INSTITUTE OF BUSINESS MANAGEMENT

CHHATRAPATI SAHU JI MAHARAJ UNIVERSITY KANPUR

(FINANCIAL SERVICES MARKETING)
TERM PAPER ON
SERVICE QUALITY-GAP MODEL AND QUALITY DIMENSIONS

SUBMITTED TO:
ARPNA KATIYAR

SUBMITTED BY:
MBA(F&C)-3rd SEM. VIKAS GAUR

SERVICE QUALITY GAP MODEL AND QUALITY DIMENSIONS

OBJECTIVES OF SERVICE QUALITY
The subject of service quality has aroused considerable recent interest among business people and academics. Of course, buyers have always been concerned with quality, but the increasing competitive market for many services has led consumers to become more selective in the services they choose. Conceptualizing the quality for services is more complex than for goods. Because of the absence of tangible manifestations, measuring service quality can be difficult but there are possible research approaches. Comprehensive models of service quality and there limitations can be studied. Understanding just what dimensions of quality are of importance to customers is not always easy in their evaluation process. It is not sufficient for companies to set quality standards in accordance with misguided assumptions of customers¶ expectations. A further problem in defining service quality lies in the importance which customers often attach to the quality if the service provider is distinct from its service offers ± the two cannot be separated as readily as in the case of goods. Finally, issues relating to the setting of quality standards and implementation of quality management should be studied.

INTRODUCTION TO SERVICE QUALITYQuality improvement and adherence to accepted norms of quality are central to the modern concept of marketing of services. The quality of service delivery results in customer satisfaction and their retention as it reinforces the perception that the value of the service received is greater than the price paid for it. Some important concepts are: Modern quality concepts result in better profitability, which is the main goal of all the business. Quality control has much to do with changing the frame of mind and psychology of the service provider and particularly the front-end and back-end employees actually providing the services. We need to know how this fundamental change in attitude can be brought about. Traditionally, most service providers have felt that they know all there is to know about the customers and their requirements. This smug or self-satisfied approach needs to be changed. Development of feedback systems is very essential part of the quality improvement. How this can be used to develop better quality standards is an issue of immense importance. Goal setting and adherence to the goals are both essential to ensure continuous improvement in the quality standards.

CUSTOMER RETENTION THROUGH QUALITY IMPROVEMENT
The focus of the modern marketers has shifted away from a one-time sale to making repeated sales to the same customer. Increasing attention is being paid to medium and long term perspectives, rather than just the short-term perspective. This has been a major revolution in thinking in the field of marketing. Customer retention usually pays dividends by way of:

Lifetime value of the customer if the customer remains loyal to the company, naturally, the repeated purchases represents a cumulative value which is quitesubstantial compared to any single transaction. Reduced costs it costs much more to acquire a new customer than to retain an oldcustomer. Therefore, the focus of marketing has shifted away from the goal of merecustomer acquisition to customer retention in order to substantially reducemarketing costs. Benefit from wider opportunities to market more products and services tocustomers who are already loyal to you. The key differentiator between customerretention is customer satisfaction. Satisfaction results when the customer feels that the value of a service received byhim is substantially higher than the price he paid for acquiring the service. Customer satisfaction can be largely attributed to the quality of the service orproduct. Thus, delivery of high quality service is crucial to the high service valueperception. When the major marketing goal of a company is customer retention, thequality of service delivery is, undeniably, the key differentiator.

LINK BETWEEN SERVICE QUALITY AND PRODUCTIVITY
The approach towards quality has changed quite drastically during the past fewyears. Previously people thought in terms of quality control. Quality is defined asthe ability of the service provider to satisfy customer needs. Customer perception,service quality, and profitability are interdependent values. The idea of control wasthat the manufacturer decided to find the reasonable number of defects that acustomer would accept without demur. The goal of the exercise was to restrict thenumber of defects in order to be called a high-quality producer. This approach wasbased on two assumptions: Other producers under similar marketing conditions would adhere to similar normsof non-compliance or transgression of quality. Thus the issue of competition drivingup the quality was not taken seriously. Live and let live was the motto that mostlarge producers adhere to. The lack of serious quality improvement translates intosavings in production costs as elaborate effort for improvement was not done. Almost every customer assumed that the service or product received by them willnot be perfect in every respect. Customers took it for granted that luck was involvedin receiving high-quality goods and services. Thus, people would avoid carsassembled on Fridays or Mondays. It was assumed that during the pre-weekendphase, when the employees where focused on the forth coming weekend, and thepost-weekend phase , when the employees were physically and mentally tired fromtheir weekend exploits, they paid less attention to work. It was thus assumed thaton Fridays and Mondays, nobody would stop the assembly line for just a bolt notfitted at the appropriate place. People preferred cars which were driven from thefactory to the dealer¶s premises rather than carried by trucks to the delivery points. Customers believed that inherent defects were bound to be uncovered during thispre-delivery phase, and, therefore they would be duly identified and rectified beforecustomer delivery. The total service quality management [TSQM] emphasizes different policies. Statements such as the following demonstrate the approach: Quality is free. It is the non-quality that costs money. Non-quality means thateverything is not done right from the beginning. About 35% of the company¶s costs are due to faults and their corrections.

it forms an important basis for judging service quality. is not the only element thatmakes up perceived service quality. This. Many analyses of service quality have attempted to distinguishbetween objective measures of quality and measures which are based on the moresubjective perceptions of customers. Many conceptualizations of service quality thereforebegin by addressing the abstract expectations that consumers hold in respect ofquality. it is necessary to carryout surveys and obtain feedback from the customers to ensure that the delivery isas per the planned level of service and quality standards. ‡ Preventive costs: these include staff training cost and costs of the robust design orrobustness built into the service. however. The costs of the quality improvement are roughly divided into two groups: cost ofconformance and cost of non-conformance. once established. A development of this idea by Gronroos identified µtechnical¶ and µfunctional¶ qualityas being the two principle components of quality. Because it can easily be measured by bothcustomer and supplier. complaints and warranty claims.Quality enhancement usually improves profitability by 5 to 10%. Examples of technical quality include the waiting time at a supermarket checkoutand the reliability of train services. consumers are also influenced by how the technical quality isdelivered to them. At its most basic. The costs are forreplacement. Service quality is a highly abstract construct. thequality goal of the various function of an organization is to comply strictly withthese specifications. whichis quite a sizable task. In this way. correction or compensation of the faulty delivery of services or goods. DEFINING SERVICE QUALITY Quality is an extremely difficult concept to define in a few words. Cost of non-conformance: The non-conformance to the established standards results in additional cost ofcustomer dissatisfaction. This is the maintenance and improvement of the quality. Gronroos also seesan important role for a service firm¶s corporate image in defining customers¶perception of quality. Consumers subsequently judge service quality as the extent to whichperceived service delivery matches up to these initial expectations.This implies thatorganizations must establish requirements and specifications. Because services involve direct consumerproducerinteraction. ‡ Cost of Control: to continuously maintain the high quality. in contrast to goods where technicalaspects of quality predominate. the company will need to increase the turnover by 20 to 25%. In the case of thequeue at a supermarket checkout. Technical quality refers to therelatively quantifiable aspects of a service which consumers receive in theirinteractions with a service firm.quality has been defined as conforming to requirements . Cost of Conformance: This includes costs incurred to adhere or stick to the existing established standardsor norms. To get a similar increase in profitability with qualityimprovement. . functional quality is influenced by such factors asthe environment in which queuing takes place and consumers perceptions of themanner in which queues are handled by the supermarket¶s staff. This is a sizablejump in the overall profitability. with corporate image being based on both technical andfunctional quality. This is what Gronroos describes as functional quality and cannotbe measured as objectively as the elements of technical quality.

These include: Performance. When service delivery fails the first time.000 to every passenger on delay of flights by morethan 59 minutes. Reliability: This dimension is shown to have the highest influence on the customer perceptionof quality. the product. form opinionsabout service quality not just from a single reference but from a host of contributingfactors. but of low quality when assessedagainst high expectations. Perceived quality or prestige. Sahara Airways has a scheme offull refund plus a coupon of Rs3. Features. which ensures timely delivery time aftertime. Managing customers¶ expectations can be facilitated bymeans of managing the risks a consumer perceives when buying a particularservice.aservice which is perceived as being of mediocre standard may be considered of highquality when compared against low expectations.e. thereby increasing the possibility of customerdissatisfaction. Durability. it was concluded that intangibility had some role in servicequality expectations. By contrast. The reliability dimension. It hopes to differentiate itself from otherairlines Indian Airlines. variability and inseparability of most services which results in a seriesof unique buyer-seller exchanges with no two services being provided in exactly thesame way. . has beenstriving to protect itself as a reliable airline. Parasuram. Sahara Airlines. It has been noted that intangibility and perceived risk ness affectsexpectations. Service marketers need to understand all the dimensions used bycustomers to evaluate service quality. These are: A. the service provider is likely to comeunder greater scrutiny. Zeithmal and Berry has identified the following five dimensions of service quality as crucial. It is the ability to perform the promised service dependably andaccurately. A further problem in understanding and managing service quality flows from theintangibility. Gronroos pointed out that a buyer of manufactured goods only encounters thetraditional marketing mix variables of a manufacturer. an upcoming domestic air carrier within India. Thus. SERVICE QUALITY DIMENSIONS Service quality is a perception of the customer. i. a bookstore and apizza shop service. a service provider may get a secondchance to provide the same service in the phase called µRecovery¶. Customers. Conformance. Analysis of service quality is complicated by the fact thatproduction and consumption of a service generally occur simultaneously. its price. however. In a further refinement of their earlier factor identification. itsdistribution and how these are communicated to him or her. with theprocess of service production often being just as important as the service outcomes. Usually productionprocess are unseen by consumers and therefore cannot be used as a basis forquality assessment. Reliability. David Garvin in the article µCompeting on the Eight Dimensions of Quality¶ identifiedthe following eight dimensions of quality applicable to both goods and services. Aesthetics. To p[protect this reliability. Serviceability. helps the service provider to meet the customer expectations fully at thelowest level of service expectation. and in one study of a long-distance phone service. Theexpectations of the customer are usually higher during the recovery phase thanbefore because of the initial failure. service inseparability results in the productionprocess being an important basis for assessing quality.

The second aspect of responsiveness is speedy response to a customer request. The customer draws his or her own conclusion about the quality of service he is likely to receive in the future. investment issues. the customers want them to go beyond this limit. the prospective customers are free to call the previous customers. C. µI will call you back¶.B. the agent and the airline may make even effort to request another passenger to exchange seats and meet the customer demand. The customers may have queries. special requests. He is unlikely tomind paying more. It refers to knowledge and courtesy of the service firm¶s employees and their ability to inspire trust and confidence in the customer toward the company. Many sales representatives respond on the phone. However. Example: Medical services requiring complex uncommon procedures. In addition. The call is never returned. the hotel could charge extra commensurate with the extra efforts. When customers feel t5hat the provider is making his best effort to see their viewpoint. However. Example: A customer calls room service to find out if they would pack a Jain lunch. However. In fact. the hotel may be rewarded in two different ways if it agreed to provide the meal. When prospective customers hear from them about the company and its satisfactory delivery. sales / purchase of financial securities. This may impose some strain on thekitchen. and even if she does not get such a seat. he may see the customer¶s viewpoint better. When response is delayed customers usually loses interest. they feel assured and develop a more positive attitude towards the company. Assurance : It defined as the ability of the company to inspire trust and confidence in the service delivery. Responsiveness : It is the willingness of the service firm¶s staff to help customers and to provide themwith prompt service. each customer may have problems of his or her own. The customer would be very pleased with the service and is very likely to recommend the hotel to his friends and acquaintances. demand this service quality dimension. The evaluation of construction services is beyond technical capabilities of most buyers. . Even if all such seats have already been taken up. Example: a lady customer with a young child arrives slightly late at the check-in counter and requests the agent for a seat along the aisle and near the toilet. Empathy : It refers to the caring. etc. The lady passenger would be delighted if her request could be honored despite the last minute checking in.complaints. she would be grateful for their effort. individualized attention the service firm provides each customer. There are property developers/builders who provide a list of previous buyers of flats or apartments to potential buyers. it may be good enough for most. etc. D. When service provider puts himself in the shoes of the customers. the customer being very religious minded would be very pleased if thehotel could pack it for him to carry and eat. Itis not the hotel¶s normal policy to cook such specialty and customized meals. legal affairs. Whilethe front-end employee may have been trained or equipped to deliver standardizedservices. It is the willingness tohelp the customer or willingness to go that extra distance that is responsiveness. This dimension is considered vital for services that involve high risk as customers may not be able to evaluate all the uncertainties involved in the process by them.

managers must be aware of potential problems with the instrument. because of excess demand. Tangibles : It refers to physical facilities. The second part ofthe questionnaire asks customers to evaluate the service performed by a specific service firm. Through SERVQUAL. consumers may indicate that physicians should provide their services at the time they promised. firms can measure customers¶ evaluations of their service performance. For example. Using SERVQUAL to Measure Service Quality The SERVQUAL instrument was based on the premise that service quality is the difference between customers¶ expectations and their evaluation of the service they received. responsiveness. patients will continue to wait. if customers consistently give firm low scores for one dimension. it does not measure variables that may be important for a particular industry. them even further. This may or may not be relevant to the capabilities of a particular service firm or the set of service firms available to a consumer. then the firm¶s management can take steps to improve that particular dimension of their service offering. equipment. An understanding of these problems may prevent service companies from misinterpreting the results and developing inappropriate marketing plans. SERVQUAL uses 21 questions to measure the five dimensions of tangibles. he becomes aware of the quality of service he is about to receive. If a dental clinic provides patients with clean rubber footwear and freshly laundered bibs or coats before the actual service. Seldom do patients see the doctor at the scheduled time. For example. yet. the patients and their accompanying relatives or friends will be impressed. reliability. Gap Theory is the method for calculating service quality that involves subtracting a customer¶s perceived level of service received from what was expected. The SERVQUAL instrument has three potential problems.E. No one likes waiting after their appointment time. The job of the tangible and physical evidence of a service is multifunctional. Tangibles provide the customer proof of the quality of service. in the airline business. First. The second problem with SERVQUAL is its generic nature. responsiveness. and appearance of a service firm¶s employees. When a patient in the waiting room of a clinic sees the doctor¶s certificate. assurance and empathy. such as reliability. Problems with SERVQUAL Although SERVQUAL is an excellent instrument for measuring service quality. For example. Since its not industry specific. The first part of the questionnaire asks customers to indicate the level of service they would expect from a firm in a particular industry. as well as with the gap theory methodology on which it is based. consumers examine five dimensions: tangibles. . assurance and empathy. SERVQUAL measures customers¶ expectations of the ideal firm in a particular service industry. reliability. A dentist dressed in a spotless white coat is likely to impress. MEASURING SERVICE QUALITY When evaluating service quality.

"With ABCmobile phones you can reach anyone. pagers and mobile phone sets and even cars are being sold on the promise of after . transaction after transaction? Yet. Measuring consumer expectations after a service has been provided will bias consumers¶ responses. If customers had a positive experience at Blockbuster. nuclear households are getting to be the norm in urban India. indoor plants and decorative. "You can count on XXXX for prompt delivery". microwave ovens and refrigerators. television and hoardings. but SERVQUAL does not measure travelers¶ perceptions of this variable. Additional variables should be added that are relevant and important to customers. they find it impossible to grapple with routine everyday tasks. The examples below underscore how the service sector has transgressed all boundaries. These service providers have added peripheral services to reduce transaction time and improve service delivery. "ZZZ Airlines . Dual-income. Supermarkets sell packaged vegetables. consumer expectations should be measured prior to the service and service perceptions after the service. anytime".more time. day after day. The makeover is apparent even in traditional services like retailing and banking. cleaning and housekeeping and even secretarial services is phenomenal. This has given rise to hitherto unconventional new services. the instrument should be modified to apply to the specific industry for which it is being used.tangible products like television sets. If SERVQUAL is used. In cities like Mumbai. Service Quality . Companies across the country and the world are seeking to outsource many of their cost centers .A Key to Success in the Services Sector "Service with a smile". families are experiencing a burning new need . anywhere. Turn to product marketing . an era for excelling in quality of service provided. CORRECT USE OF GAP THEORY Managers can use the gap theory methodology for measuring service quality performance if precautions are taken to reduce the problems just discussed. When interpreting the results.waiting to be cooked. The third problem with problem with SERVQUAL deals with the gap theory methodology used for measuring the level of service quality. Overstressed with work and travel. the time between measuring expectations and measuring the quality of service received should be relatively close. To prevent biases from interfering with the gap scores.on-time arrival is a very important dimension to travelers.the resultant surge in service providers like security services. this is the age of the service sector.consistently. How many of us can honestly claim to have experienced this service . Because consumers are affected by advertising and word-of-mouth communications. Housewives now make a cool sum with selling idli / dosa batter and homemade food. managers must remember that respondents are comparing their firm with the ideal firm in the industry.be it in the tangible or intangible form. which are chopped and cleaned . purchase after purchase. The service sector is growing in spread and depth to encompass all transactions involving buying and selling .print. air conditioners. so there is a measurable gap between what they expected and the actual service they received. Telephonic orders and home delivery are now passed with grocers and vegetable vendors. they will tend to report lower scores for their expectations.we fly you everywhere" -these are some punch lines of ad campaigns that are currently splashed across media .

How then is the service provider to go about the difficult task of analyzing his business operations for chinks in delivery of quality service? What tool would indicate to him that he has misunderstood his customer? Where would he seek a consultant for rectifying this fatal error? The Gaps model of service quality looks into the gaps in service quality. They now want an improvement in the quality of service offered. The sources of customer expectations consist of marketer ±controlled factors as well as factors that the marketer has a limited ability to affect (innate personal needs. Having tasted the joys of greater and enhanced services in all walks of life. when you visit a fast-food restaurant you expect a certain level of service. Buyers are not just conscious of the necessity of services after the purchase has been made .they demand it. and indeed it could be said that in such circumstances quality service can only be achieved by good luck rather than good management. Broadly. The gaps model is useful as it allows management to make an analytical assessment of the cause of poor service quality. it is the goal of service marketing to bridge this distance. In practice these concepts are often. In a perfect world. are at least similar enough in the consumers mind that that they are chosen and evaluated in the same manner. It is a ready reckoned to service providers to analyze their existing service delivery system and rectify matters before the company has lost the attention of the customer. one that is considerably different from the level you would expect in an expensive restaurant. urban Indians are clamoring for more. even usually. .the urban household. if not identical to goods. and often formulated in terms of what a customer believes should or will happen. word-of-mouth communications. competitive offerings). For example. If the first gaps are great. the task of bridging the subsequent gaps becomes greater.sales service.in corporate boardrooms. the local bania's siesta conversation with his neighbors and in the king's lair . separated by some distance. Service quality therefore is the latest buzzword .expectations and perceptions would be identical: customers would perceive that they receive what they thought they would and should. The assumptions appears to be that services . Customer expectations are the standards if or reference e point of performance against which service experiences are compared. THE GAPS MODEL OF SERVICE QUALITY The Customer Gap: The difference between customer perceptions and expectations Customer perceptions are subjective assessment of actual service experience customer perceptions and customer expectations play an important role in service marketing.

he was really complaining about the lack of speed and ease of operations. Berry 1985) Gap 1: Not knowing what Customers Expect Not knowing what customers expect is one of the root causes of not delivering to the customer expectations gap 1 is the difference between customer expectations of the service and company understanding of those expectations. Zeithaml. But what they did not understand was that the customer was taking note of the lack of ambience because there was a wait when he was twiddling his thumbs and looking around for a place to sit. Examples abound.foreign banks were right in thinking that customer expectation in terms of ambience was not being met.GAPs model of service quality Fig. So they brought in some good ambience and more presentable executives and thought they had bridged the gap. 1: The Integrated Gaps Model of Service Quality (Parasuraman. In other words. Result: Fancy ambience and higher .

They lost out on sustainability of the service promise. he will probably be dissatisfied because the subcontractor did not do what was expected. now defined primarily as women. may think the contractor wants to use the lowest grade to keep the cost down. Sears¶s management rediscovered its customers. Service providers may think that they know what is best for their customers.but they too slipped up as business grew. Example: If customers do not expect their cars to be vacuumed and cleaned inside when the oil is changed at Quik Lube. ‡ Unwillingness to ask customers about expectations. For example. The service providers see themselves as indifferent or superior to customers. This is the patronizing attitude towards the customers. Another example is illustrated by the management of Sears in the early 1990s. This typically happens in government-run services such as railways or postal departments where they would not want to know what customer desires. in time. In today¶s changing organizations. In the mid-1990s. the team identified key customer segments and conducted its own customer research to determine expectations. Gap one was closed without involving management as it is traditionally defined. The second danger is that the firm may be spending money on providing services that the customers do not expect or perhaps even care about. Unless the contractor clearly delineates his expectations. and began once again to be profitable and satisfying to customers.albeit by better looking personnel in better surrounds. when the company failed to understand that the customers had changed their desires and modes of shopping. these expectations will rise to meet the service being provided. Private sector banks understood the problem a mite better . ‡ Unprepared ness to address the expectations. the authority to make adjustments in service delivery is delegated to empowered teams and front line people.cost attached to the same slow and indifferent service . then at first they will be pleased with this extra touch. The reverse may also occur. But the next time they use Quik Lube. they may trigger a chain of bad decisions and suboptimal resources allocations that result in perceptions of poor service quality. Failure to vacuum and clean the interior of the car will then result in a negative gap since the vacuuming and the cleaning of the interior becomes something customers expected. when AT&T asked its long-distance operators to improve their service to customers. their expectations increase and after a few times of receiving this special touch. conventional and functional the facilities are. however. Causes of Gap One: ‡ No direct interactions with customers. When people with the authority and responsibility for setting priorities do not fully understand customers¶ service expectations. if customer expectations are consistently exceeded. The service provider may be aware of the Shortfalls but may be unprepared to address the issue in the mistaken belief that the customers may be tolerant . Example: A contractor using an electrical subcontractor for the first time may expect the subcontractor to use a certain grade of wire conduit in all of their construction sites they subcontractor. One example of displaced priorities stemming from an inaccurate understanding of customers¶ expectations is spending far too much money on buildings and appearance of a company¶s¶ physical facilities when customers may be much more concerned withhow convenient. it will become a permanent part of their expectations. The company kept its traditional catalogue store long after customers had decided to take their business elsewhere. First. thus yielding a negative impact on profit. there are two dangers. Although on the surface this sounds good because customer expectations will probably be exceeded. Management can provide a service they think customers expect without conforming customer expectations.

the chances of management having a correct understanding of what customer want in terms of service quality became more difficult. Ideas for improvement should not only be soughtfrom service contact personnel. Customers are no longer satisfied by homogenous products and services for the mass market. Allegiance has instituted a customer Bill of Rights and place a customer service manager in each branch. While segmentation has been used by marketers for decades. These strategies are: communicating with the customers. Service contact personnel must be encouraged to communicate with management in an open. ³People buy from us because they don¶t necessarily feel appreciated by regional Bell carrier. If the needs are not precisely understood due to lack of segmentation. The term relationship marketing is used to describe this approach. among them customer visits. upward communication is vital in reducing the size of Gap One. Buyer may not always be honest in their communication with management of service firm. now. Techniques involving a variety of traditional research approaches must be used to stay close to the customer. service quality is the major issue in the selection of their telecommunications provider. it may be more critical today than any other time. Formal and informal methods to capture information about customer expectations can be developed through market research. structured brainstorming. By talking to customers. To ensure management hears about customer concerns and to ensure Allegiance communicate effectively to customers. ‡ Lack of market segmentation to understand the needs are such segment. More innovative techniques such as quality function deployment. more than ever before. According to Tony Parella. non-threatening environment. expectations and demographic or psychographic profiles. therefore. When customers have strong relationships with their customers. Strategies for Reducing Gap One: Service firms have four strategies available to them to reduce the size of gap one. For firms where management is separated from the customer contact personnel. and customer panels. complaint systems. Many service firms. To be effective. Another trend related to Gap One involves current company strategies to retain customers and strengthen relationships with them. honest communication. and decreasing the number of layers of management. Market segmentation is the grouping of customers sharing similar requirements. which can either be performed by third parties or. Segmentation is usually done to understand the needs of customers more elaborately or distinctly. management will learn what buyers expect in terms of service quality and how they feel about the service they received. by the marketing department. in case of large cooperation. encouraging upward communication in the organization. but employees should be rewarded for productive ideas. and service quality gap analysis are often needed. . quality perception is likely to be poor. To ensure open. To be effective. which emphasizes strengthening the bonds with existing customers. they seeking and buying services that fit their unique configuration of needs. As the layers of management increase. upward communication must be requested by top management. the marketing research much focus on service quality issues and consumer expectations of the service.or that the lapse is unlikely to loss of customer patronage. For much small business. service firm can use marketing research. gap 1 is less likely to occur. survey research. are seeking means to reduce the number of management layers. Contact and communication between customers and management is common in small business because the owner is often the service operator.´ The goal of Allegiance management is to provide customers with personalized service. conducting marketing research. executive vice-president of Allegiance telecom of Dallas. These actions have been a major step for Allegiance in reducing the size of Gap One and ensuring a high level of customer satisfaction.

Thus. The standards for quality improvement or planning should be clearly those which are desired by the customers rather than those set by only the service provider. ‡ Absence of formal quality control goals. the debit card company claims that interest starts ticking on due date. The customer is hopping mad as he has paid up on due date. A recurring theme in service companies is the difficulty executives. They however fail to check with the department that handles inflow of payments and updating of outstanding amounts. but not sufficient. managers. While customer-contact personnel are key to providing quality service. Other marketers are embracing the concept of mass customization ± creating services for a large group of customers that can be customized or appear to be customized through technological innovations. the term used to describe the more conventional emphasis on acquiring new customer rather than on retaining them. companies charge a hefty interest rate on outstanding amounts. a chequeis sent in on the due date and a statement with the finance charge sent out on the same date. leadership plays a pivotal role in ensuring that quality standards are in place and adhered to. Frequent flyer travel programs conducted by airlines. Everyone has a valid reason. formal goals cannot be set for services delivery. Customer driven standards are different from the conventional performance standards the most services company establish in that they are based on pivotal customer requirements that are visible to and are measured by customers. Gap Two: Not Selecting the Right Service Designs Standards Accurate perceptions of customers¶ expectations are necessary.Many marketers are achieving success with niche marketing ± targeting segments of customers and developing services and strategies that fit their needs better than other companies¶ offerings. Even subjective assessment may be vital in setting the standards. one observes a reluctance to tackle the problem head-on and a lack of commitment to providing quality service. for delivering superior quality service. car rental companies. they may fail to understand the changing needs and expectations of their current customers. therefore. and other policy-setters experience in translating their understanding of customers¶ expectations into service quality specifications. They are operation standards set to correspond to customer expectations and priorities rather than to company concerns such as productivity or efficiency. the involvement of the end user/ customer in the goal setting process is crucial to its success. . In many of these cases. Example: In the billing division in debit cards. Causes of Gap Two: ‡ Absence of customer-driven standards of service quality. Often. but the situation is a mess. Relationship marketing is distinct from transactional marketing. It is not enough to say that quantification is not possible and. Gap 2 is the difference between the company understanding of customer expectations and development of customer driven service designs and standards. Technology affords companies the ability to acquire and integrate vast quantities of data on customers that can be used to build relationships. and hotels are among the most familiar programs of this type. Another prerequisite is the presence of service designs and performance standards that reflect those accurate perceptions. When companies focus too much on attracting new customers.

companies often match a competitors offering. But in the long run. Management may talk about providing high quality service. and basic telephone services. Poor service design may also be a result of failure to connect service design to service positioning. reducing costs. Second the current reward system is often based on non-service criteria. customers will switch to competitors who provide better service. this philosophy may succeed and may even generate greater revenues because more customers can be served. firm often emphasis on cost reduction. and net profit rather than a high level of quality. ‡ Resource constraints. Example. They do not put the seats further apart since other airlines are not doing it and to do so would reduce the potential passengers load. ‡ Market Conditions. To prevent a competitor from capturing additional market share. ‡ Management Indifference. In some cases. A second market condition affecting gap two is monopoly markets such as cable television services. If this is done there will be a gap between what firms know customer expect and service pacifications. ‡ Inadequate service leadership: Perception of infeasibility Inadequate management commitment Strategies for Reducing Gap Two: To reduce the size of gap two. a local air conditioner dealer knows that customers want quick repairs. a situation where competitors produce almost identical quality goods and services. Because of personnel constraints these services cannot meet customer expectations for quick service during the peak demand time. or what the firm actually provides. service firms must have the commitment of top management. gross sales. These firms may understand certain needs and expectations of their patrons but may not translate them to service specifications unless required to do so by a government agency supervising them. firms translate customer expectations into matching competitive offerings rather than meeting the wants of their customers. Defining the service would go a long way towards determining the standards of customer satisfaction. in actual practice. The goal is not to provide customer satisfaction but to avoid customer dissatisfaction. In the short run. There are two reasons for the discrepancy between mission statements and actual practice. but in actual practice they may offer only the minimum level of service that will suffice. or it may have been borrowed from some other concept. an airline may know that passengers want more leg room in the airplane but they do not translate this in service specification. The service design may have been running traditionally for a number of years without any alterations. Their rationale for permitting this situation may be that the cost of meeting customer expectations is higher than the additional revenues that could be generated if the change were made. The no of technician available to repair AC is limited and the number of hours they can work is limited. However. utilities.‡ Vague or undefined service design. Each operates with a virtual monopoly with no competitors. For example. not for enhancing service quality. The most competitive market condition impacting this gap is known as competitive parity. demand for both services in springs and early summer will exceed the firm¶s capacity to provide the service. However. A service firm may understand and even want to deliver services desired by the customers but is unable to because of resource constraints. . Many mission statements have references to the firm being committed to providing customers with high level of service quality. Managementcomplacency is a problem in many corporate owned service facilities because of the pressure to generate short term profits. Most managers are promoted and rewarded for generating greater sales. First is the difficulty of measuring service and the ease of measuring costs. increasing net profits. sales and profit.

The service quality standards must be what customers want and desire. The same concept applies to prepackaged tours offered by travel agencies and a lunch buffet offered by Pizza Hut. ‡ Design for comfort and convenience.Wal-Mart's managers are servants to the needs of their employees and customers. and the buffet used by pizza Hut. the goals must be customer oriented.If service firms are going to get serious about providing high quality service. These goals must be set with the customer. Service contact personnel can provide their supervisors with valuable input into the best process for achieving service quality goals. management must understand what is possible and what is not in terms of operations. To be effective. Reduction of this gap requires setting service quality goals. as in the case of the diagnostic computer used by auto mechanics and the automatic scrubbing machines used by cleaning the service. the service contact provider and management in mind. Closing gap two by demonstrating strong leadership commitment and by setting by setting customers¶ performance standards²has a powerful positive impact on closing the customer gap. Both methods are designed to standardize the operation and provide a uniform delivery of the service to customers. ‡ Empower the sales staff. Example: The standardized employee training procedure used by McDonald¶s. Managers who talk service but fail to deliver an example of good service are not committed. . ‡ Provide servant leadership . it will look and taste the same. By standardizing the training McDonald¶s strives to ensure that all employees use the same procedure in preparing food for their customers. In exchange. His service philosophy to spur on his people and organization is as follows: ‡ Realize that customer service is the key. Including in the goal setting process is advantageous to both management and service contact personnel. No matter where one buys a McDonalds hamburger. reducing the gap between management perception of consumer expectations. Customer contact employees must understand management¶s perspective and the need to generate a profit. companies need measurement systems that incorporate and align measures of customer perceptions and satisfaction with pivotal operational and performance indicators. Example: Hard technology can be used to completely replace the human provider as in case of ATMs or it could be used to improve the consistency of service. Not only must management be committed to providing a high level of service. To achieve competitive superiority in an era when satisfying a customer is a priority. they must start with a commitment by management. they must also set an example for their employees. ‡ Customize ‡ Invert the organizational chart so that the customer is on the top and the management is at the bottom. ‡ Provide one-stop shopping. Task standardization will also reduce the size of gap two. Leadership plays a pivotal role in providing service excellence. and the translation of those expectations into service quality specifications. While company measurement has historically been the bailiwick of finance and accounting. Sam Walton of Wal-Mart is hailed as a service leader worldwide. ‡ Recognize that the customer is always right. Standardization can be achieved through hard technology (substituting machines or computers for people) or soft technology (improving work methods). the prepackaged tours offered by many travel agencies. Strategic measurement systems are also necessary to close this gap. management strategies now call for the addition of key marketing indicators in the overall measurement program.

Narrowing Gap 3.e. if employees do not provide the service as specified in the service specifications. the wrong employees. employees must be measured and compensated on the basis of performance along those standards. motivation. These factors all relate to the company¶s human resource function. in this case the quality of theservice delivered deteriorates.They require training to achieve this. if the company fails to provide support for them²if it does not facilitate. employees who feel in conflictbetween customers and company management. when others were retrenching and cutting down on costs. it was his adherence to these very principles that led to the soaring growth of Wal-Mart in the 1990's. the firm needs to develop systems to either control or motivate these intermediaries to meet company goals. Standards must be backed by appropriate resources (people. and organizational structure. at the point of interaction between the service provider and the customer.While Sam Walton's philosophy may appear simplistic. training. Because most services are performed by people. Another problem associated with the bridging of provider gap 3 is that of dealing with franchisees. encourage. Primary causes of this gap are variable and inseparable nature of services. involving internal practices such as recruitment. customer expectations will not be met and customers will be dissatisfied. y Poor employee-technology job fit y Inappropriate evaluation and compensation systems y Lack of empowerment. y Role ambiguity and role conflict: these include employees who do not clearlyunderstand the role they are to play in the company. high quality service performance is not a certainty. perceived control. job design. Cause of Gap Three: Deficiencies in human resources policies. it reflects on the company as a whole. customers are usually satisfied and their expectations are met. systems. the general tendency is to shorten the process of theservice delivery to speed up the process. is below quality standards. Usually. If the service contact personnel provide services as specified. Even when guidelines exist for performing services well and treating customers correctly. ‡ y . When food at one outlet of Birdy¶s. the quality of service is highly dependent upon well the service provider performs his or her job. yet it is rarely possible. retailers and brokers. control over the service encounter by the company is crucial. the image of the entire chain is tarnished. and require their achievement²standards do no good. and teamwork. it falls short of what customers expect as well. by ensuring that all the resources needed to achieve the standards are in place reduce the gap. even when standards accurately reflect customers¶ expectations. agents. For this. feedback. technology) and also must be supported to be effective ²that is. Thus. Gap Three: Not Delivering to Service Standards Gap 3 is the discrepancy between developments of customer driven service standards and actual service performance by company employees. When one NIIT franchisee falls short of set educational standards. Ineffective Recruitment: The front-end employees involved in services deliveryrequire certain qualities that enable them to relate to and deal with customers. McDonald's or Croissants etc. ‡ Failure to match supply and demand: when demand for a particular serviceexceeds the supply capacity. When the level of service delivery performance falls short of the standards. Because quality in service occurs at the moment of truth i.

among employees. Therefore. All of this is achieved when every employee is involved in the company and committed to providing a high level of service to customers. Theequipment needs to be in good condition and the employees must have the knowledge and training to properly use the technology to enhance the quality of their work. There must be a spirit of cooperation. the likelihood of employees doing the job according to the specifications increases.y y y ‡ y y ‡ Failure to smooth peaks and valleys of demand Inappropriate customer mix Over reliance on price to smooth demand Customers not fulfilling roles: The customer is as much involved in the process ofservices delivery as the service provider. To perform their job according tocompany standards. the operator of the equipment can perform a good job only if the shampoo machine is running properly and he or she has the ability to operate it. interact with their customers. . not competition. service employees must have the proper equipment. cares about them and that they are a critical part of the firm¶s success. Most service companies face and evenmore formidable task: attaining service excellence and consistency in the presenceof intermediaries who represent them. morale is enhanced. Southwest Airlines is often cited as a service provider with excellent teamwork. Firms must hire individuals who have the ability to perform the job. from their immediate supervisor to the CEO of the company. Among the intermediaries that play a central role inservice delivery are retailers. Flexibility and control also allow service employees to modify the process to meet the particular needs and desires of customers. Customers negatively impacting each other Lack of training to the franchisee¶s staff: Whenever service is provided by afranchisee in lieu of the service provider. training the customer toreceive the service to derive maximum benefit is essentials. and to other employees. When employees are allowed some flexibility and control in the service process. To diagnose problems with newer automobiles. computerized diagnostic equipment is essential. tools. If service employees are encouraged and rewarded for meeting job specifications. The lowest-level employee must feel that management. and computers to assist service workers in their job. If employees are to provide the services according to the job specifications. the front-end employees of the franchiseerequire elaborate training to be able to cope with the customer demands in astandardized and pre-determined manner. many service firms are using machines. by having control of the service encounter. For instance. In cleaning carpets in homes and offices. The supervisory control system will have an impact on the size of gap 3. Customers lacking knowledge of their roles and responsibilities. franchisees and dealers. In addition. Once hired. and there is a grater desire to perform the service properly. there must be a fit between employee skills and job requirements. Strategies for Reducing Gap Three A common characteristic of successful service companies is teamwork. management must be sure each employee has to do the tasks according the company¶s procedures. The quality of diagnosis is dependent upon the quality and condition of the equipment and the ability of the service technician to operate it. A feeling of teamwork is created when employees see other employees and management as key members of the team. to the company. and yet arenot under their direct control. An important factor in reducing gap 3 is the concept of perceived employee control. the outcome of the service will become more predictable. Because of technology.

management should allow service contact personnel adequate flexibility to meet customer needs. Control and flexibility mean service employees will not have to go to other employees and managers with questions and for permission to modify the service to meet a customers¶ unique request. Role ambiguity refers to employees¶ lack of information or understanding of their job and job requirements. and sales staff. supervisors often tell employees to follow the correct job specifications but reward or punish employees on other criteria. the profitability of patronizing the firm will also increase. Promises are made to consumers by a firm¶s advertising. sales promotions. How this role conflict is handled will have an impact on how closely the service delivered matches the service specified. and the number of other employees a service provider must contact or use in the process of performing the service. For example. If the firm does not provide the service that is promised. As consumer expectations for a service increase. It also becomes difficult for employees to perform the necessary job specifications if they lack an understanding of what these specifications are. service firms must do the following: Provide frequent and clear downward communication from management on what is expected and how the service is to be performed. when employees have little control over how the service is to be performed. ‡ Provide employees with constructive feedback to help them understand how the service is to be performed and what management expects ‡ Provide employees with product and service knowledge so they canperform in theirjobs better. This conflict is increased when employees are not given flexibility to meet the needs of customers. To reduce role ambiguity. When this occurs. employees may be evaluated by their supervisors on such criteria as a balanced cash register for a bank teller. Employees need to have some control over the service encounter because the greater the control. Role conflict is inherent in many service contact positions. job morale and length of employment. the number of automobiles repaired by a mechanic. and with other employees. the less role conflict experienced. there is a gap between what customers expect and the service received. As role ambiguity increases job satisfaction decreases. Not only does reducing role conflict aid service employers in meeting the needs of customers but it will increase job satisfaction. ‡ Train and retrain employees in the proper method of performing the service Train service contact personnel ‡ Communicate effectively with customers. service contact personnel do not have clear understanding of goals and expectations. Management often mistakenly assumes employees understand their job when. These promises may be explicitly stated or they may be implied. To increase patronage. withsupervisors. the amount of paper work necessary to carry out the service. in fact. often neglecting other service specifications. Although they have been told what to do. Gap Four: Mismatch Between Promises and Performance Gap Four is the differencebetween the service delivered to customers and the external communications made about the service. To reduce role conflict. employees will shortcut the specifications to improve whatever criteria are used by their supervisors in their evaluations. It is responsibility of the management to reduce the amount of conflict faced by their service employees. they may not have been told how the service is to be performed. firms are tempted to make promises that may be difficult or even .However. and the amount of time spent cleaning a particular office by a janitor. which is called role conflict. The primary conflict faced by service contact personnel is between expectations of customers and expectation of management.

they may not be able to keep up with this additional concededdemand y Insufficient communication between advertising and operations y Differences in policies and procedures across branches or units ‡ Pricing of services. customers set the serviceexpectations according to such delivery and price quotations. With services customers often have no internal reference point for prices before purchase and consumption.impossible to deliver. the sales force may gobeyond the original script to strike the deal. Customers are not always aware of everything donebehind the scenes to serve them well. ‡ y . one found that the small print indicated that this offer was valid only at the counter and not on home delivery orders. especially the productionteam. Pricing strategies such as discounting. Causes of Gap Four Ineffective management of customer expectation Failure to manage customer expectations through all forms of communication: Inaddition unduly elevating expectations through exaggerated claims. the bank was foregoing an opportunityto favorably influence service perceptions. Communication through these channels tends to raise customer expectations and set certain standards to assess the service in the minds of customers. Any discrepancy between promised and actual service tends to broaden the customer gap. ³everyday prices´ and couponing obviously need to be different in services in cases where the customers have no sense of the price to start with! Techniques for developing prices for services are more complicated than those for pricing of tangible goods. failing which. Suchcommunication can be either formal or informal. Would the outlet have received so many calls if they had indicated this in bold type? While on the subject of pizzas.especially in Mumbai traffic. A recent advertisement by a leading Pizza chain promised one free pizza with a specified order. On calling in for the offer. By neglecting to informcustomers of such behind-the-scenes efforts. y Overpromising through physical evidence cues ‡ Inadequate horizontal communications y Insufficient communication between sales and operations: If during the personalselling phase a commitment was made to strike the deal. sales personnel promise more than what they can ever deliver. on-line teller terminals. they must be making heavy losses on free pizzas. they may be lost due to overpromising as well. If not. one wonders if Domino's manages to keep its promise of delivering anywhere in 30 minutes . Usually. whichwould translate into visible effects on customer service. it is essential to conveythis message to the other people in the organization. ‡ Overpromising y Overpromising in advertising: During the marketing phase. In packaged goods many customers possess enough price knowledge before purchase to be able to judge whether a price is fair or in line with competition. there areother. less obvious ways in which external communications influence customers¶service quality assessments. y Failure to educate customers adequately: In the anxiety to strike a deal or marketthe service. y Overpromising in personnel selling: While customers may be lost to competitiondue to under promising. One bank executive indicated that customerswere unaware of the bank¶s behind-the-counter.

firms must serve the employees through training. ³We don¶t teach our customers how to use us well and why we do the things we do. the historical significance. There is no mention of any light and . family. There could be plans for special shows on full moon night to make experience more memorable. and should not be missed. small grocers.´ Effectively coordinating actual service delivery with external communications therefore narrows provider gap 4 and favorably affects the customer gap as well. for those who could not make it on that crucial night of the month. The reverse is also true. Also people traveling with families must be provided with information on basic amenities in and around the Taj Mahal. In service organizations with field sales representatives. companies must also manage all communications to customers so that inflated promises do not lead to higher expectations. Service companies frequently fail to capitalize on opportunities to improve customers¶ perceptions. However. External communications²whether from advertising. once in Agra how to reach Taj Mahal is not known. There is neither imagery nor mystic incorporated in the communication content. a much sought after experience is also not adequately represented. this is a selling point for Taj Mahal Is not adequately flaunted. In addition to improving service delivery. The tendency to over promise increases with pressure to achieve greater profits or to meet competitive claims. service firms must address two issues: horizontal communications and propensity to over promise. External Communication Content on Taj Mahal: The information provided on the government websites on Taj Mahal is not indicative of the facilities sought by the tourists. clean toilets. the operations department needs to be aware of it so they can ensure the promises will be delivered. Since the main charm in visiting the city of Agra was the Taj Mahal. The visiting hours and weekly offs. there must be communication between the salespeople and the personnel performing the service. and group of friends or relatives. pricing or the tangibles associated with the service ± can create a larger customer gap by raising expectations about service delivery. Customers¶ service perceptions may also be enhanced if the company educates them to be better users of the service. The facilities sought in the vicinity of the Taj Mahal and basic amenities like safe drinking water. if any are not notified. Another function that must be involved in communication is human resources. cafeterias and milk. service personnel should be informed prior to an advertising or promotional campaign. severe damage to the firm¶s image can occur since it is unlikely the firm can perform the service as promised. In both cases. Taj Mahal bedecked in moonlight. Tourist could be provided with calendar data of full moon nights along with associated special events. Case: Taj Mahal ³Archetypal Drives´ of a customer who Visits Taj Mahal: The study was of the visitors including spouse. compensation and recognition to have a power full impact on the quality of service the employees deliver. Salespeople will often make promises to prospective customers to gain contacts. motivation. the prevailing basic amenities in the vicinity of Taj Mahal are not listed. For employees to deliver excellent customer service. The sample interviewed was of the opinion that the Taj Mahal bedecked in moonlight was a picture of delight. the tourists were keen on knowing the timings and approach to the spot and any rules that govern visiting this wonder of the world. On the full moon night some cultural events could also be planned and offered. As on bank executive observed. Service contact personnel should have input in the firm¶s advertising and promotional to ensure that messages conveyed to the prospective customers can be operationally performed. The primary drives of the tourist to this place are the beauty of the place and historical significance. On fundamental information.Strategies for Reducing Gap Four To reduce the size of Gap Four. For the bespoke customer. similar creations could be madethrough a light and sound show. If promises are made. Though there is a mention of the Taj¶s beauty on a full moon night but there is no mention of when the full moon is expected in the next few months.

Satisfaction is a µpost consumption¶ experience which compares perceived quality with expected quality. A distinction has often been made between the two constructs. Increasing levels of research is going into understanding the nature of the service-profit chain. while satisfaction reflects customers¶ experiences with that service. While both concepts are related and appear to be merging. whereas service quality refers to a global evaluation of a firm¶s service delivery system. In turn both are vital in helping buyers develop their future purchase intention. there are still gaps in the understanding of the two constructs. Rust and Oliver suggested that customer satisfaction or dissatisfaction . the relationship between satisfaction and service quality is strong when examined from either direction. Perceived quality. because service providers need to know whether their objective should be to have consumers who are satisfied with their performance or to deliver the maximum level of perceived service quality. on the other hand. While the majority of research suggests that service quality is a vital antecedent to customer satisfaction there is now strong evidence to suggest that satisfaction must be a vital antecedent of service quality.a µcognitive or affective reaction¶ ± emerges as a response to a single or prolonged set of service encounters. Satisfaction affects assessments of service quality and assessment of service quality affects satisfaction. Regardless of which view is taken. . Consumer Perception of Technical and Functional Quality Model QUALITY AND SATISFACTION A review of the literature will reveal that the terms µquality¶ and µsatisfaction¶ are quite often used interchangeably. Getty and Thompson defined satisfaction as aµSummary psychological state experienced by the consumer when confirmed or disconfirmed expectations exist with respect to a specific service transaction or experience¶. Heavy expenditures and importance attached to customer satisfaction measurement suggest that the link between customer satisfaction and economic performance is presumed by companies. THE SERVICE-PROFIT CHAIN The increased emphasis on customer satisfaction begs the question whether improvements in customer satisfaction lead to improvements in the economic performance of firms. So. their relationship to each other and their antecedents and consequences.¶ Oliver takes the view that satisfaction is µthe emotional reaction following a disconfirmation experience¶. According to Cronin and Taylor µthis distinction is important to both managers and researches alike. Taj Mahal is one of the wonders of the world. may be viewed as a global attitudinal judgment associated with the superiority of the service experience over time. They argued that quality improvements that are notbased on customer needs will not lead to improved customer satisfaction.sound show on any day. hence providing conservation guidelines for tourists in the communication content is an expectation. conclusion is that the key difference between the two constructs is that quality relates to managerial delivery of the service. Not surprisingly there has been considerable debate concerning the nature of the relationship between the constructs of satisfaction and quality.

Developments in information technology are offering new insights into the link between quality and financial performance.There is considerable support for a link between improvements in service quality and improvements in service quality and improvements in financial performance. Generally worded customer charters go beyond the minimum levels of business terms by stating in a general manner the standards of performance which the organization aims to achieve in its dealings with customers. individual employees or groups of employees can be linked to measure of quality. more specificstandards can be stated in a number of ways which are considered below. behavioral intention based on loyalty generated through good service can easily be broken. However. other than offers of compensation if delays exceed a specified standard or if accommodation arrangements are changed at short notice. Large multiple outlet service organization are increasingly able to experiment with elements of service quality in test sights and to judge economic performance over time. make very few promises about service quality. This decline has been attributed to a number of factors including greater choice and information available to customers. banks publish characters which specify in general terms the manner in which accounts will be conducted and complaints handled. Much of the research into the outcomes of the satisfaction has measured behavioral intentions. an organization can rely on its terms of business as a basis for determining the level of service to be delivered to customers. in the light of increasing levels of competition in most services markets. Dick and Basu. The booking conditions of tour operators. the µcommoditization¶ of several services. It is suggested that there is wide spread evidence of managers¶ frustration with the inability of quality improvement to improve organizational performance. and increased levels of competition.For example. . While information technology is opening up new possibilities for correlating data about inputs and perceived outcomes. for example. A fast-food restaurant. It also serves to communicate the standards which are expected of employees. In this way. the problem of analyzing cross-sectional data remains. consumers will not hold a favorable attitude towards a brand as compared to other alternatives available and will therefore not be predisposed to repurchase. In this way. Some service providers have disaggregated their information even further by linking service quality questionnaires to features of the service which a respondent actually received. At its most basic. Much of the literature has sort to establish a link between satisfaction and loyalty. While the general manner in which an organization goes about promoting itself may give a general impression as to what level of quality it seeks to deliver. in a conceptual paper on loyalty viewed satisfaction as an antecedent of relative attitude because. SETTING QUALITY STANDARDS A precise specification of service standards serves a valuable function in communicating standard of quality which consumers can expect to receive. These generally act to protect customers against excessively poor service rather than being used to proactively promote high standards of excellence. may implement a new staff payment system or training program in a number of ³experimental´ sites and will be able to identify changes in performance relative to other µcontrol¶ branches. Against this. for example. Grant reports that the American Customer Satisfaction Index studies found a positive correlation between customer satisfaction and stock market returns. some researchers have pointed out that much of the evidence to support a link between quality and financial performance is anecdotal in nature and refuted by analysis of corporate performance. . the likelihood of recommending a service or repurchasing it. without satisfaction. It is very difficult within a research framework to isolate all of the contributors to customers¶ perceptions of quality except those which the researcher is interested in The Service Profit-chain.

Codes of conduct adopted by members of professional associations as diverse as car repairers. training. undertakers and solicitors specify minimum standards below which service provision should not fall. While the major banks give their branch managers targets for such quality standards as queuing time for counter staff and availability of working ATM machines. ISO accreditation is granted to organizations who can show that they have in place management systems for ensuring a consistent standard of quality. The code of conduct provides both a reassurance to potential customers and a statement to employees about the minimum standards which are expected of them. increasingly. and the quality of the employees. For example. µI shall not deliver substandard service nor shall I let anybody else deliver substandard service¶ is the type of motto to be adopted. Instead. a company operating to ISO 9002 does not guarantee a high level of quality for its service. leisure centers and building contractors. Many of the public utilities now offer compensation payments if certain specified services are not delivered correctly. service organizations set their service guarantees with reference to benchmarks established by bestpractice companies within their sectors. In addition. the relevant regulating authority has the power to set the specific targets. especially in respect of service outcomes. it has subsequently found significant use among service companies. industrial purchasers of services are seeking the reassurance that its suppliers are ISO registered. the quality of the management and the influence of the leadership upon the employees. The factors that could play a crucial role in the quality of service delivery are many. Increasingly. develop a unique personality. Contrary to popular belief. quality standards are sometimes imposed from outside. As an example parcel delivery companies often guarantee to deliver a parcel within a specified time and agree to pay compensation if they fall below this standard. including education. customer feedback on quality issues has to be an important component of employee evaluation. the system in place. shaped by interpersonal relations. A few important factors are discussed below. DELIVERY OF HIGH-QUALITY SERVICE DEVELOPMENT OF A QUALITY CULTURE Organizations. HUMAN FACTORS It basically includes employee recruitment and selection. it does not guarantee a specified level of service to its customers. or in completely different sector. Many highly specific targets are therefore restricted to internal use where their function is to motivate and control staff rather than to provide guarantees to potential customers. some quality conscious automobile companies have given the right of halting the assembly line to any concerned employee who may have noticed inadequate or defective components fitted on a vehicle. rewards and motivation. Many services companies belong to a trade or professional association and incorporate the association¶s code of conduct into their own service offering. . High-quality service design and delivery is not just the function of the front end employees but of all the members of the organization. In the case of privately owned utilities.whether this itself is high or low is largely a subjective judgment. This quality consciousness is crucial to long term quality maintenance. In the case of some public sector services which operate in a monopolistic environment. Although this standard was initially adopted by manufacturing industries.Specific guarantees of service performance are sometimes offered. like human beings.

The receptionistcould not perform the best service for the customer without the cooperation from others. 1] QUALITY CIRCLES Quality circles are groups of non-supervisors and work leaders in a single company department who volunteer to conduct group activities in order to improve the effectiveness of the work in their respective departments. The role of individual employees is very crucial to quality control of services as well as goods production. in future. The reporting structure and close interaction between the supervisors and the front-end service delivery employees is very important. In addition. including the housekeeping . Thus. The customer-defined standards are classified as soft and hard standards. products. The key aspects of the focus as follows: ‡ Quality Standards must be customer driven. ‡ External and internal customers both need to be addressed. Employees have to be told that this feedback is crucial for the organizational success. A receptionist being a front-end employee may be seen as the key person for the customer interaction. Every service firm should have both company-defined and customer-defined standards of quality. FEEDBACK Organizations need to encourage feedback from every employee including the front-end employees as a part of the quality monitoring system.SYSTEMS SUPPORT It is not employees but also system which tends to produce defects. the frequency of each failure can be measured so that the reasons for poor quality service can be understood and both short and long-term measures can be instituted to tackle the situation. it may demotivate the employee. the receptionist may not report problems with the housekeeping unit. Fishbone or Ishikawa diagrams prepared by Ishikawa help to trace quality complaints to the responsible production process that is the root cause of the problem. organizations have to put systems in place that ensure high quality services delivery. ORGANIZATIONAL FACTORS Organizations with very high number of levels within the structure tend to have very poor interaction between the front-end employees and the higher echelons within the organization. and services that are important to the customer. However if the receptionist is not authorized to ask the housekeeping unit to improve upon the service when a customer has complained about it. This is more so in the case of services where the service is usually delivered in person by one of the employees. 2] TOTAL QUALITY MANAGEMENT TQM is defined as management of the entire organization so that there is continuous improvement in all dimensions of process. and. The diagram below is a root cause diagram that enables you to pinpoint the causes contributing to the delayed departure. the computerized system in the bank has to ensure accurate and timely delivery of the customer bills and statements. For example.

services to internal customers also have to be given the same degree of importance as those for external customers. We could develop a daily measure of how many buses left within this 0-10 minute¶s interval. we went into the possible reasons for the delay. small tinkering towards quality improvement also contributes significantly to overall quality improvement due to the cumulative effect. Visually. In the Ishikawa or fishbone diagram. We could use percentage of buses that left within 0-10 minutes delay as a measures of overall timeliness quality. ‡ More focus on cost saving than on long-term generation of value for the customers. in the long term. Thus. they are decorative rather than operative in nature. ‡ Commitment to quality improvement from the top management. In the short run. THE FACTORS THAT CAUSE THE FAILURE OF TQM ARE AS FOLLOWS: ‡ More rhetoric than real commitment to the development of quality culture. and whether the performance is satisfactory or not. Thus. The lack of commitment also could mean no further initiatives or follow up actions. the long-term trend. ‡ Every employee is a quality inspector and is empowered. both the operating and supervisory personnel could judge the recent trend. support. Let us assume that the acceptable standard for the service delivery is a maximum delay of 10 minutes in bus departure from the announced timetable. even on a small scale. the task of quality control would be greatly simplified. the employees feel confident that they would enjoy the support of top management even when they have to make some hard unpalatable decisions leading to short term loses. Many times we see quality statements or organizational objectives displayed prominently at work place. 3] HARD MEASURES OF SERVICE QUALITY A standard represented by a number gives a concrete idea about the goal and the gap between the performance and the goal. ‡ Lack of quality initiatives. there is less compulsion to follow up on the efforts made. quality improvement would bring about customer satisfaction through greater value delivery and customer loyalty. In particular. This does not bring about the desired changes in the products or services. Thus. most of them are for the visitors or the customers rather than the operating employees! Thus. ‡ Continuous measurement and improvement. nor does it bring about an attitudinal change. Employees may tend to think that if the immediate crisis is adverted. Contrary to this. Each and every employee can stop the assembly line. When the top management is committed to quality improvement. It has been the belief of a number of organizations that the quality improvement needs to be done on a large scale to be effective. These costs will eventually transform themselves into financial gains. . this is an ideal way of giving feedback to relevant parties about the performance. it has been seen that while it helps to have a major review of the quality of Japanese goods and services owes much to the continuous measurement and improvement. Organizational culture is very crucial to the quality improvement process. To understand this hard measure we use the example of the number of buses leaving a bus terminal. Some of the quality control initiatives require capital funds or increases in the variable cost. each employee is treated as a quality inspector and is empowered to take appropriate corrective action. the contribution of top management and their commitment is also crucial as employees usually emulate the attitudes of the top management. The timeliness index would be the percentage of buses leaving on time. they may sound like unnecessary costs and therefore not desirable.department. Surprisingly. However. Thus. If a series of such hard measures could be developed. or follow-through actions.

This total commitment to the customer loyalty would ensure long-run success. From the past data. the role of the person keeping the ledger is greatly reduced. there is some warning when the correction could be made and the trend reversed. it would meet the adequate level of service expectation quite easily. In view of these factors. The customers start to use the service of the current provider less frequently before completely switching over to another provider. While the service may or may not delight the customer. . A similar ATM transaction costs Rs 0. The advantages of automation are: ‡ The role of a service-providing person is greatly reduced or even totally eliminated. however. above which this level of satisfaction is achieved. usually. the customer is likely to remain loyal to the service provider. The techniques of data mining and data manipulation can be used effectively to bring out such instances to the attention of the management to plan suitable action. good communication with the customers may be difficult to achieve. can see the consistency in automated delivery. a frequent flyer program administered by airlines can be used effectively. thereby avoiding the risk of failure. While a number of managers would agree on the value of customer loyalty.thus. ‡ Usually the cost of automated delivery is considerably less than that of service delivery by an employee or representative. It has been noted that the switching to another source of service usually does not occur suddenly.25. A stitch in time could thus save nine. thereby reducing one source of services variation. Should there be a significant drop in the number of flights flown on this airline during two successive quarters. ‡ Due to moods. The perceived level of service. Thus. Reliability is one of the most important quality dimensions.4] PREVENTION OF CUSTOMER DEFECTION If the quality of the services extended by the organization is perceived by the customers to be of high quality. This ensures accuracy of the work. customers tend to perceive identical service delivery at different points to be different. We need to make use of the tools of computerization and data mining for this purpose. a considerable saving in operating cost can accrue to the service provider due to automation. the company knows about the average number of flights undertaken by an executive on quarterly basis. Even the moodiest of the customers. the customer is unable to ask for an impossible service alternative. A case in point is the ATM. 5] ROLE OF AUTOMATION IN SERVICE QUALITY DELIVERY The factors contributing to poor quality of service include: ‡ Employees as a source of variation in services delivery ‡ Customers as a source of variation in services delivery ‡ Due to intangible nature of services and inability to describe them. Thus. when the bank passbook entries are made directly from a computer through a printer. or even requesting a feedback about the airline performance. ‡ Automation always provides consistent and standard delivery. ‡ As automation usually means a limited number of alternatives available on a menu. emotions and variations in behavior. is called µadequate level of service¶. it may be worth acting upon a line may be dropped to the person enquiring about his health and the reasons for the lack of flying. automation can be a way of delivering high quality services. For example. they are not prepared to invest resources to ensure continued patronage. The average cost of cash receipt or payment transaction by a cashier or teller is Rs 3 to 5 per transaction.

For example. Thus. a pioneer in the technique for surgical correction of hernia (a condition usually brought about by the weakening of the stomach wall). their perception of service quality received is considerably lower. The award. Selected companies are visited by the examiners for a detailed look at the operations. Companies have to nominated themselves and make detailed submissions about their quality practices and performance. the number of alternative services that can be designed to achieve the same end purpose is limited. named after a US commerce Secretary. and his colleagues run a number of hospitals which surgically treat only hernia. reduce costs. was instituted in 1987 to promote excellence in order to meet the Japanese economic threat successfully. however. By specialization in one area. a very large percentage of them offer extensive services in almost all the areas of medical care. It can be used as a source of information about consumer behavior. 7] ROLE OF SEGMENTATION IN SERVICE QUALITY IMPROVEMENT Segmentation is one of the key techniques used in the current marketing to understand the customer needs better and then offer products or services that more particularly meets thee customer needs. Thus. Unlike in the case of other hospitals. DrShouldice. The award wakes up a number of companies and participant managers to the need for TQM. if the tourist company normally offers tours to Far East or European Countries. service and small business-for quality achievements. In the case of services. and even the companies who are not successful in winning the award benefit enormously by just participating in the award process. the need for segmentation is obviated to some extent by an elaborate range of products that can be offered simultaneously. it can be used as a vital tool for marketing the products or services produced by such a firm. This can be used to make customized offerings to high net-worth customers for mutual benefits. etc. The chosen criteria are good yardsticks for quality. The award focuses on management systems and processes. If a company receives such a highly prestigious award. Specialization in a particular area of service:While there are any number of both public and private hospitals in India. the number of service alternatives is limited to first class or economy class. The importance of quality in the global competition is brought before the participants and they get a blueprint for action that works.manufacturing. 6] ROLE OF QUALITY AWARDS AND CERTIFICATION An offshoot of the commerce department of the United States Government cal ±led µNational Institute of Standards and Technology¶ offers awards each year in three categories. special interest. and build up a quality reputation which can be unmatched. the surgery . If the customer is provided with unsuitable service not needed or required by a set of customers. In Canada. The service provider can adopt a number of measures to combat this situation. They represent the entire quality delivery process of services. a large number of alternatives exist for customers to choose from. In the case of products.‡ Automation can produce data about various customer transactions. a hospital can develop expertise. two-third points are awarded for direct measurement of quality and contribution of quality processes.

The company may offer an additional stay package at attractive prices. the company may design add-on modules and offer them to customers by way of greater variety. tourists return to the area frequently and choose the modular package best suited to their pockets and levels of energy. with the patient walking in and out of the operating theatre with the help of the surgeon. Various modules can be combined to produce distinctive services that appeal to various customers. 1] Regular customer surveys . single room supplement for a price. Indeed. easy-to-easy measures of service quality represents a key aspect of consumer behavior and services marketing research. The previously operated patients in their post-operative stay in the hospital provide moral and spiritual support to the newly admitted patients. a tour and travel company may offer an add-on package for children below 3 or between 3 and 12 years of age. chair car. Adoption of modularization Instead of offering completely different or distinct services. this will have a direct bearing on a company¶s financial performance and overall market share. Thus. In turn. For example. Naturally the correlation between financial and customers will determine the revenue generating potential of the service. which lead to reduced anxiety and faster recovery. or 6 hours. in KuluManali. which are both internally and externally focused. an integral part of any organization¶s attempt to still a µquality culture¶ is a commitment to a process of µcontinuous improvement¶. RESEARCHING SERVICE QUALITY The development of reliable. ‡ Financial measures. aimed at assessing the impact of the service performance on customers. This is especially true of µpure¶ services organizations. Ramaswamy identified three different three different sets of measures that a company must be concerned with: ‡ Service performance measures that are primarily internally focused and evaluate the current performance of the service and ensure that it is continuing to reliably meet the design specifications. Even the return arrangement is similarly made by flexible mode of transport. or even a post office bus to reach the starting point and then choose the trail of the selected duration. as unlike their counterparts in the manufacturing sector they have fewer objective measures of quality by which to judge their production. etc. One can choose either a bus. while the relationship between service performance measures and customer measures will give some indication as to how the service is performing in customers¶ eyes. 4 hours. funicular railway. a large number of hiking alternatives are available to a tourist. ski lift. Thus. the tourist can decide on an uphill and/or downhill walk.is mostly performed under local anesthesia. on the other hand. which are indicators of the financial health of the organization. As a result. To support this systematic approach to quality measurement is needed. ‡ Customer measures. The tourism department offers a choice of walk trail for 2 hours. these modules will effectively meet the demands of the greater segments of the customers moreprecisely.

who are generally frequent user. The increasing range of competing services available and customers¶ growing awareness of the fact that they are in receipt of a service for which they pay a price ± Whether directly or through taxation ± has led them to expect to be consulted and to express an opinion about the level of satisfaction provided. The result has been the emergence of µprofessional¶ panel members who may not be representative of service users as a whole. 3] Transaction analysis An increasingly popular method of evaluative research involves tracking the satisfaction of individuals with particular transactions that they have recently been involved in. Today. electricity and telecommunication.The incidence of surveys into the level of satisfaction that customers have experienced from service providers is increasing throughout the service sector. are brought together by a company on a regular basis to study their opinions about the quality of service provided. 2] Customer panels These can provide a continuous source of information on customer expectations. On other occasions. members of the public are in constant receipt of literature from a wide range of service providers asking for comments on the quality of service that they have received. It is probably true to sat that most large service providers in both private and public sectors have jumped on this quality bandwagon. User groups also have an important part to play in many of the UK¶s recently privatized industries such as gas. water. they may be employed to monitor the introduction of a new or revised service ± for example a panel could be brought together by a building society following the experimental introduction of a new branch design format. The assumption that most people make is that data from such surveys will be used to take corrective action where expectations are not reached. as well as their overall satisfaction for the service. Groups of customers. There has been a suggestion that the number of people prepared to become members of panels is not rising as quickly as firms¶ appetite for information. the Automobile Association surveys customers who have recently been served by its breakdown service and many building societies invite customers who have just used their mortgage services to express their views on the service received . the validity of this research method is quite dependent on how well the panel represents consumers as a whole. However. particularly customers¶ satisfaction with the contact personnel with whom they have interacted. although it is often questionable whether the most appropriate methods are employed to gather the information. For example. The research effort normally involves a mail-out questionnaire survey to individual customers immediately after a transaction has been completed. The use of continuous panels can offer organizations a means of anticipating problems and may act as an early warning system for emerging issues of importance. This type of research enables management to judge correct performance. Retailers have been involved in the operation of continuous panels contribute to monitor their level of service provision as well as letting panels contribute to new product development research. Such surveys usually ask recipients to relate any complaints that they may have about the services provided and any comments/suggestions for improving them. Typical application include filling in a questionnaire on the plane after a holiday or being asked by the local council to fill in a card headed Customer service enquiry.

Perception studies of ten include an analysis of the perceptions of a firm¶s employees. Audits tend to be tailored to the specific needs of a company and focus on an issue that it wishes to evaluate. The constructive nature of this research technique has to be stressed.An important function of mystery customer surveys is therefore to monitor the extent to which specified quality standards are actually being met by staff. However. if treated constructively. A major difficulty in measuring service quality is overcoming the non-conforming of staff with performance guidelines. Group discussions and/or in depth interviews are the vehicles used for assessing the perceptions of people at this stage. if the techniques are applied correctly. this may be sole method of keeping in touch with customers. Complaints by customers. referring to instances of what they consider poor-quality service may. 4] Perception surveys These investigations use a combination of qualitative and quantitative research methods. An additional benefit of this research is its capability to associate service quality performance with individual contact personnel and link it to reward system. clients are asked to judge the company¶s performance using a battery of attitude statements. The format of the enquiry is determined jointly by the client and research organization. In other words. Complaints can be made directly to the provider or perhaps indirectly through an intermediary or a watch dog body. 6] Analysis of complaints Dissatisfaction of customers is most clearly voiced through the complaints that they make about service provision. training in observation techniques which allows them to distinguish between a greeting and an acknowledgement. to help the firm itself as clients see it. customer complaints are at best an inadequate source of . they can allow management to know what is really happening at the sharp end of their business. provide a rich source of data on which to base policies for improving service quality. Their aim is to achieve a better understanding of how customers view an organization. particularly the staff involvement in such provision. To be effective mystery shopping surveys need to be undertaken independently. as the mystery customer can quite easily be mistaken by staff as an undercover agent spying on them on behalf of the management. Many professional services organization have employed such studies in order to develop future market strategies. This method of researching actual service provision involves the use of trained assessors who visit service organizations and report back their observations. This so called service-performance gap is the result of employees being unable and/or unwilling to perform the service at the desired level. The training of assessors is critical to the effective use of this research method and should include. 5] Mystery customers The use of µmystery customer¶ is a method of auditing the standard of service provision. In the quantitative phase of the survey. for example. The initial qualitative stages of a study involve researchers in identifying the attitudes of clients towards the firm as well as how the firm is perceived by the community at large. In particular. For many companies. should be objective and must be consistent.via a structured questionnaire.

There are many barriers to the flow of information from employees to managers. Many of the techniques employed to elicit the views of employees as internal customers are in principle the same asthose used in studies of external customers. feedback from Quality circles. The continuous tracking of complaints is a relatively inexpensive source of data which enables a company to review the major concerns of customers on an ongoing basis and hope fully rectifies any evident problems. As part of an overall programme for keeping in touch with customers. especially in organization where there is no culture of listening to staff.oriented organizations. Where there are clearly identified. In addition the receipt of complaints by the firm enables staff to enter into direct into direct contact with customers and provides an opportunity to interact with them over their matters of concern. Others simply change to another supplier and do not offer potentially valuable information to the service provider about whatfactors where wrong which cause them to leave. the analysis of complaints can have an important role to play. wants. remain dissatisfied and tell others about their dissatisfaction. One way in which formal feedback from staff can be built into a systematic research program is the operation of a staff suggestion scheme. involving employees in the research process and its findings. motivations and attitudes towards working conditions. Most customers don¶t both to complain. etc. Interviews and focus may be used in the collection of qualitative data on employee needs. 8] Benchmarking studies The nature of customers¶ quality expectations in other similar service industries can be useful source of information for managers. As well as eliciting customers¶ views on these issues in particular. job appraisal and performance evaluation reports. can all provide valuable information for planning quality service provision. benefits and policies. for example by creating free phone telephone lines and making comment cards readily available. 7] Employee research Research undertaken among employees can enable their views about the way that services are provided and their perceptions of how they are received by customers to be taken into account. Research into employees¶ needs can also identification of policies which improve their motivation to deliver a high quality service. It is often apparent that customer needs may be similar between different . complainants can also contribute views about customer service in general. can do a lot for improving their understanding of service quality issues throughout their organization. In truly market . Data gathered from staff training seminars and development exercises.information. Many companies have gone to great lengths to make it easy for customers to complain. a shared commitment to improving quality can greatly improve customers¶ perception. for example by using them to gather data. complaints analysis can form a useful pointer to where the process of service delivery is breaking down. showing them videotapes of group discussions and interviews with customers and circulating them with the findings of research reports. and for acting on the result. The proposals which staff may make about how services could be provided more efficiently and/or effectively certainly do have an important role to play in moving service quality. In the respect of obtaining involvement and participation.

‡ Competitive benchmarking This may be with respect to market share. many services organizations that have been operating outside the private market place for many years can benefit from an understanding of the operations of their counterparts in other countries that have openly marketed their services I in a freely competitive market. . a pleasant environment. In particular. selling price etc. Benchmarking can be undertaken at a number of levels. Many common dimensions cut across the boundaries of industries and apply to services in general ± for example courteous and competent staff. identify potential benchmarking partners. Research through such techniques as mystery customer surveys can be used to monitor the standard of quality delivered by intermediaries. performing their role in quite a different manner to goods intermediaries. the efficiency and effectiveness of customer handling procedures. In this way. For example. It can therefore be beneficial to investigate the nature of service provision in closely related services areas. the quality perceived by a customer is to a large extent determined by the performance of intermediaries. and draw upon the findings of any research that has been made available. ‡ Internal benchmarking This involves comparing internal processes and structures. ‡ Functional benchmarking Sometimes the task will be compare the performance of a company¶s functions with best practice. where intermediaries form an important part of a service delivery process. and adapt and improve. based on what is compared and what the comparison is being made against: ‡ Performance benchmarking This is essentially based on outcome measures. While benchmarking produces a standard against which improvements are continuous and benchmarks can go out of date very quickly. or completely different sectors which share similar processes. the perceived quality of an airline may be tarnished if its ticket agents are perceived as being slow or unhelpful to customers. from the benchmarking team. even though the service product on offer is ostensibly quite different. Best practice could be defined in terms of firms within the same sector. Research into intermediaries focuses on two principle concerns: ‡ Firstly. In this way. ‡ Strategic benchmarking For example. ‡ Process benchmarking For example. 9] Intermediary research Service intermediaries often perform a valuable function in the process of service delivery. collect and analyze the information. comparing the integrity of a company¶s strategic plan with best practice in the industry. based on a study a best practice elsewhere. it is possible to learn a lot about certain aspects of hospital service from what hotel and catering establishments have been researching and practicing for some considerable time.industries. to name but a few. Benchmarking involves a five-step continuous process: plan the study. The term benchmarking is frequently used to describe the process by which companies set standards for themselves. Continuing with this theme. managers within the UK National Health Service may learn a lot about customer care by examining health services in the USA. it is worth while investigating what is known in those services sector that have a good track record of analyzing and responding to customers¶ needs and identifying whether it is applicable to an industry that has only recently adopted a customer-led approach. and helpfulness.

were the main reasons for the difficulties experienced by it. and customers rejected the change. Activists published statistics showing that McDonald¶s food had a high proportion of unhealthy fats. fries and soda. many services principals find it possible to learn more about the needs and expectations of their final customers during the process of providing intermediary support services such as training. analysts noted that customer behavior in the fast food industry was paradoxical. People realized that regular consumption of fast food could play havoc with their health by increasing their intake of Cholesterol and fat. had been receiving low ratings on quality and customer satisfaction since the early 1990s. which offered sandwiches and salads in a casual dining atmosphere. McDonald¶s introduced substantial system wide changes that overhauled the company¶s products.. who was made CEO in early 2003. Changing customer eating habits. By the late 1990s. People realized that junk food was unhealthy and . For instance. No Longer the µGreat American Meal¶: Through the decades. The 1990s saw an increasing interest in healthy living and physical fitness in the US. it was clear that the company has lost its claim to that title. Richard and Maurice opened a drive-in restaurant in San Bernardino. it did not take long for the industry to become the target of lawsuits filed by people who blamed the fast food industry for their obesity. and reports also made public the unhygienic careless way in which the food was being prepared. McDonald had promoted itself as the provider of the µGreat American Meal¶. the President. As well as conducting structured research investigations of intermediaries. McDonald¶s managed a relatively quick turnaround. as a substitute for the Big Mac. McDonald introduced the McLean Deluxe Burger in the early 1990s a 91% fat free patty. increased competition and complacence on the part of the company and its franchises. after years of declining earnings and poor customer ratings. company¶s like Subway and Panera Bread. and lead to a spate of problems related to obesity and heart disease. However. Considering people¶s perception of fast food. intermediaries as co-producers of a service are further down the channel of distribution and hence closer to customers. McDonald¶s Corp. in 1937. analysts said that they generated a large amount of bad publicity. people hated its taste and McDonalds was forced to phase out the product a couple of years after it was launched. McDonalds A Story of Service Recovery Background Note: The McDonald brothers. by the1990s. which comprised mainly of burgers. people switched to sandwiches and salads. California. Instead of fast food. which were perceived as healthier foods. However. Consequently. In an attempt to recover their lost customers. seemed to have lost its claim to providing the µGreat American Meal¶.‡ Secondly. Mc Donald also attempted to shift to low fat frying oil in2002. and Charlie Bell. The company. but it wasnot able to give the trademark McDonalds taste. which was once the favorite destination of fast food lovers around the world. However. The new plan eliminated the negative elements in the system. operations and marketing. McDonald Start including healthier items likes salad and sand witches in their menu. began to take over the customer base of fast food chains like McDonalds. Under the turnaround plan. They are therefore in a position to provide valuable feedback to the service principal about consumers¶ expectations and perceptions. the largest fast food chain in the world. Although none of the lawsuits filed against the company were successful. under the leadership of JimCantalupo. These restaurants created a new subcategory in the industry and were called µfast casual outlets¶. while retaining and building on the positive aspects. Despite the protests and the accusations against the industry.

consumers were demanding better food and more variety. McDonald¶s planned to sell only the Quarter Pounder. It also began offering fruit with Happy meals. Apart from increasing public aversion to fast food. McDonald¶s had to face competition not only from fast food chains like Burger King. McDonald¶s began phasing out its µsuper-size¶ portions of fries and soft drinks. Towards this end. Some McDonald¶s outlets were also diversifying into coffee. speed and service. bottled water. to a survey. consumers who ate fast food at least once a month rated both Wendy¶s and burger king better than McDonald¶s. The Golden Arches Rise Again: After McDonald¶s announced its first quarterly loss in38 years in 2003. It also introduced new automated drink dispensers. Wendy¶s and Pizza Hut. Wendy¶s took 127 seconds to serve its customers while V took 163 seconds. McDonald focused on building more stores. but when healthier alternatives were made available.5%. increased competition also harmed McDonald¶s adversely. It also launched the Adult Happy meal. but also from chains like Subway. McDonald¶s¶ continuous expansion and failing franchisee relations had an adverse effect on service and quality. Acc. Cantalupo reinstalled the grading system by µmystery shoppers¶ to identify. McDonald¶s was also on a drive to improve quality of service and maintenance standards in its restaurants. which was a meal designed for grown-ups that included a salad. Research also found that slow service and rude professional employees were major sources of customer¶s complaints. In 2003. customers did not like them. McDonald¶s products had become stale and the company had failed to come out with successful product launches since the early 1980s. the company made several improvements designed to help the restaurants function more efficiently. The number of items in a Value Meal was also pared down from 13 to 8. To a survey conducted by Business week. which reduced inventory. Acc. and a Two-Cheeseburger meal. whitemeat chicken nuggets and chicken nuggets and chicken strips. which outlined McDonald¶s strategy for the next three years. The cornerstone of the turnaround plan was the improvement of comparable sales. Besides. the board realized that big changes were required in the company¶s strategy and direction. or eliminate underperforming restaurants and to check whether the franchisees were . Cantalupo prepared the µplan to win¶. The menu was simplified and included a greater number of healthy options. comparable store sales increased 10. Cosi and Panera Bread. Although it attempted in the 1990s. which could be increased by improving the quality of service and operations in existing restaurants. For instant. In a move to offer a healthier menu McDonald¶s Increased its focused on salads and sandwiches. as far as the quality of food was concerned. In 1990s. In 2003. improve. it reduced the number of shelf-keeping units by 84. French fry bins. and designed new menu boards that would include more pictures to make ordering easy. McDonald¶s stopped grading its franchisee¶s by mystery shoppers on parameters such as cleanliness. which had been its USP for many years. In 1992 McDonald¶s introduced µmade for you¶ kitchens to counter custom-made food systems at Wendy¶s and Burger King.criticized companies for serving it. Soon after introducing this concept. to introduce 40 food items but most of them failed to appeal to customers. but it extended the time required to serve instead of speeding it up. instead of funneling capital spending into new openings. and a hydraulic vegetable-oil-delivery system that would save time in the kitchen. For instance. it introduced entrée-sized salads. along with items like Mc-Griddles breakfast sandwiches. Some Australian franchisees were testing a concept called McCafe in over 500 outlets in Australia. In early 2004. The board ousted Greenberg and installed Cantalupo as the CEO. The plan streamlined the company¶s operations and aimed to create a McDonald¶s that was more geared to the new conditions in the fast food industry. Soon after taking over. a pedometer and a booklet of walking tips. which dealt in salads and sandwiches. while doing away with slow moving products. which were reasonably successful. a Quarter Pounder meals. instead of selling separately a Double Cheeseburger meal.

688) Accuracy in billing (0. offers. ranking just behind Santa Claus. Surveys conducted by the company in the early 2000s revealed that Ronald McDonalds was one of the best recognized icons in the US. the company decided that each restaurant would be visited by mystery shoppers.maintaining the expected high standards of hygiene and cleanliness.591) Service provision in time (0. etc. feedback. in a restaurant.at least 16 times a year. etc.508) Personalized service and customer delight Maintenance of Hygiene/ Cleanliness (0.621) Accommodation of requests (0.663) Staff¶s acknowledgment on entering the outlet (0.665) Provision of items mentioned in the menu card (0.542) Recreational or special facilities ± play area for children.594) Assistance for seating (0. In 2004. Fast Food restaurant ± Factor Analysis Fast Food Restaurant Attributes Critical Factors Influencing Service Quality Individual attention paid to you. had to walk around at regular intervals during the day to ensure that everything was in order.635) Convenience of outlet hours (0. the company introduced the µtravel path¶ which required that a staff member. nutritional value.646) Quality of preparation : Ordered items (0. Number of satisfied customers increased by more than 2 million over 2003-2004. (0.anonymous visitors paid to observe restaurants. offers. indoor games. McDonald¶s began to showing signs of turning around by early 2004. (0. Under the turnaround plan.570) Effective utilization of personal details ± for mailers.571) Courtesy shown by staff (0. etc. (0.555) SERVICE DESIGN AND DELIVERY .655) Providing reliable information²menu ingredients.683) Response to suggestions/feedback/complaints(0.715) Correct provision of ordered items (0.628) Staff¶s knowledge in answering(0.631) Image of the fast Food chain (0. when in group(0.

This study used a seven point¶s scale range from ³strongly agree´ (7) to ³strongly disagree´ (1). and thus the time between measuring expectations and perceptions have been kept very less.936 -2.Fast Food Restaurant Attribute Ratings Fast Food Attributes Dimension Rank The Fast Food outlet¶s commitment to quality. Research Methodology: Sample population was 100 individual. Avoiding all the drawbacks of the SERVQUAL method and taking necessary precautions I have used the gap theory methodology for measuring service quality performance of McDonalds.931 -1.4 -0. to assess all five dimensions of service. Results and data analysis: The service quality evaluations for each of the components of service quality forMcDonalds. particularly caring and individualized attention and low ratings on the Assurance dimensions. I made my respondents to compare McDonalds. I measured the customer expectations prior to the service and customers perception after the service delivery. I have applied the SERVQUAL instrument to the fast food industry.584 The above table shows.5 Dosa Plaza -1. Pizza Hut &Dosa Plaza are: Dimension Tangibles Reliability Responsiveness Assurance Empathy McDonalds -1.72 -0.09 -1.86 -0. .05 -1. personnel and communication materials TANGIBILITY IV The ability of the fast food outlet to perform the promised service dependably and accurately RELIABILITY V Gaps in Fast Food Service Research Questions: This study proposes to investigate the relationship between the perceived and expected service quality among consumers of fast food services.6 -1. its physical facilities.45 Pizza Hut -1. hygiene and ethics EMPATHY I The knowledge and courtesy of the staff and their ability to convey trust andconfidence ASSURANCE II The willingness of the fast food outlet to help its Customers RESPONSIVENESS III The appearance of the outlet. I have formulated it as per the particular industry and its relevancy to customers.2 -1. Pizza Hut &Dosa Plaza with the ideal firm in the fast food industry.8 -0.5 -1. In order to prevent biases. that the fast food industry received strong ratings on the empathy dimensions. I have considered the fact that customers are affected by advertising and word-of-mouth communications. Pizza Hut &Dosa Plaza.9 -2.

Each aspect of the quality of service showed differences with respect to the size of gap score.Table I suggests that Dosa Plaza is the highest performing fast food restaurant and holds an advantage over others in the area of perceived reliability. the more important the dimensions from the customer¶s point of view. . The bigger the gap is. assurance and empathy dimensions Whereas Pizza Hut is good at responsiveness and tangible dimensions. Reliability and Assurance. order: Empathy. suggesting that the Fast food restaurants considered for this study did not meet or exceed consumer¶s expectations. Tangibles. Responsiveness. Responses were computed by subtracting the expectation response from the perception response. None of the service quality dimensions had a positive SERVQUAL score. which would be ranked in the following.

the complementary aspects of basic outcome must be tracked as well to ensure an appropriate and satisfactory customer experience. Gap model of service delivery. Finally. This indicates that the sample population appears not to be getting what they expect from their fast food service experience as far as individual attention is concerned. and the new order identifies that both cost reduction and revenue increases through retention and satisfaction. Conclusion The ³Service Quality Top Ten´ Lessons The Key lessons which I learned after the whole study and the developments of the last 10-15 years are as follows: Service delivery is a process. they will optimize service delivery and provide consistent service at all times. The first assessment provides a baseline for comparison with future assessments. The frequency of reassessments will vary with the individual firm¶s situation. in that they support the findings of previous research which indicates that customer contact employees play an important role in affecting customer perception of service quality. This comparison is essential for gauging the effectiveness of service quality improvement efforts and identification of service quality trends as they emerge. service profit chain. Moreover. it is important for managers to identify the relevant intrinsic and extrinsic cues used by consumers in order to communicate the relevant quality signals to them. it is important that the service quality be assessed on a regular basis. No positive scores were found. The implication of this research is to design a service delivery system that promotes positive ³moments of truth´. and it is possible to evaluate service design systematically using tools such as service blueprinting. and most things are predominantly services. as Bob Dylan wrote gives a conclusion that the old road for financial success for business was to seek profit growth through market share and through cost economies. using service quality assessment like SERVQUAL can ensure that fail points in customer encounters are reduced. homogenous an enterprise following a single. We saw low customer ratings on the empathy dimension of service quality in our research. In general. In doing so. Additionally. act locally. perspective customer value formula doesn¶t work optimally. If the industry persists in measuring and monitoring the perceptual aspects of fast food service quality. ³The times are changing´. management should make sure that there are always sufficient staffing levels to cope with peaks and troughs in demand. The largest discrepancy was found along the ³empathy´ dimension. managers should make key performers aware of their role and provide them with adequate training in order to offer a consistently high standard of service delivery. Times have changed. or seeking market share and customer loyalty. return on quality analysis. Managerial Implications: These results have several managerial implications. leading to a positive experience and strong customer referrals. Think globally. . Everything includes service.CONCLUSION: Findings from this study provide initial direction in determining the optimum service quality attributes to focus on in promoting fast food services. it is as subject to the disciplines of analysis and process control as any manufacturing process. Larger organizations need to recognize that in delivering customer value. Due to the dominant role played by the employees in the fast food industry. Customer value is ³built in´ to service design.

and increasing customer value. There are many tried and true methods for measuring customer satisfaction. external costs and quality maintenance costs. Quality doesn¶t always lead to profits. when in doubt ± ask. . Blind faith in quality initiatives is often a cover on the organization¶s failure. and explore with staff and management as to how to deliver it. ‡ Managing evidence. Clearly there is an emerging science to developing quality service. ³For an individual firm. lastly. The ultimate goal of the customer value models is company profitability ± but service delivery systems aren¶t designed as one size to fit all. Investments in service quality improvements must be made with the an eye on Net Present Value (NPV) or Return on Investment (ROI) as other investments. and with the same discipline in identifying anticipated benefits. The consequence may be an active plan to lose some customers. Improving service quality is certainly not a simple. The best way to understand what customers¶ value is to ask them. One size doesn¶t fit all. And. and measurement of outcomes. Do it with numbers. ‡ Managing customer expectations. Service quality can be improved if the following areas are given due attention: ‡ Identifying primary quality determinants. higher service qualityis not an unconditional guarantee of profitability´. The Gap model of service delivery is useful approach to ask customers what they value. ‡ Following up the service quality information system. straight forward exercise. ‡ Educating customers about the service ‡ Developing a quality culture. ‡ Automating quality. recognize that each customer¶s needs may vary dependent on situational factors.Quality isn¶t free. ‡ Employing benchmarking wherever possible and ‡ Keeping track of internal costs. Understanding customers¶ needs ± even when you know different customers have different needs.

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