Services Management
7 September 2006 FALL 2006
Strategic Service Vision
Target Market Segments
What are common characteristics of important market segments? What dimensions can be used to segment the market, demographic, psychographic? How important are various segments? What needs does each have? How well are these needs being served, in what manner, by whom?
Strategic Service Vision
Service Concept
What are important elements of the service to be provided, stated in terms of results produced for customers? How are these elements supposed to be perceived by the target market segment, by the market in general, by employees, by others? How do customers perceive the service concept? What efforts does this suggest in terms of the manner in which the service is designed, delivered, marketed?
Strategic Service Vision
Operating Strategy
What are important elements of the strategy: operations, financing, marketing, organization, human resources, control? On which will the most effort be concentrated? Where will investments be made? How will quality and cost be controlled: measures, incentives, rewards? What results will be expected versus competition in terms of, quality of service, cost profile, productivity, morale/loyalty of servers?
Strategic Service Vision
Service Delivery System
What are important features of the service delivery system including: role of people, technology, equipment, layout, procedures? What capacity does it provide, normally, at peak levels? To what extent does it, help insure quality standards, differentiate the service from competition, provide barriers to entry by competitors?
Service Purchase Decision
Service Qualifier: To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline. Service Winner: The competitive dimension used to make the final choice among competitors. Example is price.
Service Purchase Decision (cont.)
Service Loser: Failure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization) or late delivery of package (speed).
The Gaps Model of Service Quality
The gaps model is a useful framework for understanding service quality in an organization. The most critical service quality gap to close is the customer gap, the difference between customer expectations and perceptions. Four provider gaps occur and are responsible for the customer gap. Various factors responsible for each of the four provider gaps.
The Gaps Model of Service Quality
The Customer Gap The Provider Gaps:
Gap 1 not knowing what customers expect Gap 2 not having the right service designs and standards Gap 3 not delivering to service standards Gap 4 not matching performance to promises
Putting It All Together: Closing the Gaps
Gaps Model of Service Quality
CUSTOMER
Customer Gap
Expected Service
Perceived Service
Service Delivery External Communications Gap 4 to Customers
COMPANY
Gap 3 Gap 1 Gap 2
Customer-Driven Service Designs and Standards Company Perceptions of Consumer Expectations
Gaps Model of Service Quality
Customer Gap: difference between customer expectations and perceptions Provider Gap 1 (The Knowledge Gap): not knowing what customers expect Provider Gap 2 (The Service Design & Standards Gap): not having the right service designs and standards Provider Gap 3 (The Service Performance Gap): not delivering to service standards Provider Gap 4 (The Communication Gap): not matching performance to promises
The Customer Gap
Expected service
Customer Gap
Perceived service
Key Factors Leading to Provider Gap 1
Customer Expectations
Gap 1
! Inadequate marketing research orientation
Insufficient marketing research Research not focused on service quality Inadequate use of market research
! Lack of upward communication
Lack of interaction between management and customers Insufficient communication between contact employees and managers Too many layers between contact personnel and top management
! Insufficient relationship focus
Lack of market segmentation Focus on transactions rather than relationships Focus on new customers rather than relationshi p customers
! Inadequate service recovery
Lack of encouragement to listen to customer complaints Failure to make amends when things go wrong No appropriate recovery mechanisms in place for service failures
Company Perceptions of Customer Expectations
Key Factors Leading to Provider Gap 2
Customer-Driven Service Designs and Standards
Gap 2
!Poor service design Unsystematic new service development process Vague, undefined service designs Failure to connect service design to service positioning !Absence of customer -driven standards Lack of customer -driven service standards Absence of process management to focus on customer requirements Absence of formal process for setting service quality goals !Inappropriate physical evidence and servicescape Failure to develop tangibles in line with customer expectations Servicescape design that does not mee t customer and employee needs Inadequate maintenance and updating of the servicescape
Management Perceptions of Customer Expectations
Key Factors Leading to Provider Gap 3
Customer-Driven Service Designs and Standards
Gap 3
! Deficiencies in human resource policies
Ineffective recruitment Role ambiguity and role conflict Poor employee -technology job fit Inappropriate evaluation and compensation systems Lack of empowerment, perceived control, and teamwork
! Customers who do not f ulfill roles
Customers who lack knowledge of their roles and responsibilities Customers who negatively impact each other
! Problems with service intermediaries
Channel conflict over objectives and performance Difficulty controlling quality and consistency Tension between empowerment and control
! Failure to match supply and demand
Failure to smooth peaks and valleys of demand Inappropriate customer mix Overreliance on price to smooth demand
Service Delivery
Key Factors Leading to Provider Gap 4
Service Delivery
Gap 4
! Lack of integrated services marketing communications Tendency to view each external communication as independent Not including interactive marketing in communications plan Absence of strong internal marketing program ! Ineffective management of cust omer expectations Absence of customer ex pectation management through all forms of communication Lack of adequate educati on for customers ! Overpromising Overpromising in advertising Overpromising in personal selling Overpromising through physical evidence cues ! Inadequate horizontal communications Insufficient communication between sales and operations Insufficient communication between advertising and operations Differences in policies and procedures across branches or units
External Communications to Customers
Customer Evaluation Processes for Services
Search Qualities
attributes a customer can determine prior to purchase of a product
Experience Qualities
attributes a customer can determine after purchase (or during consumption) of a product
Credence Qualities
characteristics that may be impossible to evaluate even after purchase and consumption
Continuum of Evaluation for Different Types of Products
Most Goods
Easy to evaluate
Most Services
Difficult to evaluate
Clothing
Jewelry
Furniture
Houses
Restaurant meals
Automobiles
Vacations
Haircuts
Television repair
Child care
Legal services
Root canals
High in search High in experience High in credence qualities qualities qualities
Medical diagnosis
Auto repair
Dual Customer Expectation Levels
Desired Service
Adequate Service
Possible Levels of Customer Expectations
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The Zone of Tolerance
Desired Service
Zone of Tolerance
Adequate Service
Zones of Tolerance for Different Service Dimensions
Desired Service
Level of Expectation
Zone of Tolerance
Adequate Service
Desired Service Zone of Tolerance Adequate Service
Reliability
Tangibles
Source: L. L. Berry, A. Parasuraman, and V. A. Zeithaml, Ten Lessons for Improving Service Quality, Marketing Science Institute, Report No. 93-104 (May 1993).
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Factors That Influence Desired Service
Lasting Service Intensifiers
Desired Service
Personal Needs
Zone of Tolerance Adequate Service
Factors That Influence Adequate Service
Temporary Service Intensifiers
Desired Service
Perceived Service Alternatives
Zone of Tolerance Adequate Service
Predicted Service
Self-Perceived Service Role
Situational Factors
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Factors That Influence Desired and Predicted Service
Explicit Service Promises Implicit Service Promises
Desired Service Zone of Tolerance Adequate Service
Word-of-Mouth
Past Experience
Predicted Service
Frequently Asked Questions About Customer Expectations
What does a service marketer do if customer expectations are unrealistic? Should a company try to delight the customer? How does a company exceed customer service expectations? Do customer service expectations continually escalate? How does a service company stay ahead of competition in meeting customer expectations?
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