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Assignment #2

Service Marketing

Submitted To Laeeq Hassan Jaswal
Submitted By Mustafa Mehdi
Dated 21st Nov2010

This makes customers angry and cause the product switching. In order to control this problem the firm in 1988 hired Frank King from IBM who has been responsible for instituting the stricter developers and development scheduling guidelines.Kapor. entrepreneurial atmosphere. Product 3which is billed as the next generation in spreadsheets. Lotus has a strong reputation in the industry the factors of having these benefits are very strong marketing skills and an ear on the customers feed back . and personal information managers .Another plus point which boosts the company sales is a large and extremely effective sales force. The reason behind all this was to maximize the customer satisfaction . In 1989 Lotus decided to launch a new product. Having all these strengths the single weakness which is being discussed in the scenario is the delay in shipments. It is a software development company which makes official software for the NEXT computers . Even with all this control the firm is continuing to encourage creativity and a relaxed. CD- ROM disks.A toll free number is given where a customer is listened with carefully monitoring how long a customer can wait to talk to the consultant.The story starts with the popularity of a spreadsheet software named LOTUS 1-2-3 which was well received and helped propel sales of the personal computers . That’s no doubt a basic and a serious problem LOTUS facing that with the product announcement and shipping dates . With addition to this the company also keep on modifying and upgrading the product packages including word processing. Some mangers argue that developing the application for OS/2 would have negative .The functions of 1-2-3 are as Exhibit 1 shows the sales record of five years of a firm and Exhibit -2 shows the Balance sheets of the three years records.The basic need of concentrating these activities was to eliminate the single product dependence. The basic features of this product were to enable the users redesign the spreadsheets instantly with new formulas and categories without having to reenter data or rebuild financial models. In 1989 the firm once again however starts to focus the spreadsheets. Lotus Development Corporation: Project 3 (Case Study) Summary: Lotus Development Corporation was founded in 1982 by Mitchell D. In 1988 the firm has grown to reach the $468547000 in sales. The next question to be answered was that the product should either built for Next computers or OS/2.

On the weak side company has poor relations with distributors and poor customer service. Ashton-Tot has a product called Full Impact which made a sale of $307283000and net income of $47. Wingz does not offer context sensitive help usable sample files. Wingz is the product they are scheduled to ship for the Next computers in the first quarter of 1990.It will also offer a tremendous and a vast array of graphs. Borland International and Microsoft are the five major players in the field of Spreadsheets.000 in 1989. .The basic features of Wingz are: Wingz is expected to be exactly compatible with Macintosh which means that users can expect the numerous functions and excellent output capabilities . Ashton-Tate: Ashton-Tate is in the business of acquiring. Informix Corporation: Informix Co.755. However from past three years company is focusing on improving and converting their weakness to their strength by keeping the distributors and customers in touch.It has not announced a product for the Next Computers and has no plans to do so for the Next platform. However the product will mostly likely be weak in ease of use. marketing and supporting microcomputer soft wares. This company is believed to have poor service and a poor reputation with dealers. In addition to this the competitors in the software market namely Informix Corporation. developing. On the other hand some of the mangers had an opinion that Next Computers are too risky to be invested upon as the market is crowded with competing platforms and the Next computers are far too expensive to be a commercial success. California is the 10th largest publically owned company in the packaged software industry Informix has enjoyed eight consecutive annual increases in net income. The decision about which is the best platform to build project 3 for has not taken yet. It is the developer and marketer of full impact for the Macintosh . Ashton-Tate. of Menlo Park. Computer Associates.impacts on the sales of Lotus 1-2-3 so it should be developed for Next Computers. That is.

complicated models. . Summing Up the whole discussion three decision choices must be considered when looking at the buyer behavior for Product 3: 1-OS/2 versus NeXT What should be the criteria on which the buyer would make a choice to buy a machine either OS/2 or NeXT . and support of a line of systems and applications for the computers for business and professional use.Two main factors that affect the consumer choice are the price factor and the ease to use? OS/2 machines cost from $ 4000 to $10000 however NeXT system starts from $10000. The firm is highly engaged in the design. quality. CA makes a spreadsheet called Super Calc 5 which runs on DOS machines.A final criterion is the number. Microsoft Excel spreadsheet is the number one spreadsheet on the Macintosh and number two spreadsheet on DOS systems after 1-2-3. markets. It is considered to be good product on an operating system dominated by 1-2-3. and supports standardized computer soft ware products for use of primarily with IBM. marketing. There would be two reasons One is a need for more advanced output as Lotus 1-2-3 is limited in its graphing capabilities so Project 3 would be a better choice. it needs to consider factors which could compel customers to shift from 1-2-3 to Project 3. CA president has clearly announced that they are not going in business with Next Computers but it is also rumored that the firm is considering a second look at the Next Computers. development. and usefulness of the soft wares available on the platform. 2-Switching from 1-2-3 to Project 3 Incase Lotus continue developing the software on OS/2.Computer Associates: Computer Associates International designs. Secondly Switching is the need for a product which facilitates building large. Microsoft: Microsoft Corporation is the second largest software firm in the United States.

So it seems that there are fewer chances for refusal in business computers. No doubt Project 3 will cause certain decline in the sales of Lotus 1-2-3 but on the other hand gives numerous benefits like covering large scale of market customers .3-Why Buy Project 3 on the NeXT Computers: The question to be answered is why project 3 would be preferred spreadsheet over any available competitor .Project 3 is capable of assisting and handling large data and projects with extended graphical presentations and implication of formulas. generates revenue and the most importantly identify the flaws in Lotus 1-2-3 by taking costumers feed backs . And the most importantly it is easy to learn and handle. . 1-Will sales materialize? 2-Will Corporation accepts it as business computers? 3-What will be the effect of Project 3 on sales of 1-2-3 on OS/2? Answers In my view: Considering the whole scenario in my opinion Project 3 can give Lotus Corporation a huge business if it is incorporated with OS/2 because that is cheap and easy for the customers to use while NeXT computers have totally different market to be entertained. Questions Still to Answer for Decision: Considering all the above factors there are some questions still stand to be answered for the management to take decision regarding Project 3.Project 3 would be selected if the user is creating large models another reason for being chosen is that the output quality is maintained and improved as compared to other soft wares. Project 3 can readily acceptable for the business computers because most of the features developed in the software are according to the will of the costumers .

Equal effort must be made in attracting. driving customers away. under-trained. ultimately delivering improved shareholder returns. However under-staffed. Customer Satisfaction Drives Customer Loyalty: Leading companies dealing in service sector are currently in struggle of measuring the satisfaction level of customers in quantified form. This analysis led Xerox to extend its efforts to create apostles (a term used to describe customers so satisfied that they convert the uninitiated to a product or service). Better shareholder returns mean more money is available to invest in employees and so the circle continues. In this article the relation of the components of the service chain with each other are discussed as below: Customer Loyalty Drives Profitability and Growth: The ultimate goal of any firm that comes in the market is to earn profit and grow vise versa but for this Customer loyalty is the key factor which makes it all possible. and poorly resourced employees will not deliver good quality customer service. But on the other hand there are customers who have strong discouragement for the products of any company and always have bad words of mouth influencing others. In this context Xerox is polling 480000 customers per year regarding product and service satisfaction using a five point Scale from 5 (high) to 1 (low). . In this article the relation of the components of the chain are explained as: profit and growth are stimulated primarily by customer loyalty and the loyalty is direct result of the customer satisfaction . and employee satisfaction and productivity. loyalty.Article#1 Putting the Service –Profit Chain to Work Summary: Traditionally. Ohio. motivating and retaining employees as is made for customers. In example Banc One is taken as example which is based in Columbus. The service –profit chain establishes relationships among profitability. the customer has been the prime focus for business. “The customer is always right!” is a well-worn motto.Satisfaction is largely influenced by the value of services provided to customers and Value is created by the loyal and ambitious employees for the betterment of the company.

At Southwest daily 14000 employees are unionized and is in daily contact with customers and reports its finding backs to management. Traditionally we count losses as the cost of recruiting. hiring and training replacement but in service sector we not only consider the employee but the skills developed during the time he or she spent with the company to understand and the business brought to the firm by them.Value Drives Customer Satisfaction: This is the era of awareness and technology . In other words Customers are today strongly value oriented further elaborating this statement Customers tell that value means that results they receive in relation to the total cost including both the price and other costs incurred to acquire the service. The more employees are satisfied the more business you earn and high quality service can be provided to the customers making them loyal customers. Employee Productivity Drives Value: Under this heading the importance of the employee focusing is discussed with the example of Southwest Airline second largest air line in the United States .Customers has a clear idea what they are paying for what. Progressive Corporation is creating just this kind of value for its customer by processing and paying claims quickly and with the policyholder efforts.The only reason of having a large portion of satisfied customers is the happy and motivated employees who are determined to work for the company and provide the best quality services to their customers. Employee Loyalty Drives Productivity: Employee being the representative has a vital role in making the customer satisfied more or less and this can only be done if the employee is loyal to the firm and owns it. Southwest is preferred most for the employment in States because they do provide all the necessary comforts to their employee at or before their need. Southwest has the highest on schedule flights and timely boarding and less complaints per 1000 passengers. . For Example the insurance companies. Employee Satisfaction Drives Loyalty: Employee who have their contribution in rising a firm to the peak of profits and attaining their goal also look forward of having some care from the management in return for their betterment and keeping the motivation level up high.

The factors they discovered in order of importance were satisfaction with the job itself. advancement fairness.Internal Quality Drives Employees Satisfaction: Internal quality of a working environment contributes most of the employee satisfaction. Relating Links in the Chain For Management Action: In the end considering the above relations among loyalty. treatment with respect and dignity. pay. Internal quality is also characterized by the attitudes that people have toward one another and the way people serve each other inside the organization. Many examples of the CEOs have been discussed who always give priority to their customers and welcome the suggestions coming from their employees for improvement. . many organizations have started to measure relationships between individual links in the service- profit chain . Identifying these relationships motivated MCI’s management to probe deeper and the company’s interest. tracking. For example: At States Telephone sales and service representatives are backed by the sophisticated information system that puts complete costumer information files at their finger tips at the instant they receive the call.The ways that can lead a service provider company to a comprehensive strategies for achieving lasting competitive advantage. and reorganizing them. and employee satisfaction. teamwork and the company’s interest in employees’ well being. training. Internal quality is measured by the feelings that employees have towards their jobs.Another thing that bought to light was employee satisfaction is directly linked to the customer satisfaction and intention to continue MCI services. They care about their employees and spent a great deal of time selecting. Leadership Underlies the chain’s Success: Leaders who understand the service-profit chain maintain a corporate culture around service to the customers and fellow employees.only a few have related the links in meaningful ways . growth. colleagues. and companies. They always welcome to listen. In example: Seven telephone customer service centers MCI found clear relationships between employees perception of the quality of MCI service and employee satisfaction .

Quality versus satisfaction. This process resulted in generation of 97 items (approximately 10 items per dimension).Parasuraman. The respondents were spread across five different categories Next step was the purification of the scale and the raw data was excluded as. The result oriented from 54 items out of 97items was on the basis of following dimensions: Tangibles. and Leonard L. courtesy etc. understanding of customers and access. communication credibility.Berry a descriptive discussion about the Servqual model and its parameters of scale to identify the role of Servqual in assessing the service quality. A marketing research is then started. security. credibility.Article #2 SERVQUAL: A multiple item scale for measuring Consumer perceptions of the Service Quality Summary: In this article this is written by A. Exceptions compared to perceptions. The conceptual foundation for the SERVQUAL scale was derived from the works of a handful of researchers who have examined the meaning of service quality and from a comprehensive qualitative research study that defined service quality and illuminates the dimensions along which consumer perceives and evaluate service quality. Perceived quality versus objective quality. Valarie A. Again the scale purification of this second stage and results on the basis of five dimensions were gathered. The second data collection was same as the first one but here the scale was used is of 32 items. Quality as attitude. reliability. Steps are included in the whole process. Zeithaml. This includes: Conceptualization of service quality. courtesy. competence. . The chosen sample was of 200. responsiveness. Its first step is to determine the domain of service quality constraints. Q=P-E. Where the two dimensions contain seven original dimensions-communication. because scale developers in the marketing area have chosen the same area.

The SERVQUAL scores were examined by one way ANOVA’s. Thi9s procedure may have deleted certain good items relevant to some butt not all firms. Assessing a scale content validity is necessarily qualitative rather than quantitative. Therefore. Whether they have ever reported the problem with the service they receive from the firm? Applications of the SERVQUAL: SERVQUAL is cons iced multiple item scale with good reliability and validity that retailers can use to better understand the service expectations and perceptions in the minds of the consumers. while SERVQUAL can be used in its present form of access and compare service quality across a wide verity of firms. SERVQUAL can be used to access a given firms quality along each of the five service dimensions by averaging the difference scores across all five dimensions. • The extent to which the scaled items represents the constructs domain The scale validity was also assessed empirically by examining its convergent validity. Specifically. The two questions were kept in mind: 1. The scale must satisfy certain other conceptual and empirical criteria to be considered as having good construct validly.Results show that the reliabilities are consistently high across all four samples. SERVQUAL’S high reliabilities and consistent factor structures across several independent samples provide support for its trait validity. • The thoroughness with which the construct to be scaled and its domain were explicated. items under each of five dimensions can be suitably reworded and augmented to make them more germane to the context in which the instruments are to be used. The instrument has been design to be applicable at a broad spectrum. and as a result improves the service. SERVQUAL validity was further assessed by whether the construct measured by it was empirically associated with measures of other conceptually related variables. appropriate adaption of the instrument may be desirable when only a single service is investigated. Whether the service respondent recommends the service firms? 2. • One potential application of the SEVQUAL is to determine the relative importance of he five service dimensioning influencing customers overall perceptions. with possible exceptions of a couple of values pertaining to a tangible dimension. • It provides a basic skeleton through its expectations perceptions format • SERVQUAL is more valuable when it is used periodically to track service quality trends. .

• Another application of the instrument is its use in categorizing a firm’s customer into several perceived quality sectors for example High Low and medium. the availability of this instrument will stimulate much needed empirical research focusing on service quality and its consequences. . the retailers can also use SERVQUAL to access its service performance relative to its principle competitors. In addition. • SERVQUAL can also be used by multi units’ rectal companies to track the level of service provided by each store. In simple: Ø SERVQUAL has a verity of potential applications. • SERVQUAL scores for individual stores can be used to group outlets into several clusters with scores from other stores. It can help a wide range of service retailing organizations in assessing consumer’s expectations about and perceptions of service quality. Ø It can also help in pinpointing areas requiring managerial attentions and actions to improve service quality.