that could potentially benefit any similar company in the market. Rather, long-term advantages are derived from finding unique applications of e-marketing to the company's specific business strategies (Epstein 2004). The e-marketing strategies of companies such as Dell, Cisco, and Wal-Mart are known to the business community. However, their long-term success has not relied solely upon e-marketing Rather, their previous business strategies were already uniquely suited to the advantages they were able to derive from e-marketing (Epstein 2004).   Not many e-marketing success stories have relied entirely upon commoditized solutions. It is the ability to recognize the complexities of the opportunities, and the threats, afforded by e-marketing for their business that has enabled some companies to excel at e-marketing. E-marketing opportunities, while numerous, need to be tailored to the strengths and weaknesses of particular company characteristics (Epstein 2004). E-marketing can still be improved for it to provide better services to clients around the world. E-marketing can use more precautionary measures to ensure that people who use such technology will be sure that information they divulge will be kept private. Shipping businesses that use e-marketing should be protected from hackers that intend to gather data they can abuse. Through an improved internet system the hackers cannot gather information. E-marketing created better systems for shipping business. E-marketing needs to have the proper implementation for it to work and for it to prove its worth in the shipping industry. In implementing e- marketing companies has to first consider ethical issues that may be affected by the change. Such ethical consideration can be the effect of actions to the employees well being and the lost of personal communication between the company and the clients. These considerations should be the first ones to be solved before any implementation of e-marketing techniques for better results for the company. The paper had a literature review about E-marketing and issues within it that caused some fears in the use of such technology. This project report has provided a comprehensive literature review with regard to perception of E-marketing quality for service marketing in shipping industry. It has explained the concept of services marketing mix, marketing segmentation, services marketing triangle and service quality.  Marketing needs to be implemented throughout a whole of the company.  All the company departments should therefore be coordinated.    The literature review about marketing and e marketing provided an input of how such ideas can create changes to the shipping business. It determines the benefits of using such concept and how it will help shipping business perform better. In this project report, apart from using the secondary data, the primary data was obtained by the questionnaire survey.  The aim of survey was to find out what factors are used by shippers in choosing a liner shipping company. The finding that most respondents are toy manufacturers helped in concluding that most businesses that use e-marketing are on the b2c model previously mentioned wherein they provide direct services to the clients. The findings are that the shippers are more concerned with the factors of on-time deliveries and carrier’s loss history than frequency of personal sales calls and promotional gifts.  This finding can be related to the earlier topic of consumer perceptions. As what was previously mentioned consumer perceptions can affect the purchasing attitudes of the clients. The image of a company can affect the increase or decrease in the purchases made on the company’s products.  The shippers were more concerned on the perception that the company will deliver products on time than giving freebies. The findings also revealed that the shippers place a significantly high level of importance of the factors of consignee’s instruction and traceability on their choice of carrier.  Therefore the carrier should highlight these characteristics of their service offering when marketing their potential shippers.  This research project has also examined the marketing strategies of Maersk Sealand on its Asia-Europe trades.    The project report achieved its objective of being associated with the bench mark of Maersk Sealand who is the market leader in shipping industry. The project report through the 7th question in the findings part demonstrated the dominance that Maersk Sealand has over other companies. It helped in proving that Maersk Sealand is the bench mark in its industry. With such achievement, the goal of the project was accomplished since the project associated Maersk and it being the standard for other businesses in its industry. Maersk Sealand provides the unique training and education programs to staff.  It is able to enhance the staff’s sense of belonging.    Maersk Sealand has acquired many international awards.  They have built up a better social image towards its potential shippers.  Furthermore, Maersk Sealand has made good use of all services marketing mix variables on its Asia-Europe trades.  Maersk Sealand placed thirty-six vessels on its Asia-Euorpe trades.   Maersk Sealand would advertise its new information in the shipping gazettes, journals and magazines.  This allows Maersk Sealand to promote and establish a strong image to the potential customers.  In addition, Maersk Sealand has engaged freight forwarders as an intermediary to remove the direct contact with the market.  Maersk Sealand has a unique information technology system program called MODS.  The procedures of making booking could be reduced by using MODS system.  The time of transaction can be therefore reduced.  However it can be concluded that the overall performance of Maersk Sealand in its marketing strategies and tactics are good and also it is able to satisfy its customers’ needs.    One company that can challenge Maersk’s dominance in the shipping industry is OOCL. As shown in the eighth question of the questionnaire, when the various responses of the clients were totaled the performance of OOCL is much better than Maersk. In terms of customer service and frequency of deliveries OOCL was the company that provided it according to the respondents. OOCL can still improve its services and make a much better mark in the shipping industry.  OOCL has the potential to be top ranked but it has to make sure first that it reorganizes it’s the marketing strategies or it enriches the value-added essences that can include technology that can compete with the other carriers such as Maersk.   OOCL has the option to analyze and change its marketing objectives so that it can attract more clients and gain a better standing in its market. It can alter its marketing objectives into using more advanced technologies. The benefits and disadvantage of the marketing mix mentioned in the literature review can help OOCL in improving its stature.   7.3 Limitations There were some limitations in undertaking this research project.  First was the resources obstacle.  When undertaking the case study, there are just a few ways to obtain information about Maersk Sealand.  The way of obtaining information was mainly on the Internet through the company web site.  However, it was unable to obtain sufficient useful information by the Internet only.  In addition, Maersk Sealand was unwilling to disclose widely its internal information to the public.  This was probably a security strategy for the company, this is to prevent any important information to come out and fall into unworthy hands.  Thus resources were the implication involved in the case study.  Aside from the resources obstacle, time was a vital limitation for this project.  The most common limitation is time, due to the fact that the dissertation has to be carried out within a set time frame under unforeseen circumstances.  While undertaking the questionnaire survey, a long time had to be used in order to wait for the completed questionnaires from Hong Kong. Some of the questionnaires were returned only after one month.  This long lead time impeded the subsequent processes of the project.  It also prevented some other activities for the project to be postponed. In addition, some of the companies chosen as respondents were unwilling to complete and return the questionnaire sent to them. This resulted in a low respondent rate.  Finally the financial requirement is a limitation of the study. The researchers had some financial limits that caused some issues in the study and research process. The substantial financial pressures such as copying costs and postage were involved in undertaking the questionnaire survey.   7.4 Recommendations The findings of the study as well as the suggestions of the respondents helped in preparing the following recommendations: <li class="MsoNormal" style="text-align: justify; line-height: 200%"> In adopting a market pricing policy, enough care should be taken to ensure that full rate traffic is not diverted to the lower rate in the endeavor to generate a higher volume of the business.</li> <li class="MsoNormal" style="color: red; text-align: justify; line-height: 200%"> The e-marketing system should not create any information related problems. The e-marketing system should not hamper the transfer of information to the different departments of the shipping business. The e-marketing system should make sure that information will not fall into unauthorized people.</li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> In reference to the 1st question, Maersk and other shipping companies should make sure that business will still be enticed to use shipping as a mode of transporting their products. Due to the threat of air transportation, shipping companies should strengthen the benefits of shipping transportation to prevent losing clients.</li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> In reference to the 2nd question, the shipping companies should focus on the areas that most clients export their goods. The shipping companies should make sure that it has separate strategies on enticing the client to export their product to the European market through their company.</li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> In reference to the 4th question, all business in the shipping industry should be prepared for influx of job orders and peak seasons. Maersk and other shipping companies should plan what they will do once there is sudden influx of demand for their services. </li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> In reference to the 5th question, Maersk and other shipping companies should strengthen its service on the website it uses. Maersk and the other businesses should make sure that the website will be well maintained and free from errors. </li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> In reference to the 9th question, the shipping companies need to identity probable requirements of the clients so that they can alter their strategies and attract the client’s attention towards their company thorough the clients’ own requirements.</li> <li class="MsoNormal" style="color: navy; text-align: justify; line-height: 200%"> In reference to the 10th question, the shipping companies must make sure that for them to be ideal in the eyes of clients they must have a characteristic of on-time deliveries, have a strengthened customer service, have the capacity to offer competitive rates, have good reputation and have working service networks.</li> <li class="MsoNormal" style="color: red; text-align: justify; line-height: 200%"> Maersk and other shipping companies should know the aspects in their company that needs to be integrated with e-marketing. They should determine in what aspect of the company e-marketing should be integrated. The shipping businesses should also check whether the e-marketing strategies they use are still working for the benefits of the company and not for further problems in it. </li> <li class="MsoNormal" style="color: red; text-align: justify; line-height: 200%"> Shipping businesses should find out strategies or systems that will have the same impact as e-marketing. This strategies or systems should not cost much. It should not be too complicated to prevent more problems to come out of it. </li> In addition, market pricing policy that lead to a tariff war should be avoided.  As the survey found that on time delivery is the most important factor used by the shippers in choosing the carrier, then Maersk Sealand and the other shipping companies should make each shipment on time.  Advertisements should emphasize this characteristic so as to underpin its positive brand images towards potential shippers. 7.5 Further study This study is limited to the analysis of marketing strategy for the liner shipping company.  Further study should focus on evaluating the customer service level of the liner shipping company.  Further study should also evaluate should carrier provides a customizing services to the customers.  Finally, further study should also identify and understand the selection factors where the difference would be found between export shippers and import shippers. 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Dissertation on Perception of E-Marketing Quality for Service Marketing in Shipping Industry

Chapter 1 1. INTRODUCTION This chapter provides the background of shipping industry, supply chain management, general marketing, se...