FQM-Ch 8-service quality management
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  • Service and Relationship Marketing

FQM-Ch 8-service quality management FQM-Ch 8-service quality management Presentation Transcript

  • Chapter-8Service Quality Management
  • • What are services? The word service originally associated with the work performed by servants for their masters. “ the action of serving, helping or benefiting; conduct tending to the welfare or advantage of another” Services are acts, deeds, performance or efforts. The aim of service is to provide solution to the customers problem. SRM/M1/SS
  • Services is an activity or series of activities take place byinteraction between customer and service employeesIt’s an economic activity which is consumed at a time it isproduced and provide added value in forms of Convenience,amusement, timeliness , comfort or health SRM/M1/SS View slide
  • Services Defined… “Activities, Benefits or Satisfactions which are offered for sale orprovided in connection with the sale of goods” American Marketing Association SRM/M1/SS View slide
  • Services Defined… “Separately identifiable, intangible activities which provide want satisfactionwhen marketed to consumers and/or industrial users and which are not necessarily tied to the sale of a product or another service” William J. Stanton SRM/M1/SS
  • Services Defined… “Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.Its production may or may not be tied to a physical product” Philip Kotler and Bloom SRM/M1/SS
  • Why Services Marketing ??? Goods Vs. Services• Goods are tangible • Services are intangible• Goods are homogeneous • Services are heterogeneous• Goods are produced in the • Services are produced in buyer- factory seller interactions• Production, distribution and • Production, distribution and consumption are separate and consumption take place independent functions in goods simultaneously in the case of services SRM/M1/SS
  • Goods Vs. Services• Consumers do not generally • Consumers are co- participate in the producers in services production of goods • Services can not be stored• Goods can be stored • In the sale of services,• In sale of goods, transfer of transfer of ownership will ownership takes place not take place SRM/M1/SS
  • Characteristics of Services…• Intangibility• Inseparability• Variability• Perishability• Customer participation• No ownership SRM/M1/SS
  • Perishability…• Challenges : • Strategic Options :- Storage of service is not - Demand management possible - Capacity management- Sales volume - Tactical approaches continuously in relation - Continuous study on to the capacity demand patterns and- Time pressure in sales competitive parameters SRM/M1/SS
  • Customer Participation…• Challenges : • Strategic Options:- Customers are not - Effective external marketing controllable - Customer education and- Production quality also training depends upon customer’s - Effective interactive knowledge and ability to marketing participate - Management of- Customers are evaluating at movements of truth every stage of service - Effective internal marketing production SRM/M1/SS
  • No ownership…• Challenges: • Strategic Options:- Nothing remains after - Making communication consumption tangible- Very less time to the - Customer relationship consumer to evaluate the marketing product - Managing high level of- High consumer dissonance company image SRM/M1/SS
  • Classifications of Services in Economy Value Added Services Financing, Leasing, Insurance Infrastructure service Communications, Transportation, Utilities, Banking Manufacturing Services inside company Finance, Accounting, Legal , R&D and design Distribution service Wholesaling, Retailing, Repairing SRM/M1/SS
  • Cont….. Personal Service Health care, Restaurants, Hotels Business Service supporting Manufacturing Consulting, Auditing, Advertising, Waste Disposal Governments Service Military, Education, Judicial, Police and fire protection SRM/M1/SS
  • Service Classification :Service process Matrix Degree of Interaction and Customization LOW HighDegree of Labor intensity Service Shop Service factory •Hospitals LOW •Airlines •Auto Repair •Trucking •Other repair services •Hotels •Resorts & Recreation High Mass services Professional •Retailing •Wholesaling Services •School •Physicians •Retail aspect of •Lawyers •Accountants commercial Banking •Architects SRM/M1/SS
  • Dimensions of Service Quality
  • The Gaps Model
  • Six Service Quality Gaps
  •  Gap 1: The Knowledge Gap Gap 2: The Policy Gap Gap 3: The Delivery Gap Gap 4: The Communications Gap Gap 5: The Perceptions Gap Gap 6: The Service Quality Gap SRM/M1/SS
  • Suggestions for Closing the Six Service Quality Gaps
  • Suggestions for Closing the Six Service Quality Gaps
  • Suggestions for Closing the Six Service Quality Gaps
  • Suggestions for Closing the Six Service Quality Gaps
  • Measuring and Improving Service Quality
  • Measures of Service Quality Soft Measures Hard Measures  Can be counted, timed, or Not easily observed, must be measured through audits collected by talking to customers, employees or others  Typically operational processes or outcomes Provide direction, guidance and feedback to employees on ways to  Standards often set with achieve customer satisfaction reference to percentage of occasions on which a Can be quantified by measuring particular measure is customer perceptions and beliefs achieved e.g., SERVQUAL, surveys, and customer advisory panel
  • Customer Feedback Collection Tools
  • Hard Measures of Service Quality
  • Hard Measures of Service Quality• Service quality indexes – Embrace key activities that have an impact on customers• Control charts to monitor a single variable – Offer a simple method of displaying performance over time against specific quality standards – Enable easy identification of trends – Are only good if data on which they are based are accurate• FedEx: One of the first service companies to understand the need for an index of service quality that embraced all the key activities that affect customers
  • Control Chart for Departure Delays
  • Tools to Analyze andAddress Service Quality Problems
  • Tools to Analyze and Address Service Quality Problems• Fishbone diagram – Cause-and-effect diagram to identify potential causes of problems• Pareto Chart – Separating the trivial from the important. Often, a majority of problems are caused by a minority of causes (i.e., the 80/20 rule)• Blueprinting – Visualization of service delivery, identifying points where failures are most likely to occur
  • Cause-and-Effect Chart for Flight Departure Delays
  • Analysis of Causes of Flight Departure Delays
  • Blueprinting• Depicts sequence of front-stage interactions experienced by customers plus supporting backstage activities• Used to identify potential fail points – where failures are most likely to appear• Shows how failures at one point can have a ripple effect• Managers can identify points which need urgent attention – Important first step in preventing service quality problems
  • Service Blueprinting © Oxford University Press 2008. 35 All rights reserved.
  • Return On Quality (ROQ)• Assess costs and benefits of quality initiatives – ROQ approach is based on four assumptions: • - quality is an investment • - quality efforts must be financially accountable • - it’s possible to spend too much on quality • - not all quality expenditures are equally valid – Implication: Quality improvement efforts may benefit from being related to productivity improvement programs – To determine feasibility of new quality improvement efforts, determine costs and then relate to anticipated customer response• Determine optimal level of reliability – Diminishing returns set in as improvements require higher investments – Know when improving service reliability becomes uneconomical
  • When Does Improving Service Assumption: Customers areReliability Become Uneconomical? equally (or even more) satisfied with the service recovery than with a service that is delivered as planned. Satisfy Target Satisfy Target Customers Through Customers Through 100% Service Recovery Service Recovery Service Reliability Optimal Point of Optimal Point of Reliability: Cost of Reliability: Cost of Failure = Service Failure = Service Recovery Recovery Satisfy Target Satisfy Target Customers Through Customers Through Service Delivery as Service Delivery as A B C D Planned Planned Small Cost, Investment Large Cost, Large Improvement Small Improvement
  • Productivity in a Service Context• Productivity: amount of output produced relative to amount of inputs – Improvement in productivity means an improvement in the ratio of outputs to inputs.• Intangible nature of service makes it hard to measure productivity of service firms, especially for information-based services – Both input and output are hard to define – Relatively simpler in possession-processing services, as compared to information- and people-processing services
  • Service Efficiency, Productivity, and Effectiveness• Efficiency: involves comparison to a standard, usually time-based (e.g., how long employee takes to perform specific task) – Focus on inputs rather than outcomes and may ignore variations in service quality/value• Productivity: involves financial valuation of outputs to inputs – Consistent delivery of outcomes desired by customers should command higher prices• Effectiveness: degree to which firm meets goals – Cannot divorce productivity from quality and customer satisfaction
  • Stopwatch Time Study• Standard time duration means the time taken by an average worker to perform a task at a sustainable rate under the given facility arrangements.• A performance rating (P) is multiplied with the observed time of the job to arrive at the normal time (N) of the job.• Standard time (S) is normal time plus allowances. Allowances have to be made for time consumed in adjusting or repairing the machines, workers drinking water, or taking rest breaks. 40