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Marketing of services

Marketing of services






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    Marketing of services Marketing of services Document Transcript

    • Marketing of ServicesServices: A service is any act or performance, one party can offer to another,that is essentially intangible and does not result in the ownership of anything. Itsproduction may or may not be tied to a physical product.Customer Service: It is the service provided in support of a company’s coreproducts. It includes, answering questions, taking orders, handling complaints,repairs etc. These are for building customer relationships and not the onesprovided for sale by a company.Service Marketing Mix: The service marketing mix comprises off the 7’p’s.These include:• Product• Price• Place• Promotion• People• Process• Physical evidence.People: An essential ingredient to any service provision is the use of appropriatestaff and people. Recruiting the right staff and training them appropriately in thedelivery of their service is essential if the organization wants to obtain a form ofcompetitive advantage. Consumers make judgments and deliver perceptions ofthe service based on the employees they interact with.Process: Refers to the systems used to assist the organization in delivering theservice.Physical Evidence: It is the element of the service mix which allows theconsumer again to make judgments on the organization. If you walk into arestaurant your expectations are of a clean, friendly environment. On an aircraft ifyou travel first class you expect enough room to be able to lay down! Physicalevidence is an essential ingredient of the service mix, consumers will makeperceptions based on their sight of the service provision which will have animpact on the organizations perceptual plan of the service.
    • Tangibility Spectrum: Essentially services are intangible but sometimesthey may involve the use of some tangible goods. In such cases the title of thegoods doesn’t change from the service provider to the customer. But again someservices do have a tangible component. There are four types of offer involvinggoods and services 1. pure tangible goods 2. tangible goods with accompanying services 3. major services accompanying minor goods 4. a pure service Salt  Soft Drinks  Detergents  Automobiles  Cosmetics  Fast-food Outlets  Intangible DominantTangibleDominant  Fast-food   Outlets Advertising Agencies Airlines  Investment  Management Consulting  TeachingCharacteristics of Services: The services have unique characteristicswhich make them different from that of goods. The most common characteristicsof services are:Intangibility.Inseparability.Perish ability.VariabilityIntangibility: Services are activities performed by the provider, unlike physicalproducts they cannot be seen, tasted, felt, heard or smelt before they areconsumed.Inseparability: Services are typically produced and consumed simultaneously. itcannot be separated from the service provider. Thus, the service provider wouldbecome a part of a service. Inseparability of production and consumptionincreases the importance of the quality in services.Perish ability:
    • Services are deeds, performance or act whose consumption take placesimultaneously; they tend to perish in the absence of consumption. Hence,services cannot be stored. The services go waste if they are not consumedsimultaneously i.e. value of service exists at the point when it is required.Variability:Services are highly variable, as they depend on the service provider, and whereand when they are provided. Service marketers face a problem in standardizingtheir service, as it varies with experienced hand, customer, time and firm.Service Process: A service is essentially a process and not a physicalproduct. The process is directed at different ends depending upon the nature ofservice.Some services process people and some may process objects. This leads to animportant classification on the basis of two important dimensions: 1. What is processed? Object or a Person 2. How is it processed? What is the Nature of Process? Tangible or Intangible actionsPeople Processing : Here the customers must physically enter the system (likeTransportation) and they must be prepared to spend time actively cooperatingwith the service operation. The level of involvement and output quality may vary.Possession Processing: Here the service is more directed towards the goodsor other possession rather towards the customer. People are less physicallyinvolved and usually there is no real need for them to enter the service forexample dry cleaning. The output in each instance should be a satisfactorysolution to a stated problem.Mental Stimulus Processing: these Services interact with people’s mind likeeducation. Recipients should spend time but not necessarily be physically
    • present in a service factory; just mentally in communication with informationbeing presented.Information Processing: Most intangible form of service output. The customerinvolvement determined more by tradition or personal desire to meet face to faceand not by the needs of the operational process.Classification Of Services 1. Nature of the organization : at the first level the purpose, structure and type of the service is identified. 2. Nature of the service: the second level, addresses the nature of the service in terms of degree of tradability and merchantability 3. Customer relationship : at the third level relationship is established it can be formal or informal 4. Nature of demand : in terms of the fourth level, nature of demand, its demand and supply, and demand trend is being analyzed 5. Service package: it addresses the group of services and goods offered by a service firm 6. Delivery method : it deals with the delivery of the services detail in page 14-15Positioning of Services :Services can be positioned in 6 different ways. 1. Service attributes: it involves positioning the services in terms of what it does best. Example, Federal Express tries to position itself as the best firm for overnight delivery 2. Use or application: fitness centers are often positioned in this way, some cater to individuals who want to reduce weight, while others position themselves who want to exercise for fitness 3. Price/quality relationship: Kingfisher Red has positioned itself as the low price, no frills airline in the leisure travel market. 4. Service class: pizza hut is positioned as a dine in restaurant and not a fast food restaurant 5. Service users: Business class of Jet Airways offers the highest level of service quality to the business airline travelers 6. Competitors :
    • Service Encounter: A service encounter has been defined as a socialinteraction involving one human being interacting with other. Given the highdegree of person-to-person interaction and, quite frequently the absence of anexchange of tangible goods, the service encounter becomes a critical componentof service quality.There are three key players involved in a service encounter that shape theoutcome of any encounter:The service firm, which sets policies and guidelines;The employees, who enact the policies of the firm;and the customer, who seeks to satisfy a range of needs and wants.Moment of truth occurs any time and every time the customer interacts with thefirm or the service provider. All encounters put together form a cascade. Thecascade can potentially be critical in determining customer satisfaction andloyalty.Self-Service Technologies: These are technological interfaces that enable customersto produce a service independent of direct service employee involvement.Advantages of SSTs • SSTs can improve service quality perceptions, offer flexibility and customize services to individual consumer needs • Successful implementation of SSTs leads to operational cost reduction; increasing customer satisfaction and loyalty; and reaching of new markets. • SSTs allow staff to be relieved from routine duties and concentrate on aspects of the service delivery where personal touch is more valuable.Disadvantages of SSTs • The limitations of SSTs from a service provider perspective are related to investment expenses, and staff and consumer. If the service technology does not gain adoption with consumers, the company may face increased expenses because it needs to keep the operational staff, as well as pay for the new technology. • SSTs also reduce the points of customer contact during the service delivery process which leaves fewer chances for early detection of complaints and opportunities for service recovery • Even people who have favorable attitudes towards technology may avoid SSTs because they can not replace the personal interaction. • SSTs also require higher levels of consumer participation and responsibility, so they are perceived as riskier than personal servicesPurchase Model for Services: It has got three distinct phases:Pre-Purchase Phase: It is when the purchase options are considered and decisions areactually made. During, this phase consumers weigh the alternatives available to them andthe benefits to each alternative. The decision making process is influenced by fourdifferent factors: • Internal Factors: four internal factors impact a consumer’s decision during the pre- purchase phase. These factors are individual needs and wants of consumers, past experience, expectations and level of involvement.
    • • External Factors: Three external factors influence the purchase decision during the pre purchase phase: the competitive options available to the consumer, the social context of the purchase, and word of mouth communications. • Firm Produced Factors: Promotions, Pricing and the distribution system are firm produced factors that impact the purchase decisions. • Perceived Risk: Risk has two components: 1. Uncertainty (probability that a particular outcome or consequence will occur) 2. Consequences (the degree of importance that a particular importance and danger of the outcome itself).There are six types of perceived risk:Functional - Will the product perform as I expect? If the customer is buyingsweet corn, this means, "Will this corn be as good as what I remember from lastyear or what I had last week?" If the customer is buying petunias, the risk is, "Willthey make my garden look the way I want it to look?"Physical - Can the product hurt me, my children or my pets? The use ofpesticides in the production of food crops is frequently the concern here, butornamentals that bear poisonous fruit can also be a concern.Social - What will my peers think? If customers are buying sweet corn to eat inthe privacy of their home, the risk here is low. If they buy petunias and plant themin the front yard and petunias are socially out this year, its like having a big signin your yard for five months saying, "geek lives here".Psychological - Am I doing the right thing? This can be a strong motivator inplant sales for the environ-mentally concerned or an impossible obstacle for thetruly paranoid.Financial - Can I afford the purchase? This is not a major problem for mostpeople buying sweet corn or petunias. It is a major obstacle for customersconsider-ing a specimen plant or flowering trees that may cost $60 to $100.Time - How much time and effort may I expend to make this purchase? This maybe the greatest perceived risk for the plant and produce retailer to overcome.Picture your potential customer in their car thinking, "Do I want to pull into thatcrowded parking lot? Do I want to stand in that line for a dozen ears of corn?"This is scary! Many of the stands I visit fail to overcome this perceived risk. Theirpotential customers drive by.Risk Reduction strategiesPerformance risk: to reduce the uncertainty of performance risk, service firmsmust increase the perceived probability the service will perform as consumersdesire. This can be done through communication, branding, and certification. Toreduce the consequences of performance risk, firms should ensure that theservice provider follow uniform quality control standards and procedures. Bydoing this chances of service failure are reduced
    • Financial Risks: to reduce the uncertainty of financial risk, service firms shouldoffer trial purchases, sampling and promotional incentives, as it allows thecustomers to evaluate the service provider with no financial risk. To reduce theconsequence of financial risk, service firms can offer money back guarantees.Time loss and opportunity risk: uncertainty can be reduced by branding, thepresence of the brand name will reduce the perceived chances of poor serviceperformance, which in turn will reduce the perceived chances of time loss n thepart of the consumer. To reduce the consequences of time loss risk, service firmscan offer some kind of compensation in the case of service failure, and foropportunity risk, the firm must ensure that there are quality control standards andprocedures in place and that these are followed by service personnel.Psychological and social risk: uncertainty can be reduced by branding andcommunication. Recognized brand names carry the assuarance to the customerthat the service will coincide with the consumers self image and will be wellrecived by his or her social group. Whereas communication aimed at thecustomer through advertising and interaction with service personnel can reducethe uncertainty of psychological and social risk. Consequences can be reducedby following strict quality control standards and procedures, thus reducingvariability of servicePhysical risk: uncertainty is reduced by adhering to strict safety standards,instructions and communications. Consequences are reduced by establishingand following safety standards.Service Encounter :Post Purchase Phase: the third phase of the purchase process is the postpurchase phase. During this phase, customers make an evaluation of the servicequality they received and their overall level of satisfaction or dissatisfaction. Forsatisfied customers post purchase actions include • Repeat purchases • Counter loyalty • Positive word of mouth communicationFor dissatisfied customers, these actions include: • Switching vendors • Negative word of mouth communicationManaging Customer ExpectationPre Purchase Phase: Managing customer expectations during the pre purchasephase consist of three steps:1st learn what customer expects2nd tell customers what they can expect
    • 3rd consistently provide the service that customers expectService Recovery: three strategies can be used during the service encounter tomanage customer expectations1st service personnel must communicate with the customer during the serviceencounter2nd if possible, service provider should modify service to meet the customersexpectations3rd if the service cannot bee modified the service personnel must explain why thecustomers expectations cannot be meet.Post Purchase Phase: strategies that can be used after service has completed1st companies should communicate with customers immediately after the servicehas been completed2nd firms can use follow up program3rd develop a procedure for dealing with dis-satisfied customers.Porters Generic Competitive Strategies (ways of competing)A firms relative position within its industry determines whether a firmsprofitability is above or below the industry average. The fundamental basis ofabove average profitability in the long run is sustainable competitive advantage.There are two basic types of competitive advantage a firm can possess: low costor differentiation. The two basic types of competitive advantage combined withthe scope of activities for which a firm seeks to achieve them, lead to threegeneric strategies for achieving above average performance in an industry: costleadership, differentiation, and focus. The focus strategy has two variants, costfocus and differentiation focus.1. Cost LeadershipIn cost leadership, a firm sets out to become the low cost producer in its industry.The sources of cost advantage are varied and depend on the structure of theindustry. They may include the pursuit of economies of scale, proprietarytechnology, preferential access to raw materials and other factors. A low cost
    • producer must find and exploit all sources of cost advantage. if a firm canachieve and sustain overall cost leadership, then it will be an above averageperformer in its industry, provided it can command prices at or near the industryaverage.2. DifferentiationIn a differentiation strategy a firm seeks to be unique in its industry along somedimensions that are widely valued by buyers. It selects one or more attributesthat many buyers in an industry perceive as important, and uniquely positionsitself to meet those needs. It is rewarded for its uniqueness with a premium price.3. FocusThe generic strategy of focus rests on the choice of a narrow competitive scopewithin an industry. The focuser selects a segment or group of segments in theindustry and tailors its strategy to serving them to the exclusion of others.The focus strategy has two variants.(a) In cost focus a firm seeks a cost advantage in its target segment, while in(b) differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focusers targetsegment and other segments in the industry. The target segments must eitherhave buyers with unusual needs or else the production and delivery system thatbest serves the target segment must differ from that of other industry segments.Cost focus exploits differences in cost behavior in some segments, whiledifferentiation focus exploits the special needs of buyers in certain segments.Service Recovery: The goal of service recovery is to identify customers withissues and then to address those issues to the customers satisfaction to promotecustomer retention. However, service recovery doesnt just happen. It is asystematic business process that must be designed properly and implemented inan organization.Service Recovery in an organization progresses through a series of stages,shown in the nearby diagram.Stage 1 Moribund. There is no complaint handling. Angry customers areignored. Letters to VPs and even the CEO about a damaged shipment gounanswered.Stage 2: Reactive. Customer complaints are heard, and a response is made. But its a haphazard process with no defined goals for the response and no oneowning this business process.Stage 3: Active Listening. At this stage, the response to issues voiced bycustomers is structured. Specific people have the responsibility to respond to
    • complaints and guidelines are in place for the response. However, it is stillreactive.Stage 4. Solicitous. The critical change from Stage 3 to 4 is the move fromreactive to proactive solicitation of customers with issues. The reason this is soimportant is that most customers dont bother to complain. They just move on toother suppliers of products. The solicitous role is accomplished by encouraging customer to voice theircomplaints. Event surveys (also known as transactional or transaction-drivensurvey) are a commonly used technique to get issues voiced.Stage 5: Infused. The pinnacle of Service Recovery Practices is achieved whenthe complaint identification merges with business process improvement or sixsigma programs to support root cause identification and resolution. The ownersof business processes that cause customer issues are notified of theoccurrences to prompt reexamination of the process design.Steps to Service RecoveryService recovery includes all the actions people take to get a disappointedcustomer back to a state of satisfaction. There are six caring actions thatcombine to make service recovery systematic, memorable, and satisfying.
    • 1) Apologize The point is not to determine whos to blame. Its to solve theproblem. The first step to problem solving is to acknowledge the fact that – atleast in the customers eyes—a problem exists. So start by having employees tellthem, personally and sincerely, "Im sorry."2) Listen and empathize: This is not the time to instruct customers in the finerpoints of what they should have done to avoid the problem in the first place.Customers resent being lectured to. What they mostly want customers servicereps people to do is just listen. Listening and empathizing helps customersunwind, get it out of their systems, and feel theyre talking to someone who reallycares about taking care of things.3) "Fair fix" the problem. After listening (so they know exactly whats at issue),employees people can work to resolve the problem. Usually, what customerswant now is what they wanted originally—and the sooner the better.4) Offer atonement. A recovery system will earn high marks from customers if itincludes, even symbolically, some form of atonement that, in a mannerappropriate to the issue at hand, says, "Id like to make it up to you. Of course,the bigger the service breakdown—and the more valued the customer—the moreimpressive the atonement will have to be to restore aggrieved customers to astate of satisfaction.5) Keep your promises: .Recovery time is double jeopardy "where the stakesare doubled and the scores can really change." Your system has already failedonce. If employees make promises they cant keep in trying to get the businessback in the customers good graces it will be throwing gas on the fire. Employeesneed to know how to be realistic about what they can and cant deliver, and howquickly.6) Follow-up. In a few days, or a few weeks, employees should check back tomake sure things really did work out to the customers satisfaction. That kind ofthoroughness and demonstrated concern builds loyalty that can weather futurestorms—and helps set the organization apart from competitors.Customer Expectations of Service: Pretrial beliefs a consumer hasabout the performance of a service that are used as the standard or referenceagainst which service performance is judged. Consumer expectations consist of5 levels: 1. Ideal Service level: Consumers wished for level of service 2. Desired Service level: level of performance customers want or hopr to receive from a service 3. adequate level of service: minimum level of service a consumer will tolerate and accept without being dissatisfied 4. predicted service level: level of service consumers actually expect from service firm
    • Service Failure: these are instances when a service either is not performedor is performed poorly. Service failure do not automatically result in firm switchingbehaviour and negative word of mouth communications. Customers can often berecovered. The manner in which post service failures are handled will have agreater impact on future purchase behavior then the level of dis satisfaction ofthe original service experience.Customer Complaints and Types of Customers: The handling ofcustomer complaints is an important component of providing Superior CustomerPerformance. Three important aspects of the complaint process are activelyseeking customer complaints, recognizing the type of customer that iscomplaining, and responding appropriately based on the type of complainer.Actively Seeking Customer Complaints: It is important to realize thatorganizations that are totally customer-focused do not just respond effectively tocustomer complaints; they actively seek them out. What specific activities doesthe organization utilize to provide customers with easy opportunities to registertheir dissatisfaction? Are these activities sufficient. Many dissatisfied customersjust quietly take their business elsewhere. Therefore, organizations that are trulycommitted to delivering Superior Customer Performance work hard at providingtheir customers opportunities to complain.Types of Complainers and How to Respond EffectivelyAt least five types of complainers can be identified. Each type is motivated bydifferent beliefs, attitudes, and needs. Consider the following definitions of thetypes of complainers. • The Meek Customer/ Passive Customer : Generally, will not complain. • The Aggressive Customer / Voicers : Opposite of the Meek Customer. Readily complains, often loudly and at length. • The High-Roller Customer. Expects the absolute best and is willing to pay for it. Likely to complain in a reasonable manner, unless a hybrid of the Aggressive Customer. • The Rip-Off Customer. The goal is not to get the complaint satisfied but rather to win by getting something the customer is not entitled to receive. A constant and repetitive "not good enough" response to efforts to satisfy this customer is a sure indicator of a rip-off artist. • The Chronic Complainer Customer. Is never satisfied; there is always something wrong. This customers mission is to whine. Yet, he is your customer, and as frustrating as this customer can be, he cannot be dismissed.Zone of Tolerance: The zone of tolerance is usually defined as the range ofcustomer perceptions of a service between desired and minimum acceptablestandards. In essence it is the range of service performance that a customer
    • considers satisfactory. Performance below the zone is seen as dissatisfying andperformance above the zone is seen as delighting.The importance of this zone of tolerance is that customers may accept variationwithin a range of performance, and any increase or decrease in performancewithin this area will only have a marginal effect on perceptions. Only whenperformance moves outside this range will it have any real effect on perceivedservice quality. If a customers zone of tolerance is narrow, then he or she maybe highly sensitive to the service experience, with a greater likelihood ofdissatisfying or delighting outcomes. Conversely, if a customer has a wide zoneof tolerance, then he or she may be much less sensitive to the serviceexperience, thus increasing the likelihood of a satisfactory or acceptableoutcome.Service Blueprinting: A service blueprint describes a service in enoughdetail to implement and maintain it carefully. Service blueprints need to describetime in a service. This includes the sequence of events of a service experience,its durations and timings. A blueprint should graphically and narriatively describethis time element. It also describes the service process, the points of customercontact, and the evidence of service from the customer’s point of view.Components of Service Blueprints: There are five components of a typicalservice blueprint• Customer Actions,• Onstage/Visible Contact Employee Actions,• Backstage/Invisible Contact Employee Actions,• Support Processes, and• Physical Evidence.Customer actions include all of the steps that customers take as part of theservice delivery process. What makes blueprinting different from otherflowcharting approaches is that the actions of the customer are central tothe creation of the blueprint, and as such they are typically laid out first so that allother activities can be seen as supporting the value proposition offered to or co-created with the customer.Onstage/visible contact employee actions : separated from the customer by theline of interaction. Those actions of frontline contact employees that occur as partof a face-to-face encounter are depicted as onstage contact employee actions.Every time the line of interaction is crossed via a link from the customer to acontact employee (or company self-service technology, etc.), a moment of truthhas occurred.Backstage/invisible contact employee actions: separated from the onstageactions by the very important line of visibility. Everything that appears above theline of visibility is seen by the customer, while everything below it is invisible.Below the line of visibility, all of the other contact employee actions aredescribed, both those that involve non- visible interaction with customers (e.g.,
    • telephone calls) as well as any other activities that contact employees do in orderto prepare to serve customers or that are part of their role responsibilities.Support processes separated from contact employees by the internal line ofinteraction. These are all of the activities carried out by individuals and unitswithin the company who are not contact employees but that need to happen inorder for the service to be delivered. Vertical lines from the support areaconnecting with other areas of the blueprint show the inter-functional connectionsand support that are essential to delivering the service to the final customer.Finally, for each customer action, and every moment of truth, the physicalevidence that customers come in contact with is described at the very top of theblueprint. These are all the tangibles that customers are exposed to that caninfluence their quality perceptions.Servicescape : The concept of a servicescape was developed by Booms andBitner to emphasize the impact of the physical environment in which a serviceprocess takes place. Booms and Bitner defined a servicescape as:
    • "The environment in which the service is assembled and in which the seller andcustomer interact, combined with tangible commodities that facilitateperformance or communication of the service"It can be classified in two dimensions:I Servicescape usageu Complexity of the servicescapesI. The usage takes into account as to how organizations differs in terms of whothe servicescape will actually have an effect on when they come in contact withthe service facility-customers, employees, or both groups which gives rise tothree situations: • Self-service (customers only) • Interpersonal services (both, customer and employee) • Remote services (employee only) • Remoteservices (employee only)2. The complexity of the servicescape has two environments: • Lean (simple, few elements, few spaces, and few pieces of equipments) • Elaborate (very complicated, many elements, and many forms)For lean servicescapes, design decisions are relatively straightforward,especially in self-service or remote service situations in which there is nointeraction among employees and customers.For elaborate servicescapes, the full range of marketing and organizationalobjectives can be approached through careful management of the servicescape.Roles of Servicescape:1. Package: wrap the service and convey an external image. It extends to theappearance of contact personnel through their uniforms or dress and theirelements of their outward appearances.2. Facilitator: Aiding the performances of persons in the environment. Makeservice a pleasure to experience from the customer’s point of view and apleasure to perform from the employee’s.3. Socializing: Aid in socializing of both employees and customers by conveyingthe expected roles, behaviors, and relationships through office assignments,quality of furnishings and location in organization.
    • 4. Differentiator: Exclusive positioning as differentiated from its competitors andsignal the market segment the service it intends to provide. Use of colors, music,sprice differentiation through variation of physical luxurious settings and sittings.sThe Services Marketing Triangle: The Services Marketing Trianglemodel focuses upon making and keeping promises to customers and suggestthree structural relationships as the mode by which this occurs. Company Management Internal Marketing External Marketing “Enabling the promise” “setting the promise” service environment the service product Employees Customers Interactive Marketing “Delivering the promise” service deliveryThe model is applied to the example of a typical university registry.The Model University/RegistryCompany Management Directorate Registry managers/management teamEmployees All registry staffCustomers Students University staff External bodies
    • External Marketing Consultation with Customers to identify needs“Setting the promise” and obtain feedback on performance:the service product • Course Organisers Forum • Student Union Liaison meetings • Student Services Committee • Undergraduate Student Questionnaire • Enrolment review Service Statements/Plans: • Service Provision Statement • Departmental PlanInternal Marketing Culture & philosophy“Enabling the promise” Staff recruitmentthe service environment Staff development/training Motivation and involvement in planning Team meetings/briefings Technical resourcesInteractive Marketing The serviscape and service encounter:“Delivering the promise” Delivery of serviceservice delivery Physical environment Meetings TelephoneCustomer Satisfaction and Service QualitySatisfaction: It is a customers feeling of pleasure and disappointment that resultfrom comparing a products perceived performance to their expectations. • If performance < expectations = Dissatisfied • If performance = expectations = Satisfied • If performance > expectations = Highly delightedQuality: Service quality is an assessment of the quality dimensions made by theservice consumer during service consumption over time, spanning multipletransactions and interactions with the service provider and its services. Servicequality is based on expectations across the five dimensions of a service.
    • Service quality for a service and satisfaction for any service encounter arisesfrom perceptions made by users around one or more of the following fivedimensions also known as the Service Quality Dimension: 1. Tangibles: Appearance of physical facilities, equipment, personnel, and communication materials. 2. Reliability: Ability to perform the promised service dependably and accurately. 3. Responsiveness: Willingness to help customers and provide prompt service. 4. Assurance: Knowledge and courtesy of employees and their ability to convey trust and confidence. 5. Empathy: Caring, individualized attention the firm provides its customers.Quality and satisfaction are different things altogether, yet many confuse thesebasic concepts; contributing to the ever-widening gap between business and IT.The difference between these concepts is that one may be satisfied and still feelthat service quality is low. Vice versa, one may be dissatisfied and feel thatservice is of high quality. Service quality is a complex judgment about the overallsuperiority of a service whereas satisfaction is related to contentment regarding aspecific transaction.Customer Gap/ Service Delivery GapFive areas of GAP that causes unsuccessful delivery of service are: 1. GAP 1: Gap between consumer expectation and management perception: management does not always perceive what customer want. Hospital administrators may think patients want better food, but patients may be more concerned with nurse responsiveness 2. GAP 2: Gap between management perception and service quality specification: management might correctly perceive customers wants but not set a performance standard. Hospital administrators may tell the nurses to give fast service without specifying it in minutes 3. GAP 3: Gap between service quality specifications and service delivery: personnel might be poorly trained, or incapable of or unwilling to meet the standard; or they may be held to conflicting standards, such as taking time to listen to consumers and serving them fast. 4. GAP 4: Gap between service delivery and external communications; consumer expectations are affected by statements made by company representatives and ads. If a hospital brochure shows a beautiful room, but in reality the room is cheap and tacky looking, external communication has distorted the customer’s expectations. 5. GAP 5: Gap between perceived service and expected service: this gap occurs when the consumer misperceives the service quality. The physician may keep visiting the patient to show care, but the patient may interpret this as an indication that something really is wrong.
    • Strategies for reducing Customer GAPReducing GAP 1: service firms has four strategies available to them to reducethe size of GAP 1. These strategies are : communicating with the customers,conducting marketing research, encouraging upward communication in heorganization, and decreasing the layers of management.Reducing GAP 2: 1. service firms must have the commitment of top management, 2. setting service quality goals, these goals must be set with the customer, the service contact provider and management in mind. 3. Task standardization also reduces the GAP, this can be achieved through hard technology( substituting machines or computers for people) or soft technology ( improving work methods)Reducing GAP 3: 1. Ensuring teamwork among the employees 2. Ensure there is good technology job fit 3. Developing a supervisory control system that reward employees for providing service according to the specifications.Reducing GAP 4: 1. Increase horizontal communications between the marketing department and service personnel 2. Avoid the propensity to over promise to obtain a sale 3. Inform service personnel of promises made by salespeople and marketing communicationsReducing GAP 5: ROQ analysis page no 103Customer Service GuaranteeA customer service guarantee is a set of two promises: • a commitment by a company to its customers to make good on a promised level of service • and a commitment to compensate its customers when the first promise is not met.Successful companies promote their service guarantees to everybody. Theclassic service guarantee example is Fed-Ex: “If you want your packageabsolutely, positively to be at someones doorstep the next day, then Fed-Ex it!”The company even guarantees a specific time for their overnight deliveries toreach the customers, or the delivery is free.5 Key Success FactorsYour customer service guarantees must contain the following five key successfactors:
    • 1. Must be unconditional : A good service guarantee has no conditions. They are for every customer, first-time or long-standing. If you cannot guarantee all elements of a specific service unconditionally, dont bother developing one.2. Must be specific and easy to understand : A good service guarantee is written in simple, concise language that pinpoints the promise.3. Must be meaningful: A good service guarantee process is meaningful in two respects. It guarantees those aspects of your service that are most important to your customers, and it has financial significance to your customers by providing a payout when a service promise is not kept.4. Dont over-promise: Its important to offer customer service guarantees within your capacity to deliver. If you cant consistently meet your service guarantee, it will advertise to your customers that you have a service weakness.5. Provide employee service guarantee training: Before introducing your service guarantees to your customers, you must first provide thorough customer service guarantee training to all your employees. Every employee should be encouraged and empowered to administer customer service guarantees.