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Module 4 Managing Service Quality

Generic dimensions used by customers to evaluate service quality-

Tangibles: Appearance of physical elements. Reliability: Ability to perform the promised service. Responsiveness: Willingness to help customers & provide prompt service. Competence: Possession of the skills & knowledge required to perform the service. Courtesy: Politeness, respect, friendliness of contact personnel.

To measure customer satisfaction with different aspects of service quality, the researchers developed a survey research

instrument called serqual.

Serqual is an instrument based on the assumption that customers can evaluate a firms service quality by comparing,

perceptions of its service with their own expectations.

The serqual scale includes 5 dimensions

1) Tangibles

2) Reliability

3) Responsiveness

4) Assurance

5) Empathy

Any gap that exists between customers expectations & perceptions is an indication of quality problem and a conceptual

tool is needed to correct service quality problem. This conceptual tool is called Gap Model.

Generic Dimension Used by Customers To evaluate Service Quality

Dimension Definition Examples of question that customers might raise

Credibility

Trustworthiness,

believability, honesty ofthe service provider

Does the hospital have good reputation?Does my stockbroker

refrain from pressuring me to buy? Does the repair firmguarantee his work?

Security

Freedom from danger,

risk or doubt

Is it safe for me to se the ban's atm at night? Is my credit card

protected against unauthorised use?Can I be sure that my

insurance policy provides complete coverage?

Access

Approachability and ase

of contact

how easy is it for me to talk to a superior when I have a

problem?

Communicati

on

Listening to customers ad

keeping them informed in

language they can

understand

Does the Airline have a 24-hour toll- free phone number?Is the

htel conveiently located?When I have a complaint, is the

manager willing to isten to me?Does my doctor avoid using

technical jargon?Does the electrician call when unable to keep

a scheduled appointment?

Understandi

ng the

Customer

Making the effort to

know customers and their

need

Does someone in a hotel recognise m as a regular

customer?Does my stockbroker try to determine my specific

financial objectives?Is the moving company willing to

accommodate my schedule?

Tangibles

Appearance of physical

facilities,equipment,perso

nnel,and communication

materials

Are the hotel's facilities attractive?Is my accountant dressed

appropriately?Is my bank statement easy to understand?

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Reliability

Ability to perform the

promised service

dependably and

accurately

When a lawyer says he will call me in 15 minutes, does she do

so?Is my telephone bill free from errors?Is my telephone

repaired right the first time?

Responsiven

ess

Willingness to help

customers and provide

prompt service

When there is a problem,does the firm resolve it quickly?Is my

stockbroker willing to answer my questions?Is the cable TV

company willing to give me a specific time when the installer

will show up?

Competence

Possession of the skills

and knowledge required

to perform the service

Can the bank teller process my transaction with fumbling

around?When I call my travel agent, is she able to obtain the

information I need?Does the dentist appear to know what he is

doing?

Courtesy

Politeness, respect,

consideration, and

friendliness of contactpersonnel

Does the flight attendant have a pleasant

Demeanour? Are the telephone operators

consistently polite when answering my

calls? Does the plumber take off his

muddy shoes before stepping on mycarpet?

GAP MODEL:

This model identifies a total of seven types of gaps that can occur at various pointsduring the design & delivery of a

source performance.

i) Knowledge Gap: It is the difference between what service providers believe customers expect and customeractual needs & expectations.

ii) Standard Gap: It is the difference between managements acception of customers expectations & qualitystandard established for service delivery.

iii) Delivery Gap: It is the difference between specified delivery standards & the service providers actualperformance on these standards.

iv)Internal Communication Gap: It is the gap between what the companys advertising & sales personnel think arethe products features performance & service quality level and what the company is actually able to deliver.

v) Perception Gap: It is the difference between what is infact delivered & what customers perceive they havereceived.

vi)Interpretation Gap: Difference between what a service providers communication effort promise &whatcustomer thinks was promised by these communications.

vii)Service Gaps: It is the difference between what customers expect to receive and their perceptions of the servicedelivered.

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MANAGING DEMAND AND SUPPLY IN SERVICES*

OPTION 1

Strategies for making capacity to match demand

Customer Involvement Self Service Buffets and Salad bars at restaurants

Fast food joints Cross training employeesTo perform tasks in several operations creates flexible capacity to meet localized peaks in demand.

Using part time employeesA ready part time labour pool is available from college at Coffee Day, Pizza Hut

stretch existing capacityo Stretch time Banks started working on Sundayso Stretch labour Overtime work from employeeso Stretch fascilities Additional tables & chairs at restaurantso Stretch equipments Computers, phone lines

Developing complementary servicesEg: Restaurants have complimentary services by adding a bar. Diverting waiting customers into the lounge during busy

waiting periods can be profitable to the restaurants.

Promoting off peak demandEg: Telephone companys offer lower rates to encourage long distance dialing at night.

Pricing IncentivesEg: Movies (INOX) Mon to Thurs Morning show 79/-

Fri, Sat, Sun Night show 250/-

Communicate to CustomersEg: Signs in banks and post offices that let customers know their busiest hours and days of the week, can serve as

warnings.

Modify TimingEg: Empire chain of Hotels open till midnight.

Modify LocationEg: Mobile libraries, Mobile Dialysis in ambulance

Sharing CapacityEg: Parking facilities hired from neighbouring institutions on peak hours.

Move facilities and EquipmentEg: Hotels Two rooms with a locked door inbetween can be rented to two different parties in high demand times.

Schedule [dcor] time during periods of low demandEg: Paintings / Repair & Maintenance work done at college during holiday times.

OPTION 2

Strategies for managing demand to match capacity

Partitioning demandEg: Patients flow in higher on week days. Therefore, why not make appointments in the latter part of the week to leveldemand.

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Vary the service offeringEg: Accounting firms focus on tax preparations late in the year. During other times of the year, they can focus on Audits

and general consulting activities

Advertising & Sales promotion:Can also be used to remind customers about peak demand times & promotional offers during off season are

common.

OPTION 3

Strategies when demand and capacity cannot be matched.

ReservationsThere are reservations for services particularly when supply is likely to be constrained.

Eg: Railway booking tickets, 1 Re flight charges, MTR [lunch]

Waiting lineso Once a customer arrives, he or she may be willing to wait for service to begin.o Many queues operate on first come, first serve basis.o Certain services on the basis of critical needs / urgency rather than order of arrival

Queuing situations

o Arrival patterns of customerso Service timeso Number of serverso Queue disciplines

Triage / Sorting

Eg: To handle first class & Business class travelers more expeditiously than tourist class travelers who have paid

considerably lower fares. Can serve segment demands of different kinds and route them to different service process

Delaying Service DeliveryEg: Its worth waiting one hour (or for a little while) to experience the service which is worth it. (Like waiting for MTR

lunch, waiting for the best doctor.)

YIELD MANAGEMENT

The process of allocating right type of capacity to the right type of customers at the right price so as to maintain

revenue or yield

Eg: Because of the perishable nature of airline seats, offering a discount on fares to fill the aircraft became attractive.

Airlines were the first to develop yield management.

Inventory Demand through Waiting Lines and Reservations

One of the challenges of services is that, being performances, they cannot normally be stored for later use. In an ideal

world, nobody would ever have to wait to conduct a service transaction. But firms cannot afford to provide extensive

extra capacity that would go unused most of the time.

In businesses whose demand regularly exceeds supply, managers can often take steps to inventory demand. This task

can be achieved in one of two ways: (1) by asking customers to wait in line (queuing), usually on a first come first served

basis, or (2) by offering them the opportunity of reserving, or booking space in advance.

Waiting: A Universal Phenomenon

Nobody likes to be kept waiting. Its boring, time wasting, and sometimes physically uncomfortable, especially if there is

nowhere to sit or you are outdoors. Almost every organization faces the problem of waiting lines somewhere in its

operation.

Parameters in Queuing situations

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Why Waiting Lines Occur

Queues are a symptom of resolved capacity management problems. Analysis and modeling of queues is a well-

established branch of operations management.

Tailoring Queuing Systems to Market Segments

Allocation to separate queuing areas may be based on:

1 Urgency of the job- At many hospital emergency units, a triage nurse is assigned to greet incoming patients and decide

which ones require priority medical treatment and which can safely be asked to register and then sit down while they

wait their turn.

2 Duration of service transaction- Banks, supermarkets, and other retail services often institute express lanes for

shorter, less complicated tasks.

3 Payment of a premium price- Airlines usually offer separate check-in lines for first-class line, resulting in reduced waits

for those who have paid more for their tickets.

4 Importance of the customer- A special area may be reserved for members of frequent user clubs. Airlines often

provide lounges, offering newspapers and free refreshments, where frequent flyers can wait for their flights in greater

comfort.

Ten propositions on the Psychology of Waiting Lines

Unoccupied time feels longer than occupied time Pre and postprocess waits feel longer than in process waits Anxiety makes waits seem longer Uncertain waits are longer than known, finite waits Unexplained waits are longer than explained waits Unfair waits are longer than equitable waits The more valuable the service, the longer people will wait Solo waits feel longer than group waits Physically uncomfortable waits feel longer than comfortable waits Unfamiliar waits seem longer than familiar ones

Giving Customers Information on Waits

Does it help to tell people how long they are likely to have to wait for service? Common sense would suggest that this is

useful information for customers, as it allows them to make decisions about whether they can afford to take the time to

wait now or should come back later. It also enables them to plan the use of their time while waiting.

TYPES OF MARKETING IN SERVICE FIRMS

According to Philip Kotler, service marketing not only requires traditional external marketing but also internal and

interactive marketing. The three types of marketing in service industries is depicted in the following figure.

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Internal Marketing External Marketing

enabling the promise settling the promise

Interactive Marketing

delivering the promise

EXTERNAL MARKETING

It is mainly directed towards those individuals and groups who buy goods and services from the organization. The

external marketing efforts are traditional function of marketing of the customers and make promises to the customer

regarding what is to be delivered. Anything that is conveyed to the customer in any form before the service delivery can

be viewed as part of external marketing function. External marketing builds customer expectations and beliefs aboutservice delivery. So, the first step towards external marketing is to make the firm understand what makes the customers

want a certain want a certain type of service, and what are their expectations of a particular service. The external

marketing then gives promises that correspond with the personal needs and aspirations of the target group.

It becomes imperative for the service provider to understand the needs of the customer. This leads to segmentation of

the market on a suitable basis demographic, psychographic and usage pattern. Once the service firm has decided its

market segment, its next task is to find ways to compete in that segment, this can be achieved by using the right

marketing mix after considering the external factors. The service offering planning, pricing, promotion and delivery of

the service tend to differ in respect of a customer group.

The augmented level of the service offering which is strategically used for positioning the service, price and locationwhich convey quality and the advertising campaign which communicates quality, all form part of external marketing.

The promises (which the service provider makes) should highlight the reason why the customer must choose this service

from several service providers. This promise should also match the customers expectation of the service. The methods

by which the promises are conveyed by the firm are through promotion campaign, corporate image, and word of mouth

communication and also through the past experience, which the customer has had with the firm.

External marketing is the responsibility of the marketing department of the organization as well as the advertising and

market research firms who have been assigned the work of communicating with the customers.

According to Zeithaml and Bitner, the customers expectation of the service can be derived from the following sources:

Explicit Service Promise these are personal and non-personal statements about the service made to the customerby the service firms through advertisements, contracts, personal selling and other methods of communication.

Implicit Service Promise are service related cues other than explicit promise that lead to inference about what the

service should and will be like. These quality cues are dominated by price and the tangibles associated with the service.

SERVICE FIRM

EMPLOYEES CUSTOMERS

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Word of Mouth Communication this source is more vital because it is perceived and unbiased. Moreover, service

qualities are difficult for customers to evaluate prior to purchasing and directly experiencing them. Word of mouth

communication can be sourced from friends, family and also from consumer reports.

Past Experience the previous of the customer with the service firm creates a desire and level of expectation in the

future interaction.

Corporate Image the corporate and local image of the service firm will also influence the expectations of thecustomers.

The promise setting in the external marketing function is very critical since a very high expectation may lead to a highly

dissatisfied customer. Care shall be taken to maintain credibility while setting the promise.

INTERNAL MARKETING

The employees of the service firm who interact with the customers must meet the expectations of the customers that

are created by the external marketing efforts. At the same time if the service systems as well as the service staff do not

support the frontline employees, they will not be able to meet the promises made by the organization. Thus, internal

customers of the organization are its employees, who, in their job, depend on others in the organsation, for providing

those goods (equipment) and services (information) to serve the external customers. So, directly or indirectly every

employee in the organization is serving the external customer. As Jan Carlzon says, if you dont serve customers you

better serve else in the organization