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The Integrated Gaps

Model of Service Quality


• Closing the Customer Gap
• Provider Gap 1: Not Knowing What Customers Expect
• Provider Gap 2: Not Having the Right Service Quality
Designs and Standards
• Provider Gap 3: Not Delivering to Service Standards
• Provider Gap 4: When Promises Do Not Match
Performance
• Putting It All Together: Closing the Gaps
The Integrated Gaps Model of
Service Quality

• To overview the framework of the


gaps model of service quality
• To identify the factors responsible
for each of the gaps.
Gaps Model of Service
Quality
Expected
Service
CUSTOMER
Customer
Gap
Perceived
Service

External
COMPANY Service
Communications
Delivery GAP 4 to Customers
GAP 1 GAP 3
Customer-Driven
Service Designs and
Standards
GAP 2
Company Perceptions
of Consumer
Expectations
Key Factors Leading to the
Customer Gap
Customer
Expectations

Customer

Prov
GAP

Prov
Customer
Perceptions
Key Factors Leading to
Provider Gap 1
Customer
Expectations

GAP
1
 Inadequ
Insuffi
Resea
Company Perceptions of
Customer Expectations
Key Factors Leading to
Provider Gap 2
Customer-Driven Service
Designs and Standards

GAP
2
 Poor Ser
Unsyste
Vague,
Management Perceptions of
Customer Expectations
Closing Gap 2
• Service Development and Design

• Customer-defined service standards

• Physical Evidence and Servicescape


Physical evidence
• Communicating service quality
attributes
• Setting customer expectations
• Creating service experience

Organization’s physical facility – SERVICESCAPE


Coffee shop
Music store
Elements of Physical Evidence
Servicescape Other tangibles

Facility exterior Business cards


Exterior design Stationery
Signage Billing statements
Parking Reports
Landscape Emp loyee dress
Surrounding environment Uniforms
Brochures
Facility interior Web pages
Interior design Virtual servicescape
Equipment
Signage
Layout
Air quality/temperature
Types of Sericescapes
• Servicescape use
• Complexity of servicescape
• Typology implications
Typology of Service Organizations
Based on Variations in Form and
Use of the Servicescape
Complexity of the servicescape evidence
Servicescape Elaborate Lean
usage
Self-service Golf Land ATM
(customer only) Surf 'n' Splash Ticketron
Post office kiosk
Internet services
Express mail drop-off
Interpersonal Hotel Dry cleaner
services Restaurants Hot dog stand
(both customer and Health clinic Hair salon
employeee) Hospital
Bank
Airline
School
Remote service Telephone company Telephone mail-order desk
(employee only) Insurance company Automated voice-messaging-
Utility based services
Many professional services
Roles of the servicescape
• Package
• Facilitator
• Socializer
• Differentiator
A Framework for Understanding Environment-User Relationships
in Service Organizations
Approaches for understanding
servicescape effects
• Environment surveys
• Direct observation
• Experiments
• Photographic blueprints
Guidelines for physical
evidence strategy
• Recognize the strategic impact of PE
• Map the PE of service
• Clarify roles of the servicescape
• Assess and identify PE opportunities
• Be prepared to update and modernize the
evidence
• Work cross-functionally
Key Factors Leading to
Provider GAP 3
Customer-Driven Service
Designs and Standards

GAP
3  Deficienc
Ineffectiv
Role amb
Service Delivery
Closure of Gap 3
• Understanding Employees roles in
Service Delivery
• Understanding Customers roles in
Service Delivery
• Intermediaries roles
• Managing demand & Capacity
Employees’ Roles
in Service Delivery
• The Critical Importance of Service
Employees
• Boundary Spanning Roles
• Strategies for Closing Gap 3
• Service Culture
Service Employees
• They are the service.
• They are the organization in the customer’s eyes.
• They are the brand.
• They are marketers.
• Their importance is evident in:
– The Services Marketing Mix (People)
– The Service-Profit Chain
– The Services Triangle
The Services Marketing
Triangle
Company
(Management)

Internal External
Marketing Marketing

enabling setting
promises promises

Employees Interactive Marketing Customers


keeping
promises
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
The Service Profit Chain

Source: An exhibit from J. L. Heskett, T. O. Jones, W. E. Sasser, Jr., and L. A.


Schlesinger, “Putting the Service-Profit Chain to Work,” Harvard Business Review,
March-April 1994, p. 166.
The Service Profit Chain
• Helps in understanding the link
between employee satisfaction,
customer satisfaction and profits.
• Climate for good service and climate
for employee well-being are highly
correlated.
• Service quality dimensions are driven
by employee behaviors
Service Employees
• Who are they?
– “boundary spanners”
• Organisation members who interface with
customers
• Boundary – zone where customer meets internal
operations
• Two main roles performed:
– Information processing
– External representation
Boundary spanners
• What are these jobs like?
– emotional labor
– many sources of potential conflict
• person/role
• organization/client
• Interclient
• Quality/productivity
The effect of role stress
on job performance
Human Resource Strategies for Closing GAP 3
Hire for
r Service
fo Competencies B
te t Pr e t
pe es and Service Em fer he
e
m B le pl red
Co the op Inclination oy
Pe er
Str ard nd

Te nte kills
Tr nica tive
Re ure a

ch rac
ai n l
Hire the

I S
Pe ervi g
ers

fo and
rfo ce Right People
n
w
as

r
rm
Me

Develop
Customer-

Employees
Empower
Employees

Customers

Retain the People to


Oriented
Treat

Best Deliver
as

Service Service
People
Delivery Quality
Em th any’

wo e
rk
Inc ee

am ot
Provide
plo e

Te rom
Co Visio

lud s in
y

Needed Support
mp n

P
e

Systems
De
Se velo
s

re
or rvic p a su al
i
Int ente -
e
Provide Me tern e
Pr ern d In rvic y
oc Supportive Se alit
es al
se
s Technology Qu
and
Equipment
Empowerment
• Benefits: • Drawbacks:
– quicker responses – greater investments in
– employees feel more selection and training
responsible – higher labor costs
– employees tend to interact – slower and/or inconsistent
with warmth/enthusiasm delivery
– empowered employees are a – may violate customer
great source of ideas perceptions of fair play
– positive word-of-mouth – “giving away the store”
from customers (making bad decisions)
Importance of customers
in Service delivery
• Customers are a part of the production
process.
• A service experience heavily depends on
the audience’s (customer’s) input levels
also.
• Level of customer participation in
service varies across services.
• Role of other customers
How Customers Widen
Gap 3
• Lack of understanding of their roles
• Not being willing or able to perform
their roles
• No rewards for “good performance”
• Interfering with other customers
• Incompatible market segments
Levels of customer
participation across
different services
• Low - consumer presence required
during service delivery –
– Products are standardized
– Service is provided regardless of any
individual purchase
– Payment may be the only required
customer input
• Ex. Airline travel, Hotel stay, fast food restaurant.
Contd…
• Moderate - consumer inputs required for service
creation –
– Client inputs customize a standard service
– Provision of service requires customer purchase
– Customer inputs are necessary for an adequate
outcome, but the service firm provides the service
• Ex. Restaurant, Haircuts, annual physical exam etc.,
Contd..
• High - customer cocreates the service product
– Active client participation guides the customized
service
– Services cannot be created apart from the
customer’s purchase and active participation
– Customer inputs are mandatory and cocreate the
outcome
• Ex. Marriage counseling, major illness or surgery, lawyer consultation
etc.,
Importance of Other
Customers in Service Delivery
• Other customers can detract from
satisfaction:
– Disruptive behaviors
– Excessive crowding
– Incompatible needs
• Other customers can enhance satisfaction:
– Mere presence
– Socialization/friendships
– Roles: assistants, teachers, supporters
Customer Roles in
Service Delivery
Productive Resources

Contributors to
Quality and
Satisfaction

Competitors
Customers as Productive
Resources
• “Partial employees”
– Contributing effort, time, or other resources
to the production process
• Customer inputs can affect organization’s
productivity
• Key issue:
– Should customers’ roles be expanded?
reduced?
Customers as Contributors
to Service Quality and
Satisfaction
• Customers can contribute to
– Their own satisfaction with the service
• By performing their role effectively
• By working with the service provider
– The quality of the service they receive
• By asking questions
• By taking responsibility for their own satisfaction
• By complaining when there is a service failure
Customers as
Competitors
• Customers may “compete” with the service provider
• “internal exchange” vs. “external exchange”
• Internal/external decision often based on:
– Expertise capacity
– Resource capacity
– Time capacity
– Economic rewards
– Psychic rewards
– Trust
– Control
Self-Service Technologies—
The Ultimate in Customer
Participation
• Produced directly by customers without
any direct involvement or interaction
with the firm’s employees.
• Advances in technology, have allowed
the introduction of wide range of self-
service technologies.
• Ex: ATM’s, Airline check-in, internet banking, online
auctions, etc.,
Customer Usage of SST’s
• Benefits > costs
• Customer readiness results from a
combination of – personal motivation,
ability and role clarity.
• Benefits to companies – cost savings
and revenue growth.
Success with SST’s
• Clear strategy
• Benefits to customer
• Motivating customers to try
• Making customers tech-ready
• Involving customers in the design of the
service technology system and processes
• Educating customer for encouraging adoption.
Strategies for Enhancing
Customer Participation

Effective
Recruit, Educate,
Define Customer Customer and Reward
Jobs
Participation Customers

Manage the
Customer
Mix
Strategies for Enhancing
Customer Participation
• Define customers’ jobs
– Helping himself
– Helping others
– Promoting the company
– Individual differences
• Not everyone wants to participate
Strategies for Recruiting,
Educating, and Rewarding
Customers
1. Recruit the right customers
2. Educate and train customers to perform
effectively
3. Reward customers for their contribution
4. Avoid negative outcomes of inappropriate
customer participation
Manage the customer
mix
• Attracting maximally homogeneous
groups of customers
• Compatibility of customer segments
Key Factors Leading to
Provider GAP 4
Service Delivery

GAP
4
 Lack of In
Tenden
indep
External Communications to
Customers
Marketing Communication
mix
• Advertising
• Sales promotion
• Public relations
• Direct marketing
• Personal selling
Communications and the
Services Marketing Triangle
Company
Internal Marketing External Marketing
Vertical Communications Communication
Horizontal Communications Advertising
Sales Promotion
Public Relations
Direct Marketing

Employees Interactive Marketing Customers


Personal Selling
Customer Service Center
Service Encounters
Servicescapes
Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
Key reasons for service
communication problems
• Inadequate management of service
promises
• Inadequate management of customer
expectations
• Inadequate customer education
• Inadequate internal communications
Approaches for Integrating Services
Marketing Communication

Manage
Customer
Expectations

Goal:
Manage Delivery Improve
Service greater than Customer
Promises or equal to Education
promises

Manage
Internal
Marketing
Communication
Matching service promises
with delivery
Approaches for
Managing Service
Promises

MANAGING SERVICE PROMISES

Goal:
Create Coordinate Offer Delivery
Effective Make
External Realistic Service greater than
Services Communication Guarantees or equal to
Communications Promises
promises
Services Advertising
Strategies Matched with
Properties of Intangibility
• Incorporeal existence
• Abstractness
• Generality Vs. specificity
• Nonsearchability
• Mental impalpability
Guidelines for service
advertising effectiveness
• Use narratives to demonstrate the service
experience
• Present vivid information
• Use interactive imagery
• Focus on the tangibles
• Feature employees in communication
• Promise what is possible
• Encourage W-O-M communication
Approaches for
Managing Customer Expectations
Offer Choices

Create Tiered-Value
Offerings

Communicate Criteria for


Service Effectiveness

Negotiate
Unrealistic
Expectations

Goal:
Delivery
greater than
or equal to
promises
Approaches for
Improving Customer
Education

Teach
Customers
Goal: Prepare Confirm Clarify to Avoid
Delivery Customers Performance Expectations Peak
greater than for the to Standards after the Sale Demand
or equal to Service Periods
promises Process and
Seek Slow
Periods
Approaches for Managing
Internal Marketing Communications
Goal:
Delivery
greater than
or equal to
promises

Create Effective
Vertical
Communications
Create Effective
Horizontal
Communications

Align Back
Office Personnel
w/ External Customers

Create
Cross-Functional
Teams
Pricing of Services
• Three Key Ways Service Prices are
Different for Consumers
• Approaches to Pricing Services
• Pricing Strategies That Link to the
Four Value Definitions
Three Key Ways Service
Prices are Different for
Consumers
• Customer knowledge of services
– Service heterogeneity limits knowledge
– Providers are unwilling to estimate price
– Individual customer needs vary
– Price information is overwhelming in services
– Prices are not visible
• The role of nonmonetary costs
– Time costs, search costs, convenience costs and
psychological costs
• Price as an indicator of service quality
Three Basic Price Structures and
Difficulties Associated with Usage
for Services
Co
st
-B

d n-
as

se tio
1. Price signaling ed 1. Cost-plus pricing

Ba peti
2. Going-rate pricing m 2. Fee for service
Co

a se d
nd -B
Dema
Three Basic Price Structures and
Difficulties Associated with Usage
for Services
PROBLEMS: Co PROBLEMS:
1. Small firms may charge too st 1. Costs difficult to trace
-B

d n-
as

se tio
little to be viable 2. Labor more difficult to
ed

Ba peti
2. Heterogeneity of services price than materials
limits comparability m 3. Costs may not equal value
3. Prices may not
Co

reflect customer
value
a se d
nd -B
Dema

PROBLEMS:
1. Monetary price must be adjusted to reflect
the value of non-monetary costs
2. Information on service costs less available to
customers, hence price may not be a central factor
Four Customer Definitions
of Value (perceived value)

Value is low price. Value is everything


I want in a service.

Value is the Value is all that


quality I get for I get for all
the price I pay. that I give.
Pricing Strategies When the
Customer Defines Value as Low
Price

Value is low price.


• Discounting
• Odd pricing
• Synchro-pricing
• Penetration Pricing

Synchro-Pricing: Place differentials, Time differentials,


Quantity differentials and Differentials as incentives
Pricing Strategies When the
Customer Defines Value as
Everything Wanted in a Service

Value is everything
I want in a service.

• Prestige pricing
• Skimming pricing
Pricing Strategies When the
Customer Defines Value as
Quality for the Price Paid

Value is the quality I


get for the price I pay.

• Value pricing
• Market segmentation
pricing
Pricing Strategies When the Customer
Defines Value as All That Is Received for
All That Is Given

Value is all that I get


for all that I give.
• Price framing
• Price bundling
• Complementary pricing
• Results-based pricing

Complementary Pricing: Captive pricing,


two-part pricing and Loss leadership
Summary of Service Pricing Strategies
for Four Customer Definitions of Value

Value is low price. Value is everything


I want in a service.
• Discounting
• Odd pricing • Prestige pricing
• Synchro-pricing • Skimming pricing
• Penetration Pricing

Value is the quality Value is all that I get


I get for the price I pay. for all that I give.
• Value pricing • Price framing
• Market segmentation • Price bundling
pricing • Complementary pricing
• Results-based pricing