PGDMIII Understanding Service

8/13/2019 PGDMIII Understanding Service

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The Service Concept

Two definitions to put the concept of service

and the service industry in the right

perspective:

There are no such things as Service industries.

There are only industries whose service

components are greater or less than those of other

industries. Everybody is in Service.

Theodore Levitt


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The 4 Ps of Services marketing

The 4 Ps of Services Marketing are :

People, People, People, People( Richard Dow)

Exaggerated ? Perhaps.

But the emphasis is rightly placed.


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Why the concern with Service?

The rapid growth of service sectors all over the

world and the deregulation of many serviceindustries have lead researchers with an interest in

quality issues to the importance of acquiring more

understanding about service quality.


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Reason for Interest

It is recognized that high quality service is essential

for firms that want to be successful in their business

It leads to

Customer loyalty

Higher profitability

and Lower Cost.


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The Success formula

If you thought that the most impressive part ofFedEx was its advanced technology or its

incredible service quality you are mistaken. Its

management philosophy is a magnificentexample of how to run a company.


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Fred Smith formed the following view whileserving as a marine in Vietnam :

'Take care of your People. They in turn will

deliver the impeccable Service demanded byour customers who will reward us with theProfitability necessary to secure our future.'


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A service is any act or performance that one

party can offer to another that is essentiallyintangible and does not result in the

ownership of anything. Its production may

or may not be tied to a physical product.

Definition of Service


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Kinds of service

A pure tangible good- eg Soap or Tobacco

A tangible good plus services eg Anautomobile with warranty and an instructionsmanual.

A major service with accompanying minorgoods and serviceseg Railways, Airlines

A pure service such as a psychiatrist provides


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Generalization not easy

Since there is such a wide variance in thegoodstoservice mix no generalization iseasy. The difficulty is compounded by services

further varying according to:

Whether they are people or equipment based

Whether the clients presence is required ornot ( Brain surgery vs Car repair)


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All Service Marketing programmes

depend on 4 basic characteristics

Intangibility

Inseparability

Variability ( Heterogeneity)

Perishability

These constitute the challenge to the Services

Marketer


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Inseparabilty

Unlike products, services are typicallyproduced and consumed at the same time.

They cannot be inventorized. Provider- client

interaction is a special feature of Services

Marketing.


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Variability

Services are highly variable. Thus they dependon who provides them and when and where

they are provided. Thus maintaining quality is

a perennial challenge.


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Perishabilty

A service cannot be stored. Service value

exists only at a particular time as in the case

of a newspaper.


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Elements of services marketing

Service marketing owing to its complex naturerequires not only the 4 Ps of traditional

external marketing but also two other

marketing thrusts, namely internal marketing

and interactive marketing.


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External marketing addresses itself to thetask of the normal work of the company

such as pricing, distribution and promoting

the services of the company

Internal marketing consists of training and

motivating its internal customers, namely itscustomercontact and supporting service

personnel to work as a team towards

providing customer satisfaction


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Thus the most important contribution themarketing department can make is to be

exceptionally clever in getting everyone else in

the organization to practice marketing.


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Interactive marketing describes the

employeesskill in handling customer contact.

In services marketing the service quality is

inextricably wound up with the servicedeliverer. Service Quality is judged not only

by technical quality but also by functional

quality.


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People

All human actors who play a part in the

service delivery and thus influence the buyers

perspective :

The firms personnel

The customerOther customers in the service environment


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Physical Evidence

The environment in which the service isdelivered and where the firm and customer

interact, and any tangible components that

facilitate performance or communication of the

service.


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Process

The actual procedures, mechanisms and flowof activities by which the service is delivered -

the service delivery and operating systems


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People

Employees :

Recruiting

Training

Motivation Rewards

Teamwork

Customers :

Education

Training


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Physical Evidence

Facility design

Equipment

Signage

Employee dress

Other tangibles :

Reports

Business cards

Statements

Guarantees


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Service Quality

Better service quality can be obtained througha mix of improving access, communication,

competence, courtesy, credibility, reliability,

responsiveness, security, tangibles,

understanding the customer.


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Excellence in Service

With respect to Service Quality various studies

have shown that excellently managed service

companies share a number of common

practices


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1. A Strategic concept

2. A History of Top Management Commitment

to Quality

3. The Setting of High Standards

4. Systems for measuring Service Performance

5. Systems for Satisfying Complaining

Customers.

6. Satisfying the Employees as well as the

Customers.


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Managing Productivity

1. Have Service providers work harder , failing which

work more skillfully or work smarter, through better

training and selection procedures.

2. Increase quantity of service through surrendering

some quality This needs a very careful balance.

3. Industrialize the service by adding equipment andstandardizing production.


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5.To design a more effective service.

6.To present customers with incentives to

substitute their own labour for company

labour, such as self-service counters


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The Service Edge

In todays world, companies which succeed have

what is known as the service edge over thecompetition. Such companies have succeeded in

creating Distinctive Service. It is important to

understand that creating anything is a willful

management act- an act of leadership.


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What is it that successful companies do toachieve customer delight ?


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According to psychiatrists Leonard and NatalieZunin there is a short moment in time, a 4

minute window of opportunity when

satisfying human contacts will be establishedor denied. This threshold exists in commercial

as well as private affairs. it is as critical to

customer satisfaction as it is to friendships oreven marital relations.


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Moment of truth

Jan Carlzon ,CEO of SAS exposited the concept of

managing the customers moments of truth- thetransactions the customer has with the organization.

A moment of truth occurs any time the customer

comes in contact with some aspect of the organizationand uses that opportunity to judge the quality ofservice the organization is providing.


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Moments of truth are not all created

equal . Some have more impact than others. In aparticular hotel a survey was conducted about thequality of service they had experienced with referenceto several previously identified moments of truth.

The one moment of truth that cropped up as the most

important determinant for most as to whether or notthey would stay in the same hotel again wascustomer encounters at the front desk.


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To manage efficiently and effectively,therefore we must have a way of deciding thepecking order of the different identified

moments of truth.

This is critical for the resource allocation

process , the trade-offs we make as we devisea service strategy and design the deliverysystems to implement it.


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Five specific operating principles for

building and managing extraordinarylevels of customer satisfaction andloyalty or what we call customer delight

are :


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1. Listening, understanding and responding to Customers

2. Defining Superior Service and establishing a service

strategy

3. Setting Standards and measuring Performance

4. Selecting training and empowering Employees to work for

the Customer

5. Recognizing and rewarding Accomplishment


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Summary of Model

The customer Gap : Gap 5 - Difference between customerexpectations and perceptions

Contributed to by:

Provider Gap 1 : Not knowing what customers expect

Provider Gap 2 : Not selecting the right service designs andstandards

Provider Gap 3 :Not delivering to service designs and standards

Provider Gap 4 : Not matching performance to promises

h f h l d l


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The Basis of the Servqual Model

The Gaps

The Key Service Dimensions

Causes & Solutions to Gaps


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What are the Servqual Gaps?

Gap 1: The difference between management perceptions ofwhat customers expect and what customers really do expect -is it large?

Gap 2: The difference between management perceptions andservice quality specifications - the standards gap ?

Gap 3: The difference between service quality specificationsand actual service delivery - are standards consistently met?

Gap 4: The difference between service delivery and what iscommunicated externally - are promises made consistentlyfulfilled?


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The Customer Gap

Gap 5: The difference between what customers

expect of a service and what they actually

receive

Expectations are made up of past experience,

word-of-mouth and needs/wants of customers

Measurement is on the basis of two sets of

statements in groups according to the five keyservice dimensions


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The Five Key Service Dimensions

ASSURANCE - a combination of the following :

Competence - having the requisite skills and knowledge

Courtesy - politeness, respect, consideration and

friendliness of contact staff

Credibility - trustworthiness, believability and honesty of

staff

Security - freedom from danger, risk or doubt


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TANGIBLES - the appearance of physicalfacilities, equipment, personnel andinformation material

RELIABILITY - the ability to perform theservice accurately and dependably

RESPONSIVENESS - the willingness to helpcustomers and provide a prompt service


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EMPATHY - a combination of the

following:

Access (physical and social) - approachability andease of contact

Communication - keeping customers informed in alanguage they understand and really listening tothem

Understanding the customer - making the effort toget to know customers and their specific needs


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GAP 3 - the service performance gap

role ambiguity and role conflict - unsure of what your

responsibility is and how it fits with others poor employee or technology fit - the wrong person

or system for the job

inappropriate supervisory control or lack of perceivedcontrol - too much or too little control

lack of teamwork


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GAP 4 - when promises made do not match

actual delivery

inadequate horizontal communication - between

departments or services

a propensity to overpromise


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Servqual Data - How Useful is it?

We can assess service quality from the customersperspective

We can track customer expectations and perceptionsover time and the discrepancies between them

We can compare a set of Servqualscores againstthose of competitors or best practice examples


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We can compare the expectations and perceptions of

different customer groups - this is particularly useful

in the public sector

We can assess the expectations and perceptions of

internal customers - eg other departments or services

we deal with.


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The Railway Scenario

Allen and DiCesare considered that quality ofservice for public transport industry contained twocategories: user and non-user categories. Under

the user category, it consists of speed, reliability,comfort, convenience, safety, special services andinnovations.

For the non-user-category, it is composed ofsystem efficiency, pollution and demand. Silcockconceptualized service quality for public transportindustry as the measures of accessibility,

reliability, comfort, convenience and safety.


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Traditionally, the performance indicators

for public transport industry are divided intotwo categories: efficiency and effectiveness.

Under the efficiency category, themeasures are concerned with the processesthat produce the services while themeasures in the effectiveness category areused to determine how well the servicesprovided are with respect to the objectivesthat are set for them (Pullen, 1993).


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Quality of service is one of the performance

indicators under the effectiveness category. It

is composed of accessibility, reliability,

comfort, convenience and safety (Silcock,

1981).


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Relationship between Perceived Service Quality

and Overall Satisfaction

Perceived quality and satisfaction are two different

constructs. Consumers will use the predictive level

of expected service in their comparison.

Customer satisfaction is affected by both non-

quality and quality factors. When we combine all

the elements of the above discussion, we derivethe extended SERVQUAL model for this study of

service quality and customer satisfaction


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C t l F k f R il P


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Conceptual Framework for Railway Passenger

Service Quality and Passenger Satisfaction

zone of

tolerance

tangiblesreliability

responsivenessassurancesempathy

convenience

expected service

perceived

service quality

overall

passenger

satisfaction

desired service

adequate

comfort

speed

perceived

service


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Findings

Assurance, Responsiveness and Empathy had

significant effects on overall service quality.

Assurance was the dominant predictor of

overall customer satisfaction.


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The significance tests of Pearson's correlationsshow that the ratings of each of the eight

dimensions are significantly related to the overall

customer satisfaction.

Since satisfaction and quality are different

constructs, standard and stepwise regressions were

performed to explore the best set of predictors inpredicting satisfaction. Both results indicated that

assurance is the dominant predictor.


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An important feature of the extended

SERVQUAL model is its diagnostic value

in terms of zone of tolerance and

expectation management. It helps managers

to analysis the effectiveness of the service

quality and identify those problem areas

that are needed to be improved.


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Finally, the zones of tolerance provideinformation about what areas and attributes

that are need to improve but not how to

improve them. Future research on finding,examining and measuring the determinants

of expectation would add value in

monitoring service quality.


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Importance of a Service Strategy

It functions as an internal focus of effort- asingle vision throughout the organization.

It is based on an understanding of acombination of organizational values,customer expectations of products andservices, customer expectations of the process

of doing business with the company, and an in-depth analysis of the strength and weakness ofthe organization as it confronts the threats andopportunities in the market place.


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Must answer three questions

What is our unique contribution?

To whom do we provide this service?

What key value do you want them to perceiveabout us?


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Service Strategy for BIMTECH

You are a part of the BIMTECH Management team.Kindly give 15 minutes of thought and then writedown the service strategy you would like BIMTECHto follow in the following format

Our Service Strategy framework :

To provide ( Our uniquecontribution)..to .( customer).so that we are

perceived by them as( Keyvalue).


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Documents

PGDMIII Understanding Service