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Mechanical engineering essay sample from essay writing services

  1. 1. Coursework is receipted on the understanding that it is the student's own work and that it has not, in whole or part, been presented elsewhere for assessment. Where material has been used from other sources it has been properly acknowledged in accordance with the University's Regulations regarding Cheating and Plagiarism. Tutor's comments Grade Awarded___________ Moderation required: yes/no For Office Use Only__________ Tutor______________________ Final Grade_________ Date _______________ Service Failure and Recovery
  2. 2. Service Failure and Recovery Table of contents Introduction------------------------------------------------------------------------3 Main Content What is service--------------------------------------------------------------------4 Characteristics of Service--------------------------------------------------------5 Why service goes wrong?--------------------------------------------------------8 What is service failure?----------------------------------------------------------8 Types of service failures---------------------------------------------------------8 Service recovery-----------------------------------------------------------------10 The key of service recovery---------------------------------------------------10 Service recovery strategies----------------------------------------------------12 Relationship marketing in service--------------------------------------------14 Brand Equity in service--------------------------------------------------------17 Conclusion-----------------------------------------------------------------------20 References------------------------------------------------------------------------21 1
  3. 3. Service Failure and Recovery Introduction Building strong brands is of indispensable for high-tech and service areas. The world’s overall service exports increased by 12.0% between 2000 and 2008 (Ref: World Trade Organization 2009). At the same time, the three major exporters experienced an export growth of commercial services of 22.8% (US), 38.2% (Germany), and even 77.9% (UK) higher than the export growth of manufactured goods (World Trade Organization 2009). Many people start to know service is important, but do they know the real service? And how to serve customers. This is not a simply smile. This essay will introduce what is service firstly, this part includes the definition and the characteristics of service. Secondly, the discussion is about why service goes wrong-the service failure. After that the service recovery comes, except introduce the definition, the author focus more on service recovery strategy. Last but not least, how to measure the result of these strategies also will be discussed in the last part. What is service? Services cannot be called minor or unimportant part of western economies, but go to the major view of value creation. The service sector is not novel, as proved by biblical references to innkeepers and financial helpers among others. Today nearly all of the goods we buy have an element of service somewhere. We can readily increase activities such as accountancy, banking as being service based. Also a swath of goods relies on service-based actions to give them usage worth, and a marketing advantage over other competitors. Many sophisticated goods such as television sets and washing machines pertain to service offers relying on delivery, financing, insurance and 2
  4. 4. maintenance benefits. (Palmer, 2008) There are many definitions of constitution of service. Modern definitions are based on the facts that a service alone is not giving any tangible output, but inturn helping in the production of these goods. A genuine definition of a service was given by The Economic, which states that service is "anything that cannot be dropped on your foot." The definition that would be implemented with reference to this paper is: "Any indispensable intangible facility, either by itself or as a significant element of a tangible product, that is requisite in some form of exchange and satisfies an identified need." (Palmer, 2008) While only a definition is far away to understand what is service, the characteristics of service can not be ignored when discuss about it. Characteristics of Service Service has various unique characteristics that separates them from goods and have implications how they need to be are marketed. These characteristics very often are mentioned as intangibility, variability, non-perennial nature and the inability to own a service. These are referred herewith: (Palmer, 2008) Intangibility Every pure service is assessed; it can hardly be checked or scrutinized before it is purchased. A prospective purchaser of most goods of this category is able to scrutinize goods for physical integrity, reliability, genuine appearance, flavor, arome etc. However many advertising say examining these tangible properties could be possible by inspection prior to purchase. But pure services have no tangible properties that the customer can use to examine advertising claims before the purchasing them. The intangible process features mentioning services, such as genuine faith, personal care, 3
  5. 5. staff behaviour, their efficacyetc., can only be scrutanized after purchasing or consuming that service. (Palmer, 2008) Inseparability The production and consumption of a tangible good are very different from each other. Production of goods takes place by companies in one central location and then they are transported to places where there is greatest probability of customers purchasing them. Thus, the large scale manufacturing firms can acquire economies of scale through a centralized producing unit and can maintain centralized measures for quality control. The manufacturing firms also have the advantage to manufacture goods at time as per their convenience; and make them available to customers at times that are convenient to customers. Consumption and Production are very different yet inseparable from each other. Consumption of a service is said to be interlinked and dependent on its means of production. The interaction of the producer offering the goods and the consumer buying the goods is important for the benefits of the service to be realized. There should be adequate interaction: taking in consideration the suitability of time and place for both the parties so that the producer can directly pass on service benefits to the consumers. However when talking about specific cases of personal care services, the presence of the customer is necessary through out the entire process of production: for example-a surgeon can perform an operation on a patient only when the patient is actually present there; so the complete involvement of the consumer is required here. In this context marketing has emerged as an excellent means of improving complex producer-consumer interaction; it cannot be called a mere medium of exchange in today’s context. (Palmer, 2008) Perishability Services differ from goods in terms of tangibility: the former cannot be stored. A car 4
  6. 6. manufacturing company can easily bring forward its excess stocks if it is unable to sell all of its output in the current period. It is a mojor advantage for goods manufacturing company; apart from the storage costs, financing costs and the possibility of loss through some sort of catastrophy. On the contrary, a service producer that cannot sell all of its output produced in the current period does not get such opportunity to carry forward the service for sale in the subsequent financial period. An airline offering a flight from Paris to New York at 8 AM cannot carry forward its services ( vacant seats) once the aircraft has left at 8.00 am. The service becomes ineffective once the scheduled time elapses and spare seats cannot be kept to meet any increase in demand if it is anticipated the next hour. (Palmer, 2008) Ownership Service to a large extent depends upon the characteristics of intangibility and perishability. Buyers have the right to thoroughly evaluate the required item while purchasing; the final decision to purchase lies in the hands of the buyer as they are free to what they want and can even in turn sell the product to a third party. But when a service is provided to the customer, the ownership still remains with the seller. The buyer/ customer is simply purchasing the right to benefit from a service process such as the use of a public park or a solicitor's time. However; there is a difference between the inability to own the service and the rights owned to acquire a service in future. Example buying a theatre ticket gives the buyer a temporary right to avail the facility at some specific time in future; it does not entitle him to avail the service always at his beck and call. Lovelock and Gummesson 2004 have defined the concept of rental/rights as a service where it is not possible to provide the ownership of a product to another person through an exchange or transaction medium. This factor of inability to own a service in turn has some specific lay out methodologies for the architecture of distribution channels; such that the wholesaler 5
  7. 7. or retailer is not empowered to take title, as is the case with goods. Instead, the newer direct distribution methods are popular where subsequent intermediaries are present, very often playing the role of a co-producer with the service provider. (Palmer, 2008) Over all, the service is a type of economic activity that is intangible, inseparable and variable, not stored and does not result in ownership. Services are one of the two key components of economics, the other being goods. Therefore, the service is very important to each company, while is it go right in every organization. Why service goes wrong: The requirement of each person is different, therefore it is impossible for one product to satisfy all customers. Very often services provided to the customers are not in accordance to their requirements or the way they anticipated them to be; leaving customers dissatisfied. A major reason for this discontentment is the inseparable and intangible nature of services. A customer may define a service failure as an unfavourable situation where something has gone wrong or out of the customer’s anticipation; irrespective of responsibility. Personal and high contact services are intertwined and interlinked; as a result service failure usually cannot be disguised from the customer. Service failure can be a minor negligible such as a short delay or smallinconvenience to the customer; or sometimes my also result in a grave issue, such as a food poisoning incident. (Palmer, 2008) What is service failure: Service failures can be referred to a state of sheer customer dissatisfaction mainly due to any service related mishaps or infelicitous conditions (real or perceived) that has serious repercussions on the customer's experience with a firm (Maxham, 2001). 6
  8. 8. Depending on the characteristics, service failures can be of two types: outcome and process. The former is pertaining to complicationswith the core service supply that the customer is getting in the name of service; the latter one refers to some outcomes that inturn make the service unpleasant for the customer; example service delay, a cold attitude towards the customer etc. Smith et al support this type of classification with special reference to the banking sector; very often it can be seen that there are outcome failures, such as lack of reliability and folly, and process failures, such as unhealthy communication with a bank employee. Types of service failures The consequences of service failures are not similar in each case since the outcome failure consequences are way different from those in a process failure. Smith et al (2009) has mentioned this on the basis of mental accounting principles and prospect theory. As feelings and contentment are outcomes to specific circumstances (Zeelenberg and Pieters, 2004 ), it can be suggested that each type of service failure will have a distinct impact on customers’ feelings and contentment. Bagozzi et al (1999) states that emotions/ feelings basically behave as broad classes of positive and negative affects; which inturn means that there are two basic aspects of emotion (Oliver, 1993; Westbrook, 1987). The division of emotions in two groups –positive and negative is beneficial because these divisions can act as a tool to understand and interpret a person’s attitude, and the austerity of the case (Laros and Steenkamp, 2005 ). In a service failure condition, buyers do not gain any positive experiences;so it is only the negative emotions- resentment, anger, disappointment and loss of faith that need to be considered.A detailed explanation to this would be in considering the types of failure that result in such negative emotions and discontentment. (Neira et al, 2010) 7
  9. 9. Nicholls et al (1995) inferred that customer contentment depends on the swiftness of the process and the employees’ intimacy, attention, proficiency and professionalism. Smith et al (1994) has revealed that there was more discontentments among customers who experienced process failures than those having outcome failures. Similarly Hoffman et al’ (1995) demonstrated that failures as a result of employees’ attitude towards the customers have most grave consequences unlike issues pertaining to faulty systems. In another study Gwin and Lindgren (1986) were capable of proving that for financial services the customer- service provider relationship has more importance than the service implication. Finally, Al-Eisa and Alhemoud (2009) have inferred that a swift and friendly service, warmth and helpfulness of employees are requisite for strong customer bonding and contentment especially with reference to retail banks. Outcome failures are in fact the right plans and procedure that due to chance or negligence result in unpleasant consequences. Thus, the customer will rate it negatively but there is no negative emotion associated with it. On the other hand, a process failure is in fact a wrong plan or strategy which very often appears intentional with a favourable result. This results in the customer developing a sense of treachery and negative thoughts towards the service provider. (Neira et al, 2010) So al together it can be inferred that service failures develop negative thoughts and opinion in the customers. If unresolved, it can even result in customers leaving the service provider and suggesting other customers not to have any terms with them and even challenging the organization through consumer rights bodies or legal channels. 8
  10. 10. Service recovery Service failure cannot be avoided every time; so it is important to think of plans for service recovery. Service recovery incorporates actions aimed to resolve problems, diminish negative emotions of discontented customers and eventually retain these customers" (Miller et al., 2000), and it encompasses conditions where a service failure occurs but customers show no negativity towards it (Smith et al., 1999). Further, Johnston (1994) defines it as to "seek out and approach service failures directly" the "seeking out" differentiates recovery from complaint handling, as many discontented customers do not complain. The key of service recovery Successful service recovery has significant benefits. It increases customers' anticipation of the efficiency of the service and the company; result in positive and healthy communication; increase customers-satisfaction; and develop customer bonding, loyalty and eventually effect the company’s profits (Bitner et al, 1990; Hart et al., 1990; Spreng et al, 1995; Michel, 2001). However, the extent of success is based on: A, the kind of service provided (Mattila, 2001) B, the kind of service failure (McDougall and Levesque, 1990) C, the swiftness in responding (Boshoff, 1997) In this essay, the author already introduced the type of service and service failure, while what is the speed of response and why it is also important to service recovery. The swiftness in responding to service failure is the time the customer must wait to receive a response from the service provider; be it positive or negative. It is a major point of concern in both the complaints and the service encounters literature. (Kelley 9
  11. 11. et al, 1993; Clemmer and Schneider, 1996; Taylor, 1994). But the real or objective time and perceived or subjective waiting time are not the same and this needs to be shown effectively. According to Pruyn and Smidts (1998), the latter effects the customer’s analysis to a greater extent. The equity theory suggests that a delay in the service recovery increases the perceived inequity in the bonding between the service provider and the buyer by adding to the damages claimed by the customer (Maister, 1985). This is mainly due to the importance of time in everyone’s lives. Prolonged delay in service recovery will add to the customer dissatisfaction. Customers are very conscious that a bank is actually concerned for their problems and needs or not and becomes disappointedwhen there is no help available readily (Lewis and Spyrakopoulos, 2001). Therefore, the swiftness in responding to the service failure can be inferred as an indication to recovery status and service quality (Wirtz and Mattila, 2004). Most of the studies on this topic support that the swiftness in responding has a major impact on customers' evaluations of the service which involves contentment as well (Boshoff, 1997; McDougall and Levesque, 1999; Swanson and Kelley, 2001). Thus, customers are more contented with the service recovery when there is swiftness in responding to the service failure. But in addition to rapid response, choose the right strategy is more important. Service recovery strategies Service recovery strategies involve the actions taken by the service providers in response to the service failures; these involve an amalgamation of psychological recoveries and tangible efforts, and are a topic of consideration for several researchers in this area. Bitner et al. (1990) has referred to the critical incident technique or 10
  12. 12. open-ended survey which gives respondents the liberty to emphasize any service problem they have faced in order to identify and develop service recovery strategies. Some of the strategies and plans that were inferred after such analysis were: Pardon; Briefing; Amendment; Empathy; Compensation; Follow-up; Acknowledgment; Special emphasis; and Managerial intervention. The author thinks that all the recovery strategies can be classified into below three types according to the time when they can be used. Acknowledgment – Apology (explanation) An acknowledgment and apology (explanation) are usually necessary planks of service recovery. They should be used at the first time when service failure occurs. The propose is to appease the customer's mood, avoid the situation from deteriorating. An acknowledgment/apology can be referred to as a psychological compensation. Unless really is inevitable objective reasons, or too mach explanation may let person antipathetic (Davidow, 2000). An apology is the most appropriate way of gaining customer’s confidence and esteem (a social resource) in such conditions as in the banking sector (Walster and Walster, 1973 ). In accordance with equity theory providing equity in the customer- service provider bonding after a service failure, it is acceptance of mistake is required and apology is indispensable (Boshoff and Leong, 1998). An apology refers to the acceptance given by the organization accepting the losses or inconvenience suffered by the customer and inturn trying to amend in the best possible way (Kelley et al., 1993 ). This in turn strengthens the customer’s evaluation of the recovery system (Kelley et al., 1993 ) by revealing the concern the organization has towards the customer who was affected by the service failure. Jenks (1993) declares customers do expect the organization to accept the folly in case 11
  13. 13. of a service failure. Like ways, Johnston and Fern (1999) state that apologies are essential to achieve contentment with regain of financial services. Similarly, several authors prove that an acceptance of folly strengthens customers’ idea of contentment and justice. (Hart et al., 1990; Bitner, et al., 1990; Goodwin and Ross, 1992; Conlon and Murray, 1996) Thus, there is a much higher degree of reliability and contentment in the customer’s part when the service provider gives an apology in case of service failure . Compensation strategy After the customer calmed down, how to make up the fault is need to be consider about. For the redevelopment of equity in the exchange process, it is importantthat the the service providershould pay for the losses suffered by the customer due to service failure on the organization’s part. (Walster et al, 1973). A wide range of studies on the topic reveal that customers anticipate compensation after a service failure. (Blodgett, et al, 1997).Specifically, Lewis and Spyrakopoulos (2001) reveal that retail banking customers on a service failure anticipate to get what was to be provided to them in the first place to make things smooth and normal between the two parties. Thus a most probable recovery strategy is the pay for the losses beared by the customer(Bell and Ridge, 1992; Zemke, 1994). The key concept of a compensation strategy is to compensate the customer for the losses du to the failue of services on the organization’s part and try and fabricate a balance wherein there is neither loss nor profit and contentment for both the parties(Boshoff, 1997). Thus to develop equity again, it is imperative to compensate the customer for their losses that includes redirecting the transaction and exchanging the good if possible or refunding the money. Precisely saying, a compensation strategy elavates customer belief on the organization even in case of service failures. (Miller et al, 2000, Ruyter and Wetzels, 12
  14. 14. 2000; Bitner et al, 1990; Boshoff, 1997; Duffy et al, 2006) Thus, customer belief on the organization is higher when the service provider offers compensation in cases o service failures than when it does not. Correction After the apology and compensation, it is not mean all things already finished. It is more important to find out the reasons why lead to the service failure. Even a small service failure event could destroy a brand. And the compensation also leads to a lost of interest more or less. So the following work is avoid the same thing to happen again. Although the above strategies can be used after the service failure occurs, the real service recovery strategy means something more than them. For example, using the relationship marketing to build strong links with customers is a depth and long-term strategy. Relationship marketing in service For the materialization of services marketing is requisite. Berry(1983) has defined relationship marketing as “method to allure and attract customers and – in multi-service organizations – strengthening customer relationships”. In fact relationship marketing pertains to all marketing methodologies aimed in creating, developing and maintaining healthy relational exchanges. Morgan and Hunt (1994) Successful bonding between partners is a long term process; gradually fabricated with the passage of time. Five distinct phases are present with reference to this process: (Scanzoni, 1979). Awareness is the initial phase in this bonding cycle and states that the consideration of second partner as an appropriate exchange partner is important. The 13
  15. 15. parties are not interacting with each other; it is just an effort to maintain a strong relation that can elevate their attraction toward other organizations. The next phase is exploration; it is the investigation process and initial phase in relational exchange. Here the first step is consideration of the pros and cons, benefits and losses, burdens and liabilities by the potential exchange partners. The third phase is called expansion or elaboration; it involves the incessant growth of profits achieved by exchange partners and their increasing escalating collaboration. However the basic difference between exploration and elaboration is that here there is mutual faith between the partners and also a sense of contentment. If relationships develop then commitment is formed between the two business partners. Commitment is the most requisite part of relationships and pertains to a conspicuous or inconspicuous sense of relational development between exchange partners (Dwyer et al., 1987). Two major factors affect the growth of ccommitment; the first is that both the partners need to put in significant measure of inputs to their collaboration. The second assumption is based on the reliability which is the extent to which they can rely on each other with respect to a long term association. The last phase of successful bonding development is dissolution. Here there is involved a sense of intrapsychic temperament wherein one party secretly evaluates its discontentment with the other party, deducing that the price of amendment or modification is much more compared to the negative aspects in the association.Thus it develops a sense of interdependence and each others importance. Dissolution is then presented publicly. For the above mentioned five points of successful bonding it can be said that amongst them all the fourth point – commitment is the most requisite and plays a very crucial role in building of a strong relationship between the buyer and the seller. Lack of 14
  16. 16. commitment between the parties will result in a major set-back to their association.Thus, commitment should work as a major factor in the creation of a model that relatesrelational exchanges to the service marketing. Apart from that, the foundation of commitment is faith which is created by the third phase as discussed above. Therefore, the next paragraphs will discuss about the trust and commitment. Trust Trust can be referred to as customer or organization’s faith that its requirements can be satisfied by the help and collaboration of the other party (Anderson and Weitz, 1989). Trust is prevalent only when either party has a sense of confidence and faith in the working and methodologies of the other party(Morgan and Hunt, 1994). Talking in terms of social psychology a general opinion states that trust comprises of two essential factors: trust in the partner’s honesty and trust in the partner’s benevolence. The faith that the other party will keep to its words is what is meant by honesty in the partner. Benevolence in the partner is the faith that the partner is embroiled in the company’s benefit and will not be doing actions that are unfavourable of adverse to the company’s welfare(Geyskens and Steenkamp, 1995). However a difference between affective and calculative commitment reveals that trust which includes honesty as well as benevolence has an optimistic effect on affective commitment (Anderson and Narus, 1990; Anderson and Weitz, 1989; Morgan and Hunt, 1994; Geyskens and Steenkamp, 1995). But calculative commitment is pessimistically affected by trust (Geyskens and Steenkamp, 1995). Thus it is evident that if partners in an association have faith in each other; there is a greater emotional bonding between them thereby strengthening the customer- service provider relationship. Commitment The importance of commitment in customer- service provider relationship has been discussed above. Scanzoni (1979) has referred commitment as the highest degree of 15
  17. 17. interdependence of the two partners. A collaboration and mutual interdependence has been accepted to provide appreciable returns and positive growth for the partners; this has been accepted by various researchers and marketing economists world-wide. There is mutual benefit: while the manufacturers can achieve improved product growths, increased margins and better shares for their company in the market, distributors receive greater market entrenchment and higher customer contentment. The fabrication of commitment results from industrial/organizational psychology and is considered as an indication to carry on activities that support a sense of relation building with a business partner (Fehr, 1988). Commitment is very often referred to a conspicuous or inconspicuous state of relational support between exchange partners (Dwyer et al., 1987). As a result it is seen as a source to obtain positive outcomes between the parties beneficial to both of them; so they try to develop and maintain this key factor in their relationship (Morgan and Hunt, 1994). Commitment is often mentioned as a factor that is very much required in the formation of a long-term association or as a probable influential response (Kumar et al., 1995). Therefore, commitment is a psychological aspect of human brain which is responsible for developing an attitude of association formation and perspective growth plans by mutual association. From this part, it is obviously to see that the relationship marketing is a useful tool to get service recovery. A success relationship marketing will build strong links between exchange partners. While how to know the result of relationship marketing? How can people know the recovery strategy is success or not? Brand Equity in service For above questions, the answer can be found in brand equity. Brand equity means the influential effect of brand knowledge on customers and their reactions to the promotions of the brand (Kotler, 2009). Brand equity is crucial because of its benefits in information productivity, cost effectiveness, lesser purchasing risk involvement, 16
  18. 18. powerful demonstration, and so on. However strong brand equity is related to the behavioral outcomes such as the customer’s brand loyalty, identification, the service oriented commitments, and the connectivity (Keller, 2008). So, if the brand equity of any organization is stronger, the service oriented strategies will work positively. The research over brand equity has two main approaches: finance oriented and consumer oriented. This essay is based on the consumer-based brand equity which is quite important for the industry and the organizations which are service oriented (Berry, 2000). The main aspect is all about measuring the differential effect of a brand, and it actually depicts the overall brand equity. According to the brand equity can be measured in three ways - the firm level (Chu and Hean, 2006), the product level (Ailawadi et al, 2003) and consumer level (Keller, 1993). In this essay the author discuss about the consumer level (loyalty) in the below. Loyalty The loyalty of customer is related to the behavior of the customer towards the services of the organization so that he/she buys the product or services repeatedly (Andreassen & Lindestad). The consumer who feels happy by using once the products and services of the company, buys them again and again and also promotes the positivity through mouth publicity (A. Selnes & Hansen) If we take e-business for instance: The most desirable goal is to achieve the loyalty of customers. The monetary necessity requires the increment in customer loyalty, because there is required a long time to drive the customer for repeat purchase and win his confidence in the product or services (Gefen, Reichheld & Schefter, 2000). Customer loyalty is the most important part in the organizations which are service driven (Ganesh, 2000; Jones & Sasser, Kim & Son, 2009; Mithas, Reichheld & Teal, 17
  19. 19. 1996) and may be a crucial determinant of profit in comparison with market share and position (Heskett, 1994). Loyal customers are quite interested to appreciate the concerned vendor to other friends who might be perspective customers, increasing the customer base by incurring almost negligible cost in marketing (Heskett et al., 1994; Reichheld & Sasser,). Customer loyalty is very helpful in the survival of e-businesses because mouth publicity and support from the customers who are loyal is even more beneficial than offline promotions (Reichheld & Schefter, 2000). Overall, there are many ways to measure a brand. Some measurements approaches are at the firm level, some at the product level, and still others are at the consumer level. If some of them or all of them show a increasing trend of brand equity, it means the service recovery strategy get the success. Conclusion Customer service is the most crucial part of the marketing mix that was defined for products and services industry. Customer service always creates value for the product which is very important. In the world of consumerism, the customers are very much concerned about the after sales service apart from buying the products only. The basic character of service is of being intangible and there are instances where things go wrong so there should be extra care regarding the issue. The apology and compensation strategy should be used as soon as possible when the service failure occurs. What is more important, some long-term strategies such as relationship marketing should be paid more attention. In addition, although the service is intangible, the result of service recovery strategies still can be measured by other aspects, for example, the brand equity, especially the customer loyalty of it. At the moment, the competition between different companies already transfer form the single product competition to a more comprehensive one which includes the service quality. So it is very important to value the service which is always be ignored 18
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