1

SERVICE SECTOR MANAGEMENT

WHAT IS SERVICES
Services include all economic activities whose output is not a physical
product or construction, is generally consumed at the time it is produced and
provides added value in forms (such as convenience, timeliness, comfort or
health).
That is essentially intangible concerns of its frst purchaser.
DIFFERENCES BETWEEN SERVICES AND CUSTOMER SERVICES
A company lie !"# o$ers repair and maintenance service of e%uipment,
consultancy, training services etc. These services may include a tangible
product lie a report or train manual. &ustomer Services , however is the
service provided in support of a company's core product ( ie answering
%uestion , taing orders ,dealing with billing issue , handling complaints etc
Typically there is no charge for customer service is essential for building
customer relationship . &ustomer services are hence di$erent from services
provided for sale by a company. )ederal *+press maret and delivers
services. !t also provides a high level of customer services. !ts services are
overnight pacage delivery, and logistics services. !ts customer services
include well trained sta$ who can answer all %uestion on telephone, on line
tracing of parcels etc.
CONCEPT OF SERVICE MARKETING
The perception of service mareting focuses on selling the services in the
best interest of users,customers. #areting a service is meant mareting
something intangible. !t is mareting a promise. !t is more selling yourself. !n
the mareting of services, we go through a number of problems directly or
indirectly in-uencing the business inde+. The problems lie maret
segmentation, mareting information system, behavioural management are
studied minutely which simplify the tas of formulating a sound mi+ for
mareting, such as .roduct mi+, .romotion mi+, .rice mi+ and the .lace mi+.
!t is important to mention that we fnd People an
important mi+ of mareting services. !f we maret the services in a right
direction, the available opportunities can be capitali/ed on optimally and also
it contributes substantially to the process of development. !n view of the
above, we observe the following ey points regarding the concept or
perception of services mareting0
!t is a managerial process of managing the services.
!t is an organi/ed e$ort for providing a sound foundation for the
development of an organi/ation.
1
!t is a social process helping an organi/ation to understand the emerging
social problem and to tae part in the social transformation process to 2ustify
its e+istence in the society.
SERVICE MANAGEMENT
Service #anagement is 0
1) To understand the utility the customers rceicve by consuming or using the
service o$ering of the organi/ation
1) To understand how the organi/ation (personnel, technology, physical
resources, systems and
customers)will b able to produce and deliver this utility
3) To understand how the organi/ation should be developed and managed so
that the intended %uality can be achieved
4) To mae the organi/ation function so that this %uality can be delivered on
a continuous basis
GOODS SERVICE CONTINUUM
As per Theodore 5evit 6There is no such things as service industries. There
are some service industries whose service component are greater (or less)
than those of other industries7. *verybody is in service. The point that
5eavitt was trying to put across is that with almost every tangible physical
product an intangible servicecomponent is associated. Therefore every body
is in service.8e has further put that goods can be put into two categories
Philip kotler suggests 4 ctegories
1) .ure tangible (salt)
1) #a2or tangible with minor intangibles (soap)
3) #inor tangible with ma2or intangibles (consultancy)
4) .ure service (teaching)
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The above diagram shows the Service ( goods continuum ( some goods
being tangible dominant others being service dominant. The fast food outlets
has almost 9:,9: of tangible and intangible parts i.e. in this case both
tangible factors such (food) and intangible such as (services) is important.
That is the reason it come in the middle.
!n case of other products lie salt there services won't play any important
role so it is more towards tangible and in case of teaching profession it is
purely service dominated. ;e never nown about service with out
e+periencing and in this manner various goods fall in place according to its
category i.e. less service oriented or more service oriented.
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9
<< American #areting association has defned services as 6activities,
benefts or satisfactions, which are o$ered for sale or provided in connection
with sale o goods7. This defnition too a limited view of services as it
proposed that services are o$ered only in connection with sale of goods.
<< =obert >udd defned services as 6 a maret transaction by an enterprise or
entrepreneur, where the ob2ect of maret transaction is other than the
transfer of ownership of a tangible commodity7
This recognised three broad areas of services
The right to possess and use a product (rented goods service)
The customs creation, repair, or improvement of a product (owned goods
service)
?o product elements but rather e+perience or what might be termed as
e+periential possession (nongoods service)
<< "lois defnes services, as 6a service is an activity o$ered for sale which
yields benefts and satisfactions without leading to physical change in the
form of a good7
<< @otler and "loom defnes services as 6an activity or beneft that one party
can o$er to another that is essentially intangible and dos not result in the
ownership of any thing. !ts production may not my not be tied up to a
physical product7.
<< Aummesson says, 6 Services is something which can be bought and sold
but which you cannot drop on your foot7.
<< According Aronross 6a service is an activity or series of activities of more
or less intangible in nature that normally, not necessarily, tae place in
interactions between the customer and the service employees and,or
physical resources or goods and,or system of the service provider, hich are
provided as solution to customer problems.7
)rom this it follows that
Services are by and large activities, or a series of activities rather than
things
As a result they are intangible
They tae place in interaction between the customer and service provider (
which means that services are produced and consumed simultaneously
&ustomer has a role to play in the production process as services are
provided in response to the problems of customers as a solution.
!"# Chrcteristics o$ Ser%ices &' its Mrketi&g I(plictio&s
The main &haracteristics of Services are 0
!ntangibility
!nseparability
8eterogeneity
.erishability
I&t&gi)ilit*
B
Services are actions and hence they are intangible. Cue to this it is not
possible to stoc services and hence -uctuations in demand becomes
diDcult to manage. 8otels have same number of rooms all through the year
but the customers re%uiring the room are always varying with some months
seeing very few customers while other months seeing a rush of customers.
)urther services cannot be patented and any new concept can be easily
copied by competitors. These cannot be readily displayed or easily
communicated, and hence it will be diDcult for the consumers to assess the
%uality. This also creates a problem for what to include in advertisements and
promotional materials. )urther the actual cost of 6unit service7 is diDcult to
determine and hence pricing becomes diDcult.
I&sepr)ilit*
Services are generally created or supplied simultaneously. They are
inseparable. )or e.g., the entertainment industry, health e+perts and other
professionals create and o$er their service at the same given time. Services
and their providers are associated closely and thus+ not separable. Conald
&owell states Goods are produced, sold and then consumed whereas the
services are sold and then produced and then consumed. A service is
produced when it is consumed eg. a dinning e+perience. Thus the customers
are present when the service is produced thus other customer play an
important role in satisfaction. The service producer also plays an important
role in %uality. Thus mass production is impossible, it is not possible to get
economy of scale by centralisation, operations has to be decentralised to
deliver to the consumer directly at convenient locations. A 6problem
customer7 can result in disruption of service production process creating a
dissatisfaction forhimself, other customers and also to the service producer.
Heterogeneity
As services are produced by humans, hence no two services can be identical.
)urther no two customers are precisely alie and hence their e+periences of
the same service are di$erent. *ven the same customer can be with di$erent
frame of mind at di$erent times ( which results in di$ering satisfactions from
the same service at di$erent times.
*g. A ta+ consultant may provide di$erent a service e+perience to two
di$erent customers on the same day depending upon their needs and on
whether the consultant is meeting the customer when he is fresh in the
morning or tired at the end of the day. "ecause of this ensuring a consistent
%uality becomes a challenging 2ob. The %uality depends upon a number of
factors lie the customer, service provides, other customers (their presence
or even absence) etc., hence the service provider cannot now if the service
is delivered in a manner which has been originally planned and promoted.
Sometimes services are provided by a third party further increasing the
heterogeneity.
Perish)ilit*
E
Services cannot be stored, saved, resold or returned. A bad haircut cannot be
returned or resold to another customer. 8ence demand forecasting and
creative planning to meet the demand is a problem. )urther one has to be
right the frst time or if things go wrong one should have strong recovery
strategies to retain the customer goodwill. Cue to these characteristics of
services the mareteers face a ma2or challenge in mareting of Services.
REASONS FOR THE GROWTH OF SERVICE INDUSTR
!t is obvious that the growth in the services sector has been
substantive. The reasons for this
growth are %uite a few, some of which are summari/ed as follows.
AFuence0 G The increase in per capita income from =upees 13H.H in
1I9: to =upees 11,I34.9 in 1IIH is an indicator of he increase in
general aFuence has given rise to service lie pestGcontrol, personal
security, interior designer, etc.
5eisure time0 G .eople do get some time to travel and holiday and
therefore there is a need for travel agencies, resorts, hotels, and
entertainment. There are other's who would lie to utili/e this time to
improve their career prospects and therefore there is a need for adult
education,distance learning,part time courses.
5ife e+pectancy0 G The health programmed have signifcantly
contributed to an increase in life
e+pectancy given rise to services lie old age homes, nursing homes,
health care, etc.
;oring wives0 G As more and more women have started woring, the
need for day care for children has increased, and so is the care with
paced food and home delivery.
.roduct comple+ity0 G A large no. of products are now being
purchased in households which can be serviced only by speciali/ed
persons lie water purifes, micro wave ovens, home computers, etc.
giving rise to the need for services lie after sales service agents for
durables, maintenance service providers, etc.
5ife comple+ity0 G As the daily routine gets busier, individuals fnd it
diDcult to manage things on their own. Their leads to an obvious need
for ta+ consultants, legal advisors, property advisers, etc.
=esource scarcity and ecology0 G As the natural resources are
depleting and need for conservation is increasing, we have seen the
coming up of service providers lie pollution control agencies, car,
pools, water management, etc.
H
?ew products0 G the development in information technology has
given rise to services lie .&Js, .ager service providers, ;eb Shoppe,
etc
C,NTRI-.TI,N ,/ SERVICE IN0.STR1 T, IN0IAN EC,N,M1 AN0
W,R20 EC,N,M1
W,R20 SCENARI,
as economy shifts from developing to developed stage, they will
show more and more shift toward services
today, the fastest growing segments of the KS economy is services
in 1I4H 94L of the AC. of KS was generated by services which is
H:L now
employment in this sector which was 99L in 1I9: is now H3L
the KS balance of trade in goods has remained in the red for many
years, but there has been a trade surplus in services
today service sector dominates the economics of many developed
nations. As countries develop the role of agriculture in the economy
declines and that of services increase.(china has 9:L AC. from
service, 39L from industry, and 19Lfrom agriculture)
during recession it has been seen that service output declines less
than industrial output ( the service employment is less sensitive to
business cycle -uctuation
globalisation as strategy for service frm is becoming more important
IN0IAN SCENARI,
The service sector now accounts for more than half of !ndiaMs AC.0
91.1B per cent in 1IIHGII. This sector has gained at the e+pense of
both the agricultural and industrial sectors through the 1II:s. The rise
in the service sectorMs share in AC. mars a structural shift in the
!ndian economy and taes it closer to the fundamentals of a developed
economy (in the developed economies, the industrial and service
sectors contribute a ma2or share in AC. while agriculture accounts for
a relatively lower share).
The service sectorMs share has grown from 43.BI per cent in 1II:GI1
to 91.1B per cent in 1IIHGII. !n contrast, the industrial sectorMs share
in AC. has declined from 19.3H per cent to 11.:1 per cent in 1II:GI1
and 1IIHGII respectively. The agricultural sectorMs share has fallen
from 3:.I3 per cent to 1B.H3 per cent in the respective years.
Some economists caution that if the service sector bypasses the
industrial sector, economic growth can be distorted. They say that
service sector growth must be supported by proportionate growth of
the industrial sector, otherwise the service sector grown will not be
sustainable. !t is true that, in !ndia, the service sectorMs contribution in
I
AC. has sharply risen and that of industry has fallen (as shown above).
"ut, it is e%ually true that the industrial sector too has grown, and
grown %uite impressively through the 1II:s (e+cept in 1IIHGII). Three
times between 1II3GI4 and 1IIHGII, industry surpassed the growth
rate of AC.. Thus, the service sector has grown at a higher rate than
industry which too has grown more or less in tandem. The rise of the
service sector therefore does not distort the economy.
the share of agriculture sector to AC. has come down from 9:L in
1IB: to 14L
service sector contribution to AC. is around 94L with an annual
growth of HL
employment in this sector is around 9:L
the response to liberation has been more in service sector, partly
because lower f+ed investment re%uirements, e+ample0G today's
concept of baning
technological advances have made it possible for !ndia to compete
on global basis in areas lie
SJ)T;A=*, !T, 8*A5T8, *CK&AT!J?, etc.,
in addition lower wage structure has helped to develop &A55
&*?T=*'s, #*C!&A5
T=A?S&=!.T!J?, etc.,
from 1IIB "S* has given a prominent place to service industry in it's
3: share inde+
since no ta+ is imposed on agriculture sector, most of the ta+ came
from manufacturing sector. now services are being ta+ed
service ta+ collection is to the tune of 9::: crore. H3L of this is
contributed by service sectors. 91L G Telecom, others are !nsurance,
AC agencies, &ourier and stoc broers.
many e+port benefts lie *.&A is now e+tended to the service
sector.
in last 19 years the increase in employment in the organi/ed sector
is 9EL while if only service sector is considered it is E:L(other than
service sector it 41L)
!ndia's service e+ports in1IIE were I.3 billion N against its
merchandi/ed e+ports of N31.1 billion. !t is e+pected that service
e+ports could a third of merchandi/e e+ports now this will be well
above the global average of O. !t implies that !ndia which has failed to
catch the bus in the e+ports of manufactures is among the early
leaders of the developing world in the race for service e+ports.
;ithin the services sector, the share of trade, hotels and restaurants
increased from 11.91 per cent in 1II:GI1 to 19.BH per cent in 1IIHGII.
The share of transport, storage and communications has grown from
9.1B per cent to E.B1 per cent in the years under reference. The share
of construction has remained nearly the same during the period while
1:
that of fnancing, insurance, real estate and business services has risen
from 1:.11 per cent to 11.44 per cent.
The fact that the service sector now accounts for more than half the
AC. probably mars a watershed in the evolution of the !ndian
economy.
.N0ERSTAN0ING THE C,NS.MER
! 3N,W2E0GE ,/ THE -.1ER
!n buying decisions many times other people also in-uence the decision. !n
services these roles are played by many persons. !n purchase of any service
si+ distinct roles are played
!nitiator 0 The person who has a specifc need and proposes to buy a
service
!n-uencer 0 The person or group of persons whom the decision maer
refers to or who advice the decision maer.
Aate @eeper 0 The person or organi/ation or promotional material,
which act as flter on the range of services which enter the decision
choice
Cecider 0 The person who maes the buying decision
"uyer 0 The person maes the actual purchaser
Kser 0 The actual user.
)or e+ample if a sales e+ecutive wants to do a maret tour PP.
Hi! "o!! #$y "e t%e initi$tor
The travel agency may act as a Aateeeper
The fnance department may be the in-uencer
The administrative department the buyer
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The e+ecutive the user. !n this case the user may have no role in the
buying process. 8ence while targeting a customer the service provider
may have to in-uence other persons.
C,NS.MER 0ECISI,N MA3ING"
The consumer's decision to purchase or re2ect a product or service is the
moment of fnal truth for the mareter. !t signifes the mareting strategy has
been wise, insightful and e$ective, whether it was poorly planned and
missed the mar. #areter are, therefore, interested in the consumer
decisionGmaing process by which a consumer selects an alternative
amongst the lot available. The decision not to buy is also an alternative.
A simple consumer decisionGmaing model, ties together the psychological,
social and cultural concepts into an easily understood framewor. The
decision model has three distinct sets of variables0
1. !nput Qariables,
1. .rocess Qariables,
4" Jutput Qariables.
I&put Vri)les56
!nput variables are those variables which a$ect the decision maing process
and include commercial mareting e$orts as well as nonGcommercial
in-uences from the consumer's socioGcultural environment.
0ecisio& Vri)les56
The decision process variables are in-uenced by consumer's own
psychological felds, which a$ect their recognition of a need, their preG
purchase search for information and their evaluation of alternatives.
,utput Vri)les56
The output phase of the model includes the actual purchase (either trial or
repeat purchase) and post purchase evaluation. "oth preGpurchase and postG
purchase evaluation feed bac in the form of e+perience into the consumer's
psychological feld and serves to in-uence future decision processing. (Jn a
holiday a customer may change hotels in between his stay).
/ctors I&7ue&ci&g The -u*i&g -eh%iour
Situational )actors 0 Time, Store's atmosphere, #areting Stimuli (the
occasion)
.ersonal )actors 0 .ersonality, life style, Jther demographic factors lie
age, gender, occupation etc.
Social )actors 0 &ulture, reference group, family
.sychological )actors 0 .erception, attitude, motivation
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TEN S.CH 8.A2ITIES WHICH IN/2.ENCE THE C,NS.MER9S
EVA2.ATI,N ,/
SERVICES :8ulit* 0i(e&sio&s o$ Ser%ices;
Co&siste&c*& ' it involves consistency and reliability of performances and
dependability. !t means that the frm performs the service right the frst
time. !t also means that the frm honours its promises especially in terms of
accuracy in billing, record eeping and performing the service at the
designated time.
Co&cer&56it is the willingness or responsiveness of employees to provide
the service. !t involves timeliness of service or giving prompt service, calling
the customer bac %uicly or mailing the transaction slip immediately.
Co(pete&ce5 6 it means having the re%uired sills and nowledge to
perform the service. !t involves nowledge and sill of the contact personnel,
nowledge and sill of operating support personnel and research capability
of the organi/ation. *.g. securities broerage frm.
Co&tct56 it involves approachability, access and ease of contact. !t means
that the service is easily accessible by telephoneR waiting time to receive the
services is not e+tensive, convenient hours of operation and convenient
location of service facility.
Courtes*0G it involves politeness, report, consideration and friendliness of
contact personnel. !t includes consideration for the consumer's property.
&lean and neat appearance of public contact personnel. *.g. no muddy shoes
on the carpet, proper telephone operators etc.
Co((u&ictio&56 it means eeping consumers informed in a language
that they can understand and listen to them. !t may mean that the company
has to ad2ust its language for di$erent consumers ( increasing the level of
sophistication with a well educated consumer and speaing simply and
plainly with a novice. !t involves e+plaining the service itself and how much
the service will cost e+plaining
the tradeGo$ between service and cost and assuring the customer that a
problem will be handled.
Cre'i)ilit*5 6 it involves trustworthiness, believability, honesty. !t involves
having the customer's best interest at heart thus contributing to credibility,
company name and reputation, personal characteristics of the contact
personnel and degree of hard sell involved in interaction with the customer.
Co&<'e&tilit*5 6 the security and the freedom from ris or doubt,
involving physical safety, fnancial security or confdentiality.
Custo(er k&o=le'ge5 6 it involves maing the e$ort to understand the
customer's needs, i.e. learning the customer's specifc re%uirements,
providing individuali/ed attention and recogni/ing the regular customer.
T&gi)les5 6 it includes physical evidence of the service, physical facilities,
and appearance of
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personnel tools or e%uipments used to provide the service, physical
representations of the service such as a plastic credit card or a ban
statement and other customers in the service facility.
THE SERVICE ENC,.NTERS :M,MENT ,/ TR.TH";
M,MENTS ,/ TR.TH
)rom the customer's point of view, the most vivid impression of service
occurs in the ser%ice e&cou&ter or 6Mo(e&t ,$ Truth,7 when the
customer interacts with the service frm. This is the foundation to
6Satisfaction of Service Suality7 ( it is where the promises are ept or
broen. This concept was put forth by =ichard ?orman, taing the metaphor
from "ull )ighting. #ost services are results of social acts, which tae place in
direct contact between the customer and the service provider. At this stage
the &ustomer realises the perceived service %uality.
ENC,.NTER CASCA0E
*very #oment of Truth is !mportant ( according to Scandinavian Airlines,
each one of their 1: million customers come in contact with 9 employees.
Thus the airlines say there 9: million moments of truth ( each one is
managed well and 6They prove they are the "*ST7.
8owever some encounters are more critical. The encounter cascade refers to
a series of encounters right from the time a customer comes to tae the
service. The encounter cascade can be important as any encounter can be
critical, as it determines customer satisfaction and loyalty. !f it's the frst
interaction of the customer then the initial interaction will be the frst
impression. So, these interactions have to be given importance, as they are
critical and in-uences customer's perception of the organi/ation.
E>(ple0
A customer calling for the repair service may switch to some other company
if he is put on hold for a long time or even treated rudely. *ven if the
technical %uality of that frm is superior, the frm may not get a chance to
prove themselves in front of the customer. ;hen the customer has had many
interactions with frm, each encounter will be important as it will create a
combined image of that frm. #any positive e+periences will give an image of
8igh Suality and many negative e+periences will represent a bad image.
&ombination of positive and negative interactions will leave the customer
confused about the Suality.
!t is suggested that not all encounters are e%ually important in building longG
term relations. )or every organi/ation, certain encounters can act as a ey to
customer satisfaction" /or e>(ple5 for #A==!JT hotels, it is the early
encounters that are important. !n a hospital conte+t, a study of patients
revealed that encounters with the nursing sta$ were more important in
predicting the customer satisfaction. As it is rightly said 6one bad apple can
ruin the whole baset of apples.7 The same applies in this tooR one negative
encounter can drive the customer away, no matter how many encounters
14
had taen place in the past. So a frm has to give a lot of importance to such
encounters. 6A customer who has been using a ban for nearly 19 years is
%uite happy with the service. 8e has a huge deposit and many accounts. Jne
fne morning, when he comes out of the ban the watch man ass =s. 1: for
paring charges of his car. 8e goes inside the ban and informs the cler at
the counter, who directs him to the oDcer. The oDcer directs him to the
#anager, who says he is helpless as this is a new policy of the ban. The
customer who was so happy with the ban services decides to close all his
accounts ( 6Some encounters can be very &ritical7.
Among the service encounters a hotel customer e+periences are checing in,
being taen to the room by a bell person, eating a restaurant meal etc as
shown in the fgure. !t is in these encounters that the customer receives an
overall view of the organi/ations service %uality and encounter contributes to
customer satisfaction and willingness to do business with the organi/ation
again. As for the company, each encounter represents an opportunity to
prove its potential as a %uality service provider and to increase customer
loyalty.
Some services have few service encounters and others have many. #istaes
or problems that occur in the early levels of the service cascade can e critical
because failure at one point results in greater ris of dissatisfaction in the
long run. #A==!JT 8otels learned this through their e+tensive customer
survey to determine what service element contributes to customer loyalty.
They found that 4 out of 9 factors came into play in the frst 1: minutes of
the guest's stay.
T1PES ,/ ENC,.NTERS
19
A service encounter occurs every time a customer interacts with the service
organi/ation. There are three general types of encounters G remote
encounters, phone encounters, and face to face encounters. A customer
may e+perience any of these types of encounters, or a combination of all
three in his or her relations with a service frm.
Re(ote E&cou&ter56
*ncounter can occur without any direct human contact is called as =emote
*ncounters. Such as, when a customer interacts with a ban through the AT#
system, or with Ticetron through an automated ticeting machine, or with a
mailGorder service through automated dialGin ordering. =emote encounters
also occur when the frm sends its billing statements or communicates others
types of information to customers by mail. Although there is no direct
human contact in these remote encounters, each represents an opportunity
for a frm to reinforce or establish perceptions in the customer. !n remote
encounter the tangible evidence of the service and the %uality of the
technical process and system become the primary bases for 2udging %uality.
E?AMP2E56
Services are being delivered through technology, particularly with the advent
of !nternet applications. =etail purchases, airline ticeting, repair and
maintenance troubleshooting, and pacage and shipment tracing are 2ust a
few e+amples of services available via the !nternet. All of these types of
service encounters can be considered remote encounters.
Pho&e E&cou&ters56
!n many organi/ations, the most fre%uent type of encounter between a
customer and the frm occurs over the telephone is called as phone
encounter. Almost all frms (whether goods manufacturers or service
businesses) rely on phone encounters in the form of customerGservice,
general in%uiry, or orderGtaing functions. The 2udgment of %uality in phone
encounters is di$erent from remote encounters because there is greater
potential variability in the interaction. Tone of voice, employee nowledge,
and e$ectiveness,eDciency inhandling customer issues become important
criteria for 2udging %uality in these encounters.
/ce6to @/ce E&cou&ters56
A third type of encounter is the one that occurs between an employee and a
customer in direct contact is called as )aceGtoG)ace *ncounter. !n a hotel,
face ( to ( face encounters occurs between customers and maintenance
personnel, receptionist, bellboy, food and beverage servers and others.
1B
Cetermining and understanding service e%uality issues in face ( to (face
conte+t is the most comple+ of all. "oth verbal and nonGverbal behaviours
are important determinants of %uality, as are tangible cues such as
employee dress and other symbols of service (e%uipments, informational
brochures, physical settings). !n face ( to ( face encounters the customer
also play an important role in creating %uality service for herself through her
own behaviour during the interaction. At Cisney theme pars, faceGtoGface
encounters occur between customer and ticetGtaers, maintenance
personnel, actors in Cisney character costumes, ride personnel, food and
beverage servers, and others. )or a company such as, !"#, in a businessGtoG
business setting direct encounters occur between the business customers
and salespeople, delivery personnel, maintenance representatives, and
professional consultants. Jf
all determining and understanding service %uality issues in faceGtoGface
conte+t is the most comple+. "oth verbal and nonGverbal behaviours are
important determinants of %uality, as are tangible cues such as employee
dress and other symbols of service (e.g., e%uipment, informational
brochures, and physical settings). !n face toG face encounters the customer
also plays a role in creating %uality service for herself through her own
behaviour during the interaction.
SERVICE /AI2.RES AN0 REC,VER1
SERVICE /AI2.RES
*ven with the "est organi/ations failures can 2ust happen ( they may be due
to the service not available when promised, it may be delivered late or too
slowly (some times too fast TT), the outcome may be incorrect or poorly
e+ecuted, or employees may be rude or uncaring. All these types of failures
bring about negative e+periences. !f left unf+ed they can result in customers
leaving, telling others about the negative e+periences or even challenging
through consumer courts. =esearch has shown that resolving the problems
e$ectively has a strong impact on the customer satisfaction,
loyalty, and bottomGline performance. &ustomers who e+perience service
failures, but are ultimately satisfed based on recovery e$orts by the frm,
will be more loyal.
THE REC,VER1 PARA0,?"
!t is suggested that customers who are dissatisfed, but e+perience a high
level of e+cellent service recovery, may be more satisfed and more liely to
repurchase than are those who are satisfed at the frst place.
/or e>(ple0G
A hotel customer who arrives U fnds there is no room available. !n an e$ort
to recover, the frontGdes person immediately upgrades this guest to a
better room at the same price. The customer is so thrilled with this
compensation that he is e+tremely satisfed with this e+perience, is even
more impressed with the hotel than he was never before, and vows to be
loyal into future. The logical, but not very rational, conclusion is that
1E
companies should plan to disappoint customers so they can recover Ugain
even greater loyalty from them as a result. This idea is nown to be as
Reco%er* Pr'o>" The recovery parado+ is more comple+ than it seem.
)irst of all it is e+pensive to f+ mistaes and would appear ridiculous to
encourage service failureGas reliability is the most important aspect of
service %uality. According to a research it is observed that a customer weight
their recent e+periences heavily in their decision to buy again. !f the
e+perience is negative, overall feelings about the company will decrease and
repurchase
intentions will also reduce. !f the recovery e$ort is absolutely superlative
then the negative impression can be overcome.
Then there is a recent study which shows no support to recovery parado+. !t
shows the overall satisfaction was consistently lower for those customers
who had e+perienced a service failure than for those who had e+perienced
no failure, no matter what the recovery e$ort is. The e+planation for why no
recovery parado+ is suggested by the magnitude of the service failure in this
study it isGa three hour airplane -ight delay. This type of failure may be too
much to be overcome by any recovery e$ort. &onsidering mi+ed opinions on
if recovery parado+ e+ists it is safe to say 6doing it right the frst time7 is the
best and safest strategy. ;hen a failure does occur then every e$ort at
superior recovery should be made. !n cases where the failure can be fully
overcome the failure is less critical, or the recovery e$ort is clearly
superlative, it may be possible to observe evidence of the recovery parado+.
H,W C.ST,MERS RESP,N0 T, SERVICE /A2I.RE
!f customers initiate action following service failure, the action can be various
types. A dissatisfed customer can choose complaint on the spot to the
service provider, giving the company the opportunity to respond
immediately. Thos is often the bestGcase scenario for the company it has the
second chance right at that movement to satisfy the customer, eep his or
her business in the future, and potentially avoids any negative word of
mouth.
Some customer chooses not to complaint directly to the provider but rather
spread negative word of the mouth about the company to friend, relatives,
and coworers. This negative word of mouth can be e+tremely detrimental
because it can reinforce the customer's feeling of negativism and spread that
negative impression to other as well. )urther, the company has no chance to
recover unless the negative word of mouth is accompanied by a complaint
directly to the company.
;hen there is a failure, customer can respond in a variety of ways as
illustrated in the fgure. !t is assumed that following are the failure,
dissatisfaction at some levels will occur for the customer. !n fact, research
suggest that variety of negative emotion can occur following service failure,
including such feeling as anger, discontent, disappointment, selfG pity and
an+iety. #any customers are very passive about their dissatisfaction, simply
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saying or doing nothing, tae action or not, at some point the customer will
decide weather to stay with that provider or switch to a competitor.
;hen the company fails to stand for its promises made to the customer on
the basis they build e+pectation, it's to be said that there is service failure.
;hen the service failure occurs, there can be again severe ramifcation.
&ustomer is considered to be the bread and butter, hence retaining them is
the biggest challenge, and however service failure acts as an obstacle to it.
!n such failures,
1) The customer wants what they were promised.
1) &ustomer wants personal attention
3) &ustomer wants a decent apology
4) &ustomers want that they should not be made to feel that they are
the cause of the problem. (Though in many cases they are
responsible for nuisance)
There are again fve steps involved in order to deal with service failure. They
are mentioned as below
1
st
step0 Acnowledgement and apology for the fact.
1
nd
step0 5istening to the customers.
3
rd
step0 Avoid defending the company and o$er a rational e+planation.
4
th
step0 J$er some e+tra benefts
9
th
step0 8ave a proper follow up and mae sure no mistaes this time, so
that he can easily forget about the service failure and is retained.
1I
A customer e+pects 3 shorts of fairness in case of service recovery. They are
mentioned as below.
!" I&terctio& $ir&ess0 G when there is service failure, frst the company
is supposed to acnowledge the customer. Cue to this the customer might
turn erate, but he still e+pects fairness and courtesy in the language and
tone used by the addresser
A" Proce'ure $ir&ess5 G to now in detail about the incidence of service
failure or to avail the compensation. There should be simplicity in
procedure, which is involved. Service failure and comple+ity in procedure
both together might result in a disaster as far as customer is concern.
4" ,utco(e $ir&ess0 G now when the company reali/es that there is
service failure they should end up compensating, arranging for some
alternative mode of transporting or complies with the customer condition.
The outcome should be taen by considering the customer, his needs and
the company's policy.
ACTION P(AN TO SO(VE THE PROB(EM &
8andling complaints is a big challenge for every company today. "efore
understanding how to handle, let us see what are the factors, which can
result in customer's complaints.
There are ten steps involved in handling such airline -ights delayed
departure complaints e$ectively. They are mentioned below.
1) The frontline employee handling complaints should stay calm under
any circumstances.
1) 5et the customer get the story o$ their chestG do not interrupt, this
will only cause irritation. !n this case listening sills comes into
picture.
3) Avoid admitting any liability at this stage. The oDcer 2ust need to
show concern lie, 6!'m sorry for the inconvenience, let me see what
! can do7. Aive attention to the customer, mae him feel important.
4) Aet facts by using %uestion and try to fnd out the real and whole
story behind it.
9) After listening and collecting data, 2ust identify appropriate action
considering company's policy and customer's e+pectation.
B) Tae action if you have authority or involve manager or concerned
person.
E) !f corrective action cannot be taen immediately, tell the customer.
!t's better to give bad news rather giving false news.
H) =ecord the action to be taen and inform anyone else in the
organi/ation involved.
I) 5oo into the matter, provide a proper followGup.
1:
This ten approaches if followed e$ectively, complaints can be handled
properly and possibly a customer can be retained. (Solution is only for
the taen e+ample. i.e. delayed departures of -ights).
OTHER SO(UTIONS
&ontrol costs, reduce waste
Set productive capacity to match average demand
Automate labor tass
Kpgrade e%uipment and systems
Train employees
5everage lessGsilled employees through e+pert systems
&hange timing of customer demand
Cevelop customer trust
Knderstand customers' habits and e+pectations
.retest new procedures and e%uipment
.ublici/e the benefts
Teach customers to use innovations and promote trial
#onitor performance, continue to see improvements
EIGHT C,MP,NENTS ,/ INTEGRATE0 SERVICE MANAGEMENT
The Mrketi&g Mi> :THE B P9s ,/ SERVICES MAR3ETING;
!n order for your business to sell its products and services as successfully as
possible, you need to loo at what products you are selling in detail to ensure
they will be attractive and neededR the price to ensure it is not too cheap or
too e+pensiveR where you are best distributing your productR and fnally, how
you can create interest and awareness for your products. All these elements
need to be targeted at the right people at the right time. !n order for your
business to tacle this correctly, you need to get the right type of mi+
(mareting mi+), the mi+ should include four main elements0 .roduct, .rice,
.lace and .romotion, by e+amining each and carefully and adapting them to
your customerMs needs, you will continue to produce and needed products
and services
!; Pro'uct ele(e&t5 #anagers must select the feature of both the core
product (either a good or service) and the bundle of supplementary service
elements surrounding it, with reference to the beneft desired by customers
and how well competing products perform. !n short, they must be attentive
to all aspects of the service performance that have the potential to create
value for customers
A; Price &' other user costs5 6 This components addresses management
of the e+penditures and other outlays incurred by customers in obtaining
benefts from the service product. !t is not only related to traditional pricing
tass of establishing selling price to customers, setting trade margins and
getting credit terms but also, how to minimi/e other burdens of customers
11
while purchasing such as time, mental and physical e$orts and unpleasant
sensory e+periences such as noises and smells.
4; Plce + c*)erspce &' Ti(e56 Celivering product elements to
customers involves decisions on the place and time of delivery as well as on
the methods and channels employed. Celivery may involve physical or
electronics distribution channels or both),depending on the nature of the
service being provided.
4; Pro(otio& &' e'uctio&56 ?o mareting program can succeed without
e$ective communications. This component plays three vital roles0 G
a).roviding needed information and advice (awareness).
b).ersuading target customers of the merits of a specifc product.
(&oncentrating on a particular segment of the maret).
c)*ncouraging to tae action at a specifc time (purchase).
&ommunication is educational in nature for new customers.
&ommunication can be delivered by individuals such as sales people and
trainers, media such as TV+ r'io+ &e=spper+ (gCi&es+ postures+
=e)sites etc.
This promotion is usually used as incentives to catch customer's attention
and to motivate them to act. The above four are the traditional mareting
mi+. The *VT*?C*C mareting mi+ for services mareting isas follows 0
B; People5 6 #any services depend on the direct, personal interaction
between customers and a frm's employees (such as getting a haircut or
eating at a restaurant). This interaction strongly in-uences the customer
perception of service %uality. So, successful service frm devote signifcant
e$ort to recruitment, training and motivating their personnel.
D) Ph*sicl e%i'e&ce56 The appearance of buildings, landscaping, vehicle,
interior furnishing, e%uipment, sta$ members, signs, printed materials, and
other visible cues all provide tangible evidence of the frms service %uality.
The service frms need to manage physical evidence carefully because it can
have a profound impact on customers' impression as the service itself is
intangible. A tangible element such as insurance and advertising is often
employed to create meaningful symbols.
*.g.0 G umbrella may symboli/e protection and a fortress, security.
E; Process5 6 !t is the method and se%uence of actions in which service
operating system wors.
-'l* 'esig&e' process0 G annoys customers which leads to lielihood of
service )ailures.
#; Pro'ucti%it* &' Fulit*5 6 Pro'ucti%it* relates to how inputs are
transformed into outputs that are valued by customers. !mproving
productivity eeps costs under control
8ulit* refers to the degree to which a service satisfes customers by
meeting their needs, wants and e+pectations. Service %uality helps in
product di$erentiation and building customer loyalty. !nvest in %uality
proftably i.e. by considering incremental cost and incremental revenue.
Thus, these are the Hps of service management, which are the essence of it.
11
The integration of each p's is necessary for the successful service
management &ollectively these are the tools organi/ations uses to develop
o$erings to satisfy their target maret(s) ... the only tools at their disposal.
=emember0 !f your mareting mi+ doesnMt meet their needs they will not be
satisfed G and if they arenMt satisfed you are unliely to meet your
ob2ectives.
The mareting mi+ should be viewed as an integrated and coor'i&te'
pacage of benefts that re-ect the characteristics of customers and various
targeted publics and satisfy their needs, wants, and e+pectations. ?ote that
the elements of the mareting mi+ should be integrated because each
element of the mi+ usually has some impact, direct or indirect, on the other
three.
)or e+ample, if you improve the product or service you probably have to
change the price because it costs more to produce. Although you may not
have to change where the product is delivered to the customer, you will
almost certainly have to change the promotion or communication with the
customer because you need to tell the customer about the changes you have
made in the product and how the changes will mae it more desirable and
satisfying. Jne problem in many organi/ations is that di$erent divisions may
be responsible for di$erent elements of the mareting mi+. This happens
even in wellGmanaged organi/ations. The result is that the o$ering is
confusing to the target maret. 5ac of communication among divisions
maes this problem worse. And if they donMt share the same view of
organi/ational ob2ectives, the problem is worse still.
PR,0.CT MI?
I&tro'uctio&
W.roduct' includes name, design, features, %uality, operational case,
pacaging, warranties, appearance, range and si/e. !t also includes preGsale
and postGsale services lie training, repairs, maintenance and replacements.
According to .hilip @otler 6a product is anything that can be o$ered to
maret for attention, ac%uisition use or consumption that satisfy a want or
need. !t includes physical ob2ects (TQ), service (baning), person (political
person), place (holiday resort), organi/ation (red cross) and idea (aid
awareness).7 &onventionally, a product is an ob2ect, which is delivered and
consumed. 8owever, in services there is no or very little tangible elements.
8ence, what is o$ered for sale is benefts. Service is a bundle of benefts and
has relevance for a specifc target maret. 8ence, the pacage of benefts
should have a customer's perspective.
2e%els o$ pro'uct5
@otler has identifed 9 levels of a product
1) &ore product
1) "asic product
3) *+pected product
4) Augmented product
13
9) .otential product
@otler suggested that a product should be viewed in three levels.
1. 5evel 10 &ore .roduct. ;hat is the core beneft your product o$ersT
This is the fundamental beneft or service that the customer is buying.
)or eg. A customer going to a 8otel is buying rest, sleep etc.
1. 5evel 1 "asic .roduct0 "asic functional attributes. All 8otels provide
rest and sleep. The aim is to ensure that your potential customers
purchase your one service. Thus the functional attributes lie =oom,
"ed, "ath are important.
3. 5evel 3 0 *+pected product 0 Set of attributes that the buyer e+pects
(&lean room, large towels, %uietness)
4. 5evel 40 Augmented product0 ;hat additional nonGtangible benefts can
you o$erT This meets the customer's desires beyond his e+pectations (
(.rompt room service, music, aroma etc)
9. 5evel 9 0 .otential product 0 The possible evolutions that can be made
to mae the product a distinguishedo$er (all suite room)
I& -&k these c& )e
&ore .roduct (Safety of deposits, !nterest, *asy loans
"asic product 0 Savings deposit, )C, =ecurring deposit
*+pected product 0 &orrect transaction records, timely service,
convenient timing
Augmented product 0 &ongenial waiting room, ;ater cooler
.otential product 0 Areetings for ?ew Xear, 14 hour baning
The .A&@AA* &J?&*.T of Service product ( suggests that what you o$er to
the maret si a bundle of di$erent services ( tangible and intangible. There is
a core service and around it are built the au+iliary or facilitator service.
;ithout this the service would collapse (a bell boy in a 8otel). Xet another
service is the supporting service ( it is used to increase the product value (a
car rental in a hotel). The basic product is not e%uivalent to the service
product which the customer perceives, which is in fact based on customer's
e+perience and evaluation. Therefore there is a need for an augmented
product ( lie Accessibility (number and sills of personnel, convenient
timing, location, infrastructure etc.,) !nteraction with service organi/ation
("etween employees and customer, with physical and technical resources,
with other customers) &onsumer participation.(how well the customer is
aware about the process of service delivery, his willingness to share
information and use service e%uipments)
The pacage should also include the management of service image through
encouraged word of mouth and maret communication.
Pro'uct 0ecisio&s
;hen placing a product within a maret many factors and decisions have to
be taen into consideration.
14
These include0
&onsumer benefts ( assess what benefts the consumer loos for
Service concept ( To translate it to suitable service o$er
Cevelop augmented o$er
-RAN0ING5
Jne of the most important decisions a mareting manager can mae is about
branding. The value of brands in oday's environment is phenomenal. "rands
have the power of instant salesR they convey a message of confdence,
%uality and reliability to their target maret. "rands have to be managed
well, as some brands can be cash cows for organi/ations. !n many
organi/ations
they are represented by brand managers, who have huge resources to
ensure their success within the maret. A brand is a tool, which is used by an
organi/ation to di$erentiate itself from competitors. As yourself what is the
value of a pair of ?ie trainers without the brand or the logoT 8ow does your
perception changeT !ncreasingly brand managers are becoming annoyed by
Wcopycat' strategies being employed by supermaret food retail stores
particular within the K@. &ocaG&ola threatened legal action against K@
retailer Simsbury after introducing their &lassic &ola, which displayed similar
designs and fonts on their cans. !nternet branding is now becoming an
essential part of the branding strategy game. Aeneric names lie "an.com
and "usiness.com have been sold for Ym's. (=ecently within the K@ baning
industry we have seen the introduction of !nternet bans such as
choot"co( and (r)les"co( the tas by brand managers is to insure
that consumers understand that these brands are bansZ
-r&'i&g o$ Ser%ices &' its I(port&ce
.hilip @otlar defnes a brand as 6a name, a term, a symbol, or a designed or a
combination of them which is intended to identify the goods and services of
one seller or a group of sellers and to di$erentiate them from those of
competitors7.
"rand decision is important for tangible goods. "ut in the case of service
o$ering branding is still in its infancy, there importance is e+pected to rise
due to the following reason.
1. Service maret is getting more competitive and there is as increasing
proliferation of brands in the service sector.
1. !t is fve times cheaper to retain customer than to attract new ones.
3. As a new service development assumes greater importance, the ris of
product launch is reducing in the conte+t of umbrella branding.
4. As service itself does not o$er uni%ue tangible benefts, brand
development tangibilises the service. &ustomer gives more signifcance to
the service provider than the individual service products that the
providero$ers. Therefore, this leads to branding the service providers
cooperate image. "ans especially have recogni/ed the importance of
corporate image and identity and have used slogans, logos and other means
19
to brand themselves. Jnes the corporate brand is developed it is found that
service frms move with relative easy to other service product categories.
.rimarily companies resorts to corporate brand building with a goal of
ma+imi/ing maret capitali/ation and creating shareholders wealth. !n case
of service frms corporate branding re-ects the service itself. Airlines, fastG
food restaurants, bans, professional frm are usually di$erentiated on the
basis of their corporate name and reputation rather than the specifc service
they o$er. The service organi/ation brand name is reinforce by courteous
employees, professional looing uniform, advertising etc. 8owever no matter
how good the corporate brands may be the %uality of service determines the
success of the image. There are instance where the service itself is branded.
*+ample Suvidha Account of &itiban, the various schemes of 5!& lie >eevan
@ishore, >eevan #itra etc.
A'%&tges o$ )r&'i&g ser%ices
1. To tangibilise the intangible.
1. To support the positioning strategy.
3. J$ers a powerful tool for relationship building.
4. To create an image of %uality and consistency.
9. To reduce price comparison.
B. @eeps current customers satisfed by developing and sustaining a uni%ue
service advantage.
E. *ncourages repeat usage using sales promotions.
PRICE MI?
I&tro'uctio&5
This element of the mareting mi+ is related to the decision in-uencing the
fee structure, rate of interest, commission charged and paid by the service
generating organi/ations. !t is considered to be the most critical component
of the mareting mi+. "oth from economic and social standpoint, the
management of pricing is important but at the same time more critical and
challenging. ;e fnd pricing decisions important because the pricing
decisions are to in-uence the maintenance, development and e+pansion
plans of an organi/ation.
Gui'eli&es $or ser%ice prici&g5
1) .ricing strategy should enable handling demand -uctuations successfully.
As services cannot be inventoried, pricing should encourage customers to
use the service during period of low demand.
1) As services need to have some tangible element attached to it, service
pricing should be based on costs so as to tae into account the tangible
clues.
3) Service price as an indicator of %uality0 Services not having specifc brand
names to indicate
%uality, customers use price as an indicator of %uality. This in particular in
some cases, where the price variation is too much with in a particular class
1B
of service (e.g. Tour operators). Also, where the ris associated with the
service is high (e.g. 8eart surgery). .rice is taen as an indicator of %uality.
Thus pricing too low can give wrong signals and pricing too high can set
e+pectations that the frm may fnd it diDcult to match in service delivery.
"ecause goods are dominated by search %ualities. .rice is normally not used
to 2udge %uality.
4) .ricing strategy should copeGup with the degree of competition operation
with in certain geographic and time /one. *.g. "us operators will have to
consider prices of train. !t also includes the stage ofstrategic low pricing to
attract frst time customers.
Approches to prici&g ser%ices5
The 3 approaches to pricing services are0
1) &ostGbased pricing
1) &ompetitionGbased pricing.
3) Cemand(based pricing.
!; Cost6)se' prici&g5
!n costGbased pricing, a company determines e+penses from raw materials
and labor, adds amounts or percentages for overhead and proft, and thereby
arrives at the price. This method is widely used by industries such as utilities,
contracting, wholesaling and advertising. The basic formula for costGbased
pricing is .rice [ Cirect costs \ Jverhead costs \ .roft margin
Cirect costs involve materials and labor that are associated with the service,
overhead costs are a share of f+ed costs, and the proft margin is a
percentage of full costs (direct \ overhead)
Pro)le(s i& cost6)se' prici&g ser%ices5
a) !t is diDcult to defne the units in which a service is purchased. Thus the
concept of price or
unit is vague. Thus many services are sold in terms of input units rather than
units of measured
output. *.g. consultant, teacher etc.
b) ;here a frm provides multiple services. The costs being a ma2or
component of employee time are diDcult to allocate.
c) Service cost may not represent true value. )or e.g. a darner charging
same price for a e+pensive suit and an ordinary pant.
A; Co(petitio&6)se' prici&g5
This approach focuses on the prices charged by other frms in the same
industry or maret. &ompetitionGbased pricing does not always imply
charging the identical rate others charge but rather using others prices as an
anchor for the frm's price. This approach is used predominantly in two
situations0 (a) ;hen services are standard across providers, such as in the
dry cleaning industry. (b) !n oligopolies where there are a few large service
providers, such as in the airline.
Pro)le(s i& co(petitio&6)se' prici&g5
(a) Small frms may charge too little and not mae margins high enough to
remain in business.
1E
(b) 8eterogeneity of services across and within providers maes this
approach complicated. *.g. "ans charge di$erent rates of commission for
drafts and other services.
4; 0e(&'6)se' prici&g5
The frst two approaches of pricing are based on the company and its
competitors rather than on customers. ?either approach taes into
consideration that customers may lac reference price, may be sensitive to
nonmonetary prices and may 2udge %uality on the basis of price. All of these
factors can and should be accounted for in a company's pricing decisions.
The third ma2or approach to pricing, demandGbased pricing, involves setting
prices consistent with customer perceptions of value0 prices are based on
what customers will pay for the services provided.
Pro)le(s i& 'e(&'6)se' prici&g5
(a) There is an element of nonGmonetary costs and benefts which must be
considered while calculating perceived value. *.g. services re%uiring time,
inconvenience, psychological and search costs should be riced lower. !t is
diDcult to convert this nonGmonetary cost into monetary cost. (b)
!nformation on service may be less available to customer, maing it diDcult
to assess the price.
THE P2ACE MI?"
INTR,0.CTI,N
Another important element of the mareting mi+ is place mi+, which focuses
our attention on the o$ering of services by the providers to the ultimate
users and the place of location for the service generating organi/ations. !n
some of the cases we fnd that providers have no option but to locate the
units,branches as per the instructions of the ape+ body. Some of the
essential features are taen into consideration such as easy and convenient
accessibility, safety or protection availability of the infrastructural facilities,
attractive and healthy surroundings or so.
Cue to the intangibility, services cannot be stored, transported and
inventoried. 8ence the traditional channels of product mareting lie
wholesalers cannot be used. *evn retailing cannot be an independent
activity. Similarly because of inseparability they have t be produced and sold
simultaneously. Cue to this tehe channels of distribution are made very
short. At the most there can be one agent lie in the case of insurance, travel
agency, courier eye. The better thing is direct selling. Agents when employed
can have two types of functions ( either they maret the services le travel
agents, insurance agents etc, who maret the tangible part of the service
o$ering J= there can be agents who are trained to provide the service 5ie a
Shahna/ 8ussain "eauty parlour. )urther as there is no actual transfer of
ownership, the creation of time and place utility is very important. 8ence
proper location to cover ma+imum cu+tomers becomes important. "ans
often have e+tension counters
or use money collectors.
1H
Cpcit* Pl&&i&g"
!t is not suDcient that we are interested only in managing our present. !t is
much more signifcant that we eep our eyes open, minds active to now
about the future and continue to enrich our potentials to manage the future.
The organi/ations not managing the future fail in managing the demand and
supply position, mae it diDcult to optimi/e the development of mareting
resources to cope with the changing re%uirements, mae possible a
contraction in their resistance power and both on %uantitative and %ualitative
fronts, we fnd them moving bacward. "y capacity planning, our emphasis is
on the management of strength. &apacity planning is nown as planning the
capacity in the face of future. This throws light on both the aspectsGfrst, the
organi/ations are supposed to now the demand position so that the
potentials are enriched to increase the %uantity or capacity of generating the
services and second, the organi/ations are also re%uired to now about the
lies and dislies, preferences, e+pectations, attitudes which mae an
advocacy in favor of technologies to fulfll their e+pectations and this is not
possible unless we thin in favor capacity planning. The strategic plan would
mae the ways for the mobili/ation of fnancial resources to cater to their
increasing
re%uirements. ;e can't deny the fact that if an organi/ation succeeds in
maintaining the process of proft generation, the fnancial health of that
organi/ation becomes so sound that the tas of satisfying the employees and
investors is simplifed considerably. !f an organi/ation is strong, the tas of
facing the challenges and threats in the marets is simplifed considerably. !t
is against this bacground that strategic planning assumes a place of
outstanding signifcance. ;hen we tal about capacity planning, our prime
focus is on strategic planning since the process of enriching strength can't be
made possible within a couple of days.
Cpcit* Sche'uli&g"
8ow much of what (service) will be needed to achieve its preGdetermined
goals is an important consideration that maes an advocacy in favor of
capacity planning and scheduling. There are a number of critical variables
re%uiring due consideration in the process such as, goals of the service frm,
availability of capital and the %uality of human resources, maret segments
served and the level of service %uality aimed at. A detailed scheduling of
man, materials, money and machines (four #'s) is essential for each element
of the service mi+.
PR,M,TI,N MI?
INTR,0.CTI,N5
The promotion mi+ is found instrumental in informing, sensing and
persuading the prospects or customers. The mareters bear the
responsibility of using the di$erent components of promotion in such a way
that the measures adopted for promoting the goods or services are found
productive. The promotion communicates to customer's information on the
other elements of mareting mi+, such as product, pricing and place. The
1I
advantage of product itself, details on the place through which it is sold and
details on the pricing are transmitted through promotion.
C,MP,NENTS ,/ THE PR,M,TI,N MI?5
!; A'%ertisi&g5
Advertising is paid form of persuasive promotion since it plays an e$ective
role in informing and
sensing the customers. The creativity is found to be an essential aspect of
advertising, which increases the importance of professional e+cellence in
maing the advertising processes productive.
A; Pu)licit*Gpu)lic reltio&s5
All the organi/ations need to develop and strengthen the public relation
activities to promote their business. This component of promotion is found
e$ective though the organi/ation don't mae any payment for publicity. The
most important thing in the conte+t of public relations is the instrumentality
of e+ecutives in pro2ecting a positive image of the services o$ered. They
should have the potentials to throw a positive imprint on the prospects. !t is
also signifcant that they now the art of developing rapport with the media
people.
4; Perso&l selli&g5
The personal selling is found instrumental in promoting the business of
service generating organi/ations. .ersonal selling is a process of informing
the customers besides persuading them to purchase products being
in-uenced by personal communication. !t is 2ust a process of communication
in which an individual e+ercises his or her personal potentials, tact, sill and
ability to in-uence the impulse of prospects and to transform them into
customers. .ersonal selling is basically a method of communication. !t
involves not only individual but the social behavior tooR each of the person in
faceGtoGface contact, salesman and prospect in-uence the other. Thus we
fnd personal selling a personal communication, sellerGbuyer interaction,
interGpersonal communication and more so direct selling. The following facts
are observed regarding the personal selling0
a) !t is a direct personal relation between the buyer and seller.
b) !t is an oral presentation in conservation.
c) !t is twoGway communication.
d) !t is personal and social behavior.
e) !t is an e+ercise for selling the goods and services.
f) !t is found more e$ective in the service generating organi/ations.
g) !t is based on the professional e+cellence of an individual.
h) !t is an important element of the promotion mi+.
4; Sles pro(otio&5
#areting activities other than personal selling, advertising and publicity that
stimulate customers and dealers e$ectively, such as display shows,
e+hibitions, demonstrations and various nonGrecurrent selling e$orts not in
the ordinary routine are the sales promotion measures. Sales promotional
activities are devices aimed at reaching the consumer at home or in his
business establishment. The tools are generally in the form of samples,
3:
contest, demonstrations and coupons. Sales promotion directed at
consumers may be done with a view to increase the products rate of use
among e+isting customers or to attract new customers to the company's
product.
Tools of sales promotion0
a) Aift
b) &ontest
c) Ciscount and commission
d) *ntertainment
e) Travel and tours
f) Additional allowance
g) )airs and shows
These are some of the tools of sales promotion o$ered to both, the providers
as well as the users. The motivesare increasing the selling activities,
touching the target, e+celling the competition, increasing the maret share,
clearing the old products to be declared absolute in the near future.
B; Wor'6o$6(outh pro(otio&5
#uch communication about the performance of the service generating
organi/ations actually taes place by wordGofGmouth information, which is
also as wordGofGmouth promotion. The wordGofGmouth recommendations the
hidden sales force mae the process of communication e$ective. The
growing sensitivity of the words and e+periences of hidden sales force
simplify the tas of promoting the business. The advertisements, sales
promotion measures, the personal selling may of course be e$ective but the
wordGof mouth recommendations are found acceptable in all the conditions
by almost all the prospects.
D; Tele(rketi&g5
Telemareting is found instrumental in promoting the business. The
telemareting helps in activating the process of advertisement in addition to
its instrumentality in increasing the sale. The service generating
organi/ations in general and the baning, insurance, transport, hotel, tourism
organi/ations in particular have been found using telemareting with the
twoGfold ob2ectives of selling and advertising. The instrumentality of
telephones and televisions are found e$ective in the process of promoting
the business. The instrumentality of telemareting in persuading the users is
substantially in-uenced by the %uality of personnel supposed to discharge
the responsibility. The telemareting minimi/es the dependence of service
generating organi/ations on the sales people since 2ust a counter or a center
listed in the call numbers serves multiGdimensional purposes.
PR,M,TI,N ,-HECTIVES
1) Cevelop personal relation with client
1) #ae a strong impression of competency, honesty and sincerity
3) Should be able to use indirect selling techni%ues (create a derived
demand ( mobile companies give free sim card)
4) #anage to maintain a fne image by positive word of mouth
31
9) .acing and customi/ation of service o$ering
TARGET A.0IENCE
1) "uyer (or user,in-uencer,gateeeper)
1) *mployees (discussed in detail under people)
P2ANNING THE PR,M,TI,N MI?
1) Advertisement should have positive e$ects on contact personnel
1) !t should be able to capitalise on word of mouth
3) !t should provide tangible clues to the customers
4) !t should mae the service o$ering easily understandable
9) !t should promise only what is possible to deliver
B) !t should contribute to the continuity
C,NS.MER PR,M,TI,N IN SERVICE MAR3ETING
1) Sampling is less fre%uently used compared to Aoods (Sampling gives
consumer a free trial ( though now becoming popular)
1) Aift premiums are fre%uently used to give an element of tangibility
3) .rice,%uantity promotions can be used to get long term commitments
from consumer (fre%uent -yer programme or group booing in 8otels)
4) Kse of coupons are less fre%uent (coupon with straight price cut J=
discount or fees waiver for one or more purchases with original purchase J=
Ciscounts on augmented products ( lie a free wa+ polish with car wash)
9) )uture discounts are less fre%uent
B) .ri/e promotions are fre%uently used (pri/e for mobile ban use etc)
G.I0E2INES /,R SE22ING SERVICES
1) !t is personal relationship rather than the service itself that results in
satisfaction
1) "uyer's confdence in the seller's ability to deliver the results is important
( hence mae a strong impression of competency, sincerity, and honesty.
3) As what is sold is intangible ( indirect selling techni%ues have to be
adopted (8otels selling tour programmes)
4) As word of mouth is important ( building up a favourable is image is
essential.
9) A service provider sells 6services7 and not 2ust a single service ( hence
ability to customise the service o$ering is important (>ain food in AirGlines
8otels etc)
B) .ublic relations becomes important ( particularly in industries where
advertisement cannot be used as a promotional tool lie 8ospital industry.
PE,P2E MI?
INTR,0.CTI,N
The employees of an organi/ation represent the organi/ation in the eyes of
the customers. !f they are not give proper training in representing the
organi/ation and its goals the service e$orts will fail. 8ence the most
important mareting strategy is to maret the service frst to the
organi/ation's employees. There are two types of contact personnel ( 8!A8
31
&J?TA&T .*=SJ??*5 and 5J; &J?TA&T .*=SJ??*5 (eg .in a hospital a
nurse is a high contact personnel and ward boy may be a low contact
personnel) !n addition there can be a ?J? &J?TA&T .*=SJ??*5
SERVICE TRIANG2E
;hen company maes e$orts to do e+ternal mareting, it should have
strategies of !nternal mareting. *+ternal mareting is nothing but promises
made,which needs to be fulflled ( this needs internal mareting enabling the
comapany to eep up the promises made. Knless the employees are able
and willing to deliver, the servicepromises will fail. This will result in proper
interaction of thecustomers with the service providers which helps the
organi/ation to eep the promises (!nteractive mareting)
EMP2,1EE SATIS/ACTI,N+ C.ST,MER SATIS/ACTI,N+ AN0 PR,/ITS
There is concrete evidence that satisfed employees mae more satisfed
customers (and satisfed customers can, in turn, reinforce employees' sense
of satisfaction in their 2obs). Some have even gone so far as to suggest that
unless service employees are happy in their 2obs, customer satisfaction will
be diDcult to achieve. The underlying logic connecting employee satisfaction
and loyalty to customer satisfaction and loyalty and ultimately profts is
illustrated by the service proft chain shown in the fgure. The service proft
chain suggest that there are critical linages among internal service %ualityR
employee satisfactionR productivityR the value of services provided to the
customersR and ultimately customer satisfactionR retention and profts.
Service proft chain researchers are careful to point out that the model does
not cause customer satisfactionR rather the two are interrelated and feed $
each other. The model does imply that companies that e+hibit high levels of
success on the elements of the model will be more successful and proftable
than those who do not.
33
H.MAN RES,.RCE STRATEGIES5
8uman resources decisions and strategies primary goal is to motivate and
enable employees to deliver customerGoriented promises successfully. The
strategies presented here are organi/ed around four basic themes. To build a
customerGoriented, serviceGminded worforce, an organi/ation must0
1) 8ire the right people
1) Cevelop people to deliver service %uality
3) .rovide the needed support systems
4) =etain the best people
!; Hire the right people5
Jne of the best ways to close gap 3 is to start with the right service delivery
people from the beginning. This implies that considerable attention should
be focused on hiring and recruiting service personnel.
; Co(pete $or the )est people5
To get the best people, an organi/ation needs to identify them and compete
with other organi/ations to hire them. The frm act as mareters in their
pursuit of the best employees, 2ust as they use their mareting e+pertise to
compete for customers. Thining of recruiting as a mareting activity results
in addressing issues of maret (employee) segmentation, product (2ob)
design, and promotion of 2ob availability in ways that attract potential longG
term employees.
); Hire $or ser%ice co(pete&cies &' ser%ice i&cli&tio&5
Jnce potential have been identifed, organi/ations need to be conscientious
in interviewing and
screening to truly identify the best people from the pool of candidates. !t has
been suggested that service employees need two complementary capacities0
they need both service competencies and service inclination. Service
competencies are the sills and nowledge necessary to do the 2ob.
Achieving particular degrees and certifcations validates competencies, such
as attaining a doctor of law degree and passing the relevant state bar
e+aminations for lawyers. Service competencies may not be degree related,
but may instead relate to basic intelligence or physical re%uirements.
c; -e the pre$erre' e(plo*er5
34
Jne way to attract the best people is to be nown as the preferred employer
in a particular industry or in a particular location. Jther strategies that
support a goal of being the preferred employer include providing e+tensive
training, career and advancement opportunities, e+cellent internal support
and attractive incentives and o$ering %uality goods and services that
employees a proud to be associated with.
A; 0e%elop people to 'eli%er ser%ice Fulit*5
To grow and maintain a worforce that is customer oriented and focused on
delivering %uality, an organi/ation must develop its employees to deliver
service %uality. That is, once it has hired the right employees, the
organi/ation must train and wor with these individuals to ensure service
performance.
;Tri& $or tech&icl &' i&tercti%e skills5
To provide %uality service, employees need ongoing training in the necessary
technical sills and nowledge and in process or interactive sills. *+amples
of technical sills and nowledge are woring with accountingsystems in
hotels, cash machine procedures in a retail store, underwriting procedures in
an insurance company, and any operational rules the company has for
running its business. #ost service organi/ations are %uite conscious of and
relatively e$ective at training employees in technical sills. &ompanies are
increasing their use of information technology to train employees in the
technical sills and nowledge needed on the 2ob. Service employees also
need training in interactive sills that allow them to provide courteous,
caring, responsive, and empathetic service.
); E(po=er e(plo*ees5
*mpowerment means giving employees the desire, sills, tools, and authority
to serve the customer. ;hile the ey to empowerment is giving employees
authority to mae decisions on the customer's behalf, authority alone is not
enough. *mployees need the nowledge and tools to be able to mae these
decisions and theyneed incentives that encourage them to mae the right
decisions. Jrgani/ations are well suited to empowerment strategies to ones
in which (1) the business strategy is one of di$erentiation and customi/ation,
1) customers are longGterm relationship customers, (3) technology is
nonroutine or comple+, (4) the business environment is unpredictable, and
(9) managers and employees have high growth and social needs and strong
interpersonal sills.
c; Pro(ote te(=ork5
The nature of many service 2obs suggests that customer satisfaction will be
enhanced when employees wor as teams. "ecause service 2obs are
fre%uently frustrating, demanding and challenging, a teamwor environment
will help to alleviate some of the stresses and strains. *mployees who
supported and that they have a team bacing them up will be better able to
maintain enthusiasm and provide %uality service. "y promoting teamwor an
organi/ation can enhance the employee's abilities to deliver e+cellent
39
service while the camaraderie and support enhance their inclination to be
e+cellent service providers.
4; Pro%i'e &ee' support s*ste(s5
To be eDcient and e$ective in their 2obs, service worers re%uire internal
support systems that are aligned with their need to be customer focused.
;ithout customerGfocused internal support and customerGoriented systems, it
is nearly impossible for employees to deliver %uality service no matter how
much they want to. !n e+amining customer service outcomes researchers
found that internal support from supervisors, teammates, and other
departments as well as evaluations of technology used on the 2ob were all
strongly related to employee satisfaction and ability to serve customers.
; Mesure i&ter&l ser%ice Fulit*5
Jne way to encourage supportive internal service relationships is to measure
and reward internal service. "y frst acnowledging that everyone in the
organi/ation has a customer and then measuring customer perceptions of
internal service %uality, an organi/ation can begin to develop an internal
%uality culture. !nternal customer service audits and internal service
guarantees are two strategies used to implement a culture of internal service
%uality. Through the audit, internal organi/ations identify their customers,
determine their needs, measure how well they are doing, and mae
improvements.
); Pro%i'e supporti%e tech&olog* &' eFuip(e&t5
;hen employees don't have the right e%uipment, or their e%uipment fails,
they can be easily frustrated in their desire to deliver %uality service. To do
their 2obs e$ectively and eDciently, service employees need the right
e%uipment and technology. having the right technology and e%uipment can
e+tend into strategies regarding worplace and worstation design.
c; 0e%elop ser%ice6orie&te' i&ter&l processes5
To best support service personnel in their delivery of %uality service on the
front line, an organi/ation's internal processes should be designed with
customer value and customer satisfaction in mind. !n other words, internal
procedures must support %uality service performance. !n many companies
internal processes are driven by bureaucratic rules, tradition, cost
eDciencies, or the needs of internal employees. .roviding service and
customer oriented internal processes can therefore imply a need for total
redesign of systems. This ind of wholesale redesign of systems and
processes has become nown as 6process reengineering.7
4; Reti& the )est people5
An organi/ation that hires the right people, trains and develops them to
deliver service %uality, and provides the needed support must also wor to
retain the best ones. *mployee turnover, especially when the best service
employees are the ones leaving, can be very detrimental to customer
satisfaction, employee morale, and overall service %uality. Some frms spend
lot of time attracting employees but then tend to tae them for granted,
causing these good employees to search for 2ob alternatives.
; I&clu'e e(plo*ees i& the co(p&* %isio&5
3B
)or employees to remain motivated and interested in sticing with the
organi/ation and supporting its goals, they need to share an understanding
of the organi/ation's vision. .eople who deliver service day in and day out
need to understand how their wor fts into the big picture of the
organi/ation and its goals.
); Tret e(plo*ees s custo(ers5
!f employees feel valued and their needs are taen care of, they are more
liely to stay with the organi/ation. #any companies have adopted the idea
that employees are also customers of the organi/ation, and thus basic
mareting strategies can be directed at them. The products that the
organi/ation has to o$er its employees are a 2ob and %uality of wor life. To
determine whether the 2ob and wor life needs of employees are being met,
organi/ations conduct periodic internal mareting research to assess
employee satisfaction and needs.
c; Mesure &' re=r' stro&g ser%ice per$or(ers5
!f a company wants the strongest service performers to stay with the
organi/ation, it must reward and promote them. Jften the reward systems in
organi/ations are not set up to reward service e+cellence. =eward systems
may value productivity, sales or some other dimension that can potentially
wor against good service. =eward systems need to be lined to the
organi/ation's vision and to outcomes that are truly important.
D"D"B IMP,RTANCE ,/ EMP,WERING PE,P2E IN SERVICES
An organi/ation that emphasi/es customer service needs people at the
frontline to do the service, to use discretions be concerned about the
customer, to tae initiative to provide satisfaction through e+ceptional
service. The person at the front must fell empowered to do in the
circumstances. *mpowering cannot be done through a formal delegation of
authority. A person with authority may not e+ercise that authority, if he does
not feel empowered.
E>(ple
A peon who taes responsibility to direct the freman in a burning oDce to
areas housing the most important documents is acting without formal
authority. 8e feels empowered to do so, meaning that feels a sense of
dedication to the organi/ation, that he feels it is his duty to save the
organi/ation as much as possible , that he is doing the right thing .
)ollowing are the importance of empowering the people in services0G
1) An empowered employee focuses on results. 8e is not inhabitant by
formalities of position , authorityor function .
1) 8e does not consider himself bound by rules and procedure.
3) 8e believes that the organi/ation e+pects him to be aware of the ends to
be achieved and to act in furtherance thereof. 8e 6sees7 constraints but not
does not feel prevented thereby , from what is to be done , instead he tries
to overcome the constraints.
4) 8e believes that the organi/ation will not fnd fault with him for having one
something new and nusual. Jn the contrary, he believes that the
organisation will applaud him for having done
3E
something that had to be done.
9) 8e believes that he is e+pected to tae the initiative and ensure that the
customer needs are met and thereby maintain and enhance the reputation of
the organi/ation.
B) 8e feels that he is dedicating to satisfy the customer to upgrade
organi/ation reputation
E) An empowered employee may be willing to challenge company policies at
meetings with sensors.
PH1SICA2 EVI0ENCE MI?
THE EVI0ENCE ,/ SERVICE
As services are intangible, the customers are searching for evidence of
service in every interaction they have with an organi/ation. The fgure
depicts the three ma2or categories of evidence as e+perienced by the
customer0 people, process, and physical evidence. These categories together
represent the service and provide the evidence that tangibili/es the o$ering.
The new mi+ elements essentially are evidence of service in each moment of
truth.
All of these evidence elements, or a subset of them are present in every
service encounter a customer has with a service frm and are critically
important in managing service encounter %uality and creating customer
satisfaction.
3H
;hen a guest enters the hotel for a stay the frst encounter of the guest is
the door attendant and fre%uently with receptionists at the reception. The
%uality of that encounter will be 2udged by how the registration process
wors (8ow long is to waitT !s the registration system computeri/ed and
accurateT) The actions and attitudes of the people (!s the receptionist
courteous, helpful, nowledgeableT Coes she handle the en%uiries fairly and
eDcientlyT) and the physical evidence of the service (is the awaiting area
clean and comfortable). The three types of evidence may be di$erentially
important depending on the type of service encounter
(remote, phone, face ( to ( face). All these types will operate in face ( toG
face service encounters as in the one 2ust described.
PH1SICA2 EVI0ENCE
!t is the environment in which the service is delivered and where the frm and
customer interact, and any tangible components that facilitate performance
or communication of service.
!t includes all tangible representations of the serviceGsuch as brouchers,
letter head, e%uipment etc. in somecases the physical facilities where service
is o$ered is important e.g., in a hotel the paring lot, surroundings are
important. !n other services such as telecommunication the physical facilities
may be irrelevant. !n this case other tangibles lie billing statements become
important. .hysical evidence includes
(A) .hysical facilities (essentials and peripherals)
(") .hysical setting (appearance of premises)
(&) Social setting (appearance of sta$)
The decision on the physical evidence will di$er in terms of customerG
employee interaction. At one end is selfGservice of customer without any
interaction with employee (AT#) where physical facilities must be to attract
customer and user friendly.
At other end employee performs without any interaction (mail order
business) here physical evidence is designed to promote operational
eDciency. "etween the two e+tremes is a situation where both customer and
employee interact. !n this case physical evidence must be planned to
facilitate the activities of both. (*.g., "ans, Airlines). &ertain service
environments are simple re%uiring very little space or e%uipment (AT#,
Qending machine). They are called lean environment. Jthers lie hospitals,
hotels are elaborate environment where proper planning is needed.
(a) .hysical facilities0 The potential customers form impression about the
service organi/ation on the basis of physical evidence lie building, furniture
etc.,
Esse&til E%i'e&ce5 They are dominant features lie building area, paring
space, signboards.
Peripherl E%i'e&ce5 They are less dominant lie admission card, medical
reports, etc.
(b) &onsist of service environment
Ambient factors (light, colour, temperature)
3I
Space (spatial layout and functionalityG i.e., ability of e%uipment and
furniture to accomplish interactions)
Cecor and artefacts
(c) Social setting0 *mployee uniform, appearance etc. of service scape can
in-uence customer e+pectation,satisfaction and other behavior. !n shopping
mall soft music is played,crossroads had hired separate paring space.
"itner identifes .hysical )acilities and *nvironment as SERVICE SCAPES
8owever too much decor may mae customers feel that they are paying for
the e+pensive d]cor. *mployees however feel that an investment in
environments is an indication of management's concern for their 2ob
satisfaction. 8ence the challenge is to strie a balance.
MANAGING SERVICE 8.A2IT1
To compete successfully a frm must defne how the customers perceive the
service %uality and in what way the service %uality is in-uenced. The %uality
can be of seen from two angles (1) Technical %uality (;hat is delivered) (1)
)unctional %uality (8ow it is delivered). ;hen a customer comes to the
service provider he comes with some e+pected %uality. ;hen he taes the
service he e+periences a service %uality ( this is his perceived %uality.
PERCEIVE0 SERVICE 8.A2IT1
&ustomer service is about perception. .erceptions are 2udgment of the
consumers about the actual service performance or delivery by a company.
Since service are intangible, customers search for the evidence of %uality in
every interaction they have with a service frm. The evidence of service that
are e+perience by the customer are people, process and physical evidence.
.eople ( contact employees, other customers or the customer himself.
Cimensions ( reliability, assurance, empathy and responsiveness.
.rocess ( operational -ow of activities.
Cimensions ( reliability and promptness of service.
.hysical evidence ( tangible aspect of service.
Apart from these the corporate image of the service provider as well as the
service can also in-uence the perceived %uality.
;hile comparing the e+pected and perceived service %uality the following
may be the outcome.
!;" Percei%e Fulit* I e>pecte' Fulit*"
Result J 'elighte' custo(er"
A;" Percei%e Fulit* J e>pecte' Fulit*"
Result J stis<e' custo(er"
4;" Percei%e Fulit* K e>pecte' Fulit*"
0isstis<e' custo(er"
A very important factor in important service %uality is to always eep
promises and not guarantee which the frm cannot deliver
4:
L,NE ,/ T,2ERANCE
The services provided are varying between organi/ations, between
employees and even with in employees at di$erent times. The e+tent to
which the customers recogni/e and are willing to accept this variation is
called as /one of tolerance. !f the service levels fall below this level,
customers will be frustrated.
Ci$erent customers possess di$erent /ones of tolerance
^ones of tolerance vary for di$erent dimensions fo service
^ones of tolerance vary for frst time and recovery service
8.A2IT1 GAPS
To manage the perceived %uality of a service one has to match the e+pected
service and perceived service to each other so that consumer satisfaction is
achieved. To eep the gap between e+pected service minimal, two things are
critical0 G
The promises about how the service will perform given by traditional
mareting activities and communicated by wordGofGmouth, must not be
unrealistic when compared to service received by the customer.
#anagers have to understand how the technical and functional
%uality of a service is in-uenced and how the customers perceive these
%uality dimensions. !n order to develop greater understanding of the
nature of service %uality and how it is achieved in an organi/ation, WA
Aap #odel Jf Service Suality' was developed. The model clearly
indicated that the consumer's %uality perceptions are in-uenced by a
41
series of fve distinct gaps occurring in the organi/ations, which are as
follows0 G
Gp! :Mrketi&g I&$or(tio& Gp; 5 Ci$erence between consumer
e+pectations and management perceptions of consumer e+pectations arising
due to inade%uate or inaccurate management understanding of customers'
service e+pectations
GpA :St&'r' gps; 5 Ci$erence between management perceptions of
consumer e+pectations and service %uality specifcations arising due to
#anagement's failure to develop performance specifcations re-ecting
customer's e+pectations.
Gp4 :Ser%ice Per$or(&ce Gp; 5 Ci$erence between service %uality
specifcations and the service actually delivered.
Gp4 :Co((u&ictio& Gp; 5 Ci$erence between service delivery and
what is communicated about the service to consumers resulting in
discrepancy between communications to customers describing the service
and the service actually delivered.
GpB5 Ci$erence between the perceived service and e+pected service. This
gap depends on the si/e and direction of the frst four gaps associated with
the delivery of service %uality.
These Aaps develop due to the following reasons
GAP ! 5
5ac of ade%uate maret research
5ac of upward communication between front line sta$ and
#anagement
5ac of interaction with the customers
5ac of segmentation to identify specifc needs of the customers
GAP A 5
5ac of commitment from #anagement (they may perceive that
customer e+pectations are unreasonable)
5ac of Aoal setting
5ac of resources
GAP 4 5
!ne$ective recruitment
=ole ambiguity
5ac of training,incentives to perform to the sta$
5ac of training to customer on use of service and their roles
5ac of preGtesting when new procedures are introduced
5ac of understanding of customer habits ( how they prefer to
consume a service (a customer may prefer a slow delivery of food in an
e+clusive restaurant compared to an Kdipi restaurant)
GAP 4 5
*+aggerated promises
!ne$ective communication
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5ac of 8ori/ontal communications with in the organi/ation
GAP B
Too much of Aaps (1 to 4)
To close the gaps the following things should be implemented0 G
!" Cevelop customer trust through longGterm strategy rather than a snipG
shot superfcial programme.
A" Knderstand customers' habits on how they prefer to consume a service.
eg., a customer wouldprefer e+tended hours for a meal in a e+clusive
restaurant.
4" .reGtest new procedures and e%uipments before introducing them. The
failure of a productivity improvement programme is more damaging than
otherwise, e.g., when !ndian Airlines introduced computeri/ed reservation
system to improve its service, it found that at most places the system
remained down most of the time. !t created more confusion, both among
customers and employees, and proved to be countered productive.
4" Knderstand the determinants of consumer behaviour in terms of their
choiceR by force or by any other e+ternal forces, e.g., shopping behaviour is
not even throughout the month. !t changes between the frst wees to the
fourth wee of the monthR it changes between weedays and weeends.
B" Teach consumers how to use service innovations_most people don't now
how to go about
treatment in government hospitals_there is a need to mae people aware of
how to go about from registration to appointment to chec_up and
treatment, in the same way as traDc routes at !ndia Aate or &onnaught
.lace are notifed through press and television before introducing them.
D" .romote the benefts and stimulate trial. The success in innovation lies in
encouraging trial by
maing the beneft obvious.
E" #onitor and evaluate performance. Jne can learn from e+perience_good
or bad. As one goes along introducing changes, corrective measures should
also be taen simultaneously. These measures should be restricted to
redesign of facilities and procedures or e+tending to educating,
communicating and promoting the e$orts.
43
THE B 0IMENSI,NS ,/ SERVICE 8.A2IT1 ARE AS /,22,WS ,& Which
Custo(ers Hu'ge
The Ser%ice 8ulit*
Reli)ilit*5 means the ability to perform the promised service
dependably and accurately. !n other words reliability means that the
company delivers on its promises ( promises about delivery, service
provisions, problem resolution, and pricing. )or e+ample, )ed*+, this
company e$ectively communicates and delivers on the reliability dimension.
Respo&si%e&ess5 is the willingness to help customers and provide
prompt service. This dimension emphasi/es on attentiveness and
promptness in dealing with customer's re%uest, %uestions, complaints and
problems. =esponsiveness also captures the notion of -e+ibility and ability to
customi/e the service to the customers needs.
Assur&ce5 is defned as employee's nowledge and courtesy and the
ability of the frm and its employees to inspire trust and confdence. This
dimension is liely to be particularly important for service for services that
the customer perceives as involving high ris and , or about which they feel
uncertain about their ability to evaluate outcomes. )or e+amples, baning,
insurance, broerage, etc.
E(pth*5 is defned as carrying individuali/ed attention the frm provides
its customers. The essence of empathy is conveying through personali/ed or
customi/ed service, the customers are uni%ue and special. &ustomers want
to feel understood by and important to that provide service to them. )or
e+ample, personnel at small frm now customers by name and build
relationships that re-ect their personal nowledge of customer's
44
re%uirements and preferences. ;hen such a small frm competes with large
frms, the ability to be empathetic may give the small frm a clear advantage.
T&gi)le5 tangibles are defned as the appearance of physical facilities,
e%uipment's, personnel and communication materials. All of these provide
physical representations or images of the service that customers particularly
new customers, will use to evaluate %uality. Although tangibles are used by
Service &ompany's to enhance their image, provide continuity, and signal
%uality to consumers, most company combine tangibles with another
dimension to create a service %uality strategy for the frm.
E>(ples o$ ho= custo(ers Mu'ge the B 'i(e&sio&s o$ ser%ice
Fulit*0
Cr repir :co&su(ers;5
!" =eliability0 problem f+ed the 1st time and ready when
promised.
A" =esponsiveness0 accessible, no waiting, respond to re%uest.
4" Assurance0 nowledgeable mechanics.
4" *mpathy0 acnowledges customers by name, remembers previous
problem and preferences.
B" Tangibles0 repair facility, waiting areas, uniform, and e%uipment's.
Airli&es :co&su(ers;5
!" =eliability0 -ights to promise destination, depart and arrives on time.
A" =esponsiveness0 prompt and speedy system of ticeting, in -ight baggage
handling.
4" Assurance0 trusted name, good safety records U competent employees.
4" *mpathy0 understanding of special individual needs, anticipates consumer
needs.
B" Tangibles0 aircraft, ticeting counters, uniforms, and baggage areas.
Me'icl cre :co&su(er;5
!" =eliability0 appointments are ept on schedule diagnoses prove accurate.
A" =esponsiveness0 accessible, no waiting, willingness to listen.
4" Assurance0 nowledge, sills, credentials, and reputation.
4" *mpathy0 acnowledges patients as a person, remembers previous
problems, good listening, and patients.
B" Tangibles0 waiting room, e+am rooms, and e%uipment, written materials.
Architecture :)usi&ess;5
1. =eliability0 delivers plans when promised and within budget.
1. =esponsiveness0 returns, phone calls, adapt to change.
3. Assurance0 credential, reputation, and name of the community, nowledge
and sills.
4. *mpathy0 understanding clients industry acnowledges and adapts to
specifc clients needs, gets to now the client.
9. Tangibles0 oDce areas, report, plan themselves, billing statement, dress of
the employees.
I&$or(tio& processi&g :i&ter&l;5
!" =eliability0 provides needed information whenever re%uested.
49
A" =esponsiveness0 prompt response to re%uest not 6bureaucratic' deals with
problems promptly.
4" Assurance0 nowledgeable sta$, well trained, credentials.
4" *mpathy0 nows internal customers as individuals and departmental
needs.
B" Tangibles0 internal reports, oDce areas, and dress of employees.
I&ter&l )rokerge :co&su(er &' )usi&ess;5
!" =eliability0 provides correct information and e+ecutes customer's re%uests
accurately.
A" =esponsiveness0 %uic website with easy access and no down time.
4" Assurance0 credible information sources on the site, brand recognition
credential apparent on site.
4" *mpathy0 ability to respond with human interaction as needed.
B" Tangibles0 appearance of the website and collateral.
-ENCHMAR3ING ,/ SERVICES
"enchmaring means measuring the performance of a business against that
of the competitors in order to establish W)est prctice9. "enchmaring is a
part of process of continuous improvement. "enchmaring can
be applied at three levels0
1. !nternal "enchmaring.
1. &ompetitive "enchmaring.
3. )unctional or Aeneric "enchmaring.
I&ter&l -e&ch(rki&g5
!nternal "enchmaring is normally carried by large organi/ation by way of
comparison between operation units. )or e.g.. Super maret chain might
benchmar operations across stores, fnancial across branches, di$erent
colleges under the same authority. "ut important thing is how performance is
measured Uthis is clear lin to the strategy of organi/ation.
Co(petiti%e -e&ch(rki&g5
At a second level competitive "enchmaring can be used. This is probably
the most fre%uently use where comparisons are made with directly
competitive organi/ation. &ustomer participation is necessary because of
which it will be easy to achieve in some service environments. )or e.g0 As a
hotel owner, it is possible to Wsample' the service to competitor simply by
Wposing' the guest. Jften however, this is done in informal manner. A
comparative impression gained of the service without e+amining the
di$erent facets in a structured way U attempting to measure them.
/u&ctio&l or Ge&eric -e&ch(rki&g5
The third approach is )unctional or Aeneric "enchmaring, which compares
specifc functions such as distribution and after sale service. The advantage
here is that information is sometime easier to obtain than when comparison
are being made with competitors.
4B
&are has to be taen in selecting the dimension U sales to be used for
performance measuring and ensuring that due account is taen of all
relevant factors.