Mukesh Document

8/7/2019 Mukesh Document

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Title


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Acknowledgement


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Abstract


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Table of Content


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Chapter 1: Introduction

1.1 Introduction:

E-commerce or e-business is one of the common and most happening topics of discussion

in current competitive world. E-commerce is defined as the process of selling and buying

the goods and service over internet and without making any physical visit to stores. Use

of computer in business has reshaped the relationship between the supplier and customer,

streamline the business process, restructure the whole industry and optimize the supply

chain. An internet based e-commerce solution is conducted by using World Wide Web

application for the purpose of performing more than one business activities and functions

at one point of time. These business activities and functions include buying and selling of

goods, distribution of goods, supply chain management, communication, and delivery of

payment among the suppliers, producers and customers. Use of e-commerce system in a

typical organization system makes the products and service available on internet and the

customers can buy them without making any physical visit to store or without any human

assistance. In banking sector, online service has played an important role. Customer can

do a wide range of activities online such as securing a loan, changing the address,

application for credit card and developing a personalized service level agreement without

getting help from any individual. Hence e-commerce is an innovative way of conducting

the business activities and executing the business transaction using computer. This

research study has been conducted to understand the relationship between online service

quality and customer satisfaction. The aim of this chapter is to provide background

knowledge to the reader about the topic and help the reader to understand the insights of

research area. This chapter also includes the problem discussion, research questions and

research objective.

1.1.1 E-Commerce Activities and Its Role:

Increasing penetration across the world has provided a tremendous opportunity for the

companies to reach maximum target customers with the minimal cost. The World Wide

Web users are spreading out at a significant rate. The most popular and common aim of

using e-commerce is to replace the traditional mode of business channels by initiating the


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web based store front. In such type of e-commerce generally company offer its products

and service online and it is called business to e-consumer selling. At present there are the

four common e-commerce activities undertaken by the users such as banking, investing,

shopping and electronic payment for internet services. In past few years, it has been

observed that there has been substantial growth for internet based services in both from

the traditional companies and internet based business which is also developing the online

services. The incredible growth of internet is changing the way of businesses to serve its

customers. A significant change in the way of conducting the business is observed in

banking industry where the banks are offering transactional and financial service to its

customers over internet. In last two decades banking industry has been moved up towards

the internet. There have been more than 500 conventional banks in US that has adopted e-

commerce for maintain their competitiveness in the current market place. Some of the

major banks are Well Fargo, Bank of America that has offered a range of services

including loans, fund transfer and credit cards. If look at the customer perspective, then

online banking is a convenient way of accessing the retail banking service in a time

saving manner. On one hand internet is currently improving the banking services some of

the banks are still lagging to meet the customers expectations and demand. Hence it is

important to provide expected and desired level of satisfaction and also essential while

banks are introducing the online services.

1.1.2 E-Commerce and Customer Satisfaction:

In any of the business customer satisfaction is a critical issue either it is traditional or

online. Therefore banks which are currently using internet needs to understand the how to

satisfy the customers along with maintaining the market share, sustaining the business

growth and competitiveness. Customer satisfaction is important for maintaining the long

term relationship with the customers. Also it has been evident that number of financial

institutions and banks regularly conduct customer satisfaction survey. It provides the

fundamental understanding of key drivers of satisfying the customer needs. Therefore to

understand the customer satisfaction with the e-commerce it is important to understand

first about the customer satisfaction in general. Customer satisfaction is defined as the

cognitive and affective evaluation of comparative standards in relation to the perceived


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performance. Also it can be understood by means of difference between the expected

level of service quality and what exactly is delivered by the company. for example if the

perceived level of service or product quality is less than the delivered level of quality

then the customer will be satisfied. On the other hand if the expected level of service

quality is higher than the delivered quality then the customer will be dissatisfied.

1.1.3 Relationship between Customer Satisfaction and Service Quality:

Key measure of user satisfaction is service quality. Past researches in this context

identified that there are certain dimensions of quality and they have also listed out the

various aspects of online service and its relationship with the customer satisfaction.

Another instrument of measuring the customer satisfaction is SERVQUAL where the

researcher has given much attention to understand the close relationship between the

online service quality and customer satisfaction.

1.2 Research Problem:

In the current competitive world the customer needs are essential to consider for every

business. Specifically in financial service industry, there are number of players and each

player is providing innovative solution to its customer in many ways. Therefore for some

banks it is essential to maintain their service level standards which provide the complete

satisfaction to the customers and fulfill their needs. It is considered that the internet

business provide more value to the customer rather than businesses which provide the

services in a traditional way. It is perceived that internet based businesses provide more

convenience to the customers, more interactivity and relatively low cost with a high

degree of customization. There is a very little understanding of factors which impacts on

the overall customer satisfaction even with internet based services. A rapid development

in the information and communication technologies enabled many businesses to provide

high tech service with minimal time and low cost to take care of the customer need in a

more effective way. For banks, the internet based home banking brings in the dramatic

change where they can have more substantiate relation with its customers and meet their

expectations and needs. With a rapid change in the technology, the service quality has

become an important issue for the banks to satisfy the customer needs. Number of


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researches has been conducted so far which provide the key dimensions of service quality

but no research provide the key attributes of service quality and its relation to the

customer satisfaction. The research problem can be formulated as to determine the key

attributes of service quality and its relative impact on customer satisfaction in

financial/banking sector.

1.3 Research Aim and Objectives:

The aim of this research is to determine the key attributes of service quality and its

relative impact on customer satisfaction. In order to achieve this aim, the following

research objectives have been achieved by the researcher:

o To understand the service quality and customer satisfaction in banking sector

o To determine the service quality dimension in banking sector in relation to e-

commerce and its impact on customer satisfaction

o To explain the importance of service quality dimension in relation to the customer

satisfaction in the context of internet banking

o To provide the recommendation to banks in improving the service quality and

achieve highest level of customer satisfaction

In order the above research objectives; researcher has answered the following research

questions.

Research Question 1: How service quality and customer satisfaction is interrelated in

internet banking?

Research Question 2: What are the dimensions of service quality in internet banking and

how it impacts on customer satisfaction?

Research Question 3: How important the service quality dimensions are in relation to

the customer satisfaction?


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commerce system in a typical organization system makes the products and service

available on internet and the customers can buy them without making any physical visit

to store or without any human assistance. A rapid development in the information and

communication technologies enabled many businesses to provide high tech service with

minimal time and low cost to take care of the customer need in a more effective way. The

next chapter includes the detailed literature where researcher has discussed various

theories related to service quality and customer satisfaction for gaining the better

understanding of both the factors which has also worked as a base for carrying out the

research further.


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Chapter 2: Literature Review

2.1 Introduction:

Customer satisfaction from the view of past research is defined as post evaluation of

customer behavior after purchase of a specific product or service. Most of the researchers

also stated that satisfaction is an attitude of customers which can be evaluated by

differentiating it pre purchase and post purchase of products and services. The aim of this

chapter is to provide the detailed view of literature in the context of service quality and its

relationship with the customer satisfaction.

2.2 Service Quality and Internet Banking:

Service quality is a tool which companies are using to develop the competitive advantage

and considering its importance, in past two decades the research have been undertaken to

understand how it is changing and in what ways it provides the overall customer

satisfaction. According to Bitner et al (2003), service quality is the consumption of

services by the customer to give the overall impression relatively superiority or inferiority

of services. In broader terms service quality can be defined as a difference between the

expected level of customer and perception of received service. On the other way

Parasuraman et al. (2008) defined service quality as the how well the service is delivered

to the customer to match its expectations. Service quality in internet banking has its own

place where competition in banking industry is very high. Service quality in online

banking therefore works as a competitive advantage. Internet has been emerged as a key

competitive area where future of financial service exists. Online banking offers a range of

services to the customer with interactive feature at lowest cost of service than the

traditional banking service (Cronin, 1998). The internet banking website was first

launched by Security First Network Bank (SFNB) with more than 1,000 financial

institution plans were made to offer online banking services. The new banking prodicyts

are utilized with the launch of advanced technology such as electronic money and smart

card via Internet. In early 80s internet banking proved to be a revolutionize system where

it offers more convenient and a wide range of service than the traditional banking


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services. At that time the response of customer for internet banking system was

appreciated though it is different from the home banking due to easy access. With the

launch of internet banking, the customer can access its account anywhere in the world at

any point of time and can make the necessary transaction with out actually visiting the

bank branch. In order to retain the customers and secure their loyalty, number of banks

has provided a unique online experience to its customers which were not accessible

through offline mode of banking channels. A significant investment was needed to

initiate the online banking service therefore it was critical for the banks to maintain the

service quality through online banking system. However change in technology has

reduced the burden of cost and banks are capable enough to meet the customers

expectations and maintain high quality of their online banking service.

2.3 Customer Satisfaction and Its determinants:

According to Kotler (2003), customer satisfaction is a type of feeling of an individual for

either a pleasure of disappointment from the performance of product or service

purchased. Yi (1990) defined customer satisfaction as the collective outcome of

evaluation, psychological reaction and perception from an experience of consuming

goods and services. On the other hand Hunt (1991) stated that customer satisfaction is

the function of customer belief towards the product and services purchased by them. As

per the literature of marketing Oliver (1980) stated that disconfirmation theory has been

emerged as preferable foundation of customer satisfaction model. A discrepancy between

the perceived level of performance and cognitive performance is provided the measure of

satisfaction under the theory of disconfirmation. A partial belief about the product and

service for a customer is known as the satisfaction. Customer expectation on the other

hand is viewed as the prediction of customers about what he thinks and what needs to

happen during the transactional exchange. On the other hand perceived performance is

explained as the customer view of what should be the performance of a particular product

and services. Oliver (1980) has given the process of satisfaction and its judgment in

disconfirmation and expectancy framework.

Expectation

PerceivedQuality

DisconfirmationSatisfaction


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The above figure presented the formation of satisfaction among the customers

where an arrow drawn from expectations to perceived quality indicates that the

expectations are directly proportional to the perceived quality. There is a positive impact

on the satisfaction from expectations and also the perceived level of disconfirmation.

Hence both the perceived quality and disconfirmation has greater impact on the customer

satisfaction. There are certain determinants of customer satisfaction and several authors

have provided the number of models which list out the customer satisfaction and its

determinants. For online shop[ping internet, there are five antecedents of customer

satisfaction as identified by Hi and Wu (1999) such as technical characteristics, logistics

support, informational characteristics, product characteristics and presentable view of

home page.

From the above model it can be seen that each antecedent tends towards the customer

satisfaction. Logistics support refers to the quick response of delivery of goods to the

customer through communication channel and providing better after sales service

support. Technical characteristics include the technical factors such as modern computer

network facility and structures information system to provide up-to-date information.

This also concern with the secure and reliable information. Home page presentation

includes the use of interface and detailed out the information about the goods. It also

includes the layout of the home page and presentation of information about the goods and

TechnicalCharacteristics

Home PagePresentatio

n

Customer

Satisfaction

LogisticsSupport

InformationalCharacteristics

ProductCharacteristics


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services. Product characteristics include the range of products and services and low price

products covering all the SKUs.

2.3.1 Success Model Developed by DeLone and McLean for End Users:

DeLone and McLean have provided the success model which is based on the role of

information management system and it explained how the challenges in the adoption of

e-commerce can be explained. In e-commerce enabled business, the prime users of

information system are the customers only rather than the manufacturer or supplier. Both

the suppliers and customers are the main users of system to make selling and buying

decision and taking the business transaction. The decisions made on e-commerce based

business transaction than have major impact on industries, individual users and national

economies. As per the success model, there are the six dimension of customer satisfaction

such as system quality, information quality and service quality, use of system, user

satisfaction and net benefits. In the internet environment, system quality refers to the

characteristics of e-commerce system. The value of e-commerce system quality includes

adaptability, reliability, response time and availability. Information quality refers to the

web content which should be precise, crisp and easy to understand so that customer can

quickly grab the knowledge about the product and service and purchase them online.

Service quality in this sense also refers to the overall support provided to the customer

after sales. It should include the delivery of information by the service center. some of the

critical points of information need to be pasted on the website itself such as frequently

asked questions, news blogs, customer feedbacks and other critical points which ensure to

provide better and superior customer satisfaction. Poor information support in the website

leads to the loss of customer and loss of sales. Usage refers to the visiting of website and

navigating the website to retrieve the information and use of information. Customer

satisfaction with the website is an essential means of measuring the customer opinion and

should also cover the experience cycle starting from retrieving the information, purchase

of product to make the payment and receiving the receipt. Net benefit refers to the over

all satisfaction of customer with the service quality since it is the success measure of

system quality, information quality and technical aspect of the website.


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2.3.2 Customer Satisfaction and E-Commerce Success Model:

An e-commerce success model was proposed by Molla and Licker (2001) which is based

on the model developed by DeLone and McLean as discussed in the previous section.

The point of differentiation between these models is replacement of information quality

and system quality components from DeLone and McLean model by content quality and

e-commerce system. In the traditional quality system and information quality

measurement, the constructs of content and e-commerce system cannot be captured

which is required in e-commerce success model. Customer e-commerce satisfaction has

replaced the user satisfaction. Trust and service are the two additional factors which

require capturing the custom and transactional support components in the e-commerce

system. Further it provides the relationship between the customer satisfaction and usage.

Different dimensions of measuring e-service quality have different consequences and

varying effects on customer satisfaction (Wilfinbarger and Gilly, 2002).

2.4 E-Commerce Activities:

According to Eastin (2006) there are the four activities performed by the user in e-

commerce such as online banking, online investing, online shopping and payment to be

made electronically for internet service. There are the six attributes of the e-commerce

model such as self efficacy, financial benefit, and previous use of telephone, risk and

perceived convenience.

All of the six attributes of e-commerce system together combines the adoption of e-

commerce system in the banking sector and bring in the tremendous experience of

service quality and customer satisfaction.

2.5 Online Service Quality and Customer Satisfaction:

Prior Use of Telephone

Self EfficacyRisk

Financial BenefitPerceived Convenience

Internet Use

Adoption of E-commerce

BankingShopping

Online ServiceInvesting


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In banking sector service quality is an essential component since there is a lot of

competition in the industry and each player has unique resources and strategy to attract

the customers. In such a competitive business scenario if the customers of any bank are

dissatisfied then it eventually helps the competitors to attract them. Service quality is

therefore a subject of considerable interest for both the researchers as well as the

practitioners. Service quality has a beneficial impact on the bottom line of the business

performance of the firm which has created the interest among the practitioners. In

academic perspective the customer satisfaction from service quality is recognized as

being a distinct in the industry and develops fairly independent lines of service quality.

Hence service quality leads the better customer satisfaction with on time process.

According to Caruana & Malta (2002), customer satisfaction is perceived to be an

important output from the service quality. Authors have hypothesized that the customer

satisfaction is an antecedent of service quality and it assumed to be one service factor

which contributes in measuring the customer satisfaction judgment. Few researchers in

past have tried to identify the key determinants by which the customers evaluate the

service quality. Further these researchers have analyzed whether it leads to the

satisfaction or not. According to Jayawardhan & Foley (2000) the feature of service

quality in the website of internet banking is critical and so for the customer satisfaction.

There are two key driving forces which lead to the higher level of satisfaction and

attracting new customers namely unlimited access to variety of financial services and

quality information about products and services offered by the banks. there are two well

known measures which enable the researcher to determine the impact of service quality

on customer satisfaction such as technical or the functional quality and SERVQUAL.

Laser et al (2003) has tried to compare these two models to understand the dimensions of

service quality and its impact on customer satisfaction. Based on the findings it was

observed that functional quality is more important and complex than what it is perceived.

Further the functional quality has significant influence on the customer satisfaction. In

order to measure the information quality of service product, Pather, Erwin and Remeyi

(2003) provided the model which also explains the relationship between the service

quality and customer satisfaction. This model provides the measurement learning of both

the customer satisfaction and online service quality.


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According to Laser et al (2003), the above model explain the measurement of service

quality and customer satisfaction by evaluating the five dimension of SURVQUAL

including reliability, responsiveness, tangible, empathy and assurance. Therefore to better

understand this, some of authors have provided the definition of service quality as the

subjective comparison of which a customer make between what is perceived or expected

and what actually they receive. Past researches suggested that all the dimensions do not

have equal impact on the consumers perception towards the service quality. Therefore it

is essential to understand which service quality dimensions are more critical to encourage

the greater level of customer satisfaction. In online business, every individual who visit

website is a customer and end user of both the network system and information. A 12

item scale was proposed by Doll and Torkzadeh (1988) to determine the satisfaction level

of customers with information system. There are five key dimensions that were proposed

Measuring E-commerce Effectiveness and Quality of Service

AMeasurement of

User Satisfaction

BMeasurement of

Service Quality

+

CCustomers has

expectations of service

through use of E-

commerce system

DService is delivered viainternet and supported

through call center

E-businessWebsite

Measuring the gap ofindicative level of service

quality through satisfactionuse


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to test using this scale to assess the satisfaction level of end users and these dimensions

are accuracy, content, timeliness, ease of use and format. Validity and reliability of this

scale has been tested by many researches in the past and concluded that it provides the

substantial results. In online retailing, traditional service quality dimensions are not at all

relevant however there are some factors which are critical for the success of online

business such as credibility, communication, appearance and accessibility. The following

section discusses the difference between traditional and online service quality dimensions

in more detail in the context of internet banking.

2.6 Service Quality Dimensions Traditional Vs. Online:

Service quality is the consideration of both the parishioners and researchers. Also from

the definition of service quality, it is described as the difference which a customer makes

between the expected or perceived level of service and what exactly they receive from the

provider. Customers who buy online demands more services which are available in

traditional mode of channel even if they are purely internet based. In a research

conducted by parasuraman et al (1985), the key findings of the research stated that there

are the ten determinants of service quality such as reliability, tangibles, responsiveness,

competence, courtesy, access, communication, security, knowledge to the customer and

credibility of information. These dimensions were further refined and concluded to five

such as reliability, tangibles, responsiveness, empathy and assurance. On the other hand

online service quality dimensions are four such as privacy, fulfillment, reliability and

efficiency. Based on these dimensions, it has been observed that the customer perception

is directly linked with the banking service product quality and it plays an important role

in overall customer satisfaction. In internet banking, there are the ten dimensions

identified by the Jun and Cai (2000) as courtesy, credibility, competence,

communication, access, responsiveness, reliability, continuous improvement, customer

and collaboration. Six dimensions of service quality as perceived by customers are

identified by Yang, Peterson and Huang (2001) as listed below:

Website contents which matches with the need of customers

Content accuracy


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Response to the queries of customers

Privacy of information

Ease of using friendly navigation, search on the website, speed and sitemap

Layout and interface of the website

Few banks have developed their own methods to evaluate the service quality. For

example Bizrate.com is a scale where the service quality is assessed on these ten

dimensions. Another evaluation method is Gomez.com which is an alternative solution of

Bizrate.com. The point of differentiation of Gomez.com is difference of 5 dimensions

such as ease of use, web contents, product pricing, confidentiality and security of

information.

2.7 Conceptual Framework:

Based on the literature discussion on service quality dimensions, researcher is covering

five important dimensions which are common across all the authors to test the service

quality of internet banking such as efficiency, reliability, responsiveness, privacy and

fulfillment. Customer satisfaction is an important output from online service quality.

Based on the five dimensions the online service quality of internet banking is assessed to

determine the overall customer satisfaction. Efficiency refers to the interface of the

website and web content which provide the product information for the desired products

covering all the aspects to buy it. Reliability refers to the technical aspect of website and

information which is provided in the website should be accurate. Responsiveness refers

to the response to customers within the appropriate time frame and provides support to

the customers with prompt response if in case any problem occurs. Fulfillment refers to

the delivering everything which is promised to the customer along with the accuracy of

information. Privacy refers to the security of customer information while logging into the

website and should be shared with any one else such as credit card information, debit

card information, password, internet banking pin etc.


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2.8 Summary:

Online service quality has its own importance since consumers are becoming more

conscious and they need every thing at par quality even if they dont mind to pay more

for such quality. A significant increase in the penetration has also increased the online

population and people are willing to purchase or consumer service more over the internet.

In such a way every transaction to be done over the internet is self explanatory there is

not physical support provided by the company. In this way it is essential for the

companies to maintain the service quality level up to the mark and ensure a high level of

satisfaction among customers. There are certain dimensions of online service quality

which is explained and discussed in the above literature however none all but few of

them are of great importance. Customers who buy online demands more services which

are available in traditional mode of channel even if they are purely internet based. Past

researches suggested that all the dimensions do not have equal impact on the consumers

perception towards the service quality. Therefore it is essential to understand which

service quality dimensions are more critical to encourage the greater level of customer

satisfaction.


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Chapter 3: Research Methodology

3.1 Introduction:

A research methodology is a process and steps taken by the researcher for undertaking

the research work. A research methodology consists of various components which can be

selected through suitability and relevance of research aims and objectives. This chapter

includes the detailed explanation of research methodology that has been used by the

researcher for conducting this research study.

Research Methodology:

Before proceeding towards the research methodology design it is essential for the


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Chapter 5: Conclusion and Recommendation

5.1 Introduction:

If an enterprise is managed a little better than customers expect, and if this is done in a

slightly better than competitors can manage, then the enterprise should be successful.

There are several factors which have contributed to this, a number of which are referred

to in our discussion of the strategic challenges facing organizations and the dimensions of

the new customer and the new forms of competition. Together, these have put pressures

on mangers to develop strategies which not only are far more clearly focused upon the

market, but which are also infinitely more proactive, flexible and innovative. However,

for many mangers, the problem is not necessarily that of identifying or gaining an

advantage initially, but of sustaining is over any length of time.

5.2 Conclusion:

Marketing strategy is concerned with matching the capabilities of the organization with

the demands of the environment. There is therefore a need for the strategist to monitor the

environment on an ongoing basis so that opportunities and threats facing the organization

are identified and subsequently reflected in strategy. The environmental conditions faced

by an organization are capable of varying greatly in their complexity and need to be

reflected both in the ways in which environmental analysis is conducted and in the ways

in which strategy is subsequently developed. The consequences of failing to take account

of a changing environment have, as we discussed, been illustrated by a wide variety of

organizational experiences, including those of the Swiss watch industry in the 1970s. It is

widely recognized that the pace of environmental change is increasing and that the need

for organizations to develop a structured approach to environmental analysis with the

results then being fed into the strategic marketing planning process is greater than every.

Despite this the evidence suggests that in many organizations environmental scanning

systems are only poorly developed. If this is to change, top management commitment

both to the development of a scanning system and to be incorporation of the results into

the planning process is essential.


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Businesses that survive the shakeout face new challenges as market growth stagnates. As

a market matures, total volume stablizes; replacement purchases rather than first-time

buyers account for the vast majority of that volume. A primary marketing objective of all

competitors in mature markets, therefore, is simply to hold their existing customers to

sustain a meaningful competitive advantage that will help ensure the continued

satisfaction and loyalty of those customers. Thus, a products financial success during the

mature life cycle stage depends heavily on the firms ability to achieve and sustain a

lower delivered cost or some perceived product quality or customer-service superiority.

Some firms tend to passively defend mature products while using the bulk of the

revenues produced by those items to develop and aggressively market new products with

more growth potential. This can be shortsighted, however. All segments of a market and

all brands in an industry do not necessarily reach maturity at the same time. Aging brands

such as Jell-O, Johnsons baby shampoo, and Arm & Hammer baking soda experienced

sales revivals in recent years because of creative marketing strategies. Thus, a share

leader in a mature industry might build on a cost or product differentiation advantage and

pursue a marketing strategy aimed at increasing volume by promoting new uses for an

old product or by encouraging current customers to buy and use the product more often.

Therefore, in this chapter we examine basic business strategies necessary for survival in

mature markets and marketing strategies a firm might use to extend a brands sales and

profits, including the strategies that have been so successful for Johnson Controls. Most

products eventually enter a decline phase in their life cycles. As sales decline, excess

capacity once again develops. As the remaining competitors fight to hold volume in the

face of falling sales, industry profits erode. Consequently, conventional wisdom suggests

that firms should either divest declining products quickly or harvest them to maximize

short-term profits. Not all markets decline in the same way or at the neither same speed,

however, nor do all firms have the same competitive strengths and weaknesses within

those markets. Therefore, as in most other situations, the relative attractiveness of the

declining product-market and the businesss competitive position within it should dictate

the appropriate strategy.


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5.3 Recommendation:

It has long been recognized that competition between organizations can be seen in much

the same way as a game, in that the outcome in terms of an organizations performance is

determined not just by its own actions but also by the actions and reactions of the other

players, such as competitors, customers, governments and other stakeholders. However,

as the pace of environmental change increases and the nature, sources and bases of

competition alter, markets become more complex and the competitive game consequently

became more difficult to win.

It follows from this that the need to manage competition and the competitive process,

while often difficult, is essential. Although there are no hard and fast rules, it is possible

to identify a number of very broad guidelines which companies might follow. These

include:

Never ignore new competitors, particularly those who enter at the bottom end of

the market since, almost inevitably, once a firm gains a foothold it will start

targeting other segments of the market. Examples of this include the early

manufacturers of calculators who ignored Casio; IBM, which ignored a series of

initially small players such as Apple, Dell and Compaq; the UK motorcycle

manufacturers who underestimated the Japanese such as Honda, Yamaha,

Kawasaki and Suzuki; and Xerox, which was hit hard by Canon. Always exploit competitive advantages and never allow them to disappear unless

they are being replaced by an advantage which, from the customers point of

view, is more powerful and meaningful.

Never launch a new product or take a new initiative without working out how the

competition will respond and how you will be affected by this.

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