Discussion Forum: High-Quality Customer Service and Profits

Discussion Forum
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Discussion Forum
Retail stores make trade-offs between high-quality customer service and profits more often than not. For example, understaffing is common in the stores. Thus, the customers have to wait for a long time before their needs are met. The understaffing may be because retailers target at reducing operational cost, such as labour, in order to increase their profit margins. Since they are part of the supply chain of a product, they realize low profits (Kovac et al., 2009). Most manufacturers usually regulate the market price of products in order to ensure that the consumers are not overcharged, and the prices remain competitive in the market. The retail stores may also reduce the prices of products as a means of attracting and retaining customers (Kotler, 2007).
Although reducing the cost of operation increases the possibility of reaching the target profit margin, the strategy may have a negative impact on the quality of services. However, it is not necessarily true that a retail store would realize high profits after slashing the cost. A time-consuming purchasing process, for example, is a factor that promotes consumer dissatisfaction. The consumer would opt to either substitute the product or change retail shops to one with better services (Kotler, 2007). Hence, the...