This contrasts with traditional beliefs from economists that service could not be of any considerable value to a countries economy. Levitt (1972) scrutinizes that service industries do not exist, only industries where there is more emphasis on service than others. Palmer (2001. p2) best sums up the modern position of services in today’s economy by noting “services are no longer a minor or superficial part of economies, but go to the heart of value creation within the economy.“
2.1 Characteristics of Services
A service is an intangible product offered to a customer for their benefit. Palmer (2001. p2) offers the Economists’ take on services, which is “anything that cannot be dropped on your foot”. Services differ from goods because they cannot be seen, felt or touched like a good can. The main between in goods and services are explained in Table 3 (see appendices)
Jobber (2006) explains that services possess four main characteristics:
- Intangibility
- Inseparability
- Variability
- Perishability
These are detailed in diagram 1 (see appendices).
Service can be split into different categories. Zeithaml (2006) splits it into four listed below.
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‘Service industries and companies’ main product is a service. For example, the hotel chain Hilton, provides an accommodation service.
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‘Services as a product’ are sold by service companies. For example a department store like Jenners offering free gift wrapping services.
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‘Derived service’ is the theory that products and physical goods are valued on what service they provide. For example paracetamol provides a medical service and a television provides an entertainment service. Zeithaml (2006) notes that this particular service is slightly ‘abstract’ but that it may indicate how we may think of services in a broader sense in the future.
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‘Customer service’ is a service which is provided to support a company’s core products. Keh and Teo (2001) describe customer service within a retail environment as “a set of activities and programs designed to increase the value the customers receive from the merchandise.”
Customer Service is the type of service that John Lewis will be critically evaluated on for the purpose of this report.
3 John Lewis: An Overview
The John Lewis Partnership is one of the best known names in British retailing. Established in 1864, the company has a unique “partnership” model that treats all its employees as stakeholders in the business, who have a share in the profit. The company operates in a number of sectors, but it is John Lewis’ department stores sector which is to be focused on in this report. More information on John Lewis can be found in the John Lewis Fact file (see appendices).
4 The Service Marketing Mix
A marketing mix is made up of the elements a marketing plan should be built on. The goods marketing mix, discussed by Baker (1998) and Palmer (2001) is known as the 4P’s.
- Product
- Price
- Promotion
- Place
These elements described in more detail in table 4 (see appendices)
However, as noted in Jobber (2006) the services marketing mix has three more elements.
- People
- Physical Evidence
- Processes
These elements were added to the mix due to the high level of contact between service providers and customers. These are the only elements of the marketing mix that can be controlled by John Lewis (Zeithaml, V. 2006) This is due to production and consumption happening simultaneously. Therefore, if services are produced and consumed at the same time, the staff at John Lewis are involved in real time promotion of the service and the mix has to be added to in order to accommodate this.
4.1 John Lewis and the Service Marketing Mix
4.2 People
Good service begins with good human resource management.
According to Dandy (J. 1996. p19) “…treat the staff right, and they – in turn – will treat the customers right. John Lewis’s mployees deliver exceptionally high standards of service which is largely due to the fact the John Lewis is a good manager of its people. All staff are partners which means they receive hard tangible benefits in the form of shares which are essentially money. For example, a Times online article (The Times. 2008) noted that 63,000 John Lewis employees received the equivalent of 10 weeks pay as a bonus for the back of a leap in profits. Effectively this means that how hard they work is directly responsible for how much their shares are worth.
Customers are also ‘people’ in the marketing mix as they can influence service delivery which in turn affects the quality of their service and their satisfaction (Zeithaml. V 2006). If a customer does not know what they are looking for and are advised to buy the wrong product by a member of staff as a result, their level of service is affected.
4.3 Physical Evidence
“Physical evidence cues provide excellent opportunities for the firm to send consistent and strong messages regarding the organization’s purpose…”. (Zeithaml, V. 2006. p27)
John Lewis Department Stores are well laid out and signposted making it easy for customers to find what they want. Customers value ease of access and services provided highly. John Lewis stores offer elevators, lifts, cafes and excellent baby changing facilities.
Everything sold in the store can be bought on their online catalogue. The website is attractive, very clear, simple and easy to use. It has an extensive customer service section on the website which offers a wide range of options. The page can be viewed in the appendices (see appendices)
Customers expect to be able to access everything online that is available in the store. More recently the use and ease of a website contributes to how highly a customer values a company, because as Zeithaml (2006. p27) states, “…customers have very little on to which to judge the actual quality of service.”
4.4 Processes
“ The procedures, mechanisms and flow of activities by which a service is acquired (Jobber. 2006. p180)”.
When purchasing manufactured goods, the production process is usually of little concern to the customer. However when the production process is taking place in a high-contact service, like retail, the customers could then be seen as “a co-producer of the service (Palmer. 2004. p13)”. Therefore the process must meet customers expectations.
This applies to John Lewis in respect of the overall shopping experience their customers receive. This includes: queue waiting times; product availability and delivery times The speed of their website and ease of use is also a factor in the modern customer’s expectations.
An article entitled ‘John Lewis leaves customers waiting for parts’ (The Guardian. 2008) describes how a number of customers (after realising part of a product they had bought from John Lewis was faulty) had to wait up to 3 weeks for the matter to be resolved. They had requested the faulty parts to be replaced, even offered to do it themselves, but John Lewis refused and told customers they needed the whole item returned first. This is a good example of how poor process has affected customers’ service. By making things harder for the customer have put a negative slant on the otherwise good service they provide.
5 Financial Success
Although John Lewis has been criticised for lacking in service quality, the financial success of the company cannot be faulted. It retains customers and their custom year after year and is continuously beating its own records. An article entitled ‘Another Weekly Record’ (Cabinet Maker. 2007) discusses that the company’s sales reached £101 million on December 15 2007, which is an increase of 7.7% compared to the same time the previous year. In the same week most high street stores were suffering a 3% drop in sales from the previous year (The Guardian. 2007). John Lewis’s main rivals House of Fraser and Debenhams had been forced to introduce ‘50% off’ sales to try increase their revenue.
These financial successes will further promote customers’ faith in the company. Furthermore, the fact that the company can keep their ‘Never Knowingly Undersold’ policy in action and achieve these record sales figures means people cannot feel cynical that the company is making record sales as they are not charging unreasonable prices for their products and services.
6 Customer Retention at John Lewis
John Lewis may be doing well and keeping its customers happy, but according to Lovelock (2004) the hardest part of a business is customer retention. If a company does not retain its customers, inevitably it will fail. Marketing essentially means keeping customer loyalty (Preston. C. 2008). Customer retention and loyalty does not however mean high satisfaction. Hoffman (2002) discusses that often in the case of high retention and low satisfaction customers are sticking to a brand, or in some cases it is because the service they are using has few substitutes (oligopoly). John Lewis attracts brand loyalty from its customers due to the high quality products and services they are known for.
One-way of keeping customer loyalty is in knowing what customers expect. According to Zeithaml (2006), “not knowing what customers expect is one of the root causes of not delivering to customer expectations”. The ‘Listening Gap’ is a theory that there is a definite gap between what companies believe is what customers want and what customers actually want. Siu and Cheung (2001. p1) discuss the Retail Service Quality Scale. They see it as “suitable for studying retail businesses that offer a mix of services and goods , such as department or speciality stores”. If John Lewis wants to retain customers then using this scale will enable them to measure what customers think of their retail service quality. Harris, Harris and Baron (2001. p1) note how customers can be a vital resource to a firm when it comes to feedback on services in their statement:
“…(customers) can actively participate in the firm's activities as co-producers of the service. As buyers, customers can develop a relationship with a service organization, and as recipients they register evaluations of their encounter.”
7 Report Conclusion
This report has critically reviewed John Lewis as a service provider from a services marketing perspective. After applying theories of good services marketing to the company it can be said that the company has all the right ingredients for a successful services providing organisation.
The marketing mix showed that in terms of people, John Lewis has it right. With a diverse age range within employees and an excellent reward scheme, customers will receive top class customer service from experienced, well motivated and well informed staff. Staff are what make John Lewis.
The physical evidence of John Lewis is also what makes it a success. Well located and well set out stores with well presented staff creates a pleasurable atmosphere and great accessibility with facilities for every customer’s needs. Although their processes have been criticised for problems with delivery returns, generally they are successful in making the experience for customers positive with low waiting times and an easy to use website.
John Lewis are overall a financial success. They even have managed to beat their own records when everyone else was struggling with fallen sales figures. This motivates staff and also retains customers’ confidence. They have a good mix of price, quality and brand which will enable them to hold onto customers in the future. All they must do is keep with the times as far as changing technology, products and services go and their customers will remain loyal.
8 Appendices
Table 1: Some Relevant Subject Areas Omitted From Report
Table 2: Service Contributions to GDP
Table 3: The Difference Between Goods and Services
Table 4 : The Traditional Marketing Mix Diagram 1: Service Characteristics
Table 4 : The Traditional Marketing Mix
John Lewis Fact File
John Lewis Partnership
Established: 1864
Company Info:
The John Lewis Partnership is one of the UK’s top ten retail businesses with 26 John Lewis department stores and 183 Waitrose supermarkets. It is also the country’s largest employee co-operative, with over 68,000 employees. The Partnership aims to ensure that everyone who works for it enjoys the experience of ownership, by sharing in the profits, by having access to information and by sharing in decision making.
The Partnership believes that the commitment of Partners to the business is a unique
source of competitive advantage which has underpinned 75 years of profitable growth and a reputation amongst customers and suppliers unparalleled in the UK retail industry. The company’s record of performance testifies to the robustness of the vision of its founder John Spedan Lewis, to create a company dedicated to the happiness of the staff through their worthwhile, secure and satisfying employment in a successful business.
The Partnership Board of John Lewis Partnership plc comprises thirteen members –
the Chairman, the non-executive Deputy Chairman, five members nominated by the
Chairman, five members nominated by the Partnership Council, the elected body which represents all the members of the Partnership, and a further non-executive director.
John Lewis Partnership plc and its subsidiary John Lewis plc have small issues of
preference stock which have first claim on the profits. The whole of the balance is available to be used for the benefit of the business and the Partners. The share of profits allocated to Partners, the Partnership Bonus, is fixed each year by the Partnership Board and is distributed as the same percentage of gross annual pay for all Partners. All Partners received a 18% bonus for the current year as their share of profits at a total cost of £155m.
(John Lewis Partnership plc Report and Accounts 2007)
John Lewis Partnership Sales Figures
Sales Figures Year Ending 26 January 2008
- Sales up £148.9m, 5.6%, to £2.8bn
- Operating profit (excluding property profits) up £20.3m, 12.0%, to £189.9m; including property, operating profits up £12.0m, 6.7%, to £190.4m
- Like-for-like sales up 5.0%
- John Lewis Direct sales up £82.8m, 44.6% to £268.1m
- Market share up 0.5% to 19.3%
- Operating margin up 38 basis points to 6.8% (excluding property profits
(John Lewis Partnership. 2008)
John Lewis Online Customer Service Page
9 Reference List
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Cabinet Maker. 2007 . Another Weekly Record. [online] Available from: [Accessed March 11 2008]
Dandy, J. 1996. Celebrate and record: The ethical route to service quality at John
Lewis Partnership. Managing Service Quality, Volume 6 Number 5 (4) August, pp.297-303.
Harris, K., Harris, R., Baron, S. 2001. Customer participation in retail service: lessons from Brecht. International Journal of Retail & Distribution Management
Volume 29 . Number 8 . pp. 359-369. MCB University Press
Hoffman, K D., Bateson, J E G. 2002. Essentials of Services Marketing: Concepts, Strategies, & Cases. 2nd ed. Fort Worth: Harcourt, Inc
John Lewis Partnership. 2007. Report and Accounts 2007.[online] Available from: .> [Accessed March 11 2008]
Jobber, D., Fahy, J. 2006. Foundations of Marketing. 2nd ed. Maidenhead: McGraw-Hill
Keh, H T., Teo, C W. 2001. Retail Customers as Partial Employees In Service Provision: a conceptual framework . International Journal of Retail & Distribution Management Volume 29 . Number 8 . 2001 . pp. 370-378
Levitt, T. 1972. Production Line Approach to Service. Harvard Business School Review. pp. 41-52.
Lovelock, C. 2004. Services Marketing: People, Technology, Strategy. 4th ed. Prentice Hall
Palmer, A. 2001. Principles of Services Marketing. 3rd ed. Maidenhead: McGraw-Hill
Preston, C. 2008. Services Marketing: Tutorial 4. March 4 [Tutorial] Edinburgh:
Quinn, J B., Baruch, J J., Paquette, P C. 1987. Technology in Services. Scientific American. Volume 257. Number 6. pp 50-58
Siu, N Y M.., Cheung, J T –H. 2001. A Measure of Retail Services Quality. Marketing Intelligence & Planning. Volume 19. Number 2. pp 88-96
The Guardian. 2007. Fall in High Street Shoppers Threaten Gloomy Christmas for retailers [online] Available from: <>[Accessed March 12 2008]
The Guardian. 2008. John Lewis leaves customers waiting for parts [online] Available from : [Accessed March 12 2008]
The Times. 2008. John Lewis: rate cuts will not save high street[online] Available from:< > [Accessed March 11 2008]
Zeithaml, V., Bitner, M., Gremler, D. 2006. Services Marketing. Integrating Customer Focus Across The Firm. 4th ed. NewYork: McGraw-Hill
