Joint Venture Leasing Company

Marketing Essay
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According to Asian Development Bank (ADB) Report (2002:73) states that 'LOLC was
established in March 1980 as a joint venture leasing company between International
Finance Corporation, Orient Leasing Company of Japan (Orix), National Development
Bank of Sri Lanka, Bank of Ceylon, and Development Finance Corporation of Ceylon.'
The ADB Report (2002:74) states that 'All leases financed under the Fourth
Development Finance Loan Project were implemented on time, within the estimated
costs, and completed successfully.' This shows that from the beginning itself LOLC was
focused on the primary goal of providing leasing facilities to customers.

VISION, MISSION AND VALUES

PRODUCT
According to Lovelock and Wright (2002:14) the product of a service providing
institution would be the "core product and the bundle of supplementary service
elements surrounding it, with benefits desired by customers and how well competing
products performing".
PRODUCT PORTFOLIO
Source: Authors' work based on LOLC Corporate Website (2010)
CORE SERVICE
LOLC according to LOLC Corporate Website (2010) is committed to being "the most
preferred financial solutions provider". Therefore, LOLC's core product is the provision
of high-quality leasing services to customers.

LOLC provides
According to LOLC Corporate Website (2010) the finance lease product range includes
"Structured Leases, Residual Value Leases, Insurance Factored Leases, Tax Based
Leases, and Lease Packages offered jointly with vehicle vendors".
According to LOLC Corporate Website (2010) "Ijarah (Islamic leasing) is available for
Un-registered vehicles, Plant, Equipment, Machinery and Property".
SUPPLEMENTARY SERVICE ELEMENTS
Supplementary services according to Lovelock Website (2010:86) "augment the core
product by facilitating its use and enhancing its value and appeal". The authors have
decided to employ the 'Flower of Service' concept which better analyses the
supplementary services provided by LOLC (Lovelock Website, 2010).
Key
Facilitating elements
Enhancing elements
Source: Lovelock Website (2010:88)
'Flower of Service' concept applied to LOLC
Core Service
Leasing
PETAL - FACILITATING SERVICES
Information
Company web site provides vital information on directions to service factories,
conditions of service etc.
Order taking

Must be done through written applications where LOLC will either accept or decline.
Billing
Customers receive periodic and verbal statements of amount due.
Payment
Customers may mail a cheque or pay in cash.
PETAL - ENHANCING SERVICES
Consultation
Before the customer is sure to begin the leasing process advisory services are provided.
Hospitality
LOLC branches have good washing facilities, waiting rooms and newspapers to read
during waiting times.
Safekeeping
LOLC branches have good parking arrangements and security personnel.
Exceptions
Operates a complaints, compliments and suggestions system
Source: Authors' work based on the information received from the interview
LOLC has a wide range of supplementary services and as a result can better satisfy and
retain customers.
SERVICE DESIGN AND SERVICE BLUEPRINT
According to Lovelock and Wright (2002:153) service design is "a complex task that
requires an understanding of how the core and supplementary services are combined to
create a product offering that meets the needs of target customers".

According to Johannes Schott (2009) a service blueprint "describes a service in enough

detail to implement and maintain it carefully."
SERVICE BLUEPRINT FOR LOLC
PHYSICAL EVIDENCE
CUSTOMER ACTIONS LINE OF INTERACTION
ONSTAGE/VISIBLE CONTACT EMPLOYEE ACTIONS LINE OF VISIBILITY
PARKING FACILITY
LOBBY
RECEPTIONIST
EMPLOYEES
WAITING ROOMS
PAPERWORK
WASHROOM FACILITY
EMPLOYEES
PARKING FACILITY
WEBSITE
BACKSTAGE/INVISIBLE CONTACT EMPLOYEE ACTIONS LINE OF INTERNAL
INTERACTION
SUPPORT PROCESSES
Source: Authors' work based on Lovelock and Wright (2002)
COMPETITORS

Source: Author's work

LOLC has competitors including companies dedicated to leasing and banks that operate
a leasing section. This indicates that customers may be demanding and prefer to interact
with service providers with superior supplementary services. LOLC by maintaining
quick service provision than banks, posses a competitive advantage.

PRICE
There are many differences and difficulties when it comes to pricing a service than when
product pricing since services cannot be owned and due to the complexity in stating
exactly what the service contains (Lovelock and Wright, 2002:169).
USER OUTLAYS
There exist both financial and non-financial outlays when it comes to pricing any
service. According to Lovelock and Wright (2002:173) financial outlays are "all
monetary expenditures incurred by customers in purchasing and consuming a service"
and non-financial outlays include "the time expenditures, physical and mental effort,
and unwanted sensory expenses associated with searching for, buying and using a
service".
FINANCIAL OUTLAYS
Source: Authors' work
NON-FINANCIAL OUTLAYS
Waiting time incurred during application process. LOLC maintains a 'within the day'
policy.
The leasing process is confusing but LOLC executives explain the process clearly
The waiting rooms are cold and noisy due to telephone conversations. However, LOLC
maintains a pleasant environment
Slight discomfort felt if requesting services during busy times of the day

Source: Authors' work

In the leasing sector customers prefer to be loyal to organisations that are efficient and
have less non-financial outlays even if the service has higher monetary costs.
PRICING STRATEGY
LOLC reaches a definite price only after taking into account the value of the item,
company profitability, interest rates; risk undertaken, customer capacity, repayment
period and competitive knowledge. All factors are considered in order to benefit both
customer and service provider.
PAYMANTS REQUIRED
Source: Authors' work
According to Lovelock and Wright (2002:188) "it's essential that the monetary price
charged reflect the knowledge of the service provider's fixed and variable costs,
competitor's pricing policies and the value of the service to the customer". Therefore
LOLC must use market research techniques to observe the market in which it operates,
its competitors and the company itself so as to better price the service.

PLACE
When providing services it is possible to use either physical or electronic means.
According to Lovelock & Wright (2002) this can be better termed as marketspace &
marketplace.
Marketspace is "a virtual location in cyberspace, made possible by telephone/Internet
linkages, where customers & suppliers conduct business electronically" (Lovelock &
Wright, 2002:243).
Marketplace is "a physical location where suppliers and customers meet to do business"
(Lovelock & Wright, 2002:243).

LOLC belongs to the category of a marketplace operating in multiple sites i.e. at

different branches. There is high customer interaction. In most branches there's a large
parking area for customers and employees. Most branches are turnoffs from the main
road and the LOLC logo is easily visible to passers-by and customers. Receptionists help
to direct customers to a particular desk, and answer any telephone queries via LOLC
hotline.
E-mails or questions through the net are answered within a day. Customers intent on
obtaining a lease usually visit the particular branch closest to them where they converse
with experienced executives, to explain their exact needs. The executives themselves are
required to visit the customer to double check the information given. Further
investigation is done through third parties.
This double checking mechanism ensures that LOLC and their customers get the best
out of the deal. All these measures emphasis on frequent contact between the customer
and LOLC personnel until the deal is finalized. This process is however constantly
revised to make it less tedious.

PROMOTION
"The promotion element of services marketing mix forms a vital role in helping
communicate the positioning of the service to customers...it can also add tangibility and
help the customer make a better evaluation of the service offer." (Payne, 1993: 150)
Types of promotion:
Public Relations
Personal Selling
Advertising
PROMOTION
Direct mail
Sales Promotion

Word of mouth
Source Authors own work
Through the years LOLC has done a wide range of promotion using newspaper &
television advertisements. It now has a reputation of being an efficient and reliable
organisation and therefore less promotion is required. LOLC rely on positive word of
mouth (WOM) to gain customers. Since customers provide private information, existing
customers tend to be loyal and return to LOLC. Customers by nature spread good WOM
if satisfied by services. Of course if they are unsatisfied then negative WOM may spread.
Under LOLC Care many community service projects are carried out, which can be found
in the LOLC corporate website. This plays an important part in attracting customers
who prefer to interact with organisations that are socially responsible.
In addition, articles appear in newspapers on a regular basis on all LOLC related topics.
For instance the recent takeover by LOLC of the Connaisance Group brought LOLC to
the limelight.
Since rates change regularly, no leaflets are printed but it would be useful to have one
outlining all the services and procedures of LOLC. Internal promotion in the form of
cross-selling is done. A customer obtaining a lease to buy a car will be directed to a
leasing executive who will carry out the tasks required, and then the executive
introduces the customer to the LOLC insurance department. This gains revenue for
LOLC and customer convenience increases as all related services are obtained in one
service factory.
LOLC's unique selling point has been its efficiency, customer loyalty and the fact that
many services are available in one site. This has led to positive WOM which is LOLC's
main promotion tool that helps retain and attract customers.

PEOPLE
Service staffs are crucially important
Almost anyone can recount a horror story about a dreadful service experience, and most
of the time it's a result of the actions of the service personnel (Lovelock and Wirtz,

2005:309). Therefore it's essential for any service provision to use appropriate staff. The
fact that there isn't any time lapse between the production and the consumption of the
service, all contribute to the essential need of highly trained and properly managed staff.

Human resource management: how to get it right

Leadership that:
*focuses the entire organization on the front line to support the front line
*fosters a strong service culture with passion for service and productivity
*drives value that inspire, energize and guide service providers
3. Motivate and energize your
People:
*Use the full range of rewards:
-pay
-bonus
-job content
-feedback & recognition

-goal/accomplishment
Hire the
Right people:
*Be the preferred employer and compete for talent market share:

*Intensify selection process to hire the right people for the organization and the given
job
Service Excellence and
Productivity
2. Enable your people:
*Build high performance service delivery teams:
-ideal cross functional, customer centric structure
-develop team structures and skills that work
*empower the front line
*extensive training on:
-organizational culture, purpose and strategy
-interpersonal and technical skills
-product/service knowledge
Figure**.* Wheel of successful HR in service firms
Source: Lovelock & Wirtz (2005:337)
With reference with the above given diagram and the information collected by the
authors from LOLC it was found that:
1. Hire the right people:
*LOLC had built its reputation as a preferred employer because of its high profitability
and quality services.
*LOLC engages in various techniques to ensure that they select the best candidate for
the job by:

-conducting various personality test

-conducting multiple, structured interviews
-giving applicants a realistic preview of the job
2. Enable your people:
*LOLC provides extensive high quality training for their personnel on a regular basis
like leadership, customer relationship training.
*LOLC also empowers its workers by letting them take part in decision making process
and allowing them to make their suggestions on various company related policies.
3. Motivation:
According to a personal source, LOLC provides high pay to its employees because of
their lofty profits. Also recognition is given to the front line workers when they've done a
good job. Employee feedback is provided once a month to evaluate the efficiency of the
workers.
LOLC is target oriented, therefore its HR department evaluates the performance of the
workers twice a year on cost, mistakes committed, efficiencygrade points are
awarded to the employees and on this basis a hefty bonus is given

Communication between the front and back office

staff:
Front line
Middle management
TOP management
Customer
Feedback, complaints, suggestions by conferences, telephone, E-mail, face to face

Within the organization: Orders, instruction, goals to achieve, Rules

With Customer: Information on service, Knowledge, helps to clear doubts.
Figure:
Source: Author's work based on Lovelock &Wirtz (2005:334)
Its important to have good communication inorder to build good relations within the
organization and outside.LOLC has

PRODUCTIVITY AND QUALITY

Lovelock and Wirtz (2005:405) stated that "Productivity-working faster and more
efficiently in order to reduce costs-has been a managerial imperative since 1970s."And
service quality used to depend on the quality of the staff, training, HRMbut now it's
linked with customer satisfaction.
Broadly defined, the task of value enhancements requires quality-improvement
programs to deliver and continuously enhance the benefits desired by customers. At the
same time, productivity-improvement efforts must seek to reduce the associated costs.
MarketingCustomer service, quality and marketing
Customer service levels should be determined by research-based measurement of
customer needs and competitors' performance and must recognize needs of different
market segments
Quality must be determined from the perspective of the customer based on regular
research and monitoring

Quality
Customer Service
The total quality concept should influence both the process elements (eg: managing
moments of truth in the customer encounter)

Figure: *.**
Source: Payne (1993: 215)

Service quality gaps:

Customer Needs and Expectations
The knowledge Gap
Management definition of these needs
The Internal communication Gap
The Standard Gap
Translation into design/delivery specs
The Delivery Gap
Advertising and sales promotion
Execution of design/delivery specs
The Interpretations Gap
The Perceptions Gap
Customer interpretation of communications
Customer perceptions of product execution
The Service Gap
Customer experience relative to expectation
Figure: *.**
Source: Lovelock and Wirtz (2005:412)

Improving Service quality:

Figure: *.** Service blueprinting for getting a lease
Source: Payne (1993:228)
The blueprint is a valuable tool in helping visualize the service process; it sets standards
for improvement of service quality and helps in solving problems.
LOLC's plan to improve productivity and quality in the year 2010:
The following table illustrates LOLC's quality gaps and some recovery methods:
Knowledge Gap
Standard Gap
Delivery Gap
Internal Communication Gap
Other criteria
Understand customer expectations by research
Standardize repetitive work tasks
Clarify employee roles
Dividing organization into different sections(finance, insurance)
Reduce the amount of documentation.(save time)
Complaint analysis
Provide constant training for both front and back office staff
Select the person with the right abilities for the job
Most communication is by computers

Be vigilant and keep an eye on competitors(helps improve product)

Increase interactions between managers & customers
Ensures that employees understand their goals(acquired by good communication)
Provide technical training
Regular conferences are held to give feedback to workers and help solve problems
Use various software to solve problems
Improve communication between front and back office staff
Evaluation of the workers twice a year
Develop reward system i.e. bonuses
Ensure team-work, make the workers a close knit bunch
Well-trained customer care staff to help customers in getting relevant details
Provide feedback to the workers on a weekly basis
Empower managers by letting them take part in decision making
Provide bonus every 8 months to workers based on efficiency
Source: Authors' work based on Lovelock and Wirtz (2005:414) and the information
received from the interview
Conclusion:
According to Lovelock and Wirtz (2005:430) "Enhancing Service quality and improving
service productivity are often two sides of the same coin, offering powerful potential to
improve value for both customers and the firm. A key challenge for any service business
is to deliver satisfactory outcomes to its customers in ways that are cost-effective for the
company". In short, value, productivity and quality are all important to ensure
profitability and survival of the firm.