Q1: Explain service quality

Service quality (SQ), in its contemporary conceptualisation, is a comparison of perceived

expectations (E) of a service with perceived performance (P), giving rise to the equation
SQ=P-E. This conceptualisation of service quality has its origins in the expectancy-
disconfirmation paradigm.

Definition

From the viewpoint of business administration, service quality is an achievement in customer

service. It reflects at each service encounter. Customers form service expectations from past
experiences, word of mouth and marketing communications. In general, customers compare
perceived service with expected service, and if the former falls short of the latter the
customers are disappointed.

For example, in the case of Taj Hotels Resorts and Palaces, wherein TAJ remaining the old
world, luxury brand in the five-star category, the umbrella branding was diluting the image of
the TAJ brand because although the different hotels such as Vivanta by Taj- the four star
category, Gateway in the three star category and Ginger the two star economy brand, were
positioned and categorised differently, customers still expected high quality of Taj.

Dimensions of service quality

A customer's expectation of a particular service is determined by factors such as
recommendations, personal needs and past experiences. The expected service and the
perceived service sometimes may not be equal, thus leaving a gap. The service quality model
or the ‘GAP model’ developed in 1985, highlights the main requirements for delivering high
service quality. It identifies five ‘gaps’ that cause unsuccessful delivery. Customers generally
have a tendency to compare the service they 'experience' with the service they 'expect'. If the
experience does not match the expectation, there arises a gap. Given the emphasis on
expectations, this approach to measuring service quality is known as the expectancy-
disconfirmation paradigm and is the dominant model in the consumer behaviour and
marketing literature.

A model of service quality, based on the expectancy-disconformation paradigm, and

developed by A. Parasuraman, Valarie A. Zeithaml and Len Berry, identifies the principal
dimensions (or components) of service quality and proposes a scale for measuring service
quality, known as SERVQUAL. The model's developers originally identified ten dimensions
of service quality that influence customer's perceptions of service quality. However, after
extensive testing and retesting, some of the dimensions were found to be autocorrelated and
the total number of dimensions was reduced to five, namely - reliability, assurance, tangibles,
empathy and responsiveness. These five dimensions are thought to represent the dimensions
of service quality across a range of industries and settings. Among students of marketing, the
mnemonic, RATER, an acronym formed from the first letter of each of the five dimensions,
is often used as an aid to recall.

In spite of the dominance of the expectancy-disconfirmation paradigm, scholars have

questioned its validity. In particular scholars have pointed out the expectancy-disconfirmation
approach had its roots in consumer research and was fundamentally concerned with
measuring customer satisfaction rather than service quality. In other words, questions
surround the face validity of the model and whether service quality can be conceptualised as a
gap.

Q2: Why customer expectations are important to study?

Importance of Customer Expectations

“We are in the customer service business. Our goal must be to exceed our customers’
expectations everyday”. – Dave Thomas
True customer satisfaction and stellar customer service can only happen through a complete
and proper understanding of the customer expectations. Unless your company knows what
they want, who they are and what they expect, it would be difficult to even match up to the
expectations. Companies should make it a practice to ask their customers whether they have
been able to meet or exceed their expectations through the products or services and customer
service. It is only based on this feedback that companies can assuredly know that they match
customer expectations. The reality now is that customer expectations are continually on the
rise, and unless companies are attuned to them, they will fall short of those expectations
leading to customer ire and attrition.

However companies approach this, there is no escaping that it is customer expectations that
sets and raises the bar for customer service and the resultant satisfaction or dissatisfaction.
This obviously affects customer loyalty and if they are displeased it is unlikely that they will
return. Pleased customers will return but delighted customers will speak positively of your
company through every possible channel. This happens when your company has consistently
exceeded customer expectations. Customer testimonials are great free publicity that
eliminates the first thread of doubt that most prospective customers have. So what are some
of unchanging and universal facts of customer expectations?

– Even before entering into a business relationship, customers have a perceived notion of
what they would like to receive from the relationship. Most often the customer expectations
encompass receiving more than what they expect and pay for.

– Customers expect that companies will be dependable, honest, swift and courteous.
Companies can exceed these expectations by ensuring that each experience a customer has
leaves them feeling happy and knowing that they have commitment from the company

– Customer expectations operate from two levels. One level is where they expect a certain
kind of service and product and when they receive it they are satisfied. The other level, which
is the most desired one, is the one where they expect to get more than what they are
receiving.

– Among the top in customer expectations is relationship building. Customers expect a

personalized relationship with the company they are doing business with and are happy when
it is on-going and consistent. They also prefer if the company connects with them to strike
and deal and when it is done, they expect to interact with the same person each time they
connect with the company so that they do not have repeat any information. This creates a
bond and a feeling of oneness, which is very healthy for the association.

– Customer expectations also include that companies will keep their promise on everything
committed. It is always better to under-promise and over-deliver keeping in mind the
competitive marketplace that everyone is operating in. Broken promises can have serious
impacts on customer expectations and leave them feeling highly irritated with a possibility of
severing the relationship.
It is essential and difficult but not impossible to manage customer satisfaction and one of the
metrics of doing so is managing customer expectations. To prevent souring of customer
relationships, companies must carefully set and meet customer expectations. If it seems like
something is going out of hand, it may be time to re-set or re-establish those expectations in
order to manage them better.

As we said earlier on, customer expectations set the bar for customer satisfaction. It would
benefit companies immensely to understand customer expectations from this aspect:

– Companies can know for sure which level of customer service keeps customers satisfied
and what takes that satisfaction to a level of delight and wow

– Customer expectations when properly understood can be disseminated to employees as

knowledge, making it easier for them to service customers according to those standards

– Once meeting customer expectations becomes a standard, it paves the way to exceed these
expectations and make customers become enthusiastic advocates of your company and its
service.

– Having a grasp of customer expectations also lowers the number of complaints. Also in the
event of a complaint, resolution become quicker and more effective since you would know
what the customer expects as an outcome

Q3: Define CPOS

Q4: Discuss the role of IT in retailing.

Technology is enhancing many industries from financial institutions to retail outlets. It is
important that companies stay up-to-date with the increasing changes and enhancements
technology is creating for their business. In the retail industry, technology is changing the
way many aspects of the industry are conducted.

Role of Technology in the Retail Industry

Point of Sale

Until very recently, customers have had to stand in long lines to purchase their merchandise.
Thanks to technology, though, customers can check out from wherever they are in the store
through handheld computers, scanners, and printers. This has significantly improved the
satisfaction of customers because before, about 10% of customers would leave without
making a purchase if they had to wait a long time in a long line.

The use of technology in retail has also made payment processes easier with contactless
payments. These payment methods use RFID or NFC technology to allow the customer to
make their purchase with their smartphone or even watch. This technology has eliminated the
need for passwords or PINs and has streamlined the checkout process for customers. Faster
transactions have led to higher sales volumes in stores that offer remote POS and contactless
payments.

Customer Service

When it comes to customer service, one of the areas where the most number of issues arise,
besides long lines in checkout is regarding the lack of store associates to direct customers or
give more information about their product or store. This is where technology comes in handy.
Self-help kiosks can be placed in stores, where the customers themselves can access product
information, store information, inventory information (both for that particular store as well as
other nearby stores in their chain), store directory (so as to locate what product is placed
where) and the like.

Many retailers are already using such self-help kiosks instead of additional sales associates,
which have helped them save a lot on costs. Some of these also have “get help” buttons,
which alert nearby store assistants when pressed, and enable customers to talk to them
through their voice-enabled Personal Digital Assistants (PDAs). Such kiosks allow customers
to find answers to their questions on their own without having to look around for store
assistants, thereby improving customer service.

When customers have to wait in long lines to purchase their items or can never find an
associate to help them out, they get frustrated with the store and their satisfaction goes way
down. Technology changes this by offering customers the help they need with self-help
kiosks. These kiosks have helped businesses save money and increase the satisfaction of their
customers. Machines like self-help kiosks are an excellent application of IT in the retail
industry.

Technology has also improved the way customers shop online by providing a more
personalized shopping experience. Technology is also being used by companies to offer their
customers virtual views of products through augmented reality. Augmented reality allows
customers to get a better idea of what they want to purchase before they make their final
decision. With this technology, businesses have improved the experience of their customers
and increased their sales.

Management of Inventory

Management of inventory, both in-store as well in the warehouse has always been a major
area of expense for retailers. Merchandise must be entered into inventory, tracked on
movements and removed from inventory, on being sold. Also, real-time inventory
information needs to be available in stores so as to plan the purchase of products, as and
when they go out of stock. A total inventory management system that is integrated with the
POS can put things in order to a large extent.

As the products are sold through the POS, they also get removed from the inventory and are
updated across all systems that use such inventory information. A large clothing retailer
makes use of hand-held computers or kiosks integrated with the central inventory system,
which can be used to place orders to the warehouse. This is to directly deliver a product to a
customer’s house because it was not available in-store when the customer asked for it.

In shipping, wireless barcode scanners can be used at the receiving place to enter stock
directly into the inventory, as they get delivered, with the warehouse location of the items
also being able to be tracked instantly. Many retailers are already using DEX/UCS (Direct
Exchange/Uniform Communication Standard) to allow the delivery people to directly enter
invoices into a store’s accounting system, thereby simplifying billing as well as accounting.

The practice of managing inventory has always been very costly for businesses. With
technology that can track inventory through its purchase cycle and offer real-time information
about the product to management, inventory management has gotten better and is costing
companies a lot less. With technology tracking items and offering real-time updates about the
items, managers have a much better sense of what is being purchased and what items they
need to order to keep their merchandise stocked. When technology is used to keep track of
inventory, store merchandise is more organized and the potential for employee theft is
drastically decreased.

Price Auditing

Just like with inventory management, price auditing has been a time-consuming and costly
process for businesses. Price auditing is necessary, though, for companies to ensure that
they’re not overcharging or undercharging their customers. Technology has streamlined this
process by automating price checks when products are scanned. This creates more accurate
pricing, saves store employees a lot of time and creates better trust between the store and the
customers. The impact of this information technology in retaining has been very great and
beneficial.

Technology is changing many industries and benefitting many companies and customers. It is
essential that companies stay up-to-date with changing technology and ensure that they are
utilizing all technology that is available to them. Technology is not only making jobs easier,
customers happier and businesses more accurate, it is also saving companies time and money.
What new technology have you implemented in your company recently?

Price auditing has always been a time-consuming process for retail companies. Looking up
price labels on products and verifying them with the prices charged to the customers is
definitely a hard thing to do. With wireless devices like a tablet or a notebook, the store
associate can check the price labels of all the products by scanning the shelf labels using a
barcode scanner. These devices can be linked to the store’s central database of products
which are also linked to the POS terminals in order to track the prices of products being sold.
If there are any differences between the POS prices and the database prices or the shelf
prices, corrective action can be taken immediately. Hence, accurate pricing can be achieved
and a lot of time can be saved, plus it adds to the trust factor for customers as well.

These are just some of the ways in which technology can be used in the retail business to
improve profits. Even though a lot of these technologies are not being adopted by a number
of companies due to various reasons, it is pretty clear now how important they are. As a
matter of fact, with time a lot of the traditional methods in retail are sure to get phased and
you will be left with no option but unfamiliar technology. 

Q5: Explain GAP model of service quality in detail.

Gap Model of Service Quality

The Gap Model of Service Quality (aka the Customer Service Gap Model or the 5 Gap
Model) is a framework which can help us to understand customer satisfaction.

The model shows the five major satisfaction gaps that organizations must address when
seeking to meet customer expectations. The model was first proposed by A. Parasuraman,
Valarie Zeithaml, and Leonard L. Berry in 1985.

In the Gap Model of Service Quality, customer satisfaction is largely a function of

perception. If the customer perceives that the service meets their expectations then they will
be satisfied. If not, they’ll be dissatisfied. If they are dissatisfied then it will be because of one
of the five customer service “gaps” shown below.

Service Gap Model Example

As we explain the Gap Model concept we’ll use two example companies to show how each
gap might manifest itself in two very different companies. The two example companies we’ll
consider are Netflix and Pizza hut.
 

The Gap Model of Service Quality

The diagram below shows a visual representation of the Gap Model of Service Quality.
To use the model, an organization should measure each of these gaps and then take steps to
manage and minimize each gap. Let’s examine each of the five gaps in turn.

Gap 1: Knowledge Gap

The knowledge gap is the difference between the customer’s expectations of the service and
the company’s provision of that service.

Essentially, this gap arises because management doesn’t know exactly what customers
expect. There are a number of reasons this could happen, including:

 Lack of management and customer interaction.

 Lack of communication between service employees and management.
 Insufficient market research.
 Insufficient relationship focus.
 Failure to listen to customer complaints.
Example:
If Netflix were to suffer from this gap then it could be because they don’t offer the right
amount of newer titles to their customer. If Pizza hut were to suffer from this gap then it
could be because they don’t offer pecan pie. In both cases, customers expect these things but
they simply aren’t offered.

Gap 2: The Policy Gap

The policy gap is the difference between management’s understanding of the customer needs
and the translation of that understanding into service delivery policies and standards.

There are a number of reasons why this gap can occur:

 Lack of customer service standards.

 Poorly defined service levels.
 Failure to regularly update service level standards.

Example:

If Netflix were to suffer from this gap then it could be that they offer all the right shows but
the streaming quality level isn’t high enough. If Pizza hut where to suffer from this gap then
it could be they offer pecan pie but the quality isn’t as good as people expect.

This gap causes customers to seek a similar service elsewhere but with better service.

Gap 3: The Delivery Gap

The delivery gap is the difference between service delivery policies and standards and the
actual delivery of the service.

This gap can occur for a number of reasons:

 Deficiencies in human resources policies.

 Failure to match supply to demand.
 Employee lack of knowledge of the product.
 Lack of cohesive teamwork to deliver the product or service.
Example:

If Netflix were to suffer from this gap then it could be because when the customer selects the
show they want to watch it takes five minutes before it starts to play. In this case, the product
isn’t performing as it should.

If Pizza hut were to suffer from this gap then it could be that when the customer orders the
pecan pie they are informed that the kitchen has run out. In this case, supply hasn’t been
adequately matched to demand.

Gap 4: The Communication Gap

The communication gap is the gap between what gets promised to customers through
advertising and what gets delivered.

There are a number of reasons why this can happen:

 Overpromising.
 Viewing external communications as separate to what’s going on internally.
 Insufficient communications between the operations and advertising teams.

Communication gaps lead to customer dissatisfaction. This happens because what they
receive isn’t what they were promised. In the worst case, it may cause them to turn to an
alternative supplier.
 

Example:

If Netflix were to experience this gap then it could be because that although the service is
good it isn’t as good or as easy to use as depicted in the advert. If Pizzahut were to suffer
from this gap then it could be because the pecan pie was good but it wasn’t as large or
delicious as it looked in the advert.

Gap 5: The Customer Gap

The customer gap is the difference between customer expectations and customer perceptions.
This gap occurs because customers do not always understand what the service has done for
them or they misinterpret the service quality.
 

Many organizations can be completely blind to this gap. This gap can happen because of one
of the other four gaps, or simply because the customer perceives the quality of the service
incorrectly. In a worst-case scenario, it could lead to a business losing a large proportion of
their customers overnight. Although the company thought there was no gap, the reality was
that their customers were just waiting for someone to fill their perceived gap.

 Gap 1: The Knowledge Gap

Close this gap by learning what customers expect. Options to consider include:

 Using customer research.

 Increasing interactions between management and customers.
 Increasing interactions between management and service staff.
 Act on other customer insights you receive once validated.

Gap 2: The Policy Gap

Close this gap by creating the right service quality standards. Options to consider include:

 Ensure a good proportion of senior management remuneration is aligned to service quality.

 Set, communicate and reinforce quality standards.

 Set measurable service quality goals.
 Train managers to be service quality leaders.
 Update policies regularly.
 Reward staff for the achievement of quality goals.

Gap 3: The Delivery Gap

Close this gap by ensuring that performance meets set standards. Options to consider include:

 Train employees.
 Empower employees.
 Provide the right technology, tools, and equipment.
 Focus on internal marketing.
 Take steps to retain high-performing employees.
Gap 4: The Communication Gap
Close this gap by ensuring the product or service delivered matches and promises made . Options to
consider include:

 Getting employee input to your advertising campaigns.

 Use reality advertising by using real customers, real reviews, and real employees etc.
 Ensure advertising campaigns are signed off by the operations team.
 Manage customer expectations realistically.

Gap 5: The Customer Gap

This gap can only be closed by closing the other four gaps in the model. Once this is done
then customer expectations and customer perceptions should align.