Service intangibility and its impact on consumer expectations of service quality

Service intangibility and itsimpact on consumerexpectations of service qualityCharlene Pleger BebkoProfessor of Marketing, Eberly College of Business, IndianaUniversity of Pennsylvania, USA

Keywords Service quality, Services marketing, Customer satisfaction, Customer service,Consumer behaviour

Abstract Among the areas which need to be addressed in service quality research is thenature of consumer expectations across the range of intangibility. Previous research hascompared consumers' service quality expectations across services, but different groups ofsubjects were evaluated for each different service. The problem with using differentsubjects for each service is that the subject's demographic characteristics may beresponsible for the significant differences in expectations of quality. This research uses acontrolled, repeated measures design where subjects were each asked to evaluate threeservices, varying in their degree of intangibility, over a ten week period. This made itpossible to look at service quality expectations without risking the problem thatdemographics would account for most of the differences in the data. A classificationmatrix for services based strictly on the feature of intangibility is proposed. Themanagerial implications of this simplified classification scheme for services arediscussed.

Literature reviewPre-purchase evaluation of service characteristics by consumers, as well as

their production and marketing by providers, is said to differ from products

because of intangibility, variability, inseparability and perishability. These

service characteristics have created problems of definition and measurement

of service quality for marketers. Quality is undeniably of paramount

importance to service providers. Research has demonstrated the strategic

benefits of quality in contributing to market share and ROI, as well as

lowering manufacturing costs and improving productivity (Anderson and

Zeithaml, 1984; Garvin, 1982; Tse and Wilton, 1988).

Service intangibility

It has been argued that the single most important difference between

products and services is the characteristic of intangibility. In fact, it has been

said that intangibility is the key to determining whether or not an offering is

a service or product (Zeithaml and Bitner, 1996). This characteristic has a

profound effect on the marketing of services (Lovelock, 1991; Rushton and

Carson, 1989). Levitt (1981) argued that special difficulties arise from this

intangibility which lead to quality control problems for the producer and

evaluation problems for the consumer. It is this intangibility, or lack of

physical attributes, that most likely is the reason for service variability,

inseparability and perishability.

Besides the concept of the lack of physical attributes of the offering

(outcome), there is also the concept of physical evidence of the process

which needs to be taken into consideration in an evaluation of intangibility.

`̀ Physical evidence is the environment in which the service is delivered and

where the firm and the customer interact; and any tangible commodities that

The current issue and full text archive of this journal is available at

http://www.emerald-library.com

Products and services

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 1 2000, pp. 9-26, # MCB UNIVERSITY PRESS, 0887-6045 9

An executive summary formanagers and executivereaders can be found at theend of this article

facilitate performance or communication of the service (Zeithaml and Bitner,

1996, p. 518)''. The physical evidence of the service production process can

be used to communicate service quality attributes and create the service

experience. A distinction should be made between the degree of intangibility

of the actual service and the intangibility, or lack of physical evidence, of the

production process. It has been suggested that three types of inputs can be

processed: the customer (dental services), materials (car wash), and

information (education) (Morris and Johnston, 1987). Consumers evaluate

services in regards to those elements that they actually experience in the

course of the service delivery and ± of course ± on the perceived service

outcome (Lovelock, 1991, p. 14). Recognizing this, a useful distinction

might be made in services research between the process and outcome of

service delivery.

In many instances, the outcome of service delivery is, in fact, a tangible

product, and a `̀ bundle'' of goods and services is the product offering of a

business. The goods/services bundle refers to the inseparable offering of

many goods and services (GroÈnroos, 1977; Levitt, 1980, 1981). This fact,

which has been recognized in the classification scheme of others, suggests

that the conceptualization of `̀ the bundle'' may not be separable in the

consumer's evaluation of service quality. Highly tangible goods are placed at

one end of the continuum, highly intangible services are placed at the

opposite end of the continuum, and the goods service bundle is located

somewhere in between the two. To the extent that this bundle represents

some quantity of service, the concept of bundling of goods and services

should be addressed in the context of the intangibility discussion.

Service classification schemes

Adrift in numerous service classification schemes, marketers have been

looking at the nature of services through the increasing fine lens of the

microscope. They have lost the macroscopic view which ultimately defines

the service-product difference: intangibility. Because of this, marketers are

unable to define the exact nature of the problem of purchasing and producing

services, and therefore seem unable to develop a standard set of guidelines

and instructions on the delivery of service quality.

None of the theorized classification schemes for services has been successful

in reducing the complexities of producing and consuming services to a

manageable set of characteristics. In addition, little empirical evidence is

available to support the validity of any of these classification schemes. Once

these characteristics are defined, marketers will be better equipped to

evaluate and examine consumer expectations, thereby developing a bases for

strategic marketing decisions (Lovelock, 1983; Rice et al., 1981; Zeithaml,

1981).

The very earliest distinction between goods and services resulted in a

tangibility continuum classification scheme (Rathmell, 1966; Shostack,

1977). Other, more elaborate classification schemes were developed as

interest in services marketing increased (Bell, 1981; Lovelock, 1983). At

least two approaches for classifying services recognized the importance of

tangibility as a major criteria in differentiating services. One matrix

classification system recognizes the goods-service tangibility characteristic,

and adds the concept of customization (Bell, 1986). Highly industrialized or

undifferentiated goods or services are placed on the low end of the

customization chart, while those goods and services which are `̀ made-to-

order'' are placed on the high end. Yet a big mystery still remains regarding

Service delivery

Goods and services

10 JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 1 2000

how to objectively classify services and products using these schemes. An

example of this problem using the classification matrix involves the

definition of services which are to be placed in the matrix category of

`̀ industrialized service''. An industrialized service for this scheme is defined

as `̀ a service with almost no tangible augmentation and offered without

modification to all customers''. An example of this is fast food retailing.

While it may certainly fit into this matrix category, others might be led to

believe it should be placed into the `̀ undifferentiated goods/service bundle''.

This is due to the fact that a tangible good (food) is being offered with the

food preparation and delivery services.

While classification schemes are abundant, there is an absence of explicit

criteria with which to operationalize the construct of tangibility. This

research uses a validated scale to operationalize tangibility. The scale

includes only five items which are scored on a five-point Likert scale

(McDougall and Snetsinger, 1990). The items from the scale are as follows:

(1) I have a clear picture of this item.

(2) The image comes to my mind right away.

(3) This is not the sort of item that is easy to picture (reverse score).

(4) This item is very tangible.

(5) This is a difficult item to think about (reverse score).

Measuring service quality

Service quality can be measured by the level of discrepancy between

consumer expectations or desires and their perceptions of what they

received, as described by the SERVQUAL scale. Research has shown

SERVQUAL to be an effective and stable tool for measuring service quality

across service industries (Parasuraman et al., 1985, 1988; Zeithaml et al.,

1990; 1993). This scale was developed and validated using producers in four

service sectors: retail banking, credit cards, securities brokerage, and product

repair and maintenance. These producers were selected based on the fact that

they varied along key attributes of a multidimensional classification scheme

(Lovelock, 1983). None of these services results in the outcome or

association with anything tangible being produced, although product repair

does involve consumers' tangible possessions. While the credit card and

securities brokerage have rather intangible processes, banking and product

repair involve tangible processes. There are five dimensions by which

consumers evaluate service quality:

(1) Tangibles. The appearance of physical facilities, equipment, personnel

and communications material.

(2) Reliability. The ability to perform the promised service dependably and

accurately.

(3) Responsiveness. The willingness to help customers and provide prompt

service.

(4) Assurance. The knowledge and courtesy of employees and their ability

to convey trust and confidence.

(5) Empathy. The caring, individualized attention the firm provides its

customers.

Reliability largely concerns whether the outcome of service delivery was as

promised. The other four dimensions concern the process of service delivery,

Schemes

Service quality

JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 1 2000 11

or how the service was delivered (Berry and Parasuraman, 1991). According

to the SERVQUAL model, customer assessments of service quality result

from a comparison of service expectations with actual performance.

Service quality expectations

Understanding consumers' service quality expectations is the key to

delivering service quality. While the importance of expectations has been

acknowledged in previous research of service quality and customer

satisfaction, there is little empirical evidence to demonstrate how

expectations of quality differ between services, even though the

classification of services demonstrate that differences do exist in service

characteristics (GroÈnroos, 1982; Oliver, 1981). The original research

hypothesized that most quality issues would follow the pattern where

Reliability is the most important dimension of service quality to consumers

for all services. However, there is no research evidence to indicate if an

individual consumer considers certain service quality dimensions to be more

important in some services than in others.

The research that has been conducted has compared consumers' service

quality expectations across services, using different subjects for each

different service (Bebko and Prokop, 1996; Webster, 1989). In fact, the

demographic profiles of those consumers may be the variable accounting for

most of the variance in expectations. While there is evidence that

demographics have an effect on the expectations of quality for professional

services (physicians, attorneys and dentists), there are mixed reports on

whether demographics have an effect on these expectations for non-

professional services. In one study, significant differences of consumers'

expectations of Tangibles, Assurance and Empathy were reported between

four different service industries. Additional research indicated that

demographics may have been responsible for the significant differences in

the expectations of quality dimensions (Bebko and Prokop, 1996). These

findings point to a need for further investigation into consumer expectations

across industries, while holding consumer demographics constant.

Intangibility, consumer expectations and risk

Consumers experience pre-purchase uncertainty from the purchase and use

of a product (Bauer, 1960; Cox, 1967). Because the amount and quality of

information available is diminished in the case of an intangible service, the

amount of perceived risk is expected to be higher than with products

(Guseman, 1981; Levitt, 1981; Murray and Schlacter, 1990). Intangibility

means that a consumer's perception of quality is often based on tangible

evidence and price rather than the core service (Zeithaml, 1981). Services,

then, are associated with higher risk for consumers.

What happens to consumer expectations when risk increases, as in the case

of intangible services? No research exists regarding consumers' desired

expectations for service quality across services with varying levels of risk. In

fact, intangibility of services may complicate the formation of expectations

(Parasuraman et al., 1988). If consumers can't see the tangible outcome of a

service, it may be impossible for them to decide what they should expect.

Many studies show that environmental cues in services help form consumer

expectations.

Research findings on intangibility, risk, uncertainty and expectations show

mixed conclusions. While a recent study has shown that uncertainty is

negatively associated with prepurchase expectations in industrial buying

Expectations

Pre-purchase


situations (Paterson et al., 1997), risk management principles state that an

investor's expectation for a high rate of return should increase as the

probability of loss increases. The association of intangible services,

uncertainty, risk and expectations is an area yet to be examined in the service

literature.

In conclusion, expectations play a major role in determining consumers'

post-consumption service quality evaluations. It is therefore important

that the service marketer understands these expectations across the

intangibility continuum. When marketers know the consumer's quality

expectations, they are in a position to develop marketing strategies for

service delivery.

Objective and hypothesisThe objective of this research was to determine if the consumers' service

quality expectations varied across services based on the degree of total

intangibility; process and outcome.

In addition, another goal was to determine whether the importance of each of

the five service quality dimensions (Tangibles, Reliability, Responsiveness,

Assurance, and Empathy) would be affected by the intangibility of these

services. When consumers have little or no knowledge about a specific item

which they are about to purchase, their expectations for the performance of

that service will be high.

The hypotheses being tested were:

H01: Overall consumer expectations for service quality will vary with the

level of intangibility of the service.

H02: The weights assigned to the service quality dimensions will vary with

the intangibility of the service.

Because of the conflicting nature of the findings of the uncertainty, risk, and

expectations research, the hypotheses allow for either conclusion: the

direction of variance is not anticipated as either higher or lower for

intangibles versus tangibles.

MethodologyOperationalization of the tangibility construct

Three judges who are familiar with the problems of operationalization of the

tangibility construct in the marketing of services were asked to evaluate five

different items. These items varied in their degree of intangibility. The

original five items were selected to represent those with which a student

population would be most familiar. They were the services offered by a long

distance phone company, a book store, pizza shop, movie theater, and an

internet provider. Using the five item tangibility scale developed by

McDougall and Snetsinger (1990), an averaged score of five would indicate

a highly tangible product and a score of one would indicate a highly

intangible service. Three of the five items were selected for use in this study

because they represented a low, midpoint and high range on the tangibility

index: long distance phone service (1.6), book store services (3.2) and pizza

shop services (3.9). The phone service was selected to represent pure

services and the other two were selected to represent various degrees of the

`̀ bundle'' of product and service. Two items, a movie theater and internet

provider, were eliminated because their scores, 2.4 and 1.8 respectively,

did not distinguish them as high or low tangibility with respect to the other

three.

The objective

Evaluate services


Operationalization of service quality

The SERVQUAL instrument was selected to measure service quality.

SERVQUAL asks the respondent to evaluate 22 items on a seven point scale

from 1 = strongly disagree to 7 = strongly agree. These items werecustomized to evaluate the consumers' expectations of quality for the service

in question: pizza shop service, book store services, and a long distance

phone company. The respondents were also asked to allocate 100 points

amongst the five dimensions as to their importance for that same service.

The weighted expectations were derived by multiplying the expectation

scores by the weights allocated by the respondent. The respondents also rated

the level of tangibility of the service using the tangibility scale.

Sample

The SERVQUAL survey instrument was administered to 300 graduate andundergraduate student volunteers from three midwestern state universities.

Graduate and senior level undergraduate business students in a services

marketing course recruited student volunteers by phone from a list of

undergraduates from three nearby universities. Every tenth name was called,

until 300 students volunteered for the research. Volunteers were told that

there would be a time commitment of only ten minutes for each of the three

surveys. These three surveys were to be administered over a six week period.

In some instances the students mailed the surveys to the respondent on allthree occasions. Otherwise, the students were in direct contact with the

respondent and waited while it was completed, or returned to pick it up when

it was finished. The order in which the three different service surveys were

administered to the respondents was also randomly assigned by drawing

numbers. There were 261 respondents completing all three surveys, and 39

respondents who completed one or two of the three parts but who did not

finish the battery of three.

Research design

This research required a repeated measures design with three differenttreatments. The main criterion for a research design is that it adequately test

the hypotheses and answer the research questions. An appropriate

experimental design along with randomization where possible is necessary to

meet this criterion. A second criterion is control of the independent variables.

The key to this criterion is randomization: random selection of subjects and

random assignment of experimental treatments to groups. The dependent

variable was the respondents' expectations of service quality and theindependent variable was the specific service provider described in each of

the three parts of the survey. The series of three surveys were given to the

subject one at a time over a period of approximately 12 weeks, and the

treatment of service industries was randomly assigned to the subjects.

Repeated measures design is subject to context effects of practice,

sensitization and carry over which could limit the results of the experiment.

These potentially dampening effects of this design to the validity of the

research were minimized because of the method of survey administration.

Data analysisAs expected, the subjects' rating of tangibility for each of the three servicescorresponded to the scores given by the initial panel of judges. Long distance

phone service was given the overall lowest tangibility score (1.5), followed

by the book store services (3.0) and pizza shop services (4.2). This

information guided the development of a matrix of tangibility as the primary

characteristic for classifying services. Both process and outcome tangibility

Three surveys

Research design


are included in this analysis. Process tangibility is judged as either

intangible, where no `̀ evidence'' exists for the consumer to experience, ortangible where some amount of `̀ evidence'' is perceptually available for theconsumer. Outcome tangibility has four levels:

(1) a purely intangible service outcome;

(2) an intangible service outcome which is bundled with a product;

(3) a tangible service outcome, and;

(4) a tangible service outcome bundled with a product.

This matrix classification is illustrated in Figure 1. The tangibility scaleconfirmed the location of the services used in this study within this matrixclassification.

An analysis of variance for repeated measures was run to test the hypothesisthat there were no significant differences between the mean service qualityexpectation scores for the phone company, book store, and the pizza shop.The data analysis from this research suggests that consumers' expectations ofservices do vary based on the `̀ intangibility'' of the service, increasing asintangibility increases. If the process and outcome of a service is mostlyintangible (telephone company), a consumer's service quality expectationsare higher than if part of the service had some tangibility associated with it.In the case of a pizza shop service, where a tangible product is delivered andthe process consists of mostly invisible, unseen tangibles, service qualityexpectations were not as high as in the case of the completely intangibleservice. The same was true for the retail book store, where a tangible productis purchased, and the process consists of mostly visible tangibles.

Tables I and II show the results of this ANOVA. Table I shows the meanexpectation scores for each service quality dimension of SERVQUAL:Tangibles, Reliability, Responsiveness, Assurance, and Empathy. Thehighest possible expectation score would be a seven, and the lowest possiblescore would be a one. While there were no significant differences betweenthe selected services (p = 0.79) for the dimension of Tangibles, there weresignificant differences between services in the other four dimensions. Aconsumer's expectations of Reliability, Responsiveness, Assurance andEmpathy were all higher for the intangible services of the telephonecompany. The lowest consumer expectations were for the pizza shop service,where the outcome of the service was tangible (a pizza) and the processconsisted of mostly unseen tangibles.

Table II shows the results of the ANOVA for repeated measures for each of

the 22 expectation items of the SERVQUAL instrument (Appendix). There

INTANGIBLE PROCESS TANGIBLE PROCESS

TANGIBLE SERVICEOUTCOME/PRODUCTBUNDLE

TANGIBLE SERVICEOUTCOME

INTANGIBLE SERVICEOUTCOME/PRODUCTBUNDLE

INTANGIBLE SERVICEOUTCOME

FILM DEVELOPING

DOG GROOMING

MAIL ORDER OFCLOTHING

TELEPHONE SERVICES

CARPET INSTALLATION

PIZZA SHOP

RETAIL BOOKSTORE

MEDICAL EXAMINATION

Figure 1. Outcome and process intangibility

Analysis of variance

ANOVA


were significant differences between services on each of the quality

expectation items (p < 0.05). In two of the four Tangibles' items (Tangibles

2, 3) the consumers' expectations for an intangible service (telephone

company) were higher than for a more tangible service (pizza shop service or

retail book store). The pizza shop, the service with the highest tangibility, did

not have the lowest expectations scores on seven of the 22 items (Tangibles

2,3; Reliability 5,7,8; Assurance 15,16). In Tangibles 2 and 3, the

consumers' expectations for pizza were higher than for either a telephone

company or book store. In the other five items, the consumers' quality

expectations were lower than for the telephone company but higher than for

the bookstore.

Table III shows the results of the repeated measures ANOVA of the five

SERVQUAL dimension weights. The SERVQUAL instrument asks the

respondents to distribute 100 points (100 per cent) among the five

dimensions according to their importance to the respondent. The more

important the dimension, the more points that is allocated to that dimension.

There were no significant differences (p = 0.06) in the overall importance of

Responsiveness for any of the selected services. However, for Tangibles,

Reliability, Assurance, and Empathy, significant differences (p = 0.00) were

evident. In support of previous research, Reliability was the most important

dimension of service quality across all three services.

It is interesting to note the level of importance given to Tangibles across

these three services. The importance of Tangibles was lowest for the service

Dimension Mean Group F Hotelling T2

Tangibles

Phone company 4.99

Book store 4.95 0.19 0.79

Pizza shop 5.00

Reliability

Phone company 6.34 33.99 0.00

Book store 6.00 0.12

Pizza shop 6.02 0.73

Responsive

Phone company 6.30 24.74


Pizza shop 5.97

Assurance


Book store 5.87 3.51 0.06

Pizza shop 5.78

Empathy

Phone company 6.06


Pizza shop 5.72

Total expectation


Book store 5.77

Pizza shop 5.70

Note: The italic areas indicate no significant differences between means.Scaled 1.00 low-7.00 high

Table I. Service quality dimensions across services, n = 261

SERVQUAL


Expectation Mean F Hotellings T2

Modern-looking equipment T 4.82 6.75 0.00B 4.67P 4.42

Physical facilities will be visually appealing T 4.80 3.67 0.05B 4.98P 5.01

Employees will be neat T 5.05 11.11 0.00B 5.12P 5.50

Assc. materials will be visually appealing T 5.27 5.32 0.00B 5.02P 4.98

Promise to do something at a certain time T 6.42 25.91 0.00B 5.91P 6.05

Show sincere interest in solving problem T 6.40 12.99B 6.22P 6.05

Will perform the service right the first time T 6.36 7.65 0.00B 6.10P 6.25

Will provide service at the promised time T 6.44 10.84 0.00B 6.03P 6.21

Error-free records T 6.06 25.36 0.00B 5.74P 5.51

Customers told exactly when services will be T 6.20 16.02 0.00performed B 5.88

P 5.79Prompt service will be given T 6.40 8.63 0.00

B 6.15P 6.19

Employees will always be willing to help T 6.48 23.56 0.00B 6.36P 6.06

Employees will never be too busy to respond T 6.12 10.44 0.00B 6.04P 5.81

Will instill confidence in customers T 6.13 16.67 0.00B 5.75P 5.71

Customers will feel safe in their care T 5.99 19.84 0.00B 5.44P 5.50

Consistent courtesy with customers T 6.24 3.94 0.03B 6.07P 6.14

Knowledge to answer questions T 6.28 33.54 0.00B 6.23P 5.76

Give customer individual attention T 6.03 17.59 0.00P 5.58B 5.97

Convenient hours T 6.08 5.22 0.00P 5.85B 5.87

Give customers personal attention T 6.02 12.69 0.00B 5.85P 5.62

Have the customer's best interest at heart T 6.04 5.47 0.00B 5.87P 5.78

Understand the specific needs of their T 6.15 13.20 0.00customers B 6.03

P 5.78

Table II. Expectations across services


with least tangibility. The pizza shop, the service with the highest tangibility,

had the highest level of importance for tangibility.

Table IV shows the repeated measures ANOVA results for the weighted

quality expectations for each dimension (the product of each service quality

dimension mean score and the dimension weight). As with the unweighted

expectations, the weighted quality expectation means were significantly

different (p < 0.05) between the three services on all five dimensions of

service quality. The overall weighted total expectation score was highest for

the most intangible service.

ConclusionsThese research results suggest a need to better understand the effects of

intangibility on consumers' expectations for service quality. This research

considers the characteristic of tangibility as a key factor affecting consumer

service quality expectations. It recognizes the importance of tangibility as a

classifying criteria of services without adding multiple alternative

dimensions. It takes into consideration that consumers may not be able to

mentally `̀ unbundle'' goods and services, and that both process and outcome

tangibles are an important source of `̀ tangibility'' to the consumer and

producer. Including additional classification characteristics may only

confuse and confound the conceptualization of differences in services,

thereby hindering the development of marketing strategies.

As intangibility of the process and outcome of a service increase, we know

that the consumers' expectations of quality also increase. Specifically, the

consumers' expectations increase for Reliability, Assurance, Responsiveness

and Empathy. As intangibility increases, we also know that the relative

importance of each of these four dimensions increases.

Dimension Mean WT% Group Hotelling T2

Tangibles

Phone company 12 24.01 0.00

Book store 15

Pizza shop 17

Reliability

Phone company 31

Book store 26 20.15 0.00

Pizza shop 30 1.45 0.23

Responsive


Book store 25

Pizza shop 24

Assurance


Book store 18

Pizza shop 15 15.01 0.00

Empathy


Book store 15

Pizza shop 14 8.58 0.00

Total weight 100

Note: The italic areas indicate no significant differences between means

Table III. Dimension weights (%) across services, n = 261

Research results

Process and outcome


The SERVQUAL model describes these expectations as a consumer's

desired service, or that which the customer hopes to receive. As these desired

expectations increase, there is a greater chance that the provider will not be

able to meet them. In addition, as the dimension's importance increases,

consumers will be less willing to relax service standards (Berry and

Parasuraman, 1991).

Managerial implicationsIt appears that the first task for the service provider is to define adequately

the service which is being delivered to the consumer. One must determine

whether the outcome of the service act results in a tangible possession, an

intangible or a service ± product bundle. Next the provider must determine

whether the process is or is not experienced by the consumer. The tangibility

index and the matrix described in this research are a good starting point for

this analysis. Understanding the range of consumer experiences and service

outcomes as they relate to intangibility will assist the provider in planning

strategic marketing options for the service.

As an example of this, we can look at the implications of intangibility of the

service process on the consumer. When the service process is experienced by

the consumer (tangible), he/she may have questions regarding what to

expect. Using Figure 1, when carpeting is being installed the consumer might

want to know why pieces are being cut and seamed together, or how much

pounding will occur. In the case of the medical exam, the consumer may

wonder about the degree of discomfort that should be expected during an

Dimension Mean F T2

Tangibles



Pizza shop 0.91

Reliability

Phone company 1.97


Pizza shop 1.81 0.00

Responsive



Pizza shop 1.43

Assurance



Pizza shop 0.90

Empathy


Book store 0.90

Pizza shop 0.78

Total expectation


Book store 1.18

Pizza shop 1.16

Note: aThe product of the expectation means and the dimension weights as a percentage

Table IV. Weighteda expectations across services, n = 261

First task

Implications of intangibility


exam, or the reason for the detention of 20 minutes after an injection. When

processes are experienced (tangible), the provider has an opportunity to

demonstrate how a reliable service is produced. In the carpet installation

example, the provider can provide cues to reliability. The consumer might be

concerned that installers with dirty shoes and hands might not get the

installation of the new, white carpet `̀ right the first time''. In the case of the

medical exam, some cues to reliability might be an explanation for the wait

after the injection ± `̀ while most people don't have reactions to this

injection, the doctor would like to be nearby just in case''.

When service processes are not experienced by the consumer, the provider

may want to demonstrate reliability by giving the consumer a brochure

describing how each step in the process guarantees excellent results. In the

case of the dog grooming, the groomer may want to give the dog owner a list

of all of the steps that will be taken in the grooming process which will

insure that her dog will be safe and cared for while it is being groomed.

Second, the service provider must determine the level of quality expectations

which consumers have for their service industry ± and attempt to meet them!

Service quality, or desired, expectations are defined as a blend of what the

customer believes `̀ can be'' and `̀ should be'' (Zeithaml and Bitner, 1996).

The consumers' level of satisfaction with the service is related to the

confirmation or disconfirmation of their expectations. Reliability, doing it

right the first time, remains the most important service quality expectation,

no matter what the level of intangibility of the service. The tangibility matrix

can guide the service provider by providing a comparative framework within

which services with varying levels of tangibility can be equated or

contrasted. Understanding that consumers' expectations of service quality

may be higher or lower for certain other services will help the provider to

understand expectations in a comparative framework.

Third, the service provider needs to manage customers' service quality

expectations. An understanding that tangibility levels include both service

outcome and process will help the service provider with this task. One

technique which could be used to manage expectations would be to manage

the perceived risk associated with purchasing the service. While the linkages

between intangibility, perceived risk and expectations need to be explored

further, it appears reasonable to assume that as intangibility increases,

perceived risk will also increase. If there is risk and uncertainty associated

with the service because of intangibility, there could be the expectation that a

loss will occur ± of time, of money, and perhaps an increase in stress and

anxiety. As risk increases, the service provider could expect that a

consumer's quality expectations might also increase. After all, as in any

investment of time and money, the greater the risk one has to carry, the better

the rate of return one expects. If the consumer is unable to make an educated

decision about the purchase of a service due to its intangibility, risk should

increase, as should quality expectations ± it better work and it better work

right!

If intangibility increases a consumer's perception of risk, than the promise of

reliability should reduce it. Being reliable and becoming known for

reliability in the service arena reduces a customer's expectations by reducing

the need for service recovery (Berry and Parasuraman, 1991). However,

businesses need to be cautious in promoting their reliability. Overstating or

exaggerating claims concerning reliability can have the affect of raising

consumer expectations. Businesses should work on being reliable first, then

work on letting the consumers know about it.

Service provider

Perception of risk


Insuring reliability means a management commitment to service quality. As

in the production of tangibles, the production of intangibles requires

standardization without compromising customization potential.

Standardization of services requires the use of hard and soft technologies to

provide consistent service to customers. Hard technologies, or replacing

company personnel with machines, can help insure reliability of routine

tasks. This also helps free company personnel to interact with customers.

Soft technologies, or using a formal protocol for handling routine work, also

helps insure the quality performance of services. As intangibility of the

service increases, consumer expectations increase. Therefore,

standardization should be implemented whenever possible in order to meet

the consumers' increased expectations for reliability.

Once reliability has been established, becoming known for reliability can be

achieved both by consumer word-of-mouth communication and strategic

marketing efforts. A service can increase the consumers' perception of the

reliability of a service through both explicit and implicit service promises.

Implicit service promises may be represented by tangibles and serve as

evidence or cues for quality. These cues which lead to inferences about what

the service should or will be, serve as evidence of quality thereby reducing

risk for the consumer (Berry and Parasuraman, 1991).

Cues for reliability will take on a different level of importance for each

service. The implicit cues which serve as evidence of quality for a hospital

may be sparkling clean facilities and white uniforms (Bebko and Downing,

1994). These same cues will probably not have the same impact on a

consumer's perception of reliability for an auto mechanic as they do for a

hospital. Each service needs to undertake the task of determining which cues

are relevant and connote reliability to the consumer.

But what if the service fails to deliver what the consumer expects? While the

probability of loss occurring decreases with increased reliability, up to one

half of service resolutions fail (Andreason and Best, 1977). Many of the

criteria which consumers use in their evaluation involve how well they are

able to recover if service failure occurs. Reducing the risk of loss (unreliable

service delivery) is a matter of decreasing the value of the potential loss and/

or reducing the probability of a loss occurring.

The value of the potential loss is not recoverable by merely performing the

service over again for the consumer at no charge. Commonly, service

providers think in terms of replacing the service at no charge or simply

providing a monetary refund. But if the consumer needs to be present or is

involved with the service production act, then time and energy is lost, along

with the possibility of increased frustration and stress. A small, tangible gift

of regret over the failed service may be the extra value that can replace the

time and energy which the consumer has lost.

Understanding the intangibility of a particular service appears to have some

level of importance in understanding consumer quality expectations.

Managing those expectations means managing the risks a consumer faces

when buying a particular service. The service provider who is successful in

managing these risks will make it possible for consumers to paint a realistic

set of expectations for service quality.

References

Anderson, C. and Zeithaml, C. (1984), `̀ Stage of the product life cycle, business strategy and

business performance'', Academy of Management Journal, Vol. 27, March, pp. 5-24.

Reliability

Potential loss


Andreason, A. and Best, A. (1977), `̀ Consumers complain ± does business respond?'',

Harvard Business Review, pp. 93-101.

Bauer, R.A. (1960), `̀ Consumer behavior as risk taking'', in Dynamic Marketing for a

Changing World, American Marketing Association, Chicago, IL, pp. 389-93.

Bebko, C. and Downing, J. (1994), `̀ Impressions of service quality potential based on nurse

image'', Journal of Hospital Marketing, Vol. 9, pp. 55-77.

Bebko, C. and Prokop, R. (1996), `̀ Which consumers' expectations? SERVQUAL Gap 1

Analysis for non-professional services'', Proceedings, Northeast Decision Science

Institute 25th Anniversary Conference, St. Croix, VI.

Bell, M. (1981), `̀ A matrix approach to the classification of marketing goods and services'', in

Donnelly, J. and George, W. (Eds), The Marketing of Services, American Marketing

Association, Chicago, IL.

Bell, M. (1986), `̀ Some strategy implications of a matrix approach to the classification of

marketing goods and services'', Journal of the Academy of Marketing Science, Vol. 14,

pp. 13-20.

Berry, L. and Parasuraman, A. (1991), Marketing Services: Competing through Quality, The

Free Press, New York, NY.

Cox, D. (1967), Risk-taking and information handling in consumer behavior, Harvard

University, Boston, MA.

Garvin, D. (1982), `̀ Quality on the line'', Harvard Business Review, Vol. 61, September-

October, pp. 65-73.

GroÈnroos, C. (1977), `̀ The service marketing confusion and a service oriented approach to

marketing planning'', cited by Bateson in Eiglier, P. et al., Marketing Consumer Services:

New Insights, Marketing Science Institute, Cambridge, MA.

GroÈnroos, C. (1982), Strategic Management and Marketing in the Service Sector, Swedish

School of Economics and Business Administration, Helsingfors.

Guseman, D. (1981), `̀ Risk perception and risk reduction in consumer services'', in Donnelly,

J.H. and George, W. (Eds), Marketing of Services, American Marketing Association,

Chicago, IL, pp. 200-4.

Levitt, T. (1980), `̀ Marketing success through differentiation'', Harvard Business Review,

January-February, pp. 83-91.

Levitt, T. (1981), `̀ Marketing intangible products and product intangibles'', Harvard Business

Review, Vol. 59, pp. 94-102.

Lovelock, C. (1983), `̀ Classifying services to gain strategic marketing insights'', Journal of

Marketing, Vol. 47, pp. 9-20.

Lovelock, C. (1991), Services Marketing, 2/E, Prentice-Hall, Englewood Cliffs, NJ.

McDougall, G. and Snetsinger, D. (1990), `̀ The intangibility of services: measurement and

competitive perspectives'', Journal of Services Marketing, Vol. 4, pp. 27-40.

Morris, B. and Johnston, R. (1987), `̀ Dealing with inherent variability: The difference between

manufacturing and service?'', International Journal of Production Management, Vol. 7,

pp. 13-44.

Murray, K. and Schlacter, J. (1990), `̀ The imapct of services versus goods on consumers'

assessment of perceived risk and variability'', Journal of the Academy of Marketing

Science, Vol. 18, pp. 51-65.

Oliver, R.L. (1981), `̀ What is customer satisfaction?'', The Wharton Magazine, Spring,

pp. 36-41.

Parasuraman, A., Zeithaml, V. and Berry, L. (1985), `̀ A conceptual model of service quality

and its implications for future research'', Journal of Marketing, Vol. 49, Fall, pp. 41-50.

Parasuraman, A., Zeithaml, V. and Berry, L. (1988), `̀ SERVQUAL: A multiple Item scale for

measuring consumer perceptions of service quality'', Journal of Retailing, Vol. 64, Spring,

pp. 12-40.

Paterson, P., Johnson, L. and Spreng, R. (1997), `̀ Modeling the determinants of customer

satisfaction for business-to-business professional services'', Journal of the Academy of

Marketing Science, Vol. 25, Winter, pp. 4-17.

Rathmell, J. (1966), `̀ What is meant by services?'', Journal of Marketing, October, pp. 32-6.

Rice, J., Slack, R. and Garside, P. (1981), `̀ Hospitals can learn valuable marketing strategies

from hotels'', Hospitals, Vol. 55, pp. 119-24.


Rushton, A. and Carson, D. (1989), `̀ The marketing of services: Managing the intangibles''.

European Journal of Marketing, Vol. 23, pp. 23-44.

Shostack, G.L. (1977), `̀ Breaking free from product marketing'', Journal of Marketing, April,

pp. 73-80.

Tse, D. and Wilton, P. (1988), `̀ Models of consumer satisfaction formation: an extension'',

Journal of Marketing Research, Vol. 25, May, pp. 204-12.

Webster, C. (1989), `̀ Can consumers be segmented on the basis of their service quality

expectations?'', Journal of Services Marketing, Vol. 3, Spring, pp. 35-53.

Zeithaml, V. (1981), `̀ How consumer evaluation processes differ between goods and

services'', in Donnelly and George (Eds), Marketing of Services, American Marketing

Association, Chicago, IL, pp. 186-90.

Zeithaml, V. and Bitner, M.J. (1996), Services Marketing, The McGraw-Hill Companies, Inc.,

New York, NY.

Zeithaml, V., Berry, L. and Parasuraman, A. (1993), `̀ The nature and determinants of customer

expectations of service'', Journal of the Academy of Marketing Science, Vol. 21, pp. 1-12.

Zeithaml, V., Parasuraman, A. and Berry, L. (1990), Delivering Service Quality: Balancing

Customer Perceptions and Expectations, The Free Press, New York, NY.

Appendix

Tangibility

The appearance of the company's physical facilities, equipment, personnel, and

communication materials.

. Excellent companies will have modern-looking equipment.

. The physical facilities at excellent companies will be visually appealing.

. Employees at excellent companies will be neat-appearing.

. Materials associated with the service (such as pamphlets or statements) will be visually

appealing at an excellent company.

ReliabilityThe company's ability to perform the promised service dependably and accurately.

. When people in excellent companies promise to do something by a certain time, they will

do so.

. When a customer has a problem, excellent companies will show a sincere interest in

solving it.

. Excellent companies will perform the service right the first time.

. People in excellent companies will provide their services at the time they promise to do so.

ResponsivenessThe company's willingness to help customers and provide prompt service.

. Excellent companies will insist on error-free records.

. Employees in excellent companies will tell customers exactly when services will be

performed.

. Employees in excellent companies will give prompt service to customers.

. Employees in excellent companies will always be willing to help customers.

. Employees in excellent companies will never be too busy to respond to customer requests.

AssuranceThe knowledge and courtesy of the company employees and their ability to convey trust and

confidence.

. The behavior of employees in excellent companies will instill confidence in customers.

. Customers in excellent companies will feel safe in their care.

. Employees in excellent companies will be consistently courteous with customers.

. Employees in excellent companies will have the knowledge to answer customer questions.


EmpathyThe caring, individualized attention the telephone company provides its customers.

. Excellent companies will give customers individual attention.

. Excellent companies will have hours convenient to all their customers.

. Excellent companies will have employees who give customers personal attention.

. Excellent companies will have the customer's best interest at heart.

. The employees of excellent companies will understand the specific needs of their

customers.

&


Executive summary and implications for managers andexecutives

Service processes and outcomesServices differ according to the degree of intangibility, or lack of physical

attributes, of their outcome. Dog grooming, for example, may have a more

tangible outcome than a medical examination. Services also differ according

to the intangibility of their production process. Film developing, for

example, takes place out of sight of the customer. In contrast, a carpet fitter

may work under the close eye of the customer whose carpet is being fitted.

Customers evaluate the quality of a service with regard to the elements they

actually experience in the course of the service delivery and, of course, on

their perceptions of the outcome.

Bebko suggests that there are five dimensions by which consumers evaluate

service quality:

(1) Tangibles ± the appearance of physical facilities, equipment, personnel

and communications material.

(2) Reliability ± the ability to perform the promised service dependably and

accurately.

(3) Responsiveness ± the willingness to help the customer and to provide

prompt service.

(4) Assurance ± the knowledge and courtesy of employees and their ability

to convey trust and confidence.

(5) Empathy ± the caring, individualized attention the firm provides to its

customers.

Reliability largely concerns whether the outcome of the service was as

promised. The other four factors concern the process of service delivery.

The link between intangibility and service qualityBebko investigated whether the consumer's service quality expectations

varied across services based on the degree of total intangibility (process and

outcome) and whether the importance of each of the five service quality

dimensions would be affected by the intangibility of the services. The

investigation concentrated on three services ± those provided by long

distance telephone companies, book stores and pizza shops. Long distance

telephone calls were given the overall lowest tangibility score, followed by

book stores and pizza shops.

The results show that as the intangibility of the process and outcome of a

service increase, the consumers' expectations of quality also increase.

Specifically, the consumers' expectations increase for reliability, assurance,

responsiveness and empathy. As the desired expectations increase, there is a

greater chance that the provider will not be able to meet them.

When the consumer experiences the processes of a service, the provider has

the opportunity to demonstrate how a reliable service is produced. When

service processes are not experienced by the consumer, the provider may

decide to demonstrate reliability by giving the consumer a brochure

describing how each step in the process guarantees excellent results.


This summary has beenprovided to allow managersand executives a rapidappreciation of the contentof this article. Those with aparticular interest in thetopic covered may then readthe article in toto to takeadvantage of the morecomprehensive descriptionof the research undertakenand its results to get the fullbenefit of the materialpresent

Managing customers' service quality expectationsThe service provider must determine the level of quality expectations which

consumers have for their service industry ± and attempt to meet them. In

addition, the service provider needs to manage customers' service quality

expectations. One way of doing this could be to manage the perceived risk

associated with purchasing the service. As intangibility increases, perceived

risk will also increase. If there is risk and uncertainty associated with the

service because of intangibility, there could be the expectation that a loss of

time or money, or an increase in stress and anxiety, will occur. As risk

increases, the service provider could expect that a consumer's quality

expectations might also increase. After all, as in any investment of time and

money, the greater the risk one has to carry, the better the rate of return one

expects. If the consumer is unable to make an educated decision about the

purchase of a service because of its intangibility, risk should increase, as

should quality expectations.

If intangibility increases a consumer's perception of risk, the promise of

reliability should reduce it. But businesses need to be cautious in promoting

their reliability. Overstating claims of reliability can raise customer

expectations. Businesses should work on being reliable first, then work on

letting customers know about it.

(A preÂ cis of the article `̀ Service intangibility and its impact on consumerexpectations of service quality''. Supplied by Marketing Consultants forMCB University Press.)


Documents

Service intangibility and its impact on consumer expectations of service quality