21 Jan 2020 16:59 IST

‘Most companies are jumping on the digital bandwagon without knowing why’

A Parasuraman, Pro-Chancellor, VijayBhoomi University, on marketing principles and the digital economy

Dr A Parasuraman, who recently retired as Professor and James W. McLamore Chair in Marketing at the University of Miami, has been appointed the Pro-Chancellor of Academics at VijayBhoomi University, a new liberal arts university promoted by the IFIM group of institutions. Dr Parasuraman has a Bachelor’s degree in Mechanical Engineering from IIT Madras, an MBA in Marketing from the Indian Institute of Management, Ahmedabad, and a Doctorate in Business Administration from Indiana University. He is the co-author of a study on services marketing, which developed the concept of Servqual. He has developed a Technology Readiness Index (TRI), which measures the degree of technological adoption in businesses.

Recently, he helped launch the Index of Service Excellence in India, which is an index to assess the service quality standard and ensure the seamless delivery of services. He also helped start the IFIM-AIM Parasuraman Center of Service Excellence in Bengaluru, which is set to carry forward research in service excellence across all domains and periodically share its findings with stakeholders in government, industry and academia. In this interview, Dr Parasuraman talks on all things marketing, on whether the 4Ps of marketing still hold relevance, on service excellence, and on the digital economy. Excerpts from an interview:

What is the new debate happening in the marketing world, now that the old paradigm is being redefined and online has its own set of principles? Is the marketing discipline being reimagined at B-schools?

Well, marketing is not getting redefined but the mode of marketing delivery is definitely getting redefined and whether schools are keeping pace I am not sure. There are very few schools that are keeping up. I always tell my students and faculty colleagues that industry is way ahead of what we are teaching our students. The curriculum at B-schools doesn’t change that often.

Is the 4Ps definition of marketing still relevant?

The 4Ps framework is still relevant but if you take pricing, for example, which is one of the 4Ps, it is becoming more dynamic now. It is not like you set the price and forget about it. You have to be constantly aware of what is going on, and that creates confusion for customers too. If you go online and see a price, an hour later if you go back it is different. Why? There are some internal algorithms determining what the supply and demand are. There is technology that can set dynamic pricing.

Now what does that do to consumers, and how do you make customers trust companies? Sometimes, on a plane, you talk to the guy in the next seat and discover that you have paid ₹3,000 more than him for the same flight! It can be very disconcerting. So how do companies handle it? Of course, companies are thinking from a revenue maximisation standpoint; extract the best price you can get. But the problem is that it can erode trust. So, the communication with consumers also has to change.

So, how you structure the 4Ps and how you make them a part of your marketing package requires rethinking and revisiting and, of course, most companies are jumping on the digital bandwagon without understanding what it really is doing for them and what the consequences are.

What happens to consumers who are not digitally savvy?

I have been involved with a stream of research for the past 15-20 years in the area of technology readiness. It has to do with consumers’ inherent propensity to react favourably to any technology-based gadget, be it a technologically sophisticated product or technology-delivered service. Through my research I have developed a scale called technology readiness to measure it. This consists of four major dimensions. It has nothing to do with the technical ability of people but it’s a measure of mental attitude. Some people are very enthusiastic about anything that comes down the pipe while others are not enthusiastic. The first dimension is what we call optimism. It has to do with the general feeling of technology. That technology is good as it makes life easier and gives us more control, more flexibility.

Another positive dimension in technology is innovativeness. Some people are inherently more innovative. They are willing, even excited, to try new things. Others, on the contrary, are reluctant to try new things. And then on the negative side we have technology discomfort, or overall fear or paranoia about technology, where people think technology is taking over their lives, rather than them being in control.

The fourth dimension is insecurity. Insecurity has to do with fear and is a more transaction-specific thing. Online banking is a good example. Some people are just mortified about doing anything online because they don’t trust the technology. So the technology readiness index is an amalgam of a person’s internal position on these four attributes, and has implications for marketing. Especially because many of the new start-ups these days are technology-based. They get very excited about a new, neat app but what about the user? So this technology readiness could be a potentially useful tool for companies, especially new tech start-ups to understand the market, not only in terms of technology but also from the consumer readiness viewpoint.

In your study of corporates what would you say is top of mind for the CMO? Is it technology or the consumer’s digital experience?

It is much more technology. I think there is a lot of pressure for companies to jump on and stay on the technology bandwagon. There is a CMO survey conducted by a professor at Duke University every six months and there is a website called thecmosurvey.org. They track the assessments of a random sample of 2,000 CMOs across the US from major companies, many of them global.

The survey checks what is top of mind for CMOs. Questions like: is your marketing budget likely to go up or go down? They also ask about mobile and digital marketing. One of the trends shows investments in mobile and digital marketing going up; and the survey asks how confident the CMO is about getting a good return on these investments. That has been kind of flat over the years. But, to the question, how likely are you to increase the budget for digital marketing, most answer: Very likely! Without really knowing what it is doing!

I may be oversimplifying this but I think many CMOs and CXOs in the marketing space are enamoured by some of these things and are probably under pressure to keep up with all of this. Although some of them have clearly no good idea whether it is paying off or not. So I think there is a lot more work to be done in terms of understanding how to be more intelligent about digital.