When quick service is a disadvantage

The entrepreneurial gut feel is that being faster in service is an advantage. If the quality of the product is identical, the service factor will be the area of competition. And the fastest "gun" will be the winner.

But hold on! This paradigm is only true under two conditions. The first concerns the parity with the quality of the product while the second has something to do with the market acceptance of the service provider.

A warning for new brands in the service industry. Do not make "speed is service" an initial competitive edge. It will work to your disadvantage. This conclusion was brought about by three observations involving (1) a cluster of restaurants, (2) a new brand in the food retail game in a new commercial area, and (3) a new player in the petroleum retail game.

2 Pinatay Ng Magnanakaw

x During one pay-day lunch break in the new restaurant row of the central business district, a group of friends was deciding on which restaurant to patronize. They followed the usual "…let’s meet in a particular spot at a certain time and then decide where to eat."

The group surveyed the area and walked through all the places that were designated for restaurants. Their discussion went this way:

"Let’s eat here! I’ve eaten in one of their branches and it was good!"

"No! Not there. Let’s try something new. We can always eat in the other well-known places. I’m sure they have branches in the other areas we go to."

"Okay…How about this place (pointing to a restaurant)?"

"Nope, not there. Look, the people inside are only the waiters. It’s lunch time and there are no customers yet. A good restaurant would have some people eating inside. Let’s look for another place."

"How about this place (pointing to a restaurant with some customers inside)?

"That’s better. Even if the place is unknown to us, there are people eating inside. Let’s try it."

The lesson learned in this situation is clear. Customers view the absence of customers as negative.

New Brand

Long lines have attracted people to make the line longer. A brand new player in a new area presented to the marketplace a different format of an old food concept. This new format is drawing waiting lines that last up to 45 minutes.

What is interesting is a conversation between a husband and wife who were recently in the new commercial area. The husband had a meeting in one of the restaurants and the couple agreed to rendezvous with their friends in the same area after the meeting. While the husband was busy, the wife was supposed to visit the nearby shopping area, waiting for the appointed time to regroup with their friends.

While parking the car, the wife noticed a long line in one of the food stores. It happened to be the new store with a different format of an old food product. She had heard of the product and the queues. The wife was willing to cut her shopping time to line up for the product and she ended up queuing just the same. Later, when they met with their friends, she proudly showed off to her husband the products she patiently waited for.

ew Player

N During one of the presentations of student-entrepreneurs of the Master in Entrepreneurship program of AIM’s Asian Center for Entrepreneurship, it was revealed that the new player was using speed-in-service as the competitive edge. This was based on consumer and micro-market analysis. The customers indicated that speedy service is a desired differentiator.

Based on the comparative performance of competing service stations, the new player was faster. But the service performance did not result into a higher level of sales. A counter intuitive explanation was attempted. Because the speed-of-service was very fast, there was no queue in the service station. Because there was no queue in the station, the mobile customers passing by thought the station had no patrons. Hence, they did not stop for service (just like the restaurant perceived to have no customers). A "customerless" situation evidently creates a perception that a place is not good. Remember, perception is stronger than reality–unfortunately, it was reality.

Maybe, the best move of new players is to make sure that customers are seen and perceived to be patronizing the new place. This perception is what attracts more customers. In the case of new players, the next question is " Should customers be made to wait?

(Alejandrino J. Ferreria is the dean of the Asian Center for Entrepreneurship of the Asian Institute of Management. For further comments and inquiries, you may contact him at: [email protected]. Published "Entrepreneur’s Helpline" columns can be viewed on the AIM website at http//: www.aim.edu.ph).