COURSE-SERVI

CEMARKETI
NG
UNI
T1:OVERVI
EWOFSERVI
CEMARKETI
NG
UNI
T2:SERVI
CEENVI
RONMENT
UNI
T3:SERVI
CEMARKETI
NGI
SSUES
UNI
T4:THEPURCHASEPROCESSFORSERVI
CES
UNI
T5:CONSUMEREXPECTATI
ONSOFSERVI
CES
UNI
T6:MANAGI
NGSUPPLY,
DEMANDANDPRODUCTI
VITYOFSERVI
CES

1
UNI
T1:OVERVI
EWOFSERVI
CEMARKETI
NG

Cont
ent
s
1.
0Ai
msandObj
ect
ives
1.
1Int
roduc
tion
1.
2Def
ini
ti
onofSer
vic
eMar
ket
ing
1.
3Di
ff
erenc
esBet
weenGoodsandSer
vic
eMar
ket
ing
1.
4Nat
ureorChar
act
eri
sti
csofSer
vic
es
1.
5Level
sofSer
vic
e
1.
6Cl
ass
ifi
cat
ionofSer
vic
es
1.
7Cat
egor
iesofSer
vic
eMi
x
1.
0AI
MSANDOBJ
ECTI
VES

Att
heendoft
hisuni
t,youar
eexpec
tedt
o:
-def
ines
ervi
cemar
ket
ing
-di
ff
erent
iat
ebet
weengoodsands
ervi
cemar
ket
ing
-i
dent
if
ythenat
ure,
levelandc
las
sif
icat
ionofs
ervi
ces
-under
standt
hes
ervi
cemi
x

1.
1INTRODUCTI
ON

Thi
suni
tisdes
ignedt
odi
scus
sthemaj
orpar
tsofs
ervi
cemar
ket
ing,t
hedi
ff
erenc
es
bet
weengoodsands
ervi
cemar
ket
ing,nat
ureofs
ervi
cemar
ket
ing,l
evelofs
ervi
ces
andmaj
orc
ategor
iesofs
ervi
cemi
x.Henc
eyouar
einvi
tedt
oreadeac
hconc
ept
pr
oper
lyandt
hor
oughl
yandt
ogr
aspt
hei
mpor
tantc
onc
ept
s.
Haveyouani
nter
est
ingr
eadi
ng.

1.
2DEFI
NITI
ONOFSERVI
CEMARKETI
NG

Mar
ket
ing t
heor
y and pr
act
ice devel
oped i
nit
ial
lyi
nconnec
tion wi
th phys
ical
pr
oduc
ts.
Yetoneoft
hemaj
ormegat
rendsofr
ecentyear
shasbeent
hephenomenal
gr
owt
hofs
ervi
ces
.Int
heUni
tedSt
ates
,ser
vic
ejobsnowac
countf
or79per
centofal
l

2
j
obsand74per
centofgr
ossdomes
ticpr
oduc
ts.I
tisal
sopr
edi
ctedt
hats
ervi
ce
oc
cupat
ionswi
llber
espons
ibl
eforal
lnetj
obgr
owt
hfort
hec
omi
ngyear
s.Thes
e
number
shavel
edt
oagr
owi
ngi
nter
esti
nthes
pec
ialpr
obl
emsofmar
ket
ings
ervi
ce.

Thes
ervi
ces
ect
oroft
heec
onomyenc
ompas
sesabr
oadar
rayofdi
ff
erenti
ndus
tri
es
s
uchas
:thegover
nments
ect
or,
thepr
ivat
enonpr
ofi
tsec
tor
,thebus
ines
ssec
torand
t
hemanuf
act
uri
ngs
ect
or.Thegover
nments
ect
ori
ncl
udesi
tsc
our
ts,empl
oyment
s
ervi
ces
,hos
pit
als
,loanagenc
ies
,mi
li
tar
yser
vic
es,
pol
iceandf
iredepar
tment
s,pos
t
of
fi
ce,r
egul
ator
yagenc
ies
,and s
chool
s.Thepr
ivat
enon pr
ofi
tsec
tor
,wi
thi
ts
mus
eums
,char
iti
es,bus
ines
ssec
tor
,wi
thi
tsai
rl
ines
,banks
,hot
els
,ins
uranc
e
c
ompani
es,l
aw f
irms
,managementc
ons
ult
ing f
irms
,medi
calpr
act
ices
,mot
ion
pi
ctur
ecompani
es,
plumbi
ng-
repai
rcompani
esandr
eales
tat
efi
rms
,isi
nthes
ervi
ce
bus
ines
s.I
nthemanuf
act
uri
ngs
ect
or,
suc
hasc
omput
eroper
ator
s,ac
count
ant
s,and
t
hel
egals
taf
far
ereal
lys
ervi
cepr
ovi
der
s.I
nfac
t;t
heymakeupa"
ser
vic
efac
tor
y"
pr
ovi
dings
ervi
cet
othe"
goodsf
act
ory"
.

As
ervi
cec
anbedef
inedas
:“anyac
torper
for
manc
ethatonepar
tyc
anof
fert
o
anot
hert
hati
ses
sent
ial
lyi
ntangi
bleand doesnotr
esul
tint
heowner
shi
p of
anyt
hing.
Itspr
oduc
tionmayormaynotbet
iedt
oaphys
icalpr
oduc
t”.

Asc
anbes
eenaboveas
ervi
cei
sani
ntegr
alpar
tofanyac
tivi
tyi
nthi
swor
ldwi
tha
gr
eat
esti
mpac
tont
hes
ucc
essofor
gani
zat
ions
.Tr
endsofs
ervi
cemar
ket
inghave
beenc
hangedduet
omanyf
act
ors
.Amongt
hes
efac
tor
sthef
oll
owi
ngar
esome.

i
) Changi
ngpat
ter
nsofgover
nmentr
egul
ati
on.Thes
ervi
cei
ndus
trywashi
ghl
y
r
egul
atedi
nmanyc
ount
ries
.However
,thet
rendc
hangesandmanyas
pec
tsof
t
hes
ervi
ceac
tivi
ti
esar
eder
egul
atedt
hes
edaysi
nmanyc
ount
ries
.
i
i) Rel
axat
ionofPr
ofes
sionalAs
soc
iat
ionSt
andar
ds.Bansonadver
tis
ingand
pr
omot
ionalac
tivi
ti
esar
eei
therr
emovedorr
eleas
edf
ort
hepr
ofes
sional
s.
Among t
he ef
fec
ts ofr
educ
ed r
egul
ati
on and c
hanges i
n pr
ofes
sional
s
tandar
dsar
e:
o eas
ierent
ryt
ospec
ifi
cpr
oduc
tmar
ket
s
o mor
efr
eedomt
ocompet
eonpr
ice

3
 o r
emovalofmanygeogr
aphi
cres
tri
cti
onsons
ervi
cedel
iver
y
o i
ncent
ivest
odi
ff
erent
iat
eser
vic
esi
nmeani
ngf
ulways
o t
heabi
li
tyt
ous
ethemas
smedi
atopr
omot
epr
ofes
sionals
ervi
ces
Regul
ati
onsdes
ignedt
ost
rengt
henc
ons
umerpr
otec
tional
sohavei
mpor
tant
mar
ket
ingi
mpl
icat
ions
.
i
ii
)Pr
ivat
izat
ionofpubl
icc
orpor
ati
onsandnonpr
ofi
tor
gani
zat
ions
.Thet
erm
"
pri
vat
izat
ion"wasc
oinedi
nGr
eatBr
itai
ntodes
cri
bet
hepol
icyofr
etur
ning
nat
ional
izedi
ndus
tri
est
opr
ivat
eowner
shi
p.
i
v)Comput
eri
zat
ionandTec
hnol
ogi
calI
nnovat
ion.Newt
echnol
ogi
esar
eradi
cal
ly
al
ter
ingt
hewaysi
nwhi
chmanys
ervi
cesdobus
ines
swi
tht
hei
rcus
tomer
sas
wel
las what goes on behi
nd t
he s
cenes
.New t
echnol
ogy (
or mor
e
s
ophi
sti
cat
edus
eofexi
sti
ngt
echnol
ogy)of
fer
sser
vic
ebus
ines
sesavar
iet
yof
wayst
oimpr
ovet
hei
rcompet
iti
ves
tanc
e.Thes
einc
lude
o Cr
eat
ionofnewori
mpr
oveds
ervi
ces
o Mor
einvol
vementofc
ust
omer
sinoper
ati
onalt
asksbypr
ovi
dings
elf
s
ervi
ces
yst
ems
o Cr
eat
ion ofc
ent
ral
ized c
ust
omers
ervi
ce depar
tment
s bac
ked up by
c
omput
eri
zedf
il
esys
temsandr
eac
hedbyt
oll
-fr
eet
elephonec
all
s
o Rec
ordi
ngc
ust
omeri
nfor
mat
ioni
neas
ilyac
ces
sibl
edat
abanks
.
v) Thegr
owt
hoff
ranc
his
ing.Thec
reat
ionoff
ranc
his
echai
nsi
str
ans
for
ming
i
ndus
tri
espr
evi
ous
lyc
har
act
eri
zedbys
mal
luni
tsi
ze,l
ocalor
ient
ati
on,and
abs
enc
eofpr
ofes
sionalmanagements
kil
ls.
Franc
his
ingmakec
ert
ainac
tivi
ti
es,
pr
evi
ous
lyunnec
ess
aryorbeyondt
hes
copeofani
ndi
vidualent
repr
eneur
shi
p,
havebec
omei
mpor
tantaswel
lasf
eas
ibl
e.Forexampl
e,
o Ser
vic
efeat
uresandpr
icesar
est
andar
diz
edandc
odi
fi
ed
o Br
andnames
,symbol
s,anduni
for
msar
edevel
opedt
oens
ures
yst
em wi
de
r
ecogni
ti
onands
tandar
diz
ati
on
o Mas
smedi
a adver
tis
ing i
sempl
oyed t
ocr
eat
e awar
enes
sand br
and
pr
efer
enc
eac
ros
stheent
iregeogr
aphi
calmar
ketar
eas
erved-r
ejoi
ned
nat
ionalori
nter
nat
ional
o Fors
ervi
cest
hats
pec
ial
izei
n mat
chi
ng buyer
sand s
ell
ers-s
uch as

4
 r
elat
orsandempl
oymentagenc
ies-c
reat
ionofc
ent
ral
izeddat
ali
nks
i
ncr
eas
est
hes
copeoft
hes
ervi
cesof
fer
edandi
mpr
ovest
hec
hanc
esof
ac
hievi
ngagoodmat
chac
ros
sgeogr
aphi
cdi
stanc
es.
o The ec
onomi
esofs
cal
e pr
ovi
ded bya c
hai
n al
low f
orc
reat
ion ofa
c
ent
ral
izedmar
ket
ingr
esear
chf
unc
tion.
vi
)Expans
ionofl
eas
ingandr
ent
albus
ines
ses
vi
i)Cr
eat
ionofs
ervi
cepr
ofi
tcent
erswi
thi
nmanuf
act
uri
ngf
irms
vi
ii
)Fi
nanc
ialpr
ess
uresonpubl
icandnonpr
ofi
tor
gani
zat
ions
i
x)Thei
nter
nat
ional
izat
ionofs
ervi
cebus
ines
ses
x) Ot
her
ssuc
hast
hei
nfor
mat
ionage,agi
ngoft
hepopul
ati
on,hi
gherperc
api
ta
i
ncome,
mor
ewomenwor
kingout
sidet
hehome,
changesi
nsoc
ialandc
ult
ural
val
ues
,andadvanc
esi
npr
oduc
ttec
hnol
ogy.

1.
3DI
FFERENCESBETWEENGOODSANDSERVI
CEMARKETI
NG

Mar
ket
ingc
anbedef
inedasas
oci
alandmanager
ialpr
oces
sbywhi
chi
ndi
vidual
sand
gr
oupsobt
ainwhatt
heyneedandwantt
hroughc
reat
ingandexc
hangi
ngpr
oduc
ts
andval
uewi
thot
her
s.

Apr
oduc
tisanyt
hingt
hatc
anbeof
fer
edt
oamar
ketf
orat
tent
ion,ac
qui
si
ti
on,us
e,
orc
ons
umpt
iont
hatmi
ghts
ati
sfyawantorneed.I
tinc
ludesphys
icalobj
ect
s,
s
ervi
ces
,per
sons
,pl
aces
,or
gani
zat
ionsandi
deas
.

Goodsar
ephys
icalobj
ect
s.Theyar
etangi
bleandc
anbes
een,
touc
hed,
tes
tedorf
elt
,
evenbef
oreac
tualpur
chas
e.Ser
vic
esar
eanyt
hingorbenef
itt
hatonepar
tyc
anof
fer
t
oanot
hert
hati
ses
sent
ial
lyi
ntangi
bleanddoesnotr
esul
tint
heowner
shi
pof
anyt
hing.Asc
anbes
eengoodsands
ervi
cesar
edi
ff
erent
.Thei
rdi
ff
erenc
emay
or
igi
nat
efr
omt
hemar
ket
ingpr
act
icesandal
sot
hei
rgener
ic/
nat
ure.

I
nmanyi
nst
anc
es,s
ervi
cesc
ompet
eint
hemar
ketpl
acewi
thgoodst
hatof
fer
br
oadl
ysi
mil
arbenef
it
s.Fori
nst
anc
e,buyi
ngas
ervi
cemaybeanal
ter
nat
ivet
odoi
ng
i
tyour
sel
f.Si
mil
arl
y,us
ingar
ent
als
ervi
cei
sof
tenanal
ter
nat
ivet
oowi
ngagood.

Butj
ustbec
aus
eagoodandas
ervi
cemaybec
los
ecompet
itor
sdoesnotmeant
hat

5
t
hemar
ket
ingmanagementt
asksf
oreac
har
ethes
ame.Mar
ket
ingmanagement
t
asksi
nthes
ervi
ces
ect
orc
anbedi
ff
erent
iat
edf
rom t
hos
eint
hemanuf
act
uri
ng
s
ect
oral
ongt
wodi
mens
ions
.Thef
ir
str
elat
est
othegener
icdi
ff
erenc
esbet
ween
s
ervi
cepr
oduc
tsandphys
icalgoodspr
oduc
ts.
Thes
econdc
onc
ernst
hemanagement
envi
ronmentorc
ont
extwi
thi
nwhi
chmar
ket
ingt
asksmus
tbepl
annedandexec
uted.

A)Gener
icDi
ff
erenc
esBet
weenGoodsandSer
vic
es
Seven gener
ic di
ff
erenc
es t
end t
o di
sti
ngui
shs
ervi
ces mar
ket
ing f
rom goods
mar
ket
ing.
Thes
ear
e:
) Nat
i ureoft
hepr
oduct
.Leonar
dBer
rydes
cri
besagoodas"
anobj
ect
,adevi
ce,
at
hing"i
ncont
ras
ttoas
ervi
cewhi
chi
s"adeed,aper
for
manc
e,anef
for
t."
Al
thoughs
ervi
cesof
teni
ncl
udet
angi
bleac
tions-s
uchass
itt
ingi
nanai
rl
ine
s
eat
,eat
ingameal
,orget
tingdamagedequi
pmentr
epai
red-t
hes
ervi
ce
per
for
manc
eit
sel
fisbas
ical
lyani
ntangi
ble.Li
keal
lper
for
manc
es,s
ervi
ces
ar
eti
me bound and exper
ient
ial
,even t
hough t
hey may have l
ast
ing
c
ons
equenc
es.
i
i) Cus
tomeri
nvol
vementi
npr
oduct
ion.Per
for
mingas
ervi
cei
nvol
veas
sembl
ing
anddel
iver
ingt
heout
putofami
xofphys
icalf
aci
li
ti
esandment
alorphys
ical
l
abor
.Of
tenc
ust
omer
sar
eac
tivel
yinvol
vedi
nhel
pingt
ocr
eat
ethes
ervi
ce
pr
oduc
ts-ei
therbys
ervi
ng t
hems
elvesorbyc
ooper
ati
ng wi
ths
ervi
ce
per
sonneli
nset
tingss
uchashai
rsal
ons
,hot
els
,col
legesorhos
pit
als
.Ser
vic
es
c
anbec
ategor
izedac
cor
dingt
othedegr
eeofc
ont
actt
hatt
hec
ust
omerhas
wi
tht
hes
ervi
ceor
gani
zat
ion.
Thi
swi
llbedi
scus
sedl
ater
.
i
i)Peopl
i easpar
toft
hepr
oduct
.Inhi
gh-
cont
acts
ervi
ces
,cus
tomer
snotonl
y
c
omei
ntoc
ont
actwi
ths
ervi
ceper
sonnel
,theymayal
sor
ubs
houl
der
swi
th
ot
herc
ust
omer
s.Thedi
ff
erenc
ebet
weent
wos
ervi
cebus
ines
sesof
tenl
iesi
n
t
hequal
it
yofempl
oyeeswhodel
ivert
hes
ervi
ce.Si
mil
arl
y,t
het
ypeof
c
ust
omer
swhopat
roni
zeapar
tic
ulars
ervi
cebus
ines
shel
pst
odef
inet
he
nat
ureoft
hes
ervi
ceexper
ienc
e.Ass
uch,peopl
ebec
omepar
toft
hepr
oduc
t
i
nmanys
ervi
ces
.
v)Qual
i it
y cont
rol pr
obl
ems
. Manuf
act
ured goods c
an be c
hec
ked f
or

6
 c
onf
ormanc
ewi
thqual
it
yst
andar
dsl
ongbef
oret
heyr
eac
hthec
ust
omer
.But
whens
ervi
cesar
econs
umedast
heyar
epr
oduc
ed,
final"
ass
embl
y"mus
ttake
pl
aceunderr
eal
-ti
mec
ondi
ti
ons
.Asar
esul
t,mi
stakesands
hor
tcomi
ngsar
e
har
dert
ocont
rol
.Fur
thervar
iabi
li
tyi
sint
roduc
edbyt
hepr
esenc
eofs
ervi
ce
per
sonnelandot
herc
ust
omer
s.
v) Nonei
nvent
ori
esf
ors
ervi
ces
.Bec
aus
eas
ervi
cei
sadeedorper
for
manc
e
r
athert
hanat
angi
blei
tem t
hatt
hec
ust
omerkeeps
,itc
annotbei
nvent
ori
ed.
Ofc
urs
e,t
he nec
ess
ary equi
pment
,fac
ili
ti
es,and l
aborc
an be hel
din
r
eadi
nes
stoc
reat
ethes
ervi
ce,
butt
hes
esi
mpl
yrepr
esentpr
oduc
tivec
apac
ity,
nott
hepr
oduc
tit
sel
f.Unus
edc
apac
ityi
nas
ervi
cebus
ines
sisr
atherl
ike
havi
ng ar
unni
ng t
ap i
n as
inkwi
th nopl
ug:t
hef
low i
swas
ted unl
ess
c
ust
omer
sar
epr
esentt
orec
eivei
t.Andwhendemandexc
eedsc
apac
ity,
c
ust
omer
sar
eli
kel
ytobes
entawaydi
sappoi
nted.Si
ncenoi
nvent
oryi
s
avai
labl
eforbac
kup.Ani
mpor
tantt
askf
ors
ervi
cemar
ket
ers
,ther
efor
e,i
sto
f
indwaysofs
moot
hingdemandl
evel
stomat
chc
apac
ity
.
)I
vi mpor
tanceoft
het
imef
act
or.Manys
ervi
cesar
edel
iver
edi
nrealt
ime.
Cus
tomer
shavet
obepr
esentt
orec
eives
ervi
cef
rom or
gani
zat
ionsl
ike:
ai
rl
ines
, hos
pit
als
, hai
rcut
ter
s,r
est
aur
ant
s, and many ot
her s
imi
lar
or
gani
zat
ions
.Ther
ear
eli
mit
sast
ohowl
ongc
ust
omer
sar
ewi
ll
ingt
obekept
wai
ti
ngf
ors
ervi
cet
obepr
ovi
ded;f
urt
her
,thats
ervi
cemus
tbedel
iver
ed
expedi
ti
ous
lys
othatc
ust
omer
sdonots
pendl
ongerr
ecei
vings
ervi
cet
han
appear
sreas
onabl
etot
hem.
vi
i)Di
ff
erentdi
str
ibut
ionchannel
s.Unl
ikemanuf
act
uri
ngf
irms
,whi
chr
equi
re
phys
icaldi
str
ibut
ionc
hannel
sformovi
nggoodsf
rom f
act
oryt
ocus
tomer
s,
s
ervi
ce bus
ines
sesei
therus
e el
ect
roni
cchannel
s(asi
n br
oadc
ast
ing or
el
ect
roni
cfundst
rans
fer
)orel
sec
ombi
net
hes
ervi
cef
act
ory
,ret
ailout
let
,
andpoi
ntofc
ons
umpt
ioni
ntoone.I
nthel
att
eri
nst
anc
e,s
ervi
cef
irmsof
ten
f
indt
hems
elvesr
espons
ibl
eformanagi
ngc
ust
omer
-cont
actper
sonnel(
rat
her
t
hanc
ont
rac
tingoutt
her
etai
li
ngt
askt
oint
ermedi
ari
es)
.Theymayal
sohave
t
omanaget
hec
ons
umpt
ionbehavi
orofc
ust
omer
swhoent
ert
hes
ervi
ce
f
act
oryt
oens
uret
hatt
heoper
ati
onr
unss
moot
hlyandt
hatoneper
son'
s

7
 behavi
ordoes
n'ti
rri
tat
eot
herc
ust
omer
swhoar
epr
esentatt
hes
amet
ime.

1.
4NATUREANDCHARACTERI
STI
CSOFSERVI
CES

Ser
vic
espos
ses
sfouri
nher
entc
har
act
eri
sti
csnotf
ound i
n goods
:int
angi
bil
it
y,
per
ishabi
li
ty,i
nsepar
abi
li
ty and var
iabi
li
ty.Thes
echar
act
eri
sti
csc
reat
e uni
que
c
hal
lengesf
ors
ervi
ces
.Toat
trac
tnew c
ust
omer
sandt
okeepc
urr
entc
ust
omer
s
c
omi
ngbac
k,s
ervi
cef
irmsmus
tfi
ndwayst
omeett
hes
echal
lenges
.

A)I
ntangi
bil
it
y
I
tref
erst
othel
ackoft
angi
bleas
set
sthatc
anbes
een,t
ouc
hed,s
mel
led,hear
d,or
t
est
ed pr
iort
o pur
chas
e.Bus
ines
s-t
o-Bus
ines
sExampl
e:A pr
ofes
sionalj
ani
tor
s
ervi
cewi
llhavet
orel
yonwhatt
hej
ani
tors
ervi
cet
ell
sthem aboutt
hes
ervi
cest
o
beper
for
med.

Cons
umerExampl
e:Thef
oodatar
est
aur
antc
annotbes
een,t
ouc
hed,ors
mel
led
pr
iort
othes
ervi
ce.
Thewai
terorwai
tres
scandes
cri
bet
hef
ood,
ther
est
aur
antmay
haveapi
ctur
eoft
hef
oodont
hemenuorawr
itt
endes
cri
pti
onoft
hepar
tic
ulardi
sh,
butt
hec
ons
umerc
annotac
tual
lys
eewhatwi
llbes
ervedt
othem.

I
ntangi
bil
it
yofs
ervi
cesl
eadst
ounc
ert
aint
yofc
ons
umer
sabouti
tsqual
it
yand
abi
li
tyt
osat
isf
y.Tor
educ
eunc
ert
aint
y,buyer
swi
lll
ookf
ors
ignsorevi
denc
eoft
he
s
ervi
cequal
it
y.Theywi
lldr
aw i
nfer
enc
esaboutqual
it
yfr
om t
hepl
ace,peopl
e,
equi
pment
,communi
cat
ionmat
eri
al,
symbol
sandpr
icet
hatt
heys
ee.
Ther
efor
e,t
he
s
ervi
cepr
ovi
der
'st
aski
sto"
managet
heevi
denc
e"t
o"t
angi
bil
izet
hei
ntangi
ble.
"

Thenegat
ivei
mpac
tsofi
ntangi
bil
it
yofs
ervi
cesc
an ber
educ
ed byus
ing t
he
f
oll
owi
ngs
trat
egi
es.I
ntangi
bil
it
ycanber
educ
edbys
tres
singt
angi
blec
ueswhen
mar
ket
ingt
hes
ervi
ce,us
ingper
sonals
our
cesofi
nfor
mat
ion,s
timul
ati
ngwor
d-of
-
mout
hcommuni
cat
ions
,cr
eat
ing a s
trong c
orpor
ate and br
and i
mage,and
enc
our
agi
ngempl
oyeest
ocommuni
cat
ewi
tht
hec
ust
omer
sdur
ingt
hes
ervi
ce.

Suppos
eabankwant
stopos
iti
oni
tsel
fast
he"
fas
t"bank.I
tcoul
dtangi
bil
izet
his
pos
iti
onass
trat
egyt
hroughanumberofmar
ket
ingt
ool
ssuc
has
:

8
 ) Pl
i ace: Thephys
icals
ett
ingmus
tconnot
equi
cks
ervi
ce.Theext
eri
orand
i
nter
iors
houl
dhavec
leanl
ines
.Thel
ayoutoft
hedes
ksandt
het
raf
fi
cfl
ow
s
houl
dbepl
annedc
aref
ull
y.Wai
ti
ngl
iness
houl
dnotgetover
lyl
ong.
i
i) Peopl
e:Per
sonnels
houl
dbebus
y.Ther
eshoul
dbeas
uff
ici
entnumberof
empl
oyeest
omanaget
hewor
kload.
i
i)Equi
i pment
:Equi
pment
-comput
ers
,copyi
ngmac
hines
,des
ks-
textandphot
os-
s
houl
dbeandl
ook"
stat
eoft
hear
t".
v)Communi
i cat
ionmat
eri
al:c
ommuni
cat
ionmat
eri
als-t
extandphot
os-s
houl
d
s
ugges
tef
fi
ci
enc
yands
peed.
v) Symbol
:Thenameands
ymbol
sshoul
dsugges
tfas
tser
vic
e
)Pr
vi ice:Thebankcoul
dadver
tis
ethati
twi
lldepos
it$5i
ntheac
countofany
c
ust
omerwhowai
tsi
nli
nef
ormor
ethanf
ivemi
nut
es.

B)Per
ishabi
li
ty
I
tmeansi
nabi
li
tyofas
ervi
cet
obei
nvent
ori
ed ors
tor
ed.Ser
vic
esc
annotbe
i
nvent
ori
ed,exc
eptf
ort
heequi
pmentands
uppl
iesnec
ess
aryf
ort
hei
rper
for
manc
e.
Theyar
eti
me-
dependent
;ift
heyar
enotus
edoneday,
theyc
annotbei
nvent
ori
edf
or
t
henext
.Ser
vic
emar
ket
ingmanager
smus
tbal
anc
econs
umerdemandf
ors
ervi
ces
wi
tht
heavai
labi
li
tyofs
ervi
ce,empl
oyeesandf
aci
li
ti
es.Whendemandi
sst
eady,
per
ishabi
li
tyi
snotapr
obl
em bec
aus
eempl
oyees
chedul
esc
anbeadj
ust
edt
omeet
f
orec
ast
edneeds
.However
,ser
vic
emar
ket
ersdoexper
ienc
efl
uct
uat
ioni
ndemand,
maki
ngi
tdi
ff
icul
ttos
chedul
ethenec
ess
aryr
esour
ces
.Fort
hisr
eas
on,
manys
ervi
ce
pr
ovi
der
sfi
ndi
tmor
epr
ofi
tabl
etomaxi
miz
eus
eofpar
tti
meempl
oyeesandc
ont
rac
t
outs
omes
ervi
ces
.Theyal
sous
esomes
trat
egi
est
oshi
ftt
hedemandt
imet
hrough
di
ff
erents
trat
egi
es.Forexampl
e:t
hej
ani
tors
ervi
cec
annotbei
nvent
ori
edors
tor
ed.
Ever
ydayorweek,dependi
ngont
hec
ont
rac
t,t
hes
ervi
cewi
llhavet
obeper
for
med
agai
n.Thes
ames
ateofs
pec
ifi
cat
ionswi
llbeper
for
medeac
hti
met
hebui
ldi
ngi
s
s
ervi
ced.

Thef
oodi
nar
est
aur
anti
spr
epar
edwhent
hec
ust
omerpl
acest
heor
der
.Somef
ood
maybec
ookedi
nadvanc
e,butt
heac
tualor
deri
spr
epar
edonl
yaf
teri
tisor
der
ed.I
t
c
annotbei
nvent
ori
edors
tor
edf
oral
atert
ime.

9
I
nor
dert
opr
oduc
eabet
termat
chbet
weendemandands
uppl
yinas
ervi
cebus
ines
s,
Sas
serhasdes
cri
beds
ever
als
trat
egi
esbot
hont
hedemands
ideandt
hes
uppl
ysi
de:

Ont
heDemandSi
de:
o Di
ff
erent
ialpr
ici
ngwi
lls
hif
tsomedemandf
rom peakt
oof
f-peakper
iods
.
Exampl
esi
ncl
udel
owear
ly-
eveni
ngmovi
epr
icesandweekenddi
scountpr
ices
f
orc
arr
ent
als
.
o Nonpac
kdemandc
anbec
ult
ivat
ed.Mc
Donal
d'sopenedabr
eakf
asts
ervi
ce,
andhot
elsdevel
opedmi
ni-
vac
ati
onweekends
.
o Compl
ement
arys
ervi
ces c
an be devel
oped dur
ing peak t
ime t
o pr
ovi
de
al
ter
nat
ivest
owai
ti
ngc
ust
omer
s,s
uchasc
ockt
aill
oungesi
nres
taur
ant
sand
aut
omat
ict
ell
ermac
hinesi
nbanks
.
o Res
ervat
ions
yst
emsar
eawayt
omanaget
hedemandl
evel
.Ai
rl
ines
,hot
els
,
andphys
ici
ansempl
oyt
hemext
ens
ivel
y.

Ont
hes
uppl
ysi
de:
o Par
t-t
imeempl
oyeesc
anbehi
redt
oser
vepeakdemand.Col
legesaddpar
t
t
imet
eac
her
swhenenr
oll
mentgoesup,andr
est
aur
ant
scal
linpar
t-t
ime
s
erver
swhenneeded.
o Peak-
timeef
fi
ci
enc
yrout
inesc
anbei
ntr
oduc
ed.Empl
oyeesper
for
m onl
y
es
sent
ialt
asksdur
ingpeakper
iods
.Par
amedi
csas
sis
tphys
ici
ansdur
ingbus
y
per
iods
.
o I
ncr
eas
edc
ons
umerpar
tic
ipat
ionc
anbeenc
our
aged.Cons
umer
sfi
lloutt
hei
r
ownmedi
calr
ecor
dsorbagt
hei
rowngr
ocer
ies
.
o Shar
ed s
ervi
cesc
an be devel
oped.Sever
alhos
pit
alsc
an s
har
e medi
cal
equi
pmentpur
chas
es.
o Fac
ili
ti
esf
orf
utur
eexpans
ionc
anbedevel
oped.Anamus
ementpar
kbuys
s
urr
oundi
ngl
andf
orl
aterdevel
opment
.

C)I
nsepar
abi
li
ty
I
nsepar
abi
li
tyi
sthes
imul
taneouspr
oduc
tionandc
ons
umpt
ionofs
ervi
ces
.Goodsc
an
bepr
oduc
edandt
hens
oldatal
atert
ime;s
ervi
cesc
annot
.Fori
nst
anc
e,get
ting

10
hai
rcuti
nvol
vesac
ust
omergoi
ngt
oahai
rst
yli
standbei
ngpr
esentwhi
let
hes
ervi
ce
i
sbei
ngper
for
med.
Get
tingmedi
cals
ervi
cesi
nvol
vesadoc
tororadent
istper
for
ming
anexami
nat
ionorpr
ocedur
ewhi
let
hec
ust
omeri
spr
esent
.Bec
aus
ethes
ervi
cemus
t
beper
for
medand/
orc
ons
umedatt
hes
amet
ime,t
hequal
it
yoft
hes
ervi
cei
shi
ghl
y
dependenton t
heabi
li
tyoft
hes
ervi
cepr
ovi
derand t
hequal
it
yofi
nter
act
ion
bet
weent
hes
ervi
cepr
ovi
derandt
hec
ust
omer
.Managi
ngt
hehumanel
ementi
s
c
rit
icalf
ors
ucc
essf
ors
ervi
cef
ir
mswi
thahi
ghdegr
eeofi
nsepar
abi
li
ty.
Tor
educ
ethe
dependenc
eonc
ust
omer
-empl
oyeei
nter
act
ion,c
ompani
esmayl
ookf
orwayst
o
aut
omat
ethei
rser
vic
ethr
ought
heus
eofmac
hinesandc
omput
ers
.Forexampl
e,
manyl
argebanksus
eAut
omat
edTel
lerMac
hines(
ATMs
)toc
onduc
tbus
ines
swi
th
c
ust
omer
s.Manyot
herc
ompani
esus
edi
ff
erents
trat
egi
est
ospeedupt
hes
ervi
ces
of
fer
edt
ocus
tomer
ssuc
hasl
ear
ningt
owor
kwi
thl
argergr
oupsatt
hes
amet
ime,
s
hor
teni
ngt
het
imer
equi
redt
oeac
hcus
tomers
ervi
ceandt
rai
ningmor
eser
vic
e
pr
ovi
der
sandbui
ldupc
lientc
onf
idenc
e.

D)Var
iabi
li
ty
Bec
aus
etheydependonwhopr
ovi
dest
hem andwhenandwher
etheyar
epr
ovi
ded,
s
ervi
cesar
ehi
ghl
yvar
iabl
e.Var
iabi
li
tyr
efer
stot
hes
por
adi
corr
andom l
evel
sof
s
ervi
ce qual
it
ycus
tomer
srec
eive when t
hey pat
roni
zeas
ervi
ce.Var
iabi
li
tyi
s
pr
imar
il
ycaus
edbyt
hehumanel
ement
,al
thoughmac
hinesmaymal
func
tionc
aus
ing
avar
iat
ioni
nthes
ervi
ce.

Var
iouss
ervi
ceempl
oyeeswi
llper
for
mthes
ames
ervi
cedi
ff
erent
lyandevent
he
s
ames
ervi
ceempl
oyeeswi
llpr
ovi
devar
yingl
evel
sofs
ervi
cef
rom onet
imet
o
anot
her
.Forexampl
e,t
hehai
rst
yli
stus
esdi
ff
erents
tyl
est
odi
ff
erentc
ust
omer
sor
di
ff
erenthai
rst
yli
stsus
edi
ff
erents
tyl
est
othes
amec
ust
omer
.

Var
iabi
li
tyi
sal
soc
aus
edbyavar
ianc
eint
hei
nput
.Comput
erc
ons
ult
ant
sst
aff
ing
hot
li
nesf
acet
hec
hal
lengeofdeal
ingwi
tht
hevar
iabi
li
tyofknowl
edgeandexper
tis
e
t
hatc
ust
omer
sbr
ingt
othes
ervi
cepr
oces
s.Thes
amewoul
dbet
ruef
orat
tor
neys
handl
ingl
egals
ituat
ionsf
orvar
iousc
lient
s.

Bec
aus
eoft
hevar
iabi
li
tyc
har
act
eri
sti
csofs
ervi
ces
,st
andar
diz
ati
on,ors
ervi
cet
hat

11
f
oll
owsas
tandar
dst
epofpr
ocedur
esandpr
oces
sesofal
lcus
tomer
sandqual
it
y
c
ont
rolar
emor
edi
ff
icul
t.

Var
iabi
li
tyori
ncons
ist
enc
ies
,canbeover
comebyus
ingqual
it
ycont
rolmeas
ures
,
i
ncr
eas
ing c
ust
omers
ati
sfac
tion by havi
ng ef
fec
tive s
ervi
ces
yst
emsi
n pl
ace,
moni
tor
ingc
ust
omers
ati
sfac
tionr
egul
arl
y,andmanagi
ngt
hebehavi
orofc
ust
omer
s
andempl
oyeesi
neac
hser
vic
eenc
ount
er.

1.
5LEVELSOFSERVI
CE

Ther
e ar
etwo bas
icl
evel
sofs
ervi
ce:pr
imar
yser
vic
esand anc
ill
arys
ervi
ces
.
Manager
s mus
t dec
ide on whet
her and how t
he r
espons
ibi
li
tyf
or s
ervi
ce
per
for
manc
e wi
llbe s
har
ed byt
he c
ompanyand i
tsc
ust
omer
s.Of
ten,pr
ici
ng
s
trat
egi
esar
eti
edt
othedegr
eeoff
ulls
ervi
ceors
elf
-ser
vic
eper
for
medac
ros
sbot
h
pr
imar
yandanc
ill
aryc
ust
omers
ervi
ceof
fer
ings
.

A)Pr
imar
ySer
vic
es
Cor
eser
vic
esr
efert
othemaj
orac
tivi
tyofabus
ines
s(ornonpr
ofi
tor
gani
zat
ion)
.
Pr
imar
yser
vic
esar
econs
ider
edt
obees
sent
ials
ervi
cest
hatar
ethebas
isofa
t
rans
act
ionandnec
ess
aryt
omakeandkeepas
ale.Letust
aket
woexampl
esof
r
elat
ivel
ycompl
ex pr
oduc
ts.Forc
ust
omer
s pur
chas
ing i
ntangi
blei
nves
tment
s
ervi
ces
,theus
eofabr
oker
aget
obuyands
ells
toc
ksi
sapr
imar
yser
vic
e.f
ort
hos
e
pur
chas
ingc
ompl
ext
angi
blegood,s
uchasac
omput
erf
ort
hef
irs
tti
me,i
mpor
tant
pr
imar
yser
vic
esmayi
ncl
udeknowl
edgeabl
esal
esas
sis
tanc
e,t
heavai
labi
li
tyof
c
redi
tandext
endedwar
rant
ies
,andt
heabi
li
tyt
oret
urndef
ect
ivemer
chandi
se.

B)Anc
ill
arySer
vic
es
Anc
ill
arys
ervi
cesar
eof
fer
edasexpec
tedoropt
ionals
uppl
ement
stot
hepr
imar
y
pur
chas
e.Thec
ust
omergener
all
yexpec
tst
hem,t
hought
heyar
enotr
equi
redasa
nec
ess
aryorus
ualpar
tofas
ale.However
,anc
ill
arys
ervi
cesdoaddper
cei
vedval
ue
f
ort
hec
ust
omerandc
ont
ribut
etot
hemar
ket
er'
simageandc
ompet
iti
vepos
iti
on.

Manys
ervi
cespr
evi
ous
lyc
ons
ider
ed"
ext
ra"ar
enow demandedbyc
ons
umer
sas
"
ess
ent
ial
"toas
ale,i
ncr
eas
ingt
henumberofext
rasr
equi
redt
odi
ff
erent
iat
eone

12
f
ir
m'sof
fer
ingf
rom t
hatofc
ompet
itor
s.Exampl
esofexpec
tedc
ons
umers
ervi
ces
i
ncl
ude c
arr
youtatmos
tsuper
mar
ket
s,c
onveni
entf
ree par
king,c
redi
t,and
al
ter
ati
on oras
sembl
yser
vic
es pr
ovi
ded by a r
etai
ler
.Bus
ines
sto bus
ines
s
c
ust
omer
sexpec
tspr
omptdel
iver
y,f
avor
abl
ecr
edi
tter
ms,
andr
espons
ivec
ust
omer
s
ervi
ce.

Opt
ionals
ervi
cesar
eanot
herf
orm ofanc
ill
arys
ervi
cet
hatc
ust
omer
smayormay
notpayf
or.Forexampl
e,manyr
etai
lcus
tomer
swel
comeaper
sonals
hoppi
ng
s
ervi
cet
hati
sper
for
medonaf
ormalori
nfor
malbas
is.Per
sonalnot
if
icat
ionoft
he
ar
rivalofs
pec
ialmer
chandi
se,
gif
tregi
str
ies
,orat
ravelagenc
ymaybeat
trac
tivet
o
ani
mpor
tantc
ust
omers
egment
.

Or
gani
zat
ionalc
ust
omer
sar
eexpec
tinganddemandi
ngani
ncr
eas
ingnumberof
opt
ionals
ervi
ceswi
thpr
imar
ypr
oduc
tpur
chas
es.
Thes
emayi
ncl
udeon-
sit
etr
aini
ng
as
sis
tanc
e wi
thi
nvent
ory management
,mar
ket
ing and t
echni
calexper
tis
e.A
numberofbus
ines
smar
ket
ershavedevel
opedc
ons
ult
ings
ervi
cest
osat
isf
ymanyof
t
hes
ecus
tomerneeds
.Inmanyc
ases
,thes
eanc
ill
arys
ervi
cesi
nvol
vei
ntoanewc
ore
bus
ines
s.Forexampl
e,l
argeac
count
ingf
ir
mshaveaddedi
nves
tmentadvi
si
ngt
o
t
hei
rtr
adi
ti
onalac
count
ing and f
inanc
ials
ervi
ces
.Fors
ome ac
count
ing f
irms
,
i
nves
tmentadvi
si
nghasbec
omeas
epar
atebus
ines
s-enabl
ingt
hef
irmt
opr
ovi
de
"
one-
stop"s
ervi
cet
oit
sac
count
ingc
lient
s.

1.
6CLASSI
FICATI
ONOFSERVI
CES

Cl
ass
ifyi
ngas
ervi
ceof
fer
ssever
albenef
it
s,s
uchaspr
ovi
dingabet
terunder
standi
ng
oft
hepar
tic
ulars
ervi
ceunderc
ons
ider
ati
on,hi
ghl
ight
ingt
hes
imi
lar
iti
esaswel
las
t
hedi
ff
erenc
esbet
weent
hes
ervi
cebei
ngc
las
sif
iedandot
hers
ervi
ces
,andas
sis
ting
i
nthe devel
opmentofmar
ket
ing s
trat
egi
esand t
act
ics
.Ser
vic
esi
nthe s
ame
c
ategor
ieswi
llf
acet
hes
amet
ypesofc
hal
lengesandt
hes
amemar
ket
ings
trat
egy
wi
llnor
mal
lywor
kforal
lser
vic
esi
nagi
venc
ategor
y.However
,appl
icat
ionoft
he
s
trat
egymayhaves
omevar
iat
ion wi
thi
n eac
hcat
egor
y.Thes
amei
str
uef
or
mar
ket
ingac
tivi
ti
ess
uchaspr
omot
ion,pr
ici
nganddi
str
ibut
ion;t
hes
amet
act
ics
t
endt
owor
kforal
lser
vic
eswi
thi
nas
ingl
ecat
egor
y.

13
Ser
vic
esmaybec
las
sif
iedont
hebas
isofdi
ff
erentf
act
ors
.
A)Nat
ureoft
heOr
gani
zat
ion
Thef
irs
tleveloft
hec
las
sif
icat
ions
yst
em deal
swi
tht
henat
ureoft
heor
gani
zat
ion.
Att
hisl
evelt
hepur
pos
e,s
truc
tur
e,and t
ypeoft
hes
ervi
cei
sident
if
ied.The
or
gani
zat
ionmayt
argett
osat
isf
ytheneedsofi
ndi
vidual
s,bus
ines
sesorbot
h.The
or
gani
zat
ionmaybeor
gani
zedf
orpr
ofi
tornotf
orpr
ofi
tandi
tmaybepubl
icor
pr
ivat
e.

B)Nat
ureoft
heSer
vic
e
Thes
econdl
eveloft
hes
ervi
ceaddr
ess
est
henat
ureoft
hes
ervi
cei
nter
msoft
he
degr
eeoft
radabi
li
ty,t
owhom orwhatt
heac
tioni
sdi
rec
ted,andt
hedegr
eeof
mer
chant
abi
li
ty.

Tr
adabi
li
tyi
sther
elat
ivei
nvol
vementbet
weengoodsands
ervi
cesi
nthepr
oduc
tion
oft
hes
ervi
ce.I
tmaybeembodi
eds
ervi
ceorpur
eser
vic
e.Mer
chant
abi
li
tyi
sthe
r
elat
ivedi
stanc
ebet
weent
hec
ust
omerands
ervi
cepr
ovi
deri
ntheac
qui
si
ti
onor
per
for
manc
eoft
hes
ervi
ce.
Aser
vic
emaybehi
gh,
medi
um orl
owi
nthi
sregar
d.I
tis
s
aidt
obel
ow,i
fthec
ust
omerands
ervi
cepr
ovi
derbot
hmus
tpr
esentwhent
he
s
ervi
cei
sper
for
med.
Ser
vic
emaybedi
rec
tedt
owar
dsi
ndi
vidual
sort
hings
.

Forexampl
e,t
hei
nsur
anc
eindus
tryi
sapur
eser
vic
e.Si
ncei
thasnot
angi
bleas
set
s
f
orc
ust
omer
stos
ee,t
hec
ompanywi
llhavet
omaket
hes
ervi
cemor
etangi
ble
t
hroughi
tsadver
tis
ingandpr
omot
ion.

Ahai
rcuts
ervi
cei
slowi
nmer
chant
abi
li
tyf
orexampl
e.Thec
ust
omerandt
hes
ervi
ce
pr
ovi
dermus
tpr
esentwhent
hes
ervi
cei
sper
for
med.I
tcannotbeper
for
medat
ar
m'sl
engt
hsuc
hasi
nthec
aseofc
abl
etel
evi
si
onorl
ongdi
stanc
etel
ephones
ervi
ce.
However
,tr
avelagent
sar
ehi
ghi
nmer
chant
abi
li
ty,s
otheyhavemor
efl
exi
bil
it
yin
t
ermsofhowmanyc
ust
omer
stheyc
ans
erveatonet
imeandwhent
hes
ervi
cec
an
beper
for
med.

Tomar
kets
ervi
cesl
owi
nmer
chant
abi
li
ty,
managementmus
tpr
ovi
dephys
icals
pac
e
f
orbot
hcus
tomer
sands
ervi
cepr
ovi
der
s.Thenumberofc
ust
omer
sthatc
anbe

14
s
erveds
imul
taneous
lyi
sli
mit
edbyt
hephys
icals
pac
eavai
labl
e.Tomar
kets
ervi
ces
hi
ghi
nmer
chant
abi
li
ty,l
iket
ravelagent
s,needas
mal
lphys
icals
pac
easi
tis
pos
sibl
ycan be pr
ovi
ded atdi
stantt
hrough c
abl
etel
evi
si
on orl
ong-
dis
tanc
e
t
elephones
ervi
ce.Si
ncef
ewc
ust
omer
sac
tual
lyc
omet
othes
ervi
ce,t
heamountof
phys
icals
pac
eneededf
orat
ravelagenti
squi
tes
mal
l.

C)Cus
tomerRel
ati
ons
hips
Att
het
hir
dlevel
,wec
anexami
net
henat
ureofr
elat
ions
hipt
hatexi
stsbet
weent
he
c
ust
omerandt
hes
ervi
cepr
ovi
derandt
hedegr
eeofpar
tic
ipat
ionofc
ust
omer
sin
per
for
mingt
hes
ervi
ce.
Int
ermsofr
elat
ions
hip,
itc
anbeei
therf
ormalori
nfor
malor
bot
h.For
malr
elat
ions
hipsar
eus
edbyf
aci
li
ti
est
hatc
har
gei
ndi
vidual
sanannualf
ee
oramont
hlyf
eef
ort
hei
rser
vic
es.
Forexampl
e,I
nsur
anc
eCompani
esandTel
evi
si
on
Companyt
hatc
oll
ect
spr
emi
um andf
eeannual
ly.I
nfor
malr
elat
ions
hipsar
epay-
as-
us
esys
tems
.Forexampl
e,t
ravelagenc
ies
,thatc
oll
ectf
eesonl
ywhenyout
ravel
.
Revenuei
sbas
edonhow manyi
ndi
vidual
str
avelandhow manyc
ompani
esor
or
gani
zat
ionsus
ethei
rser
vic
es.Bec
aus
eiti
sani
nfor
malr
elat
ions
hip,demandi
s
mor
edi
ff
icul
ttof
orec
ast
.

I
nter
msofdegr
eeofpar
tic
ipat
ion,
thef
oll
owi
ngopt
ionsmayexi
st.Cus
tomer
smus
t
bepr
esent
ed,c
ust
omer
smus
tst
artandf
ini
sht
hes
ervi
ce,c
ust
omerhast
ost
artt
he
s
ervi
ceorc
ust
omerhast
ofi
nis
hthes
ervi
ce.Whenc
ust
omer
smus
tbepr
esent
dur
ing t
he s
ervi
ce per
for
manc
e,déc
orand envi
ronmentoft
he bus
ines
s ar
e
i
mpor
tantt
omaket
hec
ust
omerf
eelc
omf
ort
abl
e,wher
easi
nser
vic
eswher
ethe
c
ust
omerdoesnothavet
opr
esent
,thedéc
orc
anbedes
ignedt
omeett
heneedsof
t
hes
taf
f.Al
so,s
inc
ecus
tomer
sar
epr
esent
,fac
ili
tys
izeandef
fi
ci
enc
yofoper
ati
ons
ar
eaf
fec
ted.I
nor
dert
oser
vemor
ecus
tomer
s,t
hef
aci
li
tys
izes
houl
dbeenl
arged
andasc
ust
omer
smus
tbepr
esentatt
het
imeofs
ervi
ceper
for
manc
e,ef
fi
ci
enc
yof
oper
ati
onwi
llr
educ
e.

D)Nat
ureofDemand
Att
hef
our
thl
evel
,wewi
llexami
net
hel
evelofdemand(
Demandexc
eedsc
apac
ity,
s
omet
imesdemandexc
eedsc
apac
ity,demanddoesnotexc
eedc
apac
ity)andt
he
degr
eeoff
luc
tuat
ionofdemand(
wide,
nar
row,
var
iabl
e,nof
luc
tuat
ion)
.

15
Ast
hel
evelofdemandexc
eedsc
apac
ity,t
hes
ervi
cepr
ovi
deri
sfor
cedei
thert
o
t
urndownt
hedemandofs
omec
ust
omer
sori
ncr
eas
eit
scapac
ityt
opr
ovi
demor
e
s
ervi
ces
.Asi
ttur
nsdownc
ust
omer
s,i
tmayl
osec
ust
omerc
onf
idenc
eins
ervi
ce
pr
ovi
ding.Ast
hec
ompanyi
ncr
eas
esi
tsc
apac
ity,i
tinc
reas
esi
tsc
ostwhi
chf
orc
es
t
hec
ompanyt
oinc
reas
ethepr
iceofi
tss
ervi
cesandt
her
ebyr
educ
edemandf
ort
he
s
ervi
ce.

Ast
hedemandf
luc
tuat
ioni
shi
gh,t
hec
ompanyc
anpr
epar
eit
sel
ftomeett
hehi
gh
demandbyus
ingt
empor
aryempl
oyeesandf
aci
li
ti
esort
hec
ompanymayi
ncr
eas
e
i
tsf
aci
li
tyandempl
oyeesandatt
hes
amet
imedoi
ngot
herac
tivi
ti
esasdemand
bec
omesl
ow.

E)Ser
vic
ePac
kage
Level5addr
ess
est
hei
ssuesoft
hes
ervi
cepac
kage.
Aser
vic
epac
kagei
sthegr
oupof
s
ervi
cesandgoodsof
fer
edbyas
ervi
cef
ir
m.I
nthi
sregar
dwec
anhavedi
ff
erent
c
ategor
iesofs
ervi
cepac
kagess
uchas
:numberofs
ervi
cesandgoods
,uni
tsof
s
ervi
ces
,degr
ee ofequi
pmentbas
e,degr
ee ofc
ust
omi
zat
ion,and degr
ee of
dur
abi
li
tyandwec
anal
sohavedi
ff
erentopt
ionsundereac
hcat
egor
yofs
ervi
ce
pac
kage.

Ass
uchi
nter
msofnumberofs
ervi
cesandgoods
,wec
anhavet
hes
eopt
ions
.One
s
ervi
ce,
Ones
ervi
ceonegood,
ones
ervi
cemul
ti
plegoods
,mul
ti
ples
ervi
ces
,mul
ti
ple
s
ervi
cesonegood,
mul
ti
ples
ervi
cesmul
ti
plegoods
.

Opt
ionsi
nuni
tsofs
ervi
cesar
edef
inedbys
ituat
ions
,def
inedbyt
imeorbot
h.The
degr
ee ofequi
pment bas
e may be hi
gh,medi
um and l
ow.The degr
ee of
c
ust
omi
zat
ionmayal
sobehi
gh,
medi
um orl
ow,
andt
hedegr
eeofdur
abi
li
tymaybe
hi
gh,
medi
um,
low,
rel
ati
vet
ocus
tomerorc
annotbedef
ined.

16
F)Del
iver
yMet
hod
Thes
ixt
hleveloft
hec
las
sif
icat
ions
chemedeal
swi
tht
hedel
iver
yoft
hes
ervi
ce.At
t
hisl
evelwet
ryt
oexami
nedi
ff
erenti
ssuesr
egar
dingt
hedel
iver
yoft
hes
ervi
ce
s
uchas
:theavai
labi
li
tyofs
ervi
ce:atones
iteormul
ti
ples
ites
,thenat
ureofdel
iver
y:
c
ont
inuousordi
scr
eteorbot
h,t
het
ypeofc
ons
umpt
ion;i
ndependent
,col
lec
tiveor
bot
h,and al
loc
ati
on of c
apac
ity;r
eser
vat
ion,or
der of ar
rival
,pr
efer
ent
ial
,
r
eser
vat
ionandor
derofar
rival
,res
ervat
ionandpr
efer
ent
ial
,or
derofar
rivaland
pr
efer
ent
ial
.

1.
7CATEGORI
ESOFSERVI
CEMI
X

Ac
ompany'
sof
fer
ingt
othemar
ket
plac
eof
teni
ncl
udess
omes
ervi
ces
.Thes
ervi
ce
c
omponentc
anbeami
nororamaj
orpar
toft
het
otalof
fer
ing.Fi
vec
ategor
iesof
of
fer
ingsc
anbedi
sti
ngui
shed.

A)Pur
etangi
blegoods
:theof
fer
ingc
ons
ist
spr
imar
il
yofat
angi
blegoods
uchas
s
oap,
toot
hpas
te,
ors
ale.
Nos
ervi
cesac
companyt
hepr
oduc
t(good)
.
B)Tangi
blegoodwi
thaccompanyi
ngs
ervi
ces
:theof
fer
ingc
ons
ist
sofat
angi
ble
goodac
compani
edbyoneormor
eser
vic
es.Levi
ttobs
ervest
hat"
themor
e
t
echnol
ogi
cal
lys
ophi
sti
cat
edt
hegener
icpr
oduc
t(e.
g.,c
arsandc
omput
ers
),t
he
mor
edependentar
eit
ssal
esont
hequal
it
yandavai
labi
li
tyofi
tsac
companyi
ng
c
ust
omers
ervi
ces (
e.g.
,di
spl
ay r
ooms
,del
iver
y,r
epai
rs and mai
ntenanc
e,
oper
atort
rai
ning,
ins
tal
lat
ionadvi
ce,
andwar
rant
yful
fi
ll
ment
).
C)Hybr
id:t
heof
fer
ingc
ons
ist
sofequalpar
tsofgoodsands
ervi
ces
.Forexampl
e,
peopl
epat
roni
zer
est
aur
ant
sforbot
hgoodands
ervi
ce.
D)Maj
orSer
vicewi
thaccompanyi
ngmi
norgoodsands
ervi
ces
:Theof
fer
ingc
ons
ist
s
ofa maj
ors
ervi
ce al
ong wi
th addi
ti
onals
ervi
cesors
uppor
ting goods
.For
exampl
e,ai
rl
inepas
senger
sbuyt
rans
por
tat
ions
ervi
ce.Thet
ripi
ncl
udess
ome
t
angi
bles
,suc
hasf
oodanddr
inks
,at
ickets
tub,andanai
rl
inemagaz
ine.The
s
ervi
cer
equi
resac
api
tali
ntens
ivegood-
anai
rpl
ane-
fori
tsr
eal
izat
ion,butt
he
pr
imar
yit
emi
sas
ervi
ce.
E)Pur
eser
vice:t
heof
fer
ingc
ons
ist
spr
imar
il
yofas
ervi
ce.Exampl
esi
ncl
udebaby

17
 s
itt
ing,
psyc
hot
her
apy,
andmes
sage.

Bec
aus
eoft
hisvar
yinggoods
-to-
ser
vic
emi
x,i
tisdi
ff
icul
ttogener
ali
zeabout
s
ervi
ceswi
thoutf
urt
herdi
sti
nct
ions
.However
,somegener
ali
zat
ionss
eems
afe:

Fi
rst
,ser
vic
esvar
yast
owhet
hert
heyar
eequi
pmentbas
ed(
aut
omat
edc
arwas
hes
,
vendi
ngmac
hines
)orpeopl
ebas
ed(
window was
hing,ac
count
ings
ervi
ces
).Peopl
e
bas
eds
ervi
cesvar
ybywhet
hert
heyar
epr
ovi
dedbyuns
kil
led,
ski
ll
edorpr
ofes
sional
wor
ker
s.

Sec
ond,s
omes
ervi
cesr
equi
ret
hec
lient
'spr
esenc
eands
omedonot
.Br
ains
urger
y
i
nvol
vest
hec
lient
'spr
esenc
e,butac
arr
epai
rdoesnot
.Ift
hec
lientmus
tbepr
esent
,
t
hes
ervi
cepr
ovi
derhast
obec
ons
ider
ateofhi
sorherneeds
.Thusbeaut
yshop
oper
ator
swi
lli
nves
tint
hei
rshop'
sdéc
or,
playbac
kgr
oundmus
ic,
andengagei
nli
ght
c
onver
sat
ionwi
tht
hec
lient
.

Thi
rd,
ser
vic
esdi
ff
erast
owhet
hert
heymeetaper
sonalneed(
per
sonals
ervi
ces
)ora
bus
ines
s need (
bus
ines
sser
vic
es)
.Phys
ici
ans wi
llpr
ice phys
icalexami
nat
ions
di
ff
erent
lyf
orpr
ivat
epat
ient
sver
susempl
oyeesonapr
epai
dcompanyheal
thpl
an.
Ser
vic
epr
ovi
der
stypi
cal
lydevel
opdi
ff
erentmar
ket
ingpr
ogr
amsf
orper
sonaland
bus
ines
smar
ket
s.

Four
th,
ser
vic
epr
ovi
der
sdi
ff
eri
nthei
robj
ect
ives(
prof
itornonpr
ofi
t)andowner
shi
p
(
pri
vat
eorpubl
ic)
.Thes
etwoc
har
act
eri
sti
cs,when c
ros
sed,pr
oduc
efourqui
te
di
ff
erentt
ypesofor
gani
zat
ions
.Themar
ket
ing pr
ogr
amsofapr
ivat
einves
tor
hos
pit
alwi
lldi
ff
er f
rom t
hos
e ofa pr
ivat
echar
ity hos
pit
alor a Vet
erans
Admi
nis
trat
ionHos
pit
al.

18
UNI
T2:SERVI
CEENVI
RONMENT

Cont
ent
s
2.
0Ai
msandObj
ect
ives
2.
1Int
roduc
tion
2.
2Di
mens
ionsoft
heSer
vic
eEnvi
ronment
2.
3Impac
toft
heSer
vic
eEnvi
ronmentonCons
umer
s
2.
4Res
pons
eofCus
tomer
stot
heSer
vic
eEnvi
ronment
2.
5Behavi
orsCr
eat
edbyt
heSer
vic
eEnvi
ronment
2.
6Mar
ket
ingSt
rat
egi
esf
ort
heSer
vic
eEnvi
ronment
2.
7Des
igni
ngt
heSer
vic
eEnvi
ronment

2.
0AI
MSANDOBJ
ECTI
VES

Att
heendoft
hisuni
tyouar
eexpec
tedt
o:
-l
istt
hec
omponent
soft
hes
ervi
ceenvi
ronment
-i
dent
if
ythei
mpac
tsoft
hes
ervi
ceenvi
ronmentont
hepur
chas
edec
isi
onsof
t
hec
ust
omer
-i
dent
if
yther
espons
eofc
ons
umer
stowar
dss
ervi
cef
irms
-l
istt
hebehavi
orsc
reat
edbyt
hes
ervi
ceenvi
ronment

2.
1INTRODUCTI
ON

Thi
suni
tisdes
ignedt
odef
inet
hes
ervi
ceenvi
ronment
,it
sdi
mens
ions
,andt
he
i
mpac
tsofs
ervi
ce envi
ronmenton t
he behavi
orofc
ons
umer
s.I
tdef
inest
he
r
espons
esofc
ust
omer
stot
hes
ervi
ceenvi
ronment
,themar
ket
ings
trat
egi
esf
ort
he
s
ervi
ceenvi
ronmentandt
hedes
ignoft
hes
ervi
ceenvi
ronment
.

2.
2DI
MENSI
ONSOFTHESERVI
CEENVI
RONMENT

Thes
ervi
ceenvi
ronment(
ors
ervi
cec
ape)c
ons
ist
soff
ourdi
mens
ions
:thephys
ical
f
aci
li
ty,
thel
ocat
ion,
ambi
entc
ondi
ti
onsandi
nter
per
sonalc
ondi
ti
ons
.

Thephys
icalf
aci
li
tyi
ncl
udest
heext
eri
oroft
hef
aci
li
tyandt
hei
nter
ior
,whi
ch

19
c
ons
ist
soft
he déc
or,f
urni
shi
ngs
,and equi
pment
.In addi
ti
on t
othe phys
ical
el
ement
sofas
ervi
ce,
thes
ervi
cesc
apei
ncl
udest
hei
ntangi
bleel
ement
s,orambi
ent
c
ondi
ti
onsoft
hes
ervi
ceequi
pment
,suc
hast
het
emper
atur
eoft
her
oom andodor
s
and noi
sest
hatar
e pr
esent
.The l
astc
omponentoft
he s
ervi
cesc
ape i
sthe
i
nter
per
sonalc
ondi
ti
ons
/int
erac
tionsbet
weenc
ust
omer
sands
ervi
ceper
sonnel
.

2.
3IMPACTOFTHESERVI
CEENVI
RONMENTONCONSUMERS

Cus
tomer
sof
tenmakepat
ronagedec
isi
onsbas
eds
olel
yonaf
irm'
sser
vic
esc
apeor
envi
ronment
.Forexampl
e,onat
rippeopl
emaywat
chahot
elwi
thawel
l-known
br
andname;t
heyc
los
elyexami
nedi
tsext
eri
orexper
ienc
e.Theymayeval
uat
eitas
expens
iveorabi
tcheaperdependi
ngont
hei
rbudget
.Inaddi
ti
ont
opur
chas
e
dec
isi
ons
,thes
ervi
ceenvi
ronmentwi
lli
nfl
uenc
ecus
tomerexpec
tat
ionsandt
hei
r
eval
uat
ionofs
ervi
cequal
it
y.I
fac
ust
omerpai
dles
sforas
ervi
ce,t
heexpec
tat
ions
wer
enotashi
gh.

Thes
ervi
cesc
apec
anal
soaf
fec
templ
oyeeat
tit
udesandwor
kmot
ivat
ion.
Indi
vidual
s
whowor
kinac
omf
ort
abl
ephy
sic
alenvi
ronmentt
endt
ohavebet
terat
tit
udesabout
wor
kthanempl
oyeeswhowor
kinundes
irabl
ephys
icalenvi
ronment
.Ifempl
oyees
ar
epr
oudoft
hewayas
ervi
cef
aci
li
tyl
ooks
,theywi
llt
akebet
terc
areoft
hef
aci
li
ty
andwi
llbemot
ivat
edt
obemor
epr
oduc
tivef
ort
hec
ompany
.

2.
4RESPONSEOFCUSTOMERSTOTHESERVI
CEENVI
RONMENT

I
ndi
vidual
sres
pondt
othei
renvi
ronmenti
nthr
eeways
:Cogni
ti
vel
y,af
fec
tivel
yand
ps
ychol
ogi
cal
ly.

Cogni
ti
veRes
pons
eref
erst
oani
ndi
vidual
'sknowl
edges
truc
tur
eandbel
ief
scr
eat
ed
byc
ont
actwi
thaper
son,pl
aceort
hing.Cogni
ti
ver
espons
est
otheenvi
ronment
i
nfl
uenc
eaper
son'
sbel
ief
saboutas
ervi
cebus
ines
s,t
hei
rempl
oyeesandwhatt
o
expec
tfr
omt
hes
ervi
cei
nter
msoft
echni
calandf
inanc
ials
ervi
cequal
it
y.

Af
fect
iveRes
pons
eref
erst
oani
ndi
vidual
'sf
eel
ingsandemot
ionst
hatar
ecr
eat
edby
c
ont
actwi
thaper
son,pl
aceort
hing.Thes
ervi
cesc
apeofas
ervi
cef
aci
li
tywi
ll

20
i
mpac
tthef
eel
ingsandemot
ionsofi
ndi
vidual
s.Thepl
eas
ure-
dis
pleas
uredi
mens
ion
r
efer
stot
he degr
ee a per
son f
eel
sgood,j
oyf
ul,happy ors
ati
sfi
ed wi
th an
envi
ronment
.Thear
ous
al-
nonar
ous
aldi
mens
ionr
efer
stot
hedegr
eeaper
sonf
eel
s
exc
ited,
sti
mul
ated,
aler
t,orac
tivei
nanenvi
ronment
.

Anenvi
ronmentc
anc
reat
eemot
ionsr
angi
ngf
rom pl
eas
antt
ounpl
eas
antorf
rom
ar
ous
ingt
osl
eepy.
Byc
ombi
ningt
hef
ourext
remes
,fouraddi
ti
onalt
ypesofemot
ions
c
anbec
reat
ed:exc
iti
ng,
rel
axi
ng,
gloomy,
anddi
str
ess
ing.
Alt
houghs
ervi
cesoper
ate
wi
thi
nal
lei
ghtt
ypesofemot
ions
,theys
houl
dst
rivet
omaket
heenvi
ronmentas
pl
eas
antaspos
sibl
eforbot
hempl
oyeesandc
ust
omer
s.Under
standi
ngt
heemot
ions
c
ust
omer
sfeelwi
llal
low s
ervi
cesanoppor
tuni
tyt
ous
ethei
rser
vic
esc
apet
o
i
mpr
ovet
hequal
it
yofs
ervi
ce.

Phys
iol
ogi
calRes
pons
eref
erst
othec
hangesi
nani
ndi
vidual
'sphys
iol
ogi
cals
tat
e
duet
ocont
actwi
thaper
son,pl
aceort
hing.Ambi
entc
ondi
ti
onsar
eat
mos
pher
ic
c
ondi
ti
onsofas
ervi
ces
uchast
emper
atur
eoft
hef
aci
li
ty,s
oundsands
mel
ls.Thes
e
c
ondi
ti
onsaf
fec
tpeopl
e phys
ical
ly.The phys
icalr
eac
tion wi
llc
reat
e ei
thera
c
ogni
ti
ver
eac
tionoranemot
ionalr
eac
tionorbot
h.

The c
umul
ati
ve i
mpac
tofa s
ervi
ce'
s phys
icalenvi
ronmenton an i
ndi
vidual
c
ogni
ti
vel
y,af
fec
tivel
yandphy
siol
ogi
cal
lywi
lldet
ermi
nehi
sorherbehavi
or.

2.
5BEHAVI
ORSCREATEDBYTHESERVI
CEENVI
RONMENT

The envi
ronmentar
ound i
ndi
vidual
sel
ici
tsone oft
wo behavi
or:appr
s oach or
avoi
dance.
Appr
oachbehavi
orsar
ethedes
iret
ost
ay,expl
ore,orwor
kinanenvi
ronment
.
Avoi
dancebehavi
orsar
ethedes
irenott
ost
ay,
expl
ore,
orwor
kinanenvi
ronment
.In
t
ermsofc
ust
omerbehavi
ori
ncl
udeades
iret
opat
roni
zeaf
irm andwi
ll
ingnes
sto
r
etur
ntoabus
ines
sforf
utur
epur
chas
es.Byc
ont
ras
t,c
ust
omeravoi
danc
ebehavi
ors
i
ncl
udenotwant
ingt
ospendt
imei
nabus
ines
sandnotwant
ingt
opat
roni
zei
tint
he
f
utur
e.

Forempl
oyees
,appr
oac
hbehavi
orsi
ncl
udeades
iret
owor
kandapos
iti
veat
tit
ude.

21
Pos
iti
veat
tit
uder
esul
tinhi
gherl
evel
sofj
obs
ati
sfac
tionandagr
eat
erdes
iret
o
pr
ovi
degoodc
ust
omers
ervi
ce.Empl
oyeeavoi
danc
ebehavi
orsi
ncl
udeexc
ess
ive
abs
ent
eei
sm,t
ardi
nes
s,and a negat
ive wor
k at
tit
ude.Suc
h behavi
orc
an be
det
riment
alt
obot
hfel
lowempl
oyeesandc
ust
omer
sandc
anr
esul
tinal
owerl
evel
ofper
for
manc
eands
ubs
equentc
ust
omerdi
ssat
isf
act
ionwi
tht
hel
evelofs
ervi
ce
t
heyr
ecei
ved.Avoi
danc
eandappr
oac
hbehavi
orsar
epr
ompt
edbyt
hequal
it
yof
s
oci
ali
nter
act
ion t
hat oc
cur
sint
he s
ervi
ce enc
ount
er.Empl
oyee-
cus
tomer
,
empl
oyee-
empl
oyee,andc
ust
omer
-cus
tomeri
nter
act
ionsal
lhavet
hepot
ent
ialt
o
c
reat
eavoi
danc
eorappr
oac
hbehavi
ors
.

I
ndi
vidual
sdi
ff
eri
nter
msofhow t
heyf
eelaboutenvi
ronment
s.Somei
ndi
vidual
s
wantt
o be i
n envi
ronment
sthatar
e hi
ghl
yst
imul
ati
ng whi
le ot
her
s des
ire
envi
ronment
sthatar
enotar
ous
ing.
Ont
hebas
isofenvi
ronment
als
timul
icus
tomer
's
behavi
orsar
edi
videdi
ntof
our
:ar
ous
als
eeker
s,ar
ous
alavoi
der
s,s
timul
isc
reener
s
ands
timul
inon-
scr
eener
s.

o Ar
ous
als
eeker
s:ar
eindi
vidual
s who enj
oy hi
gh l
evel
s ofenvi
ronment
al
s
timul
ati
on.
o Ar
ous
alavoi
der
s:ar
eindi
vidual
s who pr
eferl
ow l
evel
s ofenvi
ronment
al
s
timul
ati
on,donotwantt
obei
nst
imul
ati
ngenvi
ronmentandwi
llof
tenavoi
d
s
ituat
ionst
hatt
heyper
cei
vear
est
imul
ati
ng.
o Envi
ronment
als
timul
iscr
eener
s:ar
eindi
vidual
swhoc
anexper
ienc
eahi
ghl
evel
ofenvi
ronment
als
timul
iandnotbeaf
fec
ted.Theyac
tasi
fnot
hinggoi
ngon
ar
oundt
hemaf
fec
tst
hem.
o Envi
ronment
als
timul
inons
creener
s:ar
eindi
vidual
sthatar
eaf
fec
tedbys
mal
l
amount
sofenvi
ronment
als
timul
i.

Fac
tor
sthataf
fec
tthewayc
ust
omer
sandempl
oyeesr
espondt
othei
renvi
ronment
ar
e:
o Si
tuat
ionalf
act
ors
:forexampl
e,t
imepr
ess
uremodi
fi
eshow aper
sonr
eac
tst
o
envi
ronment
als
timul
i.
o Reas
onf
orpur
chas
eofas
ervi
ce

22
o Themoods
tat
esofcus
tomer
sandempl
oyees
:exampl
e:happi
nes
s,depr
ess
ion,
l
onel
ines
s,anxi
ety,
exc
itementandi
mpat
ienc
e.
2.
6MARKETI
NGSTRATEGI
ESFORTHESERVI
CEENVI
RONMENT

Tomaxi
miz
etheef
fec
tivenes
soft
hes
ervi
ceenvi
ronment
,ser
vic
efi
rmss
houl
dtake
t
hef
oll
owi
ngf
ours
teps
.
1.I
dent
if
ythef
irm'
soper
ati
onalpos
iti
on
2.I
dent
if
ytheappr
opr
iat
eser
vic
esc
apepos
iti
on
3.I
dent
if
ythedes
iredbehavi
orst
obeel
ici
tedbyt
hes
ervi
cesc
ape
4.I
dent
if
yser
vic
esc
apef
act
orst
hatwi
llenhanc
ethedes
iredbehavi
ors

a)Pos
iti
oni
ngoft
heSer
vic
esCape
Compani
esf
aceadi
ff
icul
tques
tionwheni
tcomest
odes
igni
ngas
ervi
cef
aci
li
ty;
whos
eneedsar
epar
amounti
nter
msoff
aci
li
tydes
ign?Shoul
dthef
aci
li
tybe
des
ignedt
ofoc
usont
heneedsofc
ust
omer
s?Shoul
dthef
aci
li
tybedes
ignedt
o
f
ocuspr
imar
il
yont
heneedsofempl
oyees
?Per
hapsi
tshoul
dbedes
ignedt
omeet
t
heneedsofbot
h.Ser
vic
epos
iti
oni
ngdependsonwhos
eneedsar
etobeaddr
ess
ed
byt
hes
ervi
cef
irm.
b) Obj
ect
ivesandGoal
soft
heSer
vic
esCape
Theobj
ect
ivesandgoal
soft
hes
ervi
cesc
apesvar
ydependi
ngonwhet
hert
hes
ervi
ce
f
ir
m'spr
imar
yfoc
usi
sonc
ust
omer
s,empl
oyeesort
hef
irmi
tsel
f.
i
) Focusoncus
tomer
s
I
fthes
ervi
cesc
apei
sdes
ignedt
ofoc
usont
heneedsofc
ust
omer
s,t
hent
he
s
ervi
cec
ompanyhast
hreepr
imar
ygoal
sitwi
llwantt
oac
compl
ishwi
tht
he
s
ervi
ces c
ape:c
ust
omerat
trac
tion,c
ust
omers
ati
sfac
tion and c
ust
omer
r
etent
ion.
i
i) Focusonempl
oyees
I
fthef
irm hasc
hos
ent
echni
cals
ervi
cequal
it
y,t
hepr
imar
il
ygoaloft
he
s
ervi
cesc
apei
stof
ocusont
heneedsofempl
oyees
,inc
ludi
ngempl
oyee
s
ati
sfac
tion,
empl
oyeemot
ivat
ion,
andempl
oyeeoper
ati
onalef
fi
ci
enc
y.
i
ii
)Focusont
hef
irm
Fi
rmsus
ingt
hec
ost
-ef
fi
ci
enc
yoper
ati
onalappr
oac
hwi
llwantt
odes
ignt
hei
r

23
 phys
icalf
aci
li
tyt
ofoc
usont
heneedoft
hef
irm.Theobj
ect
iveoft
hephys
ical
des
igni
stopr
ovi
deopt
imalc
ostef
fi
ci
enc
yandpr
oduc
tivi
ty.

2.
7DESI
GNI
NGTHESERVI
CEENVI
RONMENT

Eac
h oft
hef
ourdi
mens
ionsoft
hes
ervi
ceenvi
ronmentwi
lli
mpac
tcus
tomer
behavi
ort
hrough t
hei
rcogni
ti
ve,af
fec
tive,orphys
iol
ogi
calr
eac
tions t
othe
envi
ronment
.Empl
oyees
,li
kewi
se,ar
eaf
fec
tedbyeac
hoft
hef
ourdi
mens
ions
.
Managi
ngt
hes
ervi
cesc
aper
equi
ress
elec
tingt
hec
orr
ectl
ocat
ionf
ort
hef
aci
li
ty,
c
reat
ingt
her
ightphys
icalf
aci
li
tyappear
anc
e,moni
tor
ingt
heambi
entc
ondi
ti
ons
andmanagi
ngt
hei
nter
per
sonalc
ondi
ti
ons
.

a)Loc
ati
on
When c
hoos
ing as
itel
ocat
ion,s
ervi
cesmus
texami
ne s
ixc
rit
eri
a:oper
ati
onal
pos
iti
on,mer
chant
abi
li
ty,t
raf
fi
cint
erc
ept
ion,c
umul
ati
ve,c
ompet
iti
veat
trac
tion,
c
ompet
iti
vec
ompat
ibi
li
tyandac
ces
sibi
li
ty.
i
) Oper
ati
onalpos
iti
on:choos
ingal
ocat
ionf
ort
hes
ervi
cei
sthef
irs
tcr
iti
cal
dec
isi
onmanagementmus
tmakei
nthepr
oces
sofdes
igni
nganappr
opr
iat
e
s
ervi
cesc
ape.
i
i)Mer
chant
abi
li
ty:s
ervi
ceshi
ghi
nmer
chant
abi
li
tyc
anbec
onduc
tedwi
thout
t
hec
ust
omerbei
ngphys
ical
lypr
esent
.Ser
vic
esl
owi
nmer
chant
abi
li
tyei
ther
r
equi
ret
hec
ust
omert
ocomet
othes
ervi
ceort
hes
ervi
cet
ogot
othe
c
ust
omer
.Ift
hec
ust
omeri
srequi
redt
ogot
othes
ervi
ce,t
hes
itel
ocat
ion
bec
omesmor
ecr
iti
cal
.Ast
hemer
chant
abi
li
tyoft
hes
ervi
cei
ncr
eas
es,t
he
i
mpor
tanc
eoft
heac
tuals
itel
ocat
iondec
reas
es.
i
ii
)Tr
aff
ici
nter
cept
ion:r
efer
stot
het
ypeandvol
umeofbot
hvehi
cul
arand
pedes
tri
ant
raf
fi
cthatpas
sesabus
ines
s.Det
ermi
ningt
heamountandt
ypeof
t
raf
fi
cvol
umet
hatpas
sesbyas
ervi
cebus
ines
sist
hef
irs
tst
epi
nthe
eval
uat
ionoft
raf
fi
cint
erc
ept
ion.
Ser
vic
ebus
ines
sest
hatr
elyonvol
umemus
t
bel
ocat
edwher
eal
argenumberofvehi
clesorpedes
tri
anspas
sthei
rfac
ili
ty.
i
v)Cumul
ati
vecompet
iti
veat
tract
ion:r
efer
stot
hedr
awi
ngpowerofac
lus
terof
s
imi
larandc
ompl
ement
aryr
etai
les
tabl
ishment
s.Somes
ervi
cesbenef
itf
rom

24
 bei
ngl
ocat
edi
nac
lus
terofs
imi
larbus
ines
sesorc
ompl
ement
arybus
ines
ses
.
Forexampl
e,hot
elsandr
est
aur
ant
sappeart
oat
trac
tmor
ebus
ines
swhen
t
heyar
eloc
atedi
ncl
ust
ert
hanwhent
heyar
eis
olat
ed.
v)Compar
ati
ve compat
ibi
li
tyi
sthe degr
ee t
hat bus
ines
ses i
nter
change
cus
tomer
s:t
hemor
ebus
ines
sesi
nter
changec
ust
omer
s,t
hegr
eat
ert
he
benef
it of bei
ng i
nac
ompl
ement
aryc
lus
ter wi
th ot
her bus
ines
ses
.
Compet
iti
vec
ompat
ibi
li
tyi
simpor
tantt
oser
vic
ess
uchasaut
omobi
ler
ent
al
agenc
ies
.Loc
ati
ngatornearhot
elsandai
rpor
tsal
lowsani
nter
changeof
c
ust
omer
s.Ac
ces
sibi
li
tyr
efer
stot
he eas
e pot
ent
ialbuyer
s have i
n
appr
oac
hing,ent
eri
ng,andexi
ti
ngas
ervi
cebus
ines
s.Fors
ervi
ceswher
ethe
c
ust
omer
smus
tgot
othef
ir
m'spl
aceofbus
ines
s,ac
ces
sibi
li
tybec
omesan
i
mpor
tanti
ssue.

b)Phys
icalFac
ili
ty
Component
soft
hephys
icalf
aci
li
tyt
hati
mpac
tbot
hcus
tomer
sandempl
oyees
i
ncl
ude t
he ext
eri
orappear
anc
e and t
he i
nter
iordéc
or,l
ayout
,fur
nit
ure and
equi
pment
.Fornewpot
ent
ialc
ust
omer
s,t
heext
eri
oroft
hef
aci
li
tyi
sani
mpor
tant
det
ermi
nanti
nthepur
chas
edec
isi
on.Onc
eani
ndi
vidualhaspat
roni
zedas
ervi
ce,
t
heext
eri
orappear
anc
ebec
omesl
essc
rit
ical
.Theext
eri
orandi
nter
iordes
ignoft
he
s
ervi
cef
irm'
sphys
icalf
aci
li
tywi
llbedi
rec
tedbyt
het
ypeofoper
ati
onalpos
iti
ont
he
f
ir
mhasc
hos
en.

Oper
ati
onalDes
ign Ext
eri
oroft
heFac
ili
ty I
nter
ioroft
heFac
ili
ty
Cos
tef
fi
ci
ent Shoul
d be des
igned t
o Shoul
d be des
igned t
o
at
trac
t c
ust
omer
s and maxi
miz
e ef
fi
ci
enc
y and
makei
teas
yforc
ust
omer
s pr
oduc
tivi
ty
t
opat
roni
zet
hebus
ines
s.
Cus
tomi
zat
ion Shoul
d mat
cht
he i
mage Shoul
d be des
igned t
o
t
hef
irmwant
stopr
ojec
t meet t
he needs of
c
ust
omer
s
Tec
hni
cals
ervi
cequal
it
y Shoul
dconveyani
mageof Shoul
d be des
igned t
o
t
echni
calexper
tis
e maxi
miz
e t
he t
echni
cal

25
 qual
it
yoft
hes
ervi
ce
Func
tionals
ervi
cequal
it
y Shoul
d c
onvey a war
m, Shoul
d be c
ust
omer
c
ust
omerf
riendl
yimage or
ient
ed t
o c
onvey t
he
i
mpor
tanc
eofc
ust
omer
s

c
)Ambi
entCondi
ti
ons
Ambi
entc
ondi
ti
onsaf
fec
tcus
tomer
sandempl
oyeesphys
iol
ogi
cal
ly.Thes
efac
tor
s
i
ncl
udes
ucht
hingsast
het
emper
atur
eoft
hef
aci
li
ty,noi
se,mus
ic,ot
hers
ounds
,ai
r
qual
it
y,andodor
s.Ambi
entc
ondi
ti
onsi
mpac
toneoft
hef
ives
ens
es.

Phys
iol
ogi
calf
act
orsi
mpac
taper
sonc
ogni
ti
vel
yandaf
fec
tivel
y.I
fthet
emper
atur
e
i
stooc
oldort
oohot
,cus
tomer
swi
llf
eelunc
omf
ort
abl
eanddi
spl
ayaudi
enc
e
behavi
ors
.Theywi
lll
ikel
ychoos
eanot
herf
ir
mfort
henextpur
chas
eandmayeven
l
eavet
hec
urr
entf
irm ear
ly.Empl
oyeeswor
kingundert
hes
econdi
ti
onswi
llbec
ome
i
rri
tabl
eandnotpr
ovi
det
hel
evelofc
ust
omers
ervi
cet
heys
houl
d.Dys
func
tional
behavi
orss
uchasabs
ent
eei
sm,
tar
dines
sandpoorwor
khabi
tswi
llof
tenr
esul
t.

d)I
nter
per
sonalFac
tor
s
Ser
vic
e at
mos
pher
es ar
e al
so af
fec
ted by i
nter
per
sonalf
act
orss
uch as t
he
appear
anc
e,behavi
or,
andmoodofbot
hempl
oyeesandc
ust
omer
s.Cr
owdi
ngandi
ts
i
mpac
toni
ndi
vidual
sisanot
herf
act
or.Al
loft
hes
eint
erper
sonalel
ement
scr
eat
e
ei
therc
ogni
ti
veoraf
fec
tiver
espons
es,
whi
chi
ntur
nleadt
ospec
ifi
cbehavi
ors
.
) Empl
i oyeeappear
anceandbehavi
or:t
heappear
anc
eofs
ervi
ceper
sonnelwi
ll
of
tenaf
fec
tcus
tomer
s'c
ogni
ti
vebel
ief
saboutt
hequal
it
yofs
ervi
cet
heywi
ll
r
ecei
ve.Toc
ont
rolt
hei
magei
tsempl
oyeesc
onveyt
ocus
tomer
s,many
s
ervi
cesr
equi
res
taf
ftowearuni
for
ms.

The behavi
ors and moods ofs
ervi
ce per
sonnelwi
llhave an ef
fec
ton
c
ust
omer
s.Ther
ever
sec
anal
sooc
cur
.Behavi
orsandmoodsofc
ust
omer
scan
af
fec
templ
oyees
.Forexampl
e,ac
ust
omerwhoi
sinabadmoodi
sof
ten
har
dert
odealwi
tht
hanac
ust
omeri
nagoodmood.Empl
oyees
,int
urn,
nor
mal
lyt
ryhar
dert
opl
eas
eac
ust
omeri
nagoodmoodt
hanonewhoi
sinan

26
 i
rri
tabl
eordepr
ess
edmood.
Anempl
oyeewhoi
snor
mal
lyc
heer
fulandhappy
mayr
efr
ainf
rom anyexpr
ess
ionsofhappi
nes
swhi
ledeal
ingwi
thac
ust
omer
i
nani
rri
tabl
emood.

Empl
oyeemoodsandbehavi
orsi
mpac
tcus
tomer
s.Anempl
oyeewhoi
sina
depr
ess
edmoodwi
llof
tenr
espondt
ocus
tomer
sthr
oughac
tionsal
one,wi
th
l
it
tleornoemot
ion.
Thec
ust
omerwi
llf
eelt
hatt
heempl
oyeedoes
n'tc
areand
i
sn'
ttr
yingt
odoagoodj
ob.Eveni
fthet
echni
calpar
toft
hes
ervi
cei
s
adequat
e,t
hec
ust
omerwi
llof
tenbedi
ssat
isf
iedwi
tht
hef
unc
tionalpar
tof
t
hes
ervi
ce.

i
i)I
mpactofCr
owdi
ng:al
thoughc
rowdi
ngi
sbas
edonone'
sper
sonalpr
efer
enc
e,
i
tnor
mal
lypr
oduc
esanegat
iver
eac
tionandavoi
danc
ebehavi
ors
.Cus
tomer
s
t
endt
oavoi
dser
vic
epr
ovi
der
sthatar
eper
cei
vedt
obet
ooc
rowded.For
exampl
e,c
ust
omer
swhos
eeavi
deor
ent
als
tor
ethati
scr
owdedmaydec
ide
t
ogot
oanot
hers
tor
e.I
fanot
hers
tor
eisnotc
onveni
ent
,theymaypos
tpone
t
hei
rpl
annedpur
chas
eunt
ilanot
hert
ime.

Cus
tomerper
cept
ionsofc
rowdi
ngar
eaf
fec
tedbyf
ourf
act
ors
:envi
ronment
al
c
ues
,shoppi
ng mot
ives
,cons
trai
nts
, and expec
tat
ions of c
rowdi
ng.
Envi
ronment
alc
usesi
ncl
udes
uchi
temsast
henumberofpeopl
eint
hef
aci
li
ty,
t
hel
oudnes
soft
hemus
icornoi
se,andac
lut
ter
edl
ayout
.Shoppi
ngmot
ives
ar
eei
thert
askor
ient
ed(
onewhowant
stomakeapur
chas
e)ornont
ask
or
ient
ed(
onewhowant
stos
eewhati
savai
labl
e).Cons
trai
ntsar
eri
skand
t
ime pr
ess
ure.A c
ons
umer
'sexpec
tat
ion ofc
rowdi
ng i
sbas
ed on pas
t
exper
ienc
eort
hei
nit
ialappear
anc
eofaf
ir
m.

The t
wo c
ategor
iesofs
trat
egi
ess
ervi
cesc
an us
etor
educ
ethe i
mpac
t
c
rowdi
ng hason c
ust
omer
sar
eoper
ati
onsmanagementand per
cept
ions
management
.Oper
ati
ons managementi
nvol
ves maki
ng c
hanges i
nthe
s
ervi
cesc
apeandoper
ati
onsoft
hef
ir
mtoac
tual
lyr
educ
ethenumberof
i
ndi
vidual
sint
hef
aci
li
ty.Per
cept
ionsmanagementi
nvol
vesr
educ
ingonl
y
c
ust
omerper
cept
ionsofc
rowdi
ng.

27
UNI
T3:SERVI
CEMARKETI
NGI
SSUES

Cont
ent
s
3.
0.Ai
msandObj
ect
ives
3.
1.I
ntr
oduc
tion
3.
2.Mar
ket
ingSt
rat
egi
esf
orSer
vic
eMar
ket
ing
3.
3.Ser
vic
eMar
ket
ingSegment
ati
on
3.
4.Managi
ngSer
vic
eDi
ff
erent
iat
ion
3.
5.Managi
ngSer
vic
ePr
oduc
tivi
ty
3.
6.Managi
ngPr
oduc
tSuppor
tSer
vic
es
3.
7.Ser
vic
eMar
ket
ingMi
xes
3.
7.1Managi
ngSer
vic
eQual
it
y
3.
7.2Ser
vic
ePr
ici
ng
3.
7.3.
Ser
vic
eDi
str
ibut
ion
3.
7.4.
Per
sonnelI
ssuesi
nSer
vic
eFi
rms
3.
7.5.
TheSer
vic
eOper
ati
on/
Proc
ess
3.
0AI
MSANDOBJ
ECTI
VES

Att
heendoft
hisuni
tyouar
eexpec
tedt
o:
-i
dent
if
ythes
ervi
cemar
ket
ings
trat
egi
esus
edbys
ervi
cef
irms
.
-i
dent
if
yser
vic
emar
ket
ingmi
x
-i
dent
if
ythebas
icpr
inc
ipl
esunder
lyi
ngt
hec
onc
eptofs
ervi
cequal
it
y
-def
inet
hedet
ermi
nant
sofs
ervi
cequal
it
y
-out
li
net
hevar
iousgapsi
ntheeval
uat
ionofs
ervi
cequal
it
y
-expl
aint
her
oleofpr
ici
ngi
nthemar
ket
ingofs
ervi
ces
-l
istt
hef
act
orst
hati
mpac
tthes
ervi
cepr
ici
ngdec
isi
on
-s
pec
ifyhowdi
ff
erent
ialpr
ici
ngc
anbeus
edbys
ervi
cemar
ket
ers
.

3.
1INTRODUCTI
ON

Thi
suni
tdeal
swi
tht
hedi
ff
erents
ervi
cemar
ket
ingi
ssuess
uchas
:ser
vic
emar
ket
ing

28
s
trat
egi
es,s
ervi
cemar
ket
ingmi
x,s
ervi
cemar
ketdi
ff
erent
iat
ion,s
ervi
cemar
ket
s
egment
ati
on,s
ervi
cepr
oduc
tivi
ty,s
ervi
cequal
it
ymai
ntenanc
e,s
ervi
cepr
ici
ngand
pr
oduc
tsuppor
tser
vic
es.

Youar
einvi
tedt
oreadandunder
standt
hec
ont
ent
sandr
equi
redt
oans
wert
he
c
hec
kyourpr
ogr
essques
tionspr
esent
edatt
heendoft
heuni
t.Iwi
shyouhaveani
ce
s
tudy.

3.
2.MARKETI
NGSTRATEGI
ESFORSERVI
CEFI
RMS

Unt
ilr
ecent
ly,s
ervi
cef
ir
msl
aggedbehi
ndmanuf
act
uri
ngf
irmsi
nthei
rus
eof
mar
ket
ing.Manys
ervi
cebus
ines
sesar
esmal
l(Forexampl
e:s
hoer
epai
randbar
ber
s
hops
)anddonotus
efor
malmanagementormar
ket
ingt
echni
ques
.Ther
ear
eal
so
pr
ofes
sionals
ervi
ce bus
ines
ses (
Forexampl
e:l
aw and ac
count
ing f
irms
)that
f
ormer
lybel
ievedi
twasunpr
ofes
sionalt
ous
emar
ket
ing.Ot
hers
ervi
cebus
ines
ses
(
Exampl
e:c
oll
egesandhos
pit
als
)fac
eds
omuc
hdemandors
oli
ttl
ecompet
iti
onunt
il
r
ecent
lyt
hatt
heys
awnoneedf
ormar
ket
ing.
Butt
hishasc
hangedi
nmanyways
.

Bec
aus
emos
tser
vic
esar
epr
ovi
dedbypeopl
e,t
hes
elec
tion,
trai
ning,
andmot
ivat
ion
ofempl
oyees c
an make a huge di
ff
erenc
einc
ust
omer s
ati
sfac
tion.I
deal
ly,
empl
oyeess
houl
dexhi
bitc
ompet
enc
e,ac
ari
ngat
tit
ude,r
espons
ivenes
s,i
nit
iat
ive,
pr
obl
em-
sol
vingabi
li
tyandgoodwi
ll
.

Compani
esal
sot
ryt
odemons
trat
ethei
rser
vic
equal
it
ythr
oughphys
icalevi
denc
e
andpr
esent
ati
on.Ahot
elwi
lldevel
opal
ookandobs
ervabl
est
yleofdeal
ingwi
th
c
ust
omer
sthatc
arr
iesouti
tsi
ntendedc
ust
omerval
uepr
opos
iti
on,whet
heri
tis
c
leanl
ines
s,s
peed,
ors
omeot
herbenef
it
.

Fi
nal
ly,s
ervi
cec
ompani
esc
anc
hoos
eamongdi
ff
erentpr
oces
sest
odel
ivert
hei
r
s
ervi
ce.Res
taur
ant
shavedevel
opeds
uchdi
ff
erentf
ormat
sasc
afet
eri
ast
yle,f
ast
f
ood,
buf
fet
,andc
andl
eli
ghts
ervi
ce.

Ser
vic
eenc
ount
ersar
eaf
fec
tedbys
ever
alel
ement
s.Cons
iderac
ust
omervi
si
ti
nga
bankt
ogetal
oan.Thec
ust
omers
eesot
herc
ust
omer
swai
ti
ngf
ort
hisandot
her
s
ervi
ces
.Thec
ust
omeral
sos
eesaphys
icalenvi
ronmentc
ons
ist
ingofabui
ldi
ng,

29
i
nter
ior
,equi
pment
,andf
urni
tur
e.Thec
ust
omers
eesbankper
sonnelanddeal
swi
th
al
oanof
fi
cer
.Al
lthi
sisvi
si
blet
othec
ust
omer
.Notvi
si
blei
sawhol
e"bac
kroom"
pr
oduc
tionpr
oces
sandor
gani
zat
ions
yst
em t
hats
uppor
tst
hevi
si
blebus
ines
s.Thus
t
hes
ervi
ceout
come,andwhet
herornotpeopl
ewi
llr
emai
nloyalt
oas
ervi
ce
pr
ovi
der
,isi
nfl
uenc
edbyahos
tofvar
iabl
es.

I
nvi
ewoft
hisc
ompl
exi
ty,Gr
onr
ooshasar
guedt
hats
ervi
cemar
ket
ingr
equi
resnot
onl
y ext
ernalmar
ket
ing butal
soi
nter
naland i
nter
act
ive mar
ket
ing.Ext
ernal
mar
ket
ingdes
cri
best
henor
malwor
ktopr
epar
e,pr
ice,di
str
ibut
eandpr
omot
ethe
s
ervi
cet
ocus
tomer
s.I
nter
nalmar
ket
ingdes
cri
best
hewor
ktot
rai
nandmot
ivat
e
empl
oyeest
oser
vec
ust
omer
swel
l.Ber
ryhasar
guedt
hatt
hemos
timpor
tant
c
ont
ribut
iont
hemar
ket
ingdepar
tmentc
anmakei
stobe"
exc
ept
ional
lyc
leveri
n
get
ting ever
yone el
sei
nthe or
gani
zat
ion t
o pr
act
ice mar
ket
ing.
"Int
erac
tive
mar
ket
ingdes
cri
best
heempl
oyee'
sski
lli
nser
vingt
hec
lient
.Bec
aus
ethec
lient
j
udgess
ervi
cenotonl
ybyi
tst
echni
calqual
it
y(e.
g.,
wast
hes
urger
ysuc
ces
sful
?)but
al
so byi
tsf
unc
tionalqual
it
y(e.
g.,di
dthe s
urgeon s
how c
onc
ern and i
nspi
re
c
onf
idenc
e?)
,ser
vic
epr
ovi
der
smus
tdel
iver"
hight
ouc
h"aswel
las"
hight
ech"
.

Fors
omes
ervi
ces
,cus
tomer
scannotj
udget
het
echni
calqual
it
yevenaf
tert
heyhave
r
ecei
vedt
hes
ervi
ce.I
tisdi
ff
icul
ttoeval
uat
ethequal
it
iesofs
ervi
ces
.Ac
ons
umer
mayeval
uat
ethec
har
act
eri
sti
csofs
ervi
cesbef
orepur
chas
e(s
ear
chqual
it
ies
),af
ter
pur
chas
e(exper
ienc
e qual
it
ies
),and har
dto eval
uat
e even af
terc
ons
umpt
ion
(
credenc
equal
it
ies
).

Bec
aus
eser
vic
esar
egener
all
yhi
ghi
nexper
ienc
eandc
redenc
equal
it
ies
,ther
eis
mor
eri
ski
npur
chas
e.Thi
shass
ever
alc
ons
equenc
es.

1stSer
vic
econs
umer
sgener
all
yrel
yonwor
dofmout
hrat
hert
hanadver
tis
ing.
2ndTheyr
elayheavi
lyonpr
ice,
per
sonnel
,andphys
icalc
uest
ojudgequal
it
y.
3rdTheyar
ehi
ghl
yloyalt
oser
vic
epr
ovi
der
swhos
ati
sfyt
hem.
3.
3SERVI
CEMARKETSEGMENTATI
ON

Suc
ces
sfuls
ervi
cesmar
ket
ings
tar
tswi
thanunder
standi
ngofc
ust
omer
s'want
sand

30
needs
.Thi
sinc
ludesi
dent
if
yingt
hec
ust
omergr
oup(
s)t
obes
erved,t
hei
rpar
tic
ular
s
ervi
ceneeds
,andhow t
heymaket
hei
rbuyi
ngdec
isi
ons
.Thegener
albas
esf
or
mar
kets
egment
ati
ondi
scus
sedi
not
herc
our
sesc
anbeappl
iedt
ofi
nalc
ons
umer
s
andbus
ines
scus
tomer
sforbot
hgoodsands
ervi
ces
.Thec
har
act
eri
sti
csoft
hes
e
s
egment
spr
ovi
dedi
rec
tionf
ort
hes
ervi
cemar
ket
ingmi
x.Someus
efulbas
esf
or
i
dent
if
yingc
ust
omers
egment
sforavar
iet
yofs
ervi
cesi
ncl
ude:

A)Demogr
aphi
c:c
ons
umer
sandbus
ines
scus
tomer
smaybes
egment
edi
ntogr
oups
us
ingdi
ff
erentdemogr
aphi
cvar
iabl
esasf
oll
ows
.
Cons
umer
s:I
ncome,age,f
ami
lyl
if
ecyc
le,et
c.(
e.g.
,chi
ldc
areandc
hil
dsi
zed
bat
hroomsf
oryoungerc
ust
omer
s,wheelc
hai
rsandr
estar
easf
ors
eni
orc
iti
zens
).
Bus
ines
s:c
ompanys
ize,
loc
ati
on,
numberofempl
oyees
,et
c.(
e.g.
,as
sis
tanc
ewi
th
i
nvent
orymanagementorpr
omot
ionf
ors
mal
lerc
ust
omer
s).
B)Geogr
aphi
c:c
ons
umer
sandbus
ines
scus
tomer
smaybes
egment
edbas
edon
geogr
aphi
calf
act
orsasf
oll
ows
.
Cons
umer
:pr
oxi
mit
ytot
hes
tor
e,t
ypeofnei
ghbor
hood,
etc
.(e.
g.,
del
ivers
ervi
ces
andc
atal
ogort
elephones
hoppi
ngs
ervi
cesf
ordi
stantc
ust
omer
s).
Bus
ines
s:c
onc
ent
rat
ionr
elat
ivet
oani
ndus
try,
sal
est
err
itor
ychar
act
eri
sti
cs,
etc
.
C)Ps
ychogr
aphi
cs/
Lif
est
yle:f
inalc
ons
umer
scanbes
egment
edi
ntogr
oupsbas
ed
ont
hei
rps
ychogr
aphi
csorl
if
est
yleasf
oll
ows
.
Cons
umer
s:A c
ombi
nat
ion of s
imi
lar demogr
aphi
c and ps
ychol
ogi
cal
c
har
act
eri
sti
cs(Exampl
e,ac
tivi
ti
es,i
nter
est
s,opi
nions
);t
endenc
ytof
oll
ow
s
imi
larc
ons
umerbehavi
orpat
ter
ns(Exampl
e,per
sonals
hoppi
nganddel
iver
yfor
t
ime- poor dual
-car
eer c
oupl
es wi
thc
hil
dren,t
osat
isf
ythei
r need f
or
c
onveni
enc
e).
D)Benef
it
ssought
:cus
tomer
sexpec
tcer
tai
nbenef
it
sfr
om t
hepur
chas
eofpr
imar
y
s
ervi
cesandf
rom t
hes
ervi
cest
hatac
companyt
hepur
chas
eofphys
icalgoods
.
Benef
it
smayi
ncl
udec
onveni
enc
e,avoi
danc
eofr
isk(
e.g.
,War
rant
ies
,money-
bac
kguar
ant
ees
),orexc
ept
ionalval
uef
ort
hepr
ice.
Cons
umer
smays
eekot
herbenef
it
ssuc
hass
tat
usorenhanc
ementofper
sonal
i
mage.Bus
ines
ses may al
sos
eek benef
it
ssuc
h as i
mpr
oved pr
oduc
tivi
ty,
ef
fi
ci
enc
yandi
ncr
eas
edpr
ofi
ts.

31
E)Pr
iceSens
iti
vit
y:c
ons
umer
sdemandf
orr
etai
lser
vic
es,s
uchass
alesas
sis
tanc
e,
del
iver
y,orwar
rant
ies
,isr
elat
edt
othei
rsens
iti
vit
ytoc
har
gesf
ort
hes
eser
vic
es
(
e.g.
,"ec
onomi
cshopper
s"pr
efers
elf
-ser
vic
eandc
ash-
and-
car
ryt
rans
act
ionst
o
keept
hepur
chas
epr
iceasl
owaspos
sibl
e).
Bus
ines
ses s
eek val
ue t
hrough added s
ervi
ces
,suc
h as as
sis
tanc
e wi
th
pr
omot
ionalevent
sori
nvent
orymanagement
.

3.
4MANAGI
NGSERVI
CEDI
FFERENTI
ATI
ON

Ser
vic
emar
ket
ersf
requent
lyc
ompl
ainaboutt
hedi
ff
icul
tyofdi
ff
erent
iat
ingt
hei
r
s
ervi
ces
.Ac
ommonl
yus
edt
echni
queofdi
ff
erent
iat
ionus
edbys
ervi
cec
ompani
esi
s
pr
ice di
ff
erent
iat
ion.They bel
ieve t
hat c
ust
omer
s vi
ew a s
ervi
ce as f
air
ly
homogeneous
;theyc
arel
essaboutt
hepr
ovi
dert
hant
hepr
ice.Theal
ter
nat
ivet
o
pr
icec
ompet
iti
oni
stodevel
opadi
ff
erent
iat
edof
fer
,del
iver
yori
mage.

Of
fer
Theof
ferc
ani
ncl
udei
nnovat
ivef
eat
ures
.Whatt
hec
ust
omerexpec
tsi
scal
ledt
he
pr
imar
yser
vic
epac
kage,andt
othi
scanbeaddeds
econdar
yser
vic
efeat
ures
.Int
he
ai
rl
inei
ndus
try
,var
iousc
arr
ier
shavei
ntr
oduc
eds
uchs
econdar
yser
vic
efeat
uresas
movi
es,mer
chandi
sef
ors
ale,ai
r-t
o-gr
oundt
elephones
ervi
ce,andf
requentt
hei
r
awar
d, pr
ogr
ams
. Hot
els of
fer r
ooms f
or hi
gh-
tec
h t
ravel
ers who need
ac
commodat
ionst
hatwi
lls
uppor
tcomput
ers
,faxmac
hines
,and e-
mai
l.Many
c
ompani
esar
eus
ingt
heWebt
oof
fers
econdar
yser
vic
efeat
urest
hatwer
enever
pos
sibl
ebef
ore.Themaj
orc
hal
lengei
sthatmos
tser
vic
einnovat
ionsar
eeas
ily
c
opi
ed.St
il
l,t
he c
ompany t
hatr
egul
arl
yint
roduc
es i
nnovat
ions wi
llgai
na
s
ucc
ess
ionoft
empor
aryadvant
agesoverc
ompet
itor
s.Thr
oughear
ningar
eput
ati
on
f
ori
nnovat
ion,
itmayr
etai
ncus
tomer
swhowantt
hebes
t.

Del
iver
y
As
ervi
cec
ompanyc
anhi
reandt
rai
nbet
terpeopl
etodel
iveri
tss
ervi
ce.I
tcan
devel
opamor
eat
trac
tivephys
icalenvi
ronmenti
nwhi
cht
odel
ivert
hes
ervi
ce.
I
mage
Ser
vic
ecompani
esc
anal
sodi
ff
erent
iat
ethei
rimaget
hroughs
ymbol
sandbr
andi
ng.

32
Forexampl
eSher
atonhot
elus
est
hel
ionasabr
and.I
tus
est
hebr
andondi
ff
erent
mat
eri
alsi
tus
esandpr
omot
esi
tss
ervi
ces
.

3.
5MANAGI
NGSERVI
CEPRODUCTI
VITY

Ser
vic
efi
rmsar
eundergr
eatpr
ess
uret
okeepc
ost
sdownandi
ncr
eas
epr
oduc
tivi
ty.
Ther
ear
esevenappr
oac
hest
oimpr
oves
ervi
cepr
oduc
tivi
ty.
1stTohaves
ervi
cepr
ovi
der
s’wor
kmor
eski
ll
ful
ly.Thecompanycanhi
reand
f
ost
ermor
eski
ll
fulwor
ker
sthr
oughbet
ters
elec
tionandt
rai
ning.
2nd Toi
ncr
eas
ethequal
it
yofs
ervi
cebys
urr
ender
ings
omequal
it
y.Doct
ors
wor
kingf
ors
omehos
pit
alshavemovedt
owar
dhandl
ingmor
epat
ient
sand
gi
vingl
esst
imet
oeac
hpat
ient
.
3rd To "
indus
tri
ali
zet
he s
ervi
ce"by addi
ng equi
pmentand s
tandar
diz
ing
pr
oduct
ion.
4th Tor
educeormakeobs
olet
etheneedf
oras
ervi
cebyi
nvent
ingapr
oduct
s
olut
ion,t
hewayt
elevi
si
ons
ubs
tit
utedf
orout
-of
-homeent
ert
ainment
,the
was
h-and-
wears
hir
treduc
edt
heneedf
orc
ommer
ciall
aundr
ies
,andc
ert
ain
ant
ibi
oti
csr
educ
edt
heneedf
ort
uber
cul
osi
ssani
tar
iums
.
5thTodes
ignamor
eef
fect
ives
ervi
ce.How-
to-
qui
tes
moki
ngc
lini
csmayr
educ
e
t
heneedf
orexpens
ivemedi
cals
ervi
cesl
ateron.Hi
ri
ngpar
alegalwor
ker
s
r
educ
est
heneedf
ormor
eexpens
ivel
egalpr
ofes
sional
s.
6th To pr
esentcus
tomer
swi
thi
ncent
ivest
osubs
tit
utet
hei
rown l
aborf
or
companyl
abor
.Bus
ines
sesf
ir
mst
hatar
ewi
ll
ingt
osor
tthei
rownmai
lbef
ore
del
iver
ingi
ttot
hepos
tof
fi
cepayl
owerpos
talr
ates
.
7thTohar
nes
sthepoweroft
echnol
ogyt
ogi
vecus
tomer
sacces
stobet
ters
ervi
ce
andmakes
ervi
cewor
ker
smor
epr
oduct
ive.Compani
est
hatus
ethei
rWeb
Si
test
oempowerc
ust
omer
scanl
ess
enwor
kloads
,capt
ureval
uabl
ecus
tomer
dat
a,andi
ncr
eas
etheval
ueoft
hei
rbus
ines
ses
.

33
3.
6MANAGI
NGPRODUCTSUPPORTSERVI
CES

Thusf
arwehavef
ocus
edons
ervi
cei
ndus
tri
es.Nol
essi
mpor
tantar
epr
oduc
tbas
ed
i
ndus
tri
est
hatmus
tpr
ovi
deas
ervi
cebundl
e.I
nfac
t,pr
oduc
tsuppor
tser
vic
eis
bec
omi
ngamaj
orbat
tlegr
oundf
orc
ompet
iti
veadvant
age.I
nthegl
obalmar
ket
pl
ace,
compani
est
hatmakeagoodpr
oduc
tbutpr
ovi
depoorl
ocals
ervi
ces
uppor
tar
e
s
eri
ous
lydi
sadvant
aged.

Fi
rmst
hatpr
ovi
de hi
gh-
qual
it
yser
vic
e out
per
for
m t
hei
rles
sser
vic
e or
ient
ed
c
ompet
itor
s.Ar
esear
chs
howst
hatt
hehi
gh-
ser
vic
ebus
ines
sesmanagedt
ochar
ge
mor
e,gr
owf
ast
er,
andmakemor
epr
ofi
tont
hes
trengt
hofs
uper
iors
ervi
cequal
it
y.

Thec
ompanymus
tdef
inec
ust
omerneedsc
aref
ull
yindes
igni
ngi
tss
ervi
ces
uppor
t
pr
ogr
am.
Cus
tomer
shavet
hrees
pec
ifi
cwor
ries
.

o Theywor
ryaboutr
eli
abi
li
tyandf
ail
uref
requenc
y.Af
armermayt
oler
atea
c
ombi
net
hatwi
llbr
eakdownonc
eayear
,butnott
woort
hreet
imesayear
.
o Cus
tomer
swor
ryaboutdownt
imedur
ati
on.Thel
ongert
hedownt
ime,t
he
hi
ghert
hec
ost
.Thec
ust
omerc
ount
sont
hes
ell
er'
sser
vic
edependabi
li
ty-
t
hes
ell
er'
sabi
li
tyt
ofi
xthemac
hinequi
ckl
y,oratl
eas
tpr
ovi
deal
oaner
.
o Cus
tomer
swor
ryaboutout
-of
-poc
ketc
ost
sofmai
ntenanc
eandr
epai
r.How
muc
hdoest
hec
ust
omerhavet
ospendonr
egul
armai
ntenanc
eandr
epai
r
c
ost
s?

Abuyert
akesal
lthes
efac
tor
sint
ocons
ider
ati
oni
nchoos
ingavendor
.Thebuyer
t
riest
oes
timat
ethel
if
e-c
ycl
ecos
t,whi
chi
sthepr
oduc
t'spur
chas
ecos
tpl
ust
he
di
scount
edc
ostofmai
ntenanc
eandr
epai
rles
sthedi
scount
eds
alvageval
ue.Buyer
s
as
kforhar
ddat
ainc
hoos
ingamongvendor
s.

Thei
mpor
tanc
eofr
eli
abi
li
tys
ervi
cedependabi
li
tyandmai
ntenanc
evar
y.A one
c
omput
erof
fi
cewi
llneedhi
gherpr
oduc
trel
iabi
li
tyandf
ast
err
epai
rser
vic
ethanal
l
of
fi
cewher
eot
herc
omput
ersar
eavai
labl
eifonebr
eaksdown.Anai
rl
ineneeds100
per
centr
eli
abi
li
tyi
ntheai
r.

Topr
ovi
det
hebes
tsuppor
t,amanuf
act
urermus
tident
if
ythes
ervi
cesc
ust
omer
s

34
val
uemos
tandt
hei
rrel
ati
vei
mpor
tanc
e.I
nthec
aseofexpens
iveequi
pment
,suc
has
medi
calequi
pment
,manuf
act
urer
sof
ferf
aci
li
tat
ings
ervi
cess
uchasi
nst
all
ati
on,
s
taf
ftr
aini
ng,mai
ntenanc
eandr
epai
rser
vic
es,andf
inanc
ing.Theymayal
soadd
val
ue-
augment
ings
ervi
cess
uchas
:war
rant
ies
,qual
it
yaudi
ti
ng,t
rade-
inal
lowanc
es
andguar
ant
eedmovei
ndat
es.

Amanuf
act
urerc
anof
ferandc
har
gef
orpr
oduc
tsuppor
tser
vic
esi
ndi
ff
erentways
s
uchas
:
o s
tandar
dof
fer
ingpl
usabas
icl
evelofs
ervi
ces
o ext
rapayori
ncr
eas
eannualpur
chas
est
oahi
gherl
evelf
oraddi
ti
onals
ervi
ces
o c
ust
omerbonusi
npr
opor
tiont
ohowmuc
htheybuy
o s
ervi
cec
ont
rac
tswi
thvar
iabl
elengt
hsanddi
ff
erentdeduc
tibl
es

3.
7.SERVI
CEMARKETI
NGMI
X

Thes
ervi
cemar
ket
ingmi
xcons
tit
utest
hevar
iabl
ess
ervi
cef
irmsc
anmanagei
n
or
dert
opr
oduc
esal
eandpr
ofi
ts.Thes
evar
iabl
esc
anbeus
edt
odi
ff
erent
iat
eaf
irm
f
rom i
tsc
ompet
itor
sandt
obui
ldac
ompet
iti
veadvant
age.Theel
ement
soft
he
s
ervi
ce mar
ket
ing mi
xinc
lude t
he s
ervi
ce out
come (
the pr
oduc
t),t
he pr
ice,
di
str
ibut
ion,
promot
ionandf
ir
mimage.

A)Ser
vic
eOut
come
Thepr
oduc
tcomponentoft
hemar
ket
ingmi
xist
heout
comeoft
hes
ervi
ce.I
t
c
ons
ist
soft
woc
omponent
s:t
het
echni
calandt
hef
unc
tional
.

Thet
echni
calout
comei
stheendr
esul
toft
hes
ervi
ceort
he"
what
"oft
hes
ervi
ce.
Exampl
e,t
het
echni
calout
comef
ort
heEt
hiopi
anAi
rl
inesi
sthear
rivalatt
he
des
tinat
ionf
orwhi
cht
het
icketwaspur
chas
ed.Fort
hedent
als
ervi
ces
,itwoul
dbe
t
hec
ompl
etedr
ootc
analort
hec
ompl
etedc
rown.

Thef
unc
tionout
comei
sthepr
oces
sofr
ecei
vingt
hes
ervi
ceor"
how"t
hes
ervi
cewas
pr
ovi
ded.Func
tionals
ervi
cei
sthewayt
hec
ust
omerorc
lient
swast
reat
edbyt
he
f
ir
m'ss
taf
f.Fordent
als
ervi
ces
,iti
sthewayt
hedent
ist
,thedent
alas
sis
tant
,andt
he
r
ecept
ioni
sti
nter
act
edwi
tht
hepat
ient
.Fort
heEt
hiopi
anAi
rl
ines
,iti
sthewayt
he

35
t
icketagent
,thef
li
ghtat
tendant
s,andot
herai
rl
ineper
sonnelc
ommuni
cat
edwi
th
t
het
ravel
er.

B)Pr
ice
Thes
econdc
omponentoft
hemar
ket
ingmi
xist
hepr
iceoft
hes
ervi
ce.Bec
aus
e
s
ervi
cesar
eint
angi
bleandexper
ient
iali
nnat
ure,
thepr
icebec
omesmor
eimpor
tant
t
ocons
umer
sasac
ueofwhatt
oexpec
t.Hi
gherpr
icest
endt
oconveyhi
gherqual
it
y.
However
,an ext
remel
yhi
gh pr
icemaybevi
ewedbyc
ons
umer
sar
ip-
off
.The
c
onver
sei
sal
sot
rue;l
owerpr
icest
endt
oconveyl
owerqual
it
ybutf
ors
omes
ervi
ces
andf
ors
omec
ons
umer
s,t
hisi
sac
cept
abl
e.Forexampl
e,weneedt
opayhi
ghi
na
r
est
aur
antt
hatwegetper
sonal
izeds
ervi
cest
hani
nar
est
aur
antt
hatgi
vesusl
ower
s
ervi
ces
olongast
hef
oodof
fer
edi
nther
est
aur
antmeet
satl
eas
tthemi
nimum
r
equi
rement
.

C)Di
str
ibut
ion
Bec
aus
eoft
hei
nher
entc
har
act
eri
sti
csofs
ervi
ces
,di
str
ibut
ion bec
omesmor
e
c
hal
lengi
ng.
Dis
tri
but
ioni
stheavai
labi
li
tyandac
ces
sibi
li
tyofas
ervi
cet
ocons
umer
s.
Ser
vic
esar
eli
mit
edt
othei
mmedi
ategeogr
aphi
call
ocat
iont
othebus
ines
s.I
fthe
bus
ines
swant
stoexpandt
hes
ervi
cet
onewgeogr
aphi
call
ocat
ions
,ithast
obui
lda
newf
aci
li
tyi
nthenewl
ocat
ion.Henc
e,expans
ionwi
llbemor
edi
ff
icul
tfors
mal
ler
or
gani
zat
ionst
hanl
argeror
gani
zat
ions
.Inaddi
ti
on,of
fer
inguni
for
mser
vic
esat
di
ff
erentl
ocat
ionswi
llbeadi
ff
icul
ttas
kasdi
ff
erentpeopl
e,f
aci
li
ti
esandc
ondi
ti
ons
exi
statdi
ff
erentl
ocat
ions
.

D)Cor
por
ateandBr
andI
mage
Ani
mpor
tantel
ementi
nthepur
chas
edec
isi
onofs
ervi
cesi
sthei
magec
ons
umer
s
haveoft
hef
irm andbr
and.Fi
rm orbr
andi
magei
stheover
all
,orgl
obal
,opi
nion
c
ust
omer
shaveofaf
ir
m,or
gani
zat
ion,orpar
tic
ularbr
and.Cons
umer
stendt
o
pat
roni
zef
irmsandpur
chas
ebr
andst
hatt
heyper
cei
vet
ohaveahi
ghi
mageoran
i
maget
hati
scons
ist
entwi
tht
hei
rexc
ept
ions
.Per
sonalexper
ienc
e,wor
d-of
-mout
h
c
ommuni
cat
ionsf
rom ot
her
s,andadver
tis
ingal
lhaveani
mpac
tont
hei
mage
c
ons
umer
shol
d.

36
Ser
vic
efi
rmsmus
tlear
ntomanaget
hei
rcor
por
atei
mageandt
hei
rbr
andi
mageas
t
heywoul
dot
heras
pec
tsoft
hemar
ket
ingmi
x.Onc
eagoodi
magei
sdamagedi
tis
di
ff
icul
ttor
est
ore.Notonl
ywi
lldi
ssat
isf
iedc
ust
omer
snotr
etur
n,t
heywi
llus
ual
ly
t
ellot
her
saboutt
hei
rnegat
iveexper
ienc
e.Get
tingi
ndi
vidual
sorbus
ines
seswho
havehear
dbadr
epor
tsaboutabus
ines
stot
ryt
hef
irmi
sdi
ff
icul
t.

E)Pr
omot
ion
Ser
vic
efi
rmshave s
ever
almeansofpr
omot
ing t
hei
rfi
rm.Adver
tis
ing,s
ales
pr
omot
ionsandper
sonals
ell
ingar
ethemaj
orc
omponent
s.Si
nce,s
ervi
cesar
e
exper
ient
iali
nnat
ure,pr
omot
ingas
ervi
cei
smor
ecompl
ext
hanpr
omot
ingagood.
Forexampl
e,i
npr
omot
ingapar
tic
ularbr
andofaut
omobi
leanadver
tis
erc
andi
scus
s
gasmi
leage,s
tyl
e,c
omf
ort
,andot
herphys
icaldi
mens
ions
.Buti
fanat
tor
neywant
s
t
opr
omot
ehi
sorhers
ervi
ces
,whats
houl
dbeadver
tis
ed?Ther
ear
enot
angi
ble
c
har
act
eri
sti
cst
hatc
anbedi
scus
sed.I
nst
ead,t
headver
tis
ermus
tus
eint
angi
ble
c
uesandt
hought
stoc
onveyames
sage.

3.
7.1.
Managi
ngSer
vic
eQual
it
y
As
ervi
cef
irm may wi
n by del
iver
ing c
ons
ist
ent
ly hi
gher
-qual
it
yser
vic
ethan
c
ompet
itor
sandexc
eedi
ngc
ust
omer
'sexpec
tat
ions
.Thes
eexpec
tat
ionsar
efor
med
byt
hei
rpas
texper
ienc
es,wor
d ofmout
h,and adver
tis
ing.Af
terr
ecei
ving t
he
s
ervi
ces
,cus
tomer
scompar
etheper
cei
veds
ervi
cewi
tht
heexpec
teds
ervi
ce.I
fthe
per
cei
veds
ervi
cesf
allbel
ow t
heexpec
teds
ervi
ce,c
ust
omer
slos
eint
eres
tint
he
pr
ovi
der
.Ift
heper
cei
veds
ervi
cemeet
sorexc
eedst
hei
rexpec
tat
ions
,theyar
eopt
ing
t
ous
ethepr
ovi
deragai
n.

Par
asur
aman,Zei
thaml
,andBer
ryf
oundf
ivedet
ermi
nant
sofs
ervi
cequal
it
y.Thes
e
ar
epr
esent
edi
nor
derofi
mpor
tanc
e.
a.Rel
iabi
li
ty:The abi
li
tyt
o per
for
m t
he pr
omi
sed s
ervi
ce dependabl
y and
ac
cur
atel
y.
b.Res
pons
ivenes
s:Thewi
ll
ingnes
stohel
pcus
tomer
sandt
opr
ovi
depr
ompt
s
ervi
ce.
.As
c sur
ance:Theknowl
edgeandc
our
tes
yofempl
oyeesandt
hei
rabi
li
tyt
o

37
 c
onveyt
rus
tandc
onf
idenc
e.
d.Empat
hy:Thepr
ovi
si
onofc
ari
ng,
indi
vidual
izedat
tent
iont
ocus
tomer
s.
e.Tangi
bles
:Theappear
anc
eofphys
icalf
aci
li
ti
es,equi
pment
,per
sonnel
,and
c
ommuni
cat
ionmat
eri
als
.

Var
iouss
tudi
eshaves
hownt
hatexc
ell
ent
lymanageds
ervi
cec
ompani
ess
har
ethe
f
oll
owi
ngc
ommonpr
act
ice:s
trat
egi
cconc
ept
,topmanagementc
ommi
tmentt
o
qual
it
y,hi
ghs
tandar
ds,moni
tor
ings
yst
emsf
ors
ervi
ceper
for
manc
eandc
ust
omer
c
ompl
aint
s,andanemphas
isonempl
oyees
ati
sfac
tion.

a.St
rat
egi
cconcept
:Tops
ervi
cec
ompani
esar
e"c
ust
omerobs
ess
ed"
.Theyhave
ac
lears
ens
eoft
hei
rtar
getc
ust
omer
sandt
hei
rneeds
.Theyhavedevel
opeda
di
sti
nct
ives
trat
egyf
ors
ati
sfyi
ngt
hes
eneeds
.
b.Top management c
ommi
tment t
o qual
it
y:Top s
ervi
cec
ompani
es ar
e
c
ommi
ttedt
oser
vic
equal
it
y.Thei
rmanagementl
ooksnotonl
yatf
inanc
ial
per
for
manc
eonamont
hlybas
isbutal
soats
ervi
ceper
for
manc
e.
c.Hi
ghs
tandar
ds:Thebes
tser
vicepr
ovi
der
ssethi
ghs
ervi
cequal
it
yst
andar
ds.
d.Moni
tor
ings
yst
ems
:Topf
ir
msaudi
tser
vic
eper
for
manc
e,bot
hthei
rownand
c
ompet
itor
sonar
egul
arbas
is.Theyus
eanumberofmeas
urementdevi
ces
:
c
ompar
ison s
hoppi
ng,ghos
tshoppi
ng,c
ust
omers
urveys
,sugges
tion and
c
ompl
aint
sfor
mat
s,s
ervi
ceaudi
tteams
,andl
ett
erst
othepr
esi
dent
.Ser
vic
es
c
anbej
udgedonc
ust
omeri
mpor
tanc
eandc
ompanyper
for
manc
e.I
mpor
tanc
e
-
per
for
manc
eanal
ysi
sisus
edt
orat
ethevar
iousel
ement
soft
hes
ervi
ce
bundl
eandi
dent
if
ywhatac
tionsar
erequi
red.
e.Sat
isf
yingcus
tomercompl
aint
s:Theneedt
ores
olveac
ust
omerpr
obl
em i
na
s
ati
sfac
tor
ymanneri
scr
iti
cal
.Onaver
age,as
ati
sfi
edc
ust
omert
ell
sthr
ee
peopl
e abouta good pr
oduc
texper
ienc
e,butt
he aver
age di
ssat
isf
ied
c
ust
omergr
ipst
oel
evenpeopl
e.I
feac
hoft
hem t
ell
sst
il
lot
herpeopl
e,t
he
numberofpeopl
eexpos
edt
obadwor
dofmout
hmaygr
owexponent
ial
ly.

Nonet
hel
ess
,cus
tomer
swhos
ecompl
aint
sar
esat
isf
act
ori
lyr
esol
vedof
ten
bec
omemor
ecompanyl
oyalt
hanc
ust
omer
swhower
eneverdi
ssat
isf
ied.
Compani
est
hatenc
our
agedi
sappoi
nted c
ust
omer
stoc
ompl
ain and al
so

38
 empowerempl
oyeest
oremedyt
hes
ituat
ion on t
hes
pot
-ac
hievehi
gher
r
evenuesandgr
eat
erpr
ofi
tst
hanc
ompani
est
hatdonothaveas
yst
emat
ic
appr
oac
hforaddr
ess
ings
ervi
cef
ail
ure.
Henc
e,c
ompani
est
hatar
eef
fec
tiveat
r
esol
vingc
ompl
aint
s:
- Devel
opt
hei
rcr
iter
iaandt
rai
ningpr
ogr
amst
hatt
akei
ntoac
count
empl
oyees
'ser
vic
e-r
ecover
yrol
e.
- Devel
opgui
del
inesf
ors
ervi
ce-
rec
over
ythatf
ocusonac
hievi
ngf
air
nes
s
andc
ust
omers
ati
sfac
tions
.
- Removebar
rier
sthatmakei
tdi
ff
icul
tforc
ust
omer
stoc
ompl
ain,whi
le
devel
opi
ng ef
fec
tive r
espons
es,whi
ch may i
ncl
ude empower
ing
empl
oyeest
opr
ovi
dec
ompens
ati
onf
orf
ail
ure.
- Mai
ntai
ncus
tomerandpr
oduc
tdat
abas
est
hatl
ett
hec
ompanyanal
yze
t
ypesands
our
cesofc
ompl
aint
sandadj
usti
tspol
ici
es.
. Sat
f isf
ying bot
h empl
oyees and cus
tomer
s:exc
ell
ent
ly managed s
ervi
ce
c
ompani
esbel
ievet
hatempl
oyeer
elat
ionswi
llaf
fec
tcus
tomerr
elat
ions
.
Managementc
arr
iesouti
nter
nalmar
ket
ingandpr
ovi
desempl
oyees
uppor
t
andr
ewar
dsf
orgoodper
for
manc
e.Managementr
egul
arl
yaudi
tsempl
oyee
j
ob s
ati
sfac
tion.Kar
lAl
brec
htobs
erved t
hatunhappyempl
oyeesc
an be
"
ter
ror
ist
s."Ros
enbl
attandPet
ersgos
ofarast
osayt
hatt
hec
ompany
's
empl
oyees
,nott
hec
ompany
'sc
ust
omer
s,havet
obemadenumberonei
fthe
c
ompanyhopest
otr
ulys
ati
sfyi
tsc
ust
omer
s.

Ani
mpor
tantpar
tofs
ati
sfyi
ngempl
oyeesi
shel
pingt
hem c
opewi
tht
hei
r
l
ivesout
sidet
heof
fi
ce.Asempl
oyeesputahi
gherpr
emi
um onf
ami
lyt
ime
c
ompani
esar
e expec
ted t
o of
fermor
efl
exi
ble wor
k-s
chedul
est
othei
r
empl
oyeest
hathaveat
imepr
obl
emi
nthei
rfami
li
es.

3.
7.1.
1.Under
lyi
ngPr
inci
plesofSer
viceQual
it
y
Rec
eivi
ngahi
ghl
evelofs
ervi
cei
simpor
tantt
ocons
umer
sbutunder
standi
nghowt
o
eval
uat
ethes
ervi
cequal
it
yrec
eivedi
smor
edi
ff
icul
t.Twoc
ons
umer
srec
eivi
ngwhat
appear
stobet
hes
ames
ervi
cef
rom t
hes
amec
ompanymayeval
uat
ethequal
it
yof
t
hes
ervi
cedi
ff
erent
ly.Onec
ons
umermayf
eelt
hes
ervi
cewasgoodwhi
let
heot
her

39
mayf
eelt
hes
ervi
cewasper
for
medpoor
ly.

Thef
oll
owi
ngt
hreeunder
lyi
ngpr
inc
ipl
ess
houl
dbekepti
nmi
ndwhendi
scus
singt
he
c
onc
eptofs
ervi
cequal
it
y.
1.Ser
vic
equal
it
yismor
edi
ff
icul
tfort
hec
ons
umert
oeval
uat
ethant
hequal
it
y
ofagood.
2.Ser
vic
equal
it
yisbas
edonc
ons
umer
s'per
cept
ionoft
heout
comeoft
he
s
ervi
ceandt
hei
reval
uat
ionoft
hepr
oces
sbywhi
cht
hes
ervi
cewasper
for
med.
3.Ser
vic
equal
it
yper
cept
ionsr
esul
tfr
om ac
ompar
isonofwhatt
hec
ons
umer
expec
tedpr
iort
othes
ervi
ceandt
heper
cei
vedl
evelofs
ervi
cer
ecei
ved.

Thepr
oces
sus
edbyc
ons
umer
sineval
uat
ings
ervi
cesdi
ff
ersf
rom t
hepr
oces
sus
ed
f
orgoods
.Thr
eequal
it
iesar
ebei
ngeval
uat
ed:s
ear
chqual
it
ies
,exper
ienc
equal
it
ies
,
andc
redenc
equal
it
ies
.

. Sear
i chqual
it
ies
:ar
eat
tri
but
est
hatc
ons
umer
scaneval
uat
epr
iort
opur
chas
ing
as
ervi
ceorgood.I
tinc
ludess
uchi
temsasc
olor
,st
yle,f
it
,feel
,smel
l,andpr
ice.
Cons
umergoodss
uchass
hoes
,jeans
,ref
ri
ger
ator
s,andf
oodar
ehi
ghi
nsear
ch
qual
it
ies
.Bus
ines
sgoodss
uchasr
awmat
eri
als
,componentpar
ts,
off
ices
uppl
ies
andt
ool
sal
sot
endt
obehi
ghi
nsear
chqual
it
ies
.
i
i. Exper
iencequal
it
ies
:ar
eat
tri
but
est
hatc
ons
umer
scaneval
uat
eonl
ydur
ingor
af
tert
hec
ons
umpt
ionpr
oces
s.Cons
umergoodsands
ervi
ceshi
ghi
nexper
ienc
e
qual
it
iesar
efood,c
ater
ings
ervi
cesandmealent
ert
ainment
.Bus
ines
sser
vic
es
hi
ghi
nexper
ienc
equal
it
iesi
ncl
udej
ani
tor
ials
ervi
ces
,del
iver
yser
vic
esand
r
epai
rtypes
ervi
ces
.
i
i.Cr
i edencequal
it
ies
:ar
eat
tri
but
est
hatc
ons
umer
shavedi
ff
icul
tyeval
uat
ingeven
af
tert
hec
ons
umpt
ioni
scompl
ete.Somegoodsands
ervi
cesar
edi
ff
icul
tto
eval
uat
e even af
tert
he s
ervi
cei
scompl
eted.Cons
umers
ervi
cess
uch as
ac
count
ants
ervi
ces
,funer
als
ervi
ces
,educ
ati
on,and vet
eri
nar
ian c
are ar
e
exampl
esofs
ervi
ceshi
ghi
ncr
edenc
equal
it
ies
.Int
hebus
ines
ssec
tor
,exampl
es
i
ncl
udec
ons
ult
ings
ervi
ces
,fi
nanc
ialadvi
ce,
andadver
tis
ings
ervi
ces
.

 Ser
vic
est
endt
obehi
ghi
nexper
ienc
eandc
redenc
equal
it
ieswhi
le

40
 goodst
endt
obehi
ghi
nsear
chqual
it
ies
.

3.
7.1.
2.Meas
uri
ngSer
viceQual
it
y
Wheneval
uat
ings
ervi
cequal
it
y,c
ons
umer
sexami
nef
ivedi
mens
ions
:tangi
bil
it
y,
r
eli
abi
li
ty,
res
pons
ivenes
s,as
sur
anc
eandempat
hy.

. Tangi
i bles
:inc
ludet
hes
ervi
cepr
ovi
der
'sphys
icalf
aci
li
ti
es,
thei
requi
pment
,and
t
heappear
anc
eofempl
oyees
.
i
i. Rel
iabi
li
ty:i
stheabi
li
tyoft
hes
ervi
cef
irmt
oper
for
mthes
ervi
cepr
omi
sed
dependabl
yandac
cur
atel
y.Empl
oyeesmus
tbet
rai
nedt
hatmaki
ngandkeepi
ng
pr
omi
sesar
eani
mpor
tantas
pec
toft
hei
rjob.
i
i. Res
i pons
ivenes
s:i
sthewi
ll
ingnes
soft
hef
ir
m'ss
taf
ftohel
pcus
tomer
sandt
o
pr
ovi
det
hemwi
thpr
ompts
ervi
ce.
Itmaybei
ll
ust
rat
edt
hrought
hreepr
inc
ipl
es:
1.Of
fer
ingorpr
ovi
dings
ervi
cet
hatgoesbeyondwhati
sbei
ngas
ked.
2.Goi
ngoutoft
hewayt
opr
ovi
deas
sis
tanc
e,and
3.Di
spl
ayi
ngapos
iti
vement
alat
tit
udet
hatexempl
if
iest
hef
ives
tarr
ati
ng.
v. As
i sur
ance:r
efer
stot
heknowl
edgeandc
urt
syoft
hec
ompany
'sempl
oyeesand
t
hei
rabi
li
tyt
oins
pir
etr
ustandc
onf
idenc
eint
hec
ust
omer
.Inor
dert
oac
hieve
t
his
,empl
oyeess
hal
lbeempower
edandi
nst
ruc
tedt
oaddr
essc
ust
omer
sby
name.
v. Empat
hy:i
sthec
arr
ying,
indi
vidual
izedat
tent
iont
hes
ervi
cef
irm pr
ovi
deseac
h
c
ust
omer
.
Ther
ear
esomemet
hodsofmeas
uri
ngqual
it
yofs
ervi
c .Theyar
es e:SERVQUAL,Gap
t
heor
y,andSer
vic
eper
for
manc
emeas
ure.

a.
Usi
ngSERVQUALt
omeas
ureSer
vic
equal
it
y

TheSERVQUALi
nst
rumenti
sbas
ed on t
hepr
emi
set
hats
ervi
cequal
it
yist
he
di
ff
erenc
ebet
weenc
ust
omer
s'expec
tat
ionsandt
hei
reval
uat
ionoft
hes
ervi
cet
hey
r
ecei
ved.
Thi
sins
trumenthast
wopar
tques
tionnai
res
.

1stPar
t:as
ksc
ust
omer
stoi
ndi
cat
ethel
evelofs
ervi
cet
heywoul
dexpec
tfr
om af
irm
i
napar
tic
ulari
ndus
try.

41
2ndPar
t:as
ksc
ust
omer
stoeval
uat
ethes
ervi
ceper
for
medbyas
pec
ifi
cser
vic
efi
rm.

Pr
obl
emswi
thSERVQUAL
TheSERVQUALi
nst
rumenthast
hreepot
ent
ialpr
obl
ems
.Theyar
e:
1.SERVQUALmeas
uresc
ust
omer
s'expec
tat
ionsoft
hei
dealf
irmi
napar
tic
ular
s
ervi
cei
ndus
try.Thi
smayormaynotber
elevantt
othec
apabi
li
ti
esofa
par
tic
ulars
ervi
cef
irmort
hes
etofs
ervi
cef
irmsavai
labl
etoac
ons
umer
.
2.Thegener
icnat
ureofSERVQUAL.Si
ncei
tisnoti
ndus
trys
pec
ifi
c,i
tdoesnot
meas
urevar
iabl
est
hatmaybei
mpor
tantt
oapar
tic
ulari
ndus
try.
3.SERVQUALdeal
swi
tht
hegapt
heor
ymet
hodol
ogyus
edf
ormeas
uri
ngt
hel
evel
ofs
ervi
cequal
it
y.Meas
uri
ngc
ons
umerexpec
tat
ionsaf
teras
ervi
cehasbeen
pr
ovi
dedwi
llbi
asc
ons
umer
s'r
espons
es.I
fcus
tomer
shadapos
iti
veexper
ienc
e
ataf
irm,
theywi
llt
endt
orepor
tlowers
cor
esf
ort
hei
rexpec
tat
ions
,sot
her
eisa
meas
urabl
e gap bet
ween whatt
heyexpec
ted and t
he ac
tuals
ervi
cet
hey
r
ecei
vedandi
fcus
tomer
shadanegat
iveexper
ienc
eataf
irm,t
heoppos
ite
oc
cur
s.

b.
GapTheor
y
Gapt
heor
yist
hemet
hodf
orc
alc
ulat
ings
ervi
cequal
it
ythati
nvol
vess
ubt
rac
tinga
c
ust
omer
'sper
cei
vedl
evelofs
ervi
cer
ecei
vedf
romwhatwasexpec
ted.

Cor
rec
tUs
eofGapTheor
y
Manager
scan us
ethe gap t
heor
y met
hodol
ogy f
ormeas
uri
ng s
ervi
ce qual
it
y
per
for
manc
eifpr
ecaut
ionsar
etaken t
oreduc
ethepr
obl
emsj
ustdi
scus
sed.I
f
SERVQUALi
sus
ed,t
hei
nst
ruments
houl
dbemodi
fi
edt
oappl
ytot
hes
pec
ifi
c
i
ndus
tryf
orwhi
chi
tisbei
ngus
ed.Addi
ti
onalvar
iabl
ess
houl
dbeaddedt
hatar
e
r
elevantandi
mpor
tantt
ocus
tomer
s.Topr
eventbi
asesf
romi
nter
fer
ingwi
tht
hegap
s
cor
es,c
ons
umerexpec
tat
ionss
houl
dbemeas
uredpr
iort
othes
ervi
ceands
ervi
ce
per
cept
ionsaf
tert
hes
ervi
ce.Bec
aus
econs
umer
sar
eaf
fec
tedbyadver
tis
ingand
wor
d-of
-mout
hcommuni
cat
ions
,the t
ime bet
ween meas
uri
ng expec
tat
ionsand
meas
uri
ngt
hequal
it
yofs
ervi
cer
ecei
veds
houl
dber
elat
ivel
ycl
ose.

42
 c
.Ser
vic
ePer
for
manc
eMeas
ures
Anal
ter
nat
ivet
ous
inggapt
heor
ymet
hodol
ogyf
ormeas
uri
ngs
ervi
cequal
it
yist
o
obt
ains
ervi
ceper
for
manc
emeas
ures
.Ther
ear
etwot
ypesofper
for
manc
emeas
ures
t
hatc
anbeobt
ainedar
eint
ernalmeas
uresandc
ust
omermeas
ures
.

I
nter
nalmeas
uresofs
ervi
cequal
it
yar
edes
ignedt
opr
ovi
deobj
ect
ivemeas
uresof
t
hef
ir
m'sper
for
manc
ewhi
lec
ust
omermeas
uresar
edes
ignedt
omeas
ureat
tit
udes
andopi
nionsofc
ust
omer
s.

Advant
agesandDi
sadvant
agesofSer
vic
ePer
for
manc
eMeas
ures
Ser
. Ser
vic
e Exampl
es Advant
ages Di
sadvant
ages
No Per
for
manc
eMeas
ure
1 I
nter
nal - Ont
imer
ate - Loc
ateweakar
eas - Lac
ksc
ust
omerper
spec
tive
per
for
manc
e - Fi
llr
ate - I
dent
if
y ar
eas of - May not be i
mpor
tant t
o
meas
ures - Cus
tomer exper
tis
e c
ust
omer
s
c
ompl
aint
's - Doesnotmeas
urebehavi
orals
ide
- Ser
vic
eti
me ofs
ervi
ce
2 Cus
tomer - At
tit
ude of - Gai
n i
nfor
mat
ion - Doesnotr
efl
ectopi
nion ofnon
per
for
manc
e c
ust
omer
s about how c
ust
omer
s
meas
ures - Opi
nion of c
ust
omer
sfeel - Does not pr
ovi
de c
ompar
ati
ve
c
ust
omer
s - Pr
ovi
dei
nfor
mat
ion i
nfor
mat
ion
onc
ust
omerneeds - Di
ff
icul
t t
o get unbi
ased
i
nfor
mat
ion

3.
7.1.
3.AModelofSer
viceQual
it
y
Toeval
uat
ethequal
it
yofs
ervi
ce,c
ons
umer
swi
llc
ompar
ethes
ervi
cet
heyr
ecei
ve
wi
th t
he s
ervi
cet
hey expec
ted.I
fser
vic
e qual
it
y wer
eto be c
alc
ulat
ed
mat
hemat
ical
ly,t
hef
ormul
awoul
dbeP-E,wi
thPbei
ngt
hec
ons
umer
'sper
cei
ved
l
evelofs
ervi
cer
ecei
vedandEbei
ngc
ons
umerexpec
tat
ionspr
iort
othes
ervi
ce
enc
ount
er.A negat
ivenumberi
ndi
cat
est
hatexpec
tat
ionswer
enotmet
.A z
ero
i
ndi
cat
esc
ons
umerexpec
tat
ionswer
emet
.Apos
iti
venumberi
ndi
cat
esc
ons
umer

43
expec
tat
ionswer
eexc
eeded.

Par
asur
aman,
Zei
thaml
,andBer
ryf
ormul
atedas
ervi
ce-
qual
it
ymodelt
hathi
ghl
ight
s
t
hemai
nrequi
rement
sfordel
iver
inghi
ghs
ervi
cequal
it
y.Themodeli
dent
if
iesf
ive
gapst
hatc
aus
euns
ucc
ess
fuldel
iver
y.

GapOne
I
tist
he di
ff
erenc
e bet
ween whatc
ust
omer
sexpec
tfr
om a s
ervi
ce and what
managementbel
ievesc
ust
omer
sexpec
tfr
om a s
ervi
ce.I
tsc
aus
eisf
ail
ure of
managementt
oident
if
ycus
tomerexpec
tat
ionsc
orr
ect
ly.Hos
pit
aladmi
nis
trat
ors
mayt
hinkt
hatpat
ient
swantbet
terf
ood,butpat
ient
smaybemor
econc
ernedwi
th
nur
ser
espons
ivenes
sThef
oll
owi
ngs
trat
egi
esc
anbeappl
iedt
oreduc
egapone.
1.Communi
cat
ewi
thc
ust
omer
saboutwhatt
heyexpec
t.
2.Conduc
tmar
ket
ingr
esear
cht
olear
nwhatc
ust
omer
sexpec
t.
3.Enc
our
ageupwar
dcommuni
cat
ionswi
thi
nthes
ervi
ceor
gani
zat
ion.
4.Dec
reas
ethenumberofl
ayer
sofmanagement
.

GapTwo
I
tist
hedi
ff
erenc
ebet
weenmanagement
'sper
cept
ionofc
ons
umerexpec
tat
ionsofa
s
ervi
ceandt
hes
ervi
cequal
it
yspec
ifi
cat
ions
.Caus
esofGapTwoar
e:r
esour
ce
c
ons
trai
nts
,mar
ketc
ondi
ti
onsandmanagementi
ndi
ff
erenc
e.Managementmi
ght
c
orr
ect
ly per
cei
ve t
he c
ust
omer
s'want
sbutnots
eta s
pec
ifi
ed per
for
manc
e
s
tandar
d.Hos
pit
aladmi
nis
trat
orsmayt
ellt
henur
sest
ogi
ve"
fas
t"s
ervi
cewi
thout
s
pec
ify
ingquant
itat
ivel
ywhat‘
fas
t’means
.

Thes
trat
egi
esus
edt
oreduc
egapt
woar
e:
1.Topmanagementc
ommi
tmentt
opr
ovi
dings
ervi
cequal
it
y.
2.Devel
ops
ervi
cequal
it
ygoal
s.
3.St
andar
diz
ati
onoft
asks
.
4.Addr
essf
eas
ibi
li
tyofc
ust
omerexpec
tat
ions
.

GapThr
ee
I
tist
hedi
ff
erenc
ebet
weent
hes
ervi
cequal
it
yspec
ifi
cat
ionsf
oras
ervi
ceandt
he
del
iver
yoft
hes
espec
ifi
cat
ionsbyt
hes
ervi
cepr
ovi
der
.Caus
esofGapThr
eear
e:(1)

44
Empl
oyeesar
eunawar
eofs
ervi
ces
pec
ifi
cat
ionsort
heymaybepoor
lyt
rai
ned,(
2)
Empl
oyeesdonothavet
hes
kil
lsori
ncapabl
etoper
for
mthes
ervi
ces
pec
ifi
cat
ions
,
(
3)Empl
oyees ar
e unwi
ll
ing t
o pr
ovi
de t
he s
ervi
ce ac
cor
ding t
othe s
ervi
ce
s
pec
ifi
cat
ions
,(4)Empl
oyeesmaybehel
dtoc
onf
li
cti
ngs
tandar
ds,s
uchast
aki
ng
t
imet
oli
stent
ocus
tomer
sands
ervi
ngt
hemf
ast
.

Thes
trat
egi
est
oreduc
eGapThr
eear
e:
o Enhanc
eteamwor
kamongt
heempl
oyees
o Ens
uret
her
eisagoodempl
oyeej
obf
it
o Ens
uret
her
eisagoodt
echnol
ogyj
obf
it
o Pr
ovi
deempl
oyeess
omec
ont
rolonhow t
heyc
anper
for
mthes
ervi
ceand
powert
omodi
fyt
hes
ervi
cet
omeetc
ons
umerr
eques
ts
o Devel
opas
uper
vis
oryc
ont
rols
yst
em t
hatr
ewar
dsempl
oyeesf
orpr
ovi
ding
s
ervi
ceac
cor
dingt
othes
pec
ifi
cat
ions
o Reduc
eempl
oyeer
olec
onf
li
cts
o Reduc
eempl
oyeer
oleambi
gui
ty

GapFour
I
tist
he di
ff
erenc
e bet
ween t
he s
ervi
cet
hatwasdel
iver
ed and t
he ext
ernal
c
ommuni
cat
ionsoft
hef
ir
m.Cons
umerexpec
tat
ionsar
eaf
fec
tedbys
tat
ement
s
madebyc
ompanyr
epr
esent
ati
vesandads
.Caus
esofGapFourar
e:(
1)Poororl
ackof
c
ommuni
cat
ionbet
weens
ervi
ceper
sonnelandwhati
spr
omi
sedbyadver
tis
ing,
mar
ket
ingc
ommuni
cat
ions
,ands
alespeopl
e,(
2)Overpr
omi
si
ngbys
aless
taf
fand
ot
hermeansofmar
ket
ingc
ommuni
cat
ions
.Forexampl
e,i
fahos
pit
albr
ochur
eshows
abeaut
if
ulr
oom,butt
hatpat
ientar
rivesandf
indst
her
oom t
obec
heapandt
acky
l
ooki
ng,
ext
ernalc
ommuni
cat
ionshavedi
stor
tedt
hec
ust
omer
'sexpec
tat
ions

St
rat
egi
est
oreduc
eGapFourar
e:
1.I
ncr
eas
ehor
izont
alc
ommuni
cat
ionsbet
weent
hemar
ket
ingdepar
tmentand
s
ervi
ceper
sonnel
.
2.Avoi
dthepr
opens
ityt
ooverpr
omi
set
oobt
ains
ales
.Bes
urewhati
spr
omi
sed
c
anbepr
ovi
ded.

45
 3.I
nfor
mser
vic
eper
sonnelofpr
omi
sesmadebys
ales
peopl
eandmar
ket
ing
c
ommuni
cat
ions
.

GapFi
ve
Thi
sisGapbet
weenper
cei
veds
ervi
ceandexpec
teds
ervi
ce.
Thi
sgapoc
cur
swhent
he
c
ons
umermi
sper
cei
vest
hes
ervi
cequal
it
y.Forexampl
e,t
hephys
ici
anmaykeep
vi
si
ti
ngt
hepat
ientt
oshowc
are,butt
hepat
ientmayi
nter
prett
hisasani
ndi
cat
ion
t
hats
omet
hingr
eal
lyi
swr
ong.

I
tist
hes
um ofgapsonet
hroughf
ourandi
stheover
allc
ompar
isonofwhat
c
ons
umer
sexpec
tedf
rom t
hes
ervi
cepr
ovi
derandt
hei
rper
cept
ionoft
hes
ervi
ce
t
heyr
ecei
vedf
rom t
hes
ervi
cepr
ovi
der
.Anegat
ives
cor
eindi
cat
est
hatt
hes
ervi
ce
di
dnotmeett
hec
ons
umer
'sexpec
tat
ions
;az
eros
cor
emeanst
hes
ervi
cemet
expec
tat
ionsand a pos
iti
ve s
cor
e meanst
he s
ervi
ce exc
eeded t
he c
ust
omer
's
expec
tat
ions
.GapFi
vei
saf
fec
tedbybot
hthedi
rec
tionandt
hemagni
tudeofgaps
onet
hroughf
our
.

3.
7.2Ser
vic
ePr
ici
ng
3.
7.2.
1.TheRol
eofPr
ici
ngi
nSer
vices
Bec
aus
eoft
heuni
quec
har
act
eri
sti
csofs
ervi
ces
,thepr
ici
ngofs
ervi
cei
smor
e
c
hal
lengi
ngt
hanpr
ici
nggoods
.Cons
umer
sof
tenus
epr
iceasoneoft
hec
rit
eri
onf
or
f
ormi
ngexpec
tat
ionsofas
ervi
ceandi
nmaki
ngpur
chas
edec
isi
ons
.Ifc
ons
umer
sar
e
notf
ami
li
arwi
thapar
tic
ulars
ervi
cevendor
,pr
icebec
omesevenmor
eimpor
tant
bec
aus
eoft
hel
ackofot
hers
ear
chqual
it
ies
.Fors
ervi
ceshi
ghi
ncr
edenc
eand
exper
ienc
e pr
oper
ties
,pr
ices
ervesasone oft
he t
angi
blec
uesf
orc
ons
umer
expec
tat
ionsbec
aus
eoft
hel
ackofot
hert
angi
blec
uesi
nwhi
cht
omakeaj
udgment
aboutt
hes
ervi
ce.

Pr
icei
sus
edbyc
ons
umer
sint
hei
rser
vic
equal
it
yeval
uat
ions
.Cons
umer
snor
mal
ly
f
eelt
hats
ervi
cequal
it
yispos
iti
vel
yrel
atedt
opr
ice.Themor
econs
umer
spayf
ora
s
ervi
ce,
themor
etheyexpec
tfr
omt
hes
ervi
ce.

Pr
icei
sal
soani
mpor
tantel
ementi
ncont
rol
li
ngdemand.
Inc
reas
ingt
hepr
iceatpeak
demandt
imesnor
mal
lyr
educ
est
hedemand.Thehi
gherpr
icewi
llc
aus
esome

46
demandt
oshi
ftf
rom hi
ghert
olowerus
ageper
iods
.Inaddi
ti
on,s
ervi
cesmayl
ower
t
hepr
iceatl
owerus
aget
imes
.Thi
slowerpr
icewi
llnotonl
ycaus
eas
hif
tofdemand,
buti
twi
llal
sos
timul
atenewdemand.

3.
7.2.
2.Pr
iceDet
ermi
nant
s
Det
ermi
ningt
hepr
iceofas
ervi
cei
scr
uci
alt
oit
smar
ket
abi
li
tyandc
anhavean
i
mpac
tont
hes
ucc
essoft
hes
ervi
ce.Sever
alf
act
orsgoi
ntot
hepr
ici
ngdec
isi
on.
Thes
efac
tor
sar
e or
gani
zat
ionalpr
ici
ng obj
ect
ives
,cos
ts,demand/
pri
cec
urve,
el
ast
ici
tyofpr
ice,c
ompl
eti
ngoper
ati
onalpos
iti
on,andmar
ket
ingmi
xcompos
iti
ons
.
Forexampl
e:

A)Or
gani
zat
ionalPr
ici
ngObj
ect
ives
Fi
rmsus
eoneoff
ourpr
ici
ngobj
ect
ives
:pr
ofi
tmaxi
miz
ati
on,s
alesmaxi
miz
ati
on,
mar
kets
har
emaxi
miz
ati
onorc
ompet
iti
vepar
ity.Thepr
icec
har
gedbyas
ervi
cei
s
bas
edonwhi
chpr
ici
ngobj
ect
ivei
sbei
ngus
edbyt
hef
irm.

ForPr
ofi
tMaxi
miz
ati
on:apr
icet
hatyi
eldt
hehi
ghes
tpr
ofi
t.
ForSal
esMaxi
miz
ati
on:apr
icet
hatwi
llyi
eldt
hehi
ghes
ttot
alr
evenuef
ort
hef
irm
wi
thi
napr
e-s
pec
ifi
edpr
ofi
tcons
trai
nt.
ForMar
ketShar
eMaxi
miz
ati
on:apr
icet
hatwi
llpr
ovi
det
hef
irm wi
tht
hel
arges
t
mar
kets
har
eort
otaluni
tsal
es.
ForCompet
iti
vePar
ity:appr
oxi
mat
elyequalpr
icewi
tht
hec
ompet
iti
on.

B)Cos
tAnal
ysi
s
Cos
tsnor
mal
lys
erveasapr
ici
ngf
loor
,orl
owes
tpr
icel
evel
.Tor
emai
navi
abl
e
bus
ines
s,f
irmsmus
tobt
ainac
ert
ainl
evelofgr
osspr
ofi
ttoc
overover
headexpens
es.
Theamountofgr
osspr
ofi
twi
lldependont
hef
ir
m'sobj
ect
ivesandt
hec
ompet
iti
on.
Cal
cul
ati
ngt
hec
ostofas
ervi
cei
smor
edi
ff
icul
tthanf
oragood.

C)Demand/
Pri
ceSc
hedul
e
Todet
ermi
net
hec
orr
ectpr
ice,ademand/
pri
ces
chedul
emus
tbegener
ated.A
demand/
pri
ces
chedul
eshowst
hedemandf
oras
ervi
ceatvar
iouspr
icesandc
anbe
gener
atef
romhi
stor
icaldat
aors
alesf
orec
ast
s.

47
D)Pr
iceEl
ast
ici
ty
Ani
mpor
tanti
ngr
edi
enti
npr
ici
ngdec
isi
onsi
sac
onc
eptc
all
edpr
iceel
ast
ici
tyof
demand.Pr
iceel
ast
ici
tyofdemandi
stheper
cent
agec
hangei
ndemanddi
videdby
t
heper
cent
agec
hangei
npr
ice.I
ftheper
cent
agec
hangei
ndemandi
sgr
eat
ert
han
t
heper
cent
agec
hangei
npr
ice,
thepr
icei
ssai
dtobeel
ast
icatt
hatpr
icepoi
nt.
Ift
he
per
cent
agec
hangei
ndemandi
sles
sthant
heper
cent
agec
hangei
npr
ice,t
hepr
ice
i
ssai
dtobei
nel
ast
icatt
hatpr
icepoi
nt.

E)Compet
iti
on
Fi
rmsmus
texami
ne t
he pr
ici
ng s
truc
tur
e oft
hei
rcompet
itor
.Pr
icest
hatar
e
dr
ast
ical
lydi
ff
erentt
hanc
ompet
itor
s'wi
llbemor
eel
ast
ict
hanpr
icest
hatar
ecl
ose
t
othec
ompet
iti
on.I
naddi
ti
ont
opr
imar
ycompet
itor
s,f
irmsmus
tbeawar
eof
s
econdandt
hir
dlevelc
ompet
itor
s.

F)Oper
ati
onalPos
iti
on
Theoper
ati
onalpos
iti
onc
hos
enbyt
hes
ervi
cehasamaj
ori
mpac
tont
hepr
ice.
Fir
ms
us
ingt
hec
ost
-ef
fi
ci
enc
yoper
ati
onalappr
oac
hwi
llhaveal
owerpr
icet
hanf
irms
us
ingt
heot
herappr
oac
hes
.Fi
rmsus
ingt
hec
ust
omi
zat
ionappr
oac
hwi
llhavet
he
hi
ghes
tpr
ices
.Fi
rmsus
ingei
thers
ervi
cequal
it
yappr
oac
hwi
llbei
nthemi
ddl
epr
ice
r
ange.However
,fi
rmst
hathavedevel
opedahi
ghl
evelofexper
tis
eint
het
echni
cal
s
ervi
cequal
it
yar
eawi
llbeabl
etoc
har
gemor
efort
hei
rser
vic
es.

G)Mar
ket
ingMi
x
Themar
ket
ingmi
xcompos
iti
onal
sohasani
mpac
tont
hepr
ice.Mar
ket
ingmi
x
el
ement
sar
epr
omot
ions
,ser
vic
eout
come,di
str
ibut
ion,andc
orpor
atei
mage.Al
l
t
hes
efac
tor
saf
fec
tcos
toft
hes
ervi
ceandi
ntur
nthepr
iceoft
hes
ervi
ce.

3.
7.2.
3.Pr
ici
ngi
ntheBus
ines
s-t
o-Bus
ines
sSect
or
Amaj
ordi
ff
erenc
ebet
weenpr
ici
ngi
nthec
ons
umermar
ketandt
hebus
ines
s-t
o-
bus
ines
sandor
gani
zat
ionalmar
keti
sthec
ompet
iti
vebi
d.Compet
iti
vebi
ddi
ngi
sthe
pr
oces
sofabuyerobt
aini
ngbi
dsf
rom pr
ospec
tives
uppl
ier
sforapar
tic
ulars
ervi
ce.
al
thoughal
istpr
icemaybes
et,manyc
ont
rac
tsar
egai
nedt
hroughc
ompet
iti
ve
bi
ddi
ng.

48
Compet
iti
vebi
dsc
anbeei
therc
los
edbi
dsoropenbi
ds.
o Cl
osedBi
ddi
ng:i
nvol
vess
uppl
ier
ssubmi
tti
ngs
eal
edbi
ds,whi
char
eopened,
r
evi
ewedandeval
uat
edatt
hes
amet
ime.Cl
osedbi
dsar
eus
edbymos
t
gover
nmentuni
tsandpubl
ici
nst
itut
ionswhobyl
awar
enor
mal
lyr
equi
redt
o
us
ethi
spr
ocedur
eforc
ont
rac
tingwi
ths
ervi
cec
ompani
es.
o Open Bi
ddi
ng:i
smor
einf
ormaland al
lowsf
ornegot
iat
ion bet
ween t
he
s
uppl
ierandt
hebuyer
.Openbi
ddi
ngt
endst
obeus
edbyt
hepr
ivat
esec
tor
bec
aus
eital
lowsf
ornegot
iat
ionsand al
lowsbuyer
stos
tres
sthe bes
t
c
ombi
nat
ion oft
echni
calqual
it
y,f
unc
tionalqual
it
y,del
iver
yandpr
ice.I
t
al
lowss
uppl
ier
stheoppor
tuni
tyt
omodi
fyt
hei
rbi
d.

3.
7.2.
4.Pr
ici
ngModi
fi
cat
ions
Ser
vic
efi
rmshavef
ourvar
iat
ionsofpr
ici
ngmet
hodst
oboos
tsal
esandpr
ofi
ts.
Thes
e
met
hodsi
ncl
udedi
ff
erent
ialpr
ici
ng,
yiel
dmanagement
,pr
icebundl
ingandmul
ti
ple-
us
edi
scount
s.

A)Di
ff
erent
ialPr
ici
ng:
I
tref
erst
oset
tingdi
ff
erentpr
icesatdi
ff
erentt
imes
.Thepur
pos
eofdi
ff
erent
ial
pr
ici
ngi
sei
thers
hif
tdemandf
rom hi
ghdemandper
iodst
olow demandper
iods
,
r
educ
edemandatpeakdemandper
iodsort
ost
imul
atedemanddur
ingl
owdemand
per
iods
.Fordi
ff
erent
ialpr
ici
ngt
obeef
fec
tive,i
tmus
tmeett
hef
oll
owi
ngf
ive
c
rit
eri
ons
,whi
ch,i
fsat
isf
ied,enabl
etheus
eofdi
ff
erent
ialpr
ici
ng t
oinc
reas
e
r
evenuesandc
ont
ribut
etof
ixedover
headc
ost
s.Thec
rit
eri
onsar
ethef
oll
owi
ng:

1.Segment
smus
tval
uet
hes
ervi
cedi
ff
erent
ly.
2.Segment
smus
tbel
argeenought
obei
dent
if
iabl
eandpr
ofi
tabl
e.
3.Amec
hani
sm mus
tpr
ohi
bitc
ust
omer
sint
hel
owerpayi
ngs
egmentf
rom s
ell
ing
t
ohi
gherpayi
ngs
egment
s.
4.Thec
ostofi
mpl
ement
ingt
hedi
ff
erent
ialpr
ici
ngs
yst
em mus
tnotexc
eedt
he
i
ncr
ement
alr
evenuegener
ated.
5.Thedi
ff
erent
ialpr
ici
ngs
yst
em mus
tnotbec
onf
usi
ngt
ocur
rentandf
utur
e
c
ust
omer
s.

49
Ser
vic
epr
icesmaybedi
ff
erent
iat
edont
hebas
esoft
hef
oll
owi
ngc
rit
eri
ons
.
1.Byt
imeofs
ervi
ceus
age
2.Byt
het
imeofr
eser
vat
ion
3.Byt
het
imeof(
ti
cket
)pur
chas
e
4.Bas
edondi
ff
erentt
argetmar
ket
s
5.Byl
ocat
ionofc
ons
umpt
ion

B)Yi
eldManagement
I
tisadi
ff
erent
ialpr
ici
ngmet
hodol
ogydes
ignedt
opr
oduc
ethehi
ghes
trevenues
bas
edonadet
ail
edanal
ysi
soft
hepas
tpur
chas
ebehavi
orofeac
hmar
kets
egment
s
ervedbyac
ompany.Yi
eldmanagementus
eshi
stor
icaldat
aandmat
hemat
ical
al
gor
ithmst
ocal
cul
atet
hehi
ghes
tpr
icest
hatc
anbeobt
ainedf
oreac
hmar
ket
s
egmenti
neac
hpur
chas
esi
tuat
ion.

Underyi
eldmanagement
,thel
owes
t-di
scounti
temsar
esol
dfi
rstandt
hehi
ghes
t
pr
icedar
esol
dlas
twhi
chi
stheoppos
iteoft
het
radi
ti
onalmet
hodofpr
ici
ngwhi
ch
pas
sest
hroughc
ont
ainer
spr
icedi
scount
ingt
il
lthel
asts
ale.

Byus
ingc
omput
ert
echnol
ogyandt
hec
onc
eptofyi
eldmanagement
,anai
rl
inec
an
i
ncr
eas
ethei
rrevenuebys
ell
ingt
hei
rcheapers
eat
sfi
rstands
lowl
yinc
reas
ingt
he
pr
iceunt
ilt
hehi
ghes
tpr
icesar
echar
gedj
ustbef
oret
akeof
f.Byus
ingpas
thi
stor
y,
t
heai
rl
inewi
lll
owerandr
isepr
icesast
imegoesbyt
oei
theri
ncr
eas
edemandor
dec
reas
edemand.

I
fal
lthes
eat
sona200s
eatai
rpl
anewer
epr
icedatadi
scountf
areofBr
.125.
00,
the
pl
anewoul
dfi
llqui
ckl
yandBr
.25,
000r
evenuewoul
dbegener
ated.However
,us
ing
yi
eldmanagement
,theai
rl
inedi
videt
hes
eat
sint
ocat
egor
ieswi
thdi
ff
erentpr
ices
us
inghi
stor
icaldat
aasf
oll
owswi
lli
ncr
eas
eit
srevenue.

50
NumberofSeat
sandPr
ices Tot
alRevenue
60s
eat
satBr125.
00eac
h Br
.7,
500.
00s
oldear
li
er,nor
efundsorexc
hange
wi
thoutapenal
ty
50s
eat
satBr175.
00eac
h Br16,
250.
00
40s
eat
satBr225.
00eac
h Br25,
250.
00
30s
eat
satBr275.
00eac
h Br33,
500.
00
20s
eat
satBr350.
00eac
h Br40,
500.
00f
orbus
ines
str
avel
erst
hatar
rivesat
l
atet
imesj
ustbef
oret
akeof
f

C)Pr
iceBundl
ing
I
tisof
fer
ingc
ons
umer
stwoormor
egoodsors
ervi
cesi
nas
ingl
epac
kagef
ora
s
pec
ialpr
ice.Ther
ear
etwobas
icf
ormsofbundl
ing s
ervi
ces
:pur
eand mi
xed
bundl
ing.

Pur
ebundl
ingi
scombi
ningt
woormor
egoodsors
ervi
cesnots
oldi
ndi
vidual
lyi
ntoa
s
ingl
epac
kagef
ort
hec
ons
umer
.Mi
xedbundl
ingi
scombi
ningt
woormor
egoodsor
s
ervi
cess
oldi
ndi
vidual
lyi
ntoas
ingl
epac
kagef
oras
pec
ialpr
ice.

Pur
ebundl
ingi
sus
edwhent
hec
ombi
nat
ionofgoodsors
ervi
cesi
smor
eval
uabl
eto
t
hec
ons
umert
hananyoft
hemwoul
dbei
ndependent
ly.
Byc
ombi
ningmanys
ervi
ces
i
nto one pac
kage,r
evenue wi
llbe gr
eat
er,ec
onomi
esofs
cal
e and oper
ati
ng
ef
fi
ci
enc
ycanbeobt
ained.

Mi
xedbundl
ingi
sbr
okendowni
ntot
wot
ypes
:mi
xedl
eaderandmi
xedj
oint
.Mi
xed
l
eaderpr
ici
ngof
fer
sser
vic
eofgoodBf
oradi
scounti
fyoupur
chas
eser
vic
eorgoodA.
Mi
xedj
ointi
swhent
woormor
eser
vic
esorpr
oduc
tsar
eof
fer
edt
oget
herataf
ixed
pr
ice.

3.
7.2.
5Mul
ti
pleUs
ePr
ici
ngDi
scount
s
Toenc
our
ager
epeatpur
chas
ingormul
ti
pleus
esofas
ervi
ce,manys
ervi
cesus
e
mul
ti
pleus
epr
ici
ngdi
scount
s.Mul
ti
pleus
epr
ici
ngdi
scount
sar
epr
icer
educ
tions
gi
vent
ocus
tomer
sforr
epeatus
ageofas
ervi
ce.Themul
ti
pleus
edi
scount
scanbe
us
edf
oraf
ixednumberofus
esorbeunl
imi
ted.I
tcanbef
oraf
ixeddur
ati
onoft
ime

51
ori
tcanbef
oranunl
imi
tedamountoft
ime.Thef
ourpos
sibl
emul
ti
pleus
edi
scount
c
ombi
nat
ionsar
e
- f
ixedus
ageandf
ixeddur
ati
on
- f
ixedus
ageandunl
imi
teddur
ati
on
- unl
imi
tedus
ageandf
ixeddur
ati
on
- unl
imi
tedus
ageandunl
imi
teddur
ati
on.

3.
7.2.
6.Ef
fect
sofPr
iceI
ncr
eas
einSer
viceMar
ket
ing
I
ncr
eas
ingt
hepr
iceofas
ervi
ceof
fer
sauni
quec
hal
lengef
orf
irms
,es
pec
ial
lyf
or
s
ervi
cest
hathaveanel
ast
icdemandc
urve.Evenf
ors
ervi
cest
hathaveani
nel
ast
ic
demandc
urve,pr
icesi
ncr
eas
esof
tenr
esul
tinl
owerl
evel
sofc
ust
omers
ati
sfac
tion
andar
educ
tionofpur
chas
efr
equenc
y.Cons
umer
sreac
tpos
iti
vel
ytopr
icewar
sand
pr
icer
educ
tions
,butnegat
ivel
ytopr
icei
ncr
eas
es.

Pr
icei
ncr
eas
eswi
llnotnor
mal
lyaf
fec
tshar
eofas
ingl
evendori
fal
loft
hef
irmsi
n
ani
ndus
tryi
ncr
eas
est
hei
rpr
ices
.However
,ifal
lfi
rmsdonotr
ais
ethei
rpr
ices
,pr
ice
i
ncr
eas
esar
emor
edi
ff
icul
ttoac
hievewi
thoutanegat
ivei
mpac
tons
alesr
evenue.
Fort
hisr
eas
on,mos
tcompani
eswi
lladoptoneoft
hef
oll
owi
ngs
trat
egi
eswheni
tis
bel
ievedt
hatpr
icess
houl
dbei
ncr
eas
ed.
1.Wai
tunt
ils
omeoneel
sei
nthei
ndus
tryi
ncr
eas
est
hei
rpr
ices
.
2.Us
eac
ommuni
cat
ionspr
ogr
amt
oexpl
aint
ocus
tomer
swhyt
hepr
icei
ncr
eas
e
i
snec
ess
ary
.Thi
scanbedonebys
ales
peopl
e,adver
tis
ing,poi
nt-
of-
pur
chas
e
di
spl
aysors
aless
taf
f.
3.Makenoac
knowl
edgementofapr
icei
ncr
eas
e;hopi
ngc
ust
omerwi
llnot
not
icei
t.I
fcus
tomer
sdonot
icet
hepr
icei
ncr
eas
e,t
hes
tandar
dans
werof
i
ncr
eas
edc
ost
sisgi
ven
4.I
nst
itut
epr
icei
ncr
eas
ethr
oughs
mal
linc
rement
soveraper
iodoft
ime.
5.Modi
fyt
hes
ervi
ceof
fer
ingoraddas
ervi
cef
eat
uret
hatwoul
djus
tif
ythepr
ice
i
ncr
eas
etot
hec
ons
umer
.
6.Reduc
ethe l
evelofs
ervi
ce.I
fas
pec
tsoft
he s
ervi
ce noti
mpor
tantt
o
c
ust
omer
sar
ereduc
edorel
imi
nat
ed,c
ust
omer
smayac
ceptt
hismor
eeas
ily
t
hanapr
icei
ncr
eas
e.

52
3.
7.2.
7Cus
tomer
-Focus
edPr
ici
ng
I
ndet
ermi
ningt
hepr
iceofas
ervi
ce,i
tisbenef
ici
alt
ovi
ewi
tfr
om t
hes
tandpoi
ntof
t
hebuyer
.Pr
ici
ngdec
isi
onsmadewi
thoutc
onc
ernf
ort
hec
ust
omerus
ual
lyr
esul
tin
adec
linei
ncons
umers
ati
sfac
tion,s
alesandpr
ofi
ts.Buyer
sar
econc
ernedabout
per
cei
ved val
uewhi
chi
sbas
ed on pas
texper
ienc
e,avai
labi
li
tyofal
ter
nat
ives
,
s
wit
chi
ngc
ost
s,andper
sonalneeds
.Cus
tomer
sar
eal
soc
onc
ernedaboutpur
chas
e
r
isk,t
hel
evelofi
nvol
vementoft
hepur
chas
e,andper
sonalpar
tic
ipat
ionl
eveli
nthe
s
ervi
ce.

A)Val
ue
Val
ue,
toc
ons
umer
s,i
sthebes
tcombi
nat
ionofpr
ice,
ser
vic
equal
it
yandf
irmi
mage.
Theval
ueofas
ervi
cepr
ovi
dedbyas
pec
ifi
cvendori
sbas
edon:
- t
hec
ons
umer
'sper
cept
ionsoft
hes
ervi
ceandpas
texper
ienc
ewi
tht
he
vendor
- whatot
herf
ir
msof
fer
- t
hec
ostofs
wit
chi
ngt
oanot
herf
ir
m:di
rec
tori
ndi
rec
tcos
ts
- t
heneedsandwant
soft
hec
ons
umer
.

B)Ri
sk
Cons
umer
sseepr
iceasameansofmodi
fyi
ngr
isk.Theyc
ompar
ethepr
icesof
fer
ed
bydi
ff
erentvendor
s.Ex
cept
ional
lyl
owerandhi
gherpr
icesar
eper
cei
vedt
ober
isky.
However
,ift
heyar
ecl
oset
ocompet
itor
s;c
ons
umer
smayf
eelal
lvendor
sar
eabout
t
hes
amer
iskort
heymayf
eelt
hatr
iski
ssl
ight
lyl
owerf
ort
hehi
ghes
tbi
dder
.

C)LevelofI
nvol
vement
Per
sonall
evelofi
nvol
vementi
nthepur
chas
eaf
fec
tshowc
ons
umer
svi
ewt
hepr
ice
ofas
ervi
ce.Forhi
gh-
invol
vements
ervi
ces
,pr
ici
ngt
endst
obemor
einel
ast
ict
han
f
orl
ow-
invol
vements
ervi
ces
.

D)LevelofCus
tomerPar
tic
ipat
ion
Af
inalf
act
orbuyer
scons
iderwheneval
uat
ingpr
icei
sthei
rlevelofpar
tic
ipat
ioni
n
t
hes
ervi
ce.I
ngener
al,t
hemor
ecus
tomer
sar
einvol
vedi
nthepr
oduc
tionoft
he

53
s
ervi
ce,
thel
esst
heyexpec
ttopay.
Cus
tomer
sexpec
ttopayl
essatas
elf
-ser
vic
ecar
was
hfac
ili
tyt
hanatanaut
omat
icc
arwas
h.

3.
7.3.
Ser
vic
eDi
str
ibut
ion
Di
str
ibut
ioni
stheavai
labi
li
tyandac
ces
sibi
li
tyofas
ervi
cet
ocons
umer
s.Fr
om a
c
ons
umer
’svi
ewpoi
nt,avai
labi
li
tymeanst
hes
ervi
cei
savai
labl
etot
hec
ons
umer
whenheors
hewant
sit
.Ac
ces
sibi
li
tymeansi
tisr
elat
ivel
yeas
yfort
hec
ons
umert
o
c
onduc
tat
rans
act
ionwi
tht
hes
ervi
cevendor
.

Oper
ati
nghour
sar
eac
rit
icaldi
str
ibut
iondec
isi
onanddi
rec
tlyi
mpac
tac
ces
sibi
li
ty
andavai
labi
li
ty.Tobes
ucc
ess
ful
,ser
vic
eoper
ati
onsneedt
ohaveoper
ati
nghour
s
t
hatar
ecompat
ibl
ewi
tht
hei
rtar
getmar
ket
s.I
tneedsapr
operunder
standi
ngast
o
t
her
ightt
imef
ort
hec
ust
omer
stohaveac
ces
stot
hes
ervi
cec
ent
er.
Theext
ens
ionof
wor
kinghour
stot
heext
entofc
ust
omer
s’f
reet
imei
ncl
udi
ngweekendsandl
ate
dai
lywor
kinghour
sar
eimpor
tdevi
sest
ogetc
ust
omer
s.Bes
idest
othi
stheus
eof
t
elec
ommuni
cat
ionandaut
omat
edt
echnol
ogi
es(
li
keATMbyt
hebanks
)canbeus
ed
t
omakes
ervi
cesac
ces
sibl
etoc
ust
omer
s.
Advanc
esi
ntel
ecommuni
cat
ionshavemades
ervi
cesmor
eac
ces
sibl
etoc
ust
omer
s.
Manys
ervi
cess
uchast
ravelagent
snow c
onduc
tbus
ines
sthatus
edt
obedonei
n
per
sonovert
het
elephone.Faxmac
hineshaveal
soenhanc
edac
ces
sibi
li
ty,al
lowi
ng
s
ervi
cest
osendi
nfor
mat
ionandr
eser
vat
ionf
ormst
ocus
tomer
s.Us
eoft
hei
nter
net
f
orbus
ines
str
ans
act
ionsal
sohasbeens
teadi
lyont
her
ise.Mor
eandmor
eser
vic
es
ar
eus
ingWebpagest
oreac
hpot
ent
ialc
ust
omer
sandt
oconduc
tbus
ines
s.

3.
7.3.
1.ChannelSt
ruct
ures
Themeansus
edbybus
ines
sest
oreac
hthei
rcus
tomer
sar
eknownasc
hannel
sand
t
hel
engt
hofac
hannelvar
iesf
ordi
ff
erentbus
ines
ses
.Thec
hannell
engt
htendst
o
bes
hor
terf
ors
ervi
cest
hanf
orgoods
.Manys
ervi
cesar
eper
for
medt
hroughadi
rec
t
c
hanneloradi
str
ibut
ionc
hannelf
rom pr
oduc
ert
ocons
umerwi
thnoi
nter
medi
ari
es.
Ot
hers
ervi
cesus
eagent
sori
nter
medi
ari
est
oper
for
m oneormor
efunc
tions
.A
di
str
ibut
ionc
hannelf
rom pr
oduc
ert
ocons
umerus
ingagent
sori
nter
medi
ari
est
o
as
sis
tint
hedel
iver
yoft
hes
ervi
cei
sref
err
edt
oasani
ndi
rec
tchannel
.

54
Thes
ervi
cepr
oces
scanbedi
videdi
ntof
ourc
omponent
s:i
nfor
mat
ion,r
eser
vat
ion,
payment
,andc
ons
umpt
ion. Ser
vic
epr
ovi
der
scanus
eagent
sort
hir
dpar
tiest
o
per
for
m anyoft
hef
ourf
unc
tions
.Us
ingagent
stoc
arr
youtoneormor
eoft
he
f
unc
tionsal
lowsas
ervi
cef
ir
mtogr
owwi
thmi
nimali
nves
tment
.Twos
ervi
cest
hat
us
eagent
sext
ens
ivel
yar
eins
uranc
ecompani
esandai
rl
ines
.

a.
ChannelOpt
ions
Whendec
idi
ngwhatt
ypeofc
hannels
truc
tur
etous
e,s
ervi
cef
irmshavet
hree
opt
ions
:exc
lus
ivedi
str
ibut
ion,
sel
ect
ivedi
str
ibut
ion,
andi
ntens
ivedi
str
ibut
ion.
i
.Exc
lus
ivedi
str
ibut
ion:-i
nvol
vest
heus
eofal
imi
tednumberofagent
sor
out
let
sthatc
arr
yonl
yonebr
and.Thi
stypeofdi
str
ibut
ions
yst
em i
sus
edwhen
t
hes
ervi
cepr
ovi
derwant
stomai
ntai
nahi
ghl
evelofc
ont
rolovert
hef
unc
tions
oft
heagentort
hir
dpar
ty.
i
i.
Sel
ect
ivedi
str
ibut
ion:-i
nvol
vest
heus
eofaf
ewi
nter
medi
ari
est
opr
ovi
det
he
s
ervi
cebutnotal
lwhowoul
dli
ket
ocar
ryapar
tic
ularbr
and.Us
ingt
his
s
trat
egyr
educ
esc
ost
sfors
ervi
cesf
ir
msandal
lowst
hei
rser
vic
est
obeof
fer
ed
bymor
eagent
sthanunderanexc
lus
ivedi
str
ibut
ions
trat
egy.Mos
tof
ten
I
nsur
anc
ecompani
esus
ethi
sst
rat
egy.
i
ii
.I
ntens
ivedi
str
ibut
ion:-i
nvol
vespl
aci
ngt
hes
ervi
cewi
thasmanydi
ff
erent
agent
sort
hir
d par
tiesaspos
sibl
e.Cr
edi
tcar
dcompani
esus
eint
ens
ive
di
str
ibut
ioni
nter
msofc
ons
umpt
ion.

b.
Mul
ti
-channelSys
tems
I
tinvol
vest
heus
eoft
woormor
echannel
stor
eac
honeormor
emar
kets
egment
s.I
t
i
sus
edt
oinc
reas
emar
ketc
over
age.I
naddi
ti
on,t
hiss
trat
egyof
tenl
ower
scos
tsof
di
str
ibut
ion.
Mos
tai
rl
inesus
ethi
sst
rat
egy.
To i
ncr
eas
esal
esc
over
age,s
ome s
ervi
cec
ompani
esus
etel
emar
ket
ing f
irms
,
al
lowi
ngt
hef
irmt
oreac
hmor
epot
ent
ialc
ust
omer
s.Tel
emar
ket
ersar
etr
ainedi
n
t
elephone s
ales t
echni
ques and us
ual
ly obt
ain bet
ter r
esul
tst
han c
ompany
r
epr
esent
ati
ves
.

55
 c
.ChannelSqueez
e.
Thei
nter
medi
ari
esi
nthec
hannelofbot
hgoodsands
ervi
ces
,suc
haswhol
esal
ers
,
di
str
ibut
ors
,andagent
s,havebeenexper
ienc
ingc
ons
ider
abl
epr
ess
urei
nrec
ent
year
sduet
ofal
li
ng pr
icesatt
her
etai
llevel
,inc
reas
ed c
ompet
iti
on,and new
i
nfor
mat
iont
echnol
ogi
ess
uchast
heI
nter
net
.

Ser
vic
efi
rmsnowhaveanopt
ion,i
nst
eadofus
ingt
hei
nter
medi
ari
es,t
odi
str
ibut
e
t
hei
rser
vic
est
othe c
ust
omer
s.They may us
ethe I
nter
netorknown s
ingl
e
c
ompani
eswhi
chdoesal
lthedi
str
ibut
ionac
tivi
ti
esdi
rec
tlyf
romt
hemanuf
act
urert
o
t
hef
inalc
ons
umer
.

3.
7.3.
2.Di
str
ibut
ionGr
owt
hOpt
ions
Ser
vic
efi
rmshaves
evendi
str
ibut
iongr
owt
hst
rat
egi
esavai
labl
etot
hem.Thet
hree
pr
imar
yopt
ionsar
emul
ti
-si
te,
mul
ti
-ser
vic
e,andmul
ti
-segment
.

Amul
ti
-si
tedi
str
ibut
ions
trat
egyi
sexpans
ionofas
ervi
cet
oanot
herl
ocat
ion.
Amul
ti
-
ser
vic
edi
str
ibut
ions
trat
egyi
stheaddi
ti
onofanew s
ervi
cet
oaf
irm’
sexi
sti
ng
por
tfol
io.Forexampl
e,ac
afet
hathasonl
yani
ndoorf
aci
li
tymayaddanout
door
s
ervi
ce.A mul
ti
-segmentdi
str
ibut
ion s
trat
egyi
sthe expans
ion oft
he c
urr
ent
s
ervi
cest
oanewmar
kets
egment
.Aheal
thc
lubt
hatexpandsi
tss
wimmi
ngl
ess
ons
f
romc
hil
drent
oinc
ludeadul
tswhodonotknowhowt
oswi
mwoul
dbeus
ingamul
ti
-
s
egments
trat
egy.

Ther
emai
ningf
ours
trat
egi
esar
ecombi
nat
ionsoft
het
hreeopt
ionsj
ustdi
scus
sed.
A
f
irmc
anc
hoos
eamul
ti
-si
te,
mul
ti
-ser
vic
est
rat
egywher
etheyexpandt
oot
hers
ites
andexpands
ervi
cesatt
hes
amet
ime.Anot
heropt
ioni
samul
ti
-si
te,mul
ti
-segment
s
trat
egy,whi
chi
nvol
vess
ervi
ngdi
ff
erentmar
kets
egment
swi
thdi
ff
erentmar
ket
s
egment
swi
thdi
ff
erents
itel
ocat
ions
.Amul
ti
-ser
vic
e,mul
ti
-segments
trat
egyi
san
opt
ional
lowi
ngf
irmst
oexpandt
hei
roper
ati
onbyof
fer
ingnew s
ervi
cest
onew
mar
kets
egment
s.Thef
inals
trat
egyi
sac
ombi
nat
ionofal
lthet
hreeoft
hepr
imar
y
opt
ions
:mul
ti
-si
te,
mul
ti
-ser
vic
e,andmul
ti
-segment
.

56
 Under
standi
ngt
heThr
eePr
imar
yDi
str
ibut
ionSt
rat
egi
es.
Gr
owt
h Benef
it
s Conc
erns
St
rat
egy
Mul
ti
-si
te -Rapi
dexpans
ion -Fi
ndi
nggoodl
ocat
ion
-Fas
tsal
esgr
owt
h -St
rai
nonf
inanc
ialr
esour
ces
-Rel
ati
vel
yeas
ytomanage -Managi
ngmul
ti
pleout
let
s
-Pr
ovi
dingt
hes
amel
evelofs
ervi
cequal
it
yat
al
lout
let
s.
Mul
ti
-ser
vic
e -Can s
erve c
urr
entc
ust
omer
s -Dec
linei
noper
ati
ngef
fi
ci
enc
y
bet
ter -Cos
tofaddi
ngaddi
ti
onals
ervi
ce
-Cangai
nnewc
ust
omer
s -Managi
ngmul
ti
ples
ervi
ces
-Sal
esgr
owt
hwi
thoutexpandi
ng -Canni
bal
ismofc
urr
ents
ervi
ces
t
onewf
aci
li
ti
es - Mai
ntai
ningc
ons
ist
ents
ervi
cequal
it
yofal
l
oft
hes
ervi
ces
Mul
ti
-segment - Bet
ter ut
il
izat
ion of c
urr
ent -Loc
ati
ngc
ompl
ement
arymar
kets
egment
s.
r
esour
cesandf
aci
li
ti
es -Conf
usi
onandc
onf
li
ctsamongt
hedi
ff
erent
-Sal
esgr
owt
hwi
thoutexpandi
ng mar
kets
egment
s
t
onewf
aci
li
ti
es. -Pr
ovi
dingt
hes
amel
evelofs
ervi
cequal
it
yto
al
loft
hes
egment
s
Mul
ti
-si
te, -Pr
ovi
dess
alesgr
owt
h -Hi
ghover
headc
ost
s
mul
ti
-ser
vic
e -
One-
stop s
hoppi
ng f
or i
ts -Chal
lengei
nmanagi
ngs
ervi
ces
truc
tur
e.
c
ust
omer
s. -Di
ff
icul
tyi
n mai
ntai
ning c
ons
ist
ents
ervi
ce
-
Cans
ervei
tsc
urr
entc
ust
omer
s qual
it
y
bet
ter
.
Mul
ti
-si
te, -Pr
ovi
dess
alesgr
owt
h -Hi
ghover
headc
ost
s
mul
ti
-segment -Eac
hsi
tec
an s
pec
ial
izei
n a -Chal
lengei
nmanagi
ngs
ervi
ces
truc
tur
e.
par
tic
ularmar
kets
egment
. -Di
ff
icul
tyi
n mai
ntai
ning c
ons
ist
ents
ervi
ce
qual
it
y.
Mul
ti
-si
te, -Pr
ovi
dess
alesgr
owt
h -Hi
ghover
headc
ost
s
mul
ti
-segment -Cans
ervi
cec
urr
entc
ust
omer
s -Chal
lengei
nmanagi
ngs
ervi
ces
truc
tur
e.
bet
ter
. -Di
ff
icul
tyi
n mai
ntai
ning c
ons
ist
ents
ervi
ce
-Cangai
nnewc
ust
omer
s. qual
it
y.
-Canc
aus
ecus
tomerc
onf
usi
on.
Mul
ti
-si
te, -Pr
ovi
dess
alesgr
owt
h -Hi
ghover
headc
ost
s
mul
ti
-ser
vic
e, - Can pr
ovi
de one-
stoppi
ng -Chal
lengei
nmanagi
ngs
ervi
ces
truc
tur
e.
mul
ti
-segment s
hoppi
ng. -
Dif
fi
cul
tyi
n mai
ntai
ning c
ons
ist
ents
ervi
ce

57
 -Can pr
eventc
opmet
iton f
rom qual
it
y.
er
odi
ngmar
kets
har
e -
Cans
trai
nfi
nanc
ialr
esour
ces
-Canc
reat
ecus
tomerc
onf
usi
on

3.
7.4.
Per
sonnelI
ssuesi
nSer
vic
eFi
rms
Qual
it
yofc
ust
omers
ervi
cec
anbet
rac
edt
oanumberofper
sonneli
ssueshi
ri
ngt
he
r
ightpeopl
e,t
rai
ningt
hem pr
oper
lyi
ncus
tomers
ervi
cet
echni
ques
,empower
ing
t
hem t
ocus
tomer
'sneeds
,andc
ompens
ati
ngt
hem onc
ust
omers
ati
sfac
tionaswel
l
asons
alesorpr
ofi
ts.

o Adequat
eSt
aff
ing:adequat
est
aff
ingf
orper
for
manc
eofs
ervi
ceac
tivi
ti
es
r
equi
res t
he abi
li
tyt
o manage demand and s
uppl
y.Ser
vic
e mar
ket
ers
exper
ienc
eaf
requenti
mbal
anc
e bet
ween s
ervi
cec
ostand pr
oduc
tivi
ty.
Cus
tomers
ervi
ceneedsandpr
obl
emsoc
cur
,mos
tof
ten,att
imeswhent
he
f
ewes
tper
sonnelar
eavai
labl
e,t
heyar
ethebus
ies
twi
thot
herc
ust
omer
s,or
t
heyar
efat
igued.
o TheI
mpor
tanceofTr
aini
ng:cus
tomer
sbec
omef
rus
trat
edandunhappywhen
empl
oyees ar
e not pr
epar
ed t
o per
for
m expec
ted c
ust
omer s
ervi
ce
s
ati
sfac
tor
il
y.Cus
tomer
swantt
ofeelt
hats
omeonei
sli
steni
ngt
othem and
under
standsandc
aresaboutt
hei
rneeds
,thatt
heyar
eli
kedandr
espec
ted,
t
hatt
hei
rbus
ines
sisappr
eci
atedandt
hatt
hei
rpr
obl
emswi
llbes
olvedbut
mos
tlyt
hats
omeonec
aresandwi
llr
espondt
othei
rconc
erns
.

Thi
srequi
rest
rai
ningofal
lor
gani
zat
ionalmember
sfr
omt
heCEOt
othel
ower
l
evelpeopl
eatt
hef
rontoft
hec
ust
omers
ervi
cei
ndi
ff
erentar
eass
uchas
:
pr
oduc
t,c
ust
omeror
ient
ati
on,
companypol
icyandpr
ocedur
es,
etc
.
o Empower
ment
:once cus
tomers
ervi
ce knowl
edge and s
kil
ls have been
devel
oped,s
ervi
ce per
sonnels
houl
d be empower
ed t
oser
ve and gi
ve
adequat
esuppor
tto pr
ovi
des
ati
sfyi
ng s
olut
ionsf
ort
hei
rcus
tomer
s.An
empower
edempl
oyeeexper
ienc
esf
eel
ingsof
1.c
ont
roloverhowt
odot
hej
ob
2.awar
enes
sofhowt
hewor
kfi
tsi
ntot
he"
bigpi
ctur
e"
3.ac
count
abi
li
tyf
orhi
sorherownwor
kout
put

58
 4.s
har
edr
espons
ibi
li
tyf
orper
for
manc
eoft
hewor
kgr
ouporor
gani
zat
ion
5.equi
tyi
nthewayr
ewar
dsar
edi
str
ibut
edbas
edoni
ndi
vidualandc
oll
ect
ive
per
for
manc
e.
o Compens
ati
on,
Awar
dsandRecogni
ti
on:acombi
nat
ionofc
ompens
ati
onbas
ed
ons
alesors
trai
ghts
alar
yandaddi
ti
onalawar
dsandr
ecogni
ti
onf
orhi
gh
l
evel
sofper
for
manc
einc
ust
omers
ervi
ceac
tivi
ti
esc
anmot
ivat
eempl
oyees
t
o'putt
hec
ust
omerf
ir
st.
'Adi
ver
segr
oupofs
ervi
cef
irmsbel
ievei
nas
ervi
ce
et
hict
hatf
ocus
esonc
ust
omerr
etent
ion:whent
hec
ust
omeri
shappy,t
he
empl
oyeei
shappy,
andvi
cever
sa,
reduc
ingl
ossofc
ust
omer
sandempl
oyees
.

3.
7.4.
1Rol
eofSer
vicePer
sonnel
Ser
vic
e empl
oyeesc
an be di
vided i
ntot
wo c
ategor
ies
:suppor
tper
sonneland
c
ust
omerc
ont
actper
sonnel
.Suppor
tper
sonnelar
esel
dom s
eenbyt
hec
ust
omer
.
Thi
smi
ghtbet
hec
ookwhopr
epar
est
hef
ood,t
hej
ani
torwhoc
leanst
hef
aci
li
ty,or
t
heempl
oyeewhodevel
opsyourphot
os.Thequal
it
yoft
het
echni
calc
omponentof
s
ervi
cequal
it
yispr
imar
il
ydet
ermi
ned bys
uppor
tper
sonnelbec
aus
etheyar
e
gener
all
ytheonesper
for
mingt
hes
ervi
ce.

Cus
tomerc
ont
actempl
oyeesar
ethei
nter
fac
ebet
weent
hes
ervi
ceor
gani
zat
ionand
i
tsc
ust
omer
s.Thes
eempl
oyeesar
etheonesc
ust
omer
sseeandt
heoneswi
thwhom
t
heyi
nter
act
.Thequal
it
yoft
hef
unc
tionalc
omponentofs
ervi
cequal
it
yispr
imar
il
y
det
ermi
nedbyc
ust
omerc
ont
actempl
oyeesbec
aus
etheyar
emor
eawar
eoft
he
c
ust
omer
'swant
sandneeds
.

Unf
ort
unat
ely,many s
ervi
ce bus
ines
sesdo notunder
stand t
he val
ue oft
hei
r
empl
oyees
.Andhenc
e,t
heymi
str
eatt
hei
rempl
oyeest
hati
ncr
eas
ether
ateof
t
urnoverandt
her
ecr
uit
mentands
elec
tionc
ost
s.

3.
7.4.
2Des
igni
ngJ
obst
oSer
vicePer
sonnel
Cus
tomerc
ont
actempl
oyeesi
nthes
ervi
cei
ndus
trys
erveaboundar
y-s
panni
ngr
ole
orar
olel
inki
ngi
nor
gani
zat
ionorbus
ines
swi
thi
tsenvi
ronmentt
hroughi
nter
act
ion
bet
weenmember
soft
heor
gani
zat
ionandmember
soft
heenvi
ronment
.

59
Mot
ivat
ings
uppor
tper
sonnelt
oper
for
mcons
ist
ent
,hi
ghqual
it
ywor
kisi
mpor
tant
f
ort
hes
ucc
essofs
ervi
cef
ir
ms.
Indes
igni
ngs
ervi
cej
obs
,fi
rmsmus
tbeawar
eoff
ive
i
mpor
tantmot
ivat
ionalj
obc
har
act
eri
sti
cs.
Thes
echar
act
eri
sti
csar
eski
llvar
iet
y,t
ask
i
dent
ity,
tas
ksi
gni
fi
canc
e,aut
onomy,
andf
eedbac
k.

o Ski
llVar
iet
y:i
sthedegr
eeorr
angeofabi
li
ti
esr
equi
redbyanempl
oyeet
odoa
j
ob.
o Tas
kIdent
ity:i
sthedegr
eet
hataj
obhasi
dent
if
iabl
euni
tsofwor
kwi
thvi
si
ble
out
comes
.
o Tas
kSi
gni
fi
cance:i
sthedegr
eeofi
mpac
tonanempl
oyeeper
for
manc
ehi
sor
herj
obhasont
hel
ivesofot
heri
nsi
deorout
sidet
heor
gani
zat
ion.
o Aut
onomy:i
sthedegr
eeoff
reedom anddi
scr
eti
onanempl
oyeehasi
nhi
sor
herwor
kdes
ign.
o Feedbac
k:i
sthedegr
eeofdi
rec
t,c
leari
nfor
mat
ionanempl
oyeer
ecei
vesf
rom
s
uper
ior
sconc
erni
ngt
heef
fec
tivenes
sofhi
sorherper
for
manc
e.

3.
7.4.
3TheCont
rolI
ssuei
nSer
viceFi
rms
Ac
rit
icalel
ementi
nthec
ust
omerc
ont
actpos
iti
oni
sthei
ssueofc
ont
rol
.Indi
vidual
s
wantc
ont
rolovert
hei
rli
vesandt
het
hingst
hathappent
othem.Wi
thi
nthes
ervi
ce
s
ett
ing,
cus
tomer
smus
tsur
renders
omec
ont
roloft
hei
rli
vesi
nor
derf
ort
hes
ervi
ce
t
obeper
for
med.
Adent
alpat
ientmus
tsur
renders
omec
ont
roli
nor
dert
obet
reat
ed
byt
hedent
ist
.Thes
amei
str
uef
orot
herpr
ofes
sionals
ervi
cess
uchasmedi
caland
l
egals
ervi
ces
.

Pur
chas
ing ofnon pr
ofes
sionals
ervi
cesr
equi
resc
ust
omer
stos
urr
enders
ome
c
ont
roldur
ingt
hes
ervi
ceenc
ount
er,al
thoughus
ual
lynotasmuc
h.Forexampl
e,
hai
rcuts
ervi
ces
,tr
avelagent
,chi
ldday
-car
ecent
ermus
tbegi
venc
ont
roloft
he
s
ervi
ce pr
oces
sto pr
oper
lygi
ve t
he s
ervi
ce.To per
for
m t
he s
ervi
ce pr
oper
ly,
c
ust
omerc
ont
actper
sonnelwoul
dli
ket
ohavemaxi
mum c
ont
rol
.Toens
uret
heyget
t
hes
ervi
cet
heywant
,cus
tomer
swantt
okeepasmuc
hcont
rolast
heyc
an.I
n
addi
ti
ont
othes
etwopar
tic
ipant
sint
hes
ervi
ces
ett
ing,t
hef
irm hasani
nter
esti
n
howt
hes
ervi
cei
sper
for
med.

60
3.
7.4.
4Incr
eas
ingFi
rmandSer
vicePer
sonnelCont
rol
Fi
rmsands
ervi
ceper
sonnelmus
thaves
omec
ont
rolofas
ervi
ceenc
ount
ert
oens
ure
t
hes
ervi
cei
sper
for
medpr
oper
ly.
Theamountofc
ont
roldes
iredi
sdet
ermi
nedbyt
he
f
irm'
soper
ati
onalpos
iti
on.Themet
hodsf
ir
msands
ervi
ceempl
oyeesus
etogai
n
c
ont
roloft
hes
ervi
ceenc
ount
erar
ephys
icalc
ont
rol
,cont
rolt
hroughl
eader
shi
p,
c
ont
rolt
hroughr
ewar
ds,
andeduc
ati
ngt
hec
lient
.

o Phys
icalCont
rol
:manys
ervi
cesus
ephys
icalc
ont
rolt
otakec
har
geofa
s
ervi
ceenc
ount
er.Forexampl
e,dent
ist
spl
acepat
ient
sinac
hai
r,whi
chi
s
of
tenr
ecl
inedbac
kwar
ddur
ingt
hepr
ocedur
e.

I
naddi
ti
on,dent
alas
sis
tant
sof
tenpl
aceat
owelandi
nst
rument
sont
he
pat
ient
'sc
hes
t.Al
loft
hes
ephys
icalc
ont
rolmeas
uresal
low t
hedent
istt
o
c
ont
rolt
hes
ervi
ceenc
ount
er.

o Cont
rolt
hroughLeader
shi
p:whens
ervi
ceempl
oyeest
aket
hel
eadi
nan
i
nter
act
ion ordemons
trat
eexper
tis
e,t
heyar
eat
tempt
ingt
ocont
rolt
he
s
ituat
iont
hroughl
eader
shi
p.

Anat
tor
neyus
est
hisappr
oac
hasheques
tionsac
lientaboutal
egals
ituat
ion.
Heors
hei
sdemons
trat
ingexper
tis
e.
Cer
tai
nphys
icalac
tsbyempl
oyeesc
anbeus
edt
odemons
trat
econt
rol
.A
nur
sei
sdemons
trat
ingc
ont
rolwhens
hec
leansat
her
momet
erorpr
epar
esa
bl
oodpr
ess
urec
uff
.

Anot
herwayempl
oyeesc
anus
ethi
smet
hodi
sbyt
het
oneofvoi
cet
heyus
ein
addr
ess
ingac
ust
omer
.Thi
smet
hodi
snor
mal
lyus
edonl
ybypr
ofes
sional
s
whohaves
igni
fi
cantexper
tis
eint
hei
rpar
tic
ularf
iel
d.

o Cont
rolt
hroughRewar
ds:of
fer
ingc
ust
omer
srewar
dsc
anbeus
edbys
ervi
ce
per
sonnelt
ogai
ncont
roloft
hes
ervi
ces
ituat
ion.Chi
ldr
enmaybeof
fer
eda
l
oll
ipopi
ftheyl
ett
henur
segi
vet
hemas
hot
.

o Educ
ati
ngt
hec
ust
omer
.Thi
sisanot
hermet
hodus
edbys
ervi
cest
ocont
rol

61
 t
hes
ervi
ceenc
ount
er.AnX-
rayt
echni
ci
anwi
lli
nst
ruc
tpat
ient
sonhowt
hey
ar
etopos
iti
ont
hems
elvesdur
ingt
heX-
rays
.Fi
tnes
scent
erper
sonnelwi
ll
educ
atet
hei
rcus
tomer
sonhowt
ous
ecer
tai
nexer
cis
eequi
pment
.

Cus
tomer
sdonotl
ikes
urr
ender
ingc
ont
roloft
hei
rli
ves
,eveni
nser
vic
esi
tuat
ions
.
Themor
econt
rolc
ust
omer
sar
efor
cedt
osur
rendert
oei
thert
hes
ervi
cef
irm ort
he
s
ervi
ceper
sonnel
,thegr
eat
ert
hepr
obabi
li
tyt
hatt
hec
ust
omerwi
llbedi
ssat
isf
ied
wi
tht
hes
ervi
ceexper
ienc
e.Yet
,toper
for
m as
ervi
ce,c
ust
omer
smus
tsur
render
s
omec
ont
rol
.Tos
olvet
hisdi
lemma,f
ir
mss
houl
dfi
ndwaysofi
ncr
eas
ingc
ust
omer
's
per
cei
vedc
ont
rolovert
hes
ervi
ceenc
ount
er.I
fcus
tomer
sper
cei
vet
heys
til
lhave
s
omec
ont
rol
,theyar
emor
ewi
ll
ingt
ogi
veupac
tualc
ont
rolandar
emor
esat
isf
ied
wi
tht
hes
ervi
ce.

Ser
vic
efi
rmshavet
womet
hodsofi
ncr
eas
ingper
cei
vedc
ont
rol
:behavi
oralc
ont
rol
andc
ogni
ti
vec
ont
rol
.

Behavi
oralc
ont
roli
swhenc
ust
omer
sar
egi
vent
heabi
li
tyt
ochange,modi
fy,or
c
hoos
ehowt
hes
ervi
cewi
llbeper
for
med.
Cogni
ti
vec
ont
roli
sthebel
iefbyc
ust
omer
sthatt
heyhaves
omec
ont
rolovert
he
s
ervi
ceenc
ount
erbec
aus
eofknowl
edget
heyhaveobt
ained.

3.
7.4.
5.Deal
ingwi
thConf
li
ctandSt
res
s
Bec
aus
ethes
ervi
ces
ect
ort
endst
obel
abori
ntens
ive,c
onf
li
ctsamongpeopl
ewi
ll
oc
curmor
eof
tent
hani
nthemanuf
act
uri
ngs
ect
or.Ani
ncr
eas
einc
onf
li
ctr
esul
tsi
n
i
ncr
eas
edempl
oyees
tres
s.Ani
ncr
eas
einempl
oyees
tres
sleadst
oani
ncr
eas
ein
empl
oyeeheal
thpr
obl
emsandabs
ent
eei
sm.Ac
orr
espondi
ngdec
linei
npr
oduc
tivi
ty
andef
fi
ci
enc
ycanal
sooc
cur
.

Bec
aus
eoft
heboundar
y-s
panni
ngr
oleofc
ust
omerc
ont
actper
sonnel
,thei
rpos
iti
on
byi
tsver
ynat
urei
shi
ghi
nconf
li
ct.Cus
tomer
swantt
oobt
ainahi
ghl
evelofs
ervi
ce
att
hel
owes
tpr
icepos
sibl
e.Ser
vic
epr
ovi
der
swantt
opr
ovi
deahi
ghl
evelofs
ervi
ce
butnotatt
heexpens
eofear
ningapr
ofi
torbei
ngef
fi
ci
ent
.Thec
ust
omerc
ont
act
per
sons
tandsbet
weent
hes
edi
ff
eri
nggoal
s

62
a)TypesofConf
li
ct
Ser
vic
efi
rmsdealwi
ths
evendi
ff
erentt
ypesofc
onf
li
ct.
Thr
eet
ypesofc
onf
li
ctoc
cur
wi
th empl
oyees
,thr
ee oc
curwi
thc
ust
omer
sand one bet
ween c
ust
omer
sand
empl
oyees
.

i
.Conf
li
ctsencount
eredbyempl
oyees
Thet
ypesofc
onf
li
ctf
acedbyempl
oyeesi
ncl
udeempl
oyee-
rol
econf
li
ct,empl
oyee-
or
gani
zat
ionc
onf
li
ctandempl
oyee-
empl
oyeec
onf
li
ct.
 Empl
oyee-
rol
econf
li
ct
Amaj
orc
aus
eofempl
oyee-
rol
econf
li
cti
sthei
nequal
it
ydi
lemmai
nthats
ervi
ce
empl
oyees
,byt
hever
ynat
ureoft
hei
rjob,
areof
tenr
equi
redt
oas
sumes
ubs
ervi
ent
r
olesr
espec
tivet
ocus
tomer
s.Ser
vic
eempl
oyeesar
eexpec
tedt
obui
ldupt
he"
ego"
oft
hei
rcus
tomer
sandt
omaket
hec
ust
omerf
eels
pec
ial
.Theol
dsayi
ngt
hatt
he
c
ust
omeri
sal
waysr
ighti
sa s
tandar
d oper
ati
ng phi
los
ophy ofmany s
ervi
ce
c
ompani
es.I
fcus
tomer
sar
erudeori
mpol
it
e,s
ervi
ceempl
oyeesar
eexpec
tedt
o
s
mil
eandt
akei
t.Thi
ssubs
ervi
entr
oleexpec
tedofs
ervi
ceempl
oyeesdoesnot
al
waysc
oinc
idewi
tht
heempl
oyee'
ssel
fimage.
Fors
omeempl
oyees
,iti
sdi
ff
icul
tto
ac
tasas
ervant
.

I
n addi
ti
on t
o pr
esc
ribi
ng empl
oyee behavi
or,many f
irms al
so have pol
ici
es
c
onc
erni
ngempl
oyeeappear
anc
esuc
hashai
rst
yle,
hai
rlengt
h,dr
ess
ing,
jewel
ryand
makeup.Al
loft
hes
efac
tor
sleadt
oinc
reas
edc
onf
li
ctsbet
weens
ervi
ceempl
oyees
andt
her
olet
heyar
eexpec
tedt
opl
ay.
Tor
educ
ethes
econf
li
cts
,ser
vic
efi
rmss
houl
d
c
aref
ull
ysc
reenappl
icant
s.Appl
icant
s,whos
esel
f-i
magec
onf
li
ctswi
tht
hej
obr
ole,
s
houl
dnotbehi
red.

 Empl
oyee-
Organi
zat
ionConf
li
ct
Asar
esul
toft
henat
ureoft
her
oleofc
ust
omerc
ont
rac
tper
sonnel
,theyar
eof
ten
t
hrus
tint
othet
wo-
bos
sdi
lemma.Theper
sonnelhavet
wobos
ses
-ont
heonehand
t
hec
ust
omeri
sbel
ievedt
ober
ightoraki
ngandhast
ober
espec
tedwhathes
aid.
Ont
heot
herhandt
her
eisac
ompanypol
icywhi
chmus
tber
espec
ted.
Whenever
,the
c
ust
omerdemandss
omet
hingwhi
chi
snotac
cept
edbyt
hec
ompanypol
icyt
he

63
per
sonnelwi
llf
indhi
msel
forher
sel
fint
oadi
lemma.Thedemandsoft
hec
ust
omer
s
c
las
hwi
tht
hepol
ici
esoft
heempl
oyer
.Ift
heper
sonnelac
ceptwhatt
hec
ust
omer
demanded,t
hec
ompanypol
icyi
svi
olat
ed.I
ftheper
sonnelr
espec
tthec
ompany
pol
icy,
thec
ust
omerwi
llbedi
ssat
isf
iedandqui
tehi
s/herpur
chas
e.

Bot
hoft
hes
edemandsmus
tbemeti
nor
derf
ort
heempl
oyeet
oper
for
mhi
s/herj
ob.
Ot
her
wis
e,bot
htheempl
oyerandt
hec
ust
omermaydi
ssat
isf
ywhi
chl
eadst
owar
ds
ac
onf
li
ct.Thi
sconf
li
ctbet
weent
heempl
oyeeandt
heor
gani
zat
ioni
sint
ens
ifi
ed
whent
hes
ervi
ceempl
oyeedi
sagr
eeswi
tht
hef
ir
m'spol
icy
.

Thef
irs
tst
epi
nreduc
ingempl
oyee-
organi
zat
ionc
onf
li
cti
sens
uri
ngempl
oyees
under
standt
hepol
ici
esandgoal
soft
hec
ompany.Thes
econds
tepi
stoempower
empl
oyeest
onegot
iat
econf
li
ctswi
thc
ust
omer
s.Thet
hir
dst
epi
sformanagement
t
osuppor
templ
oyees
'dec
isi
ons
.Ifs
ervi
ceor
gani
zat
ionsf
oll
ow t
hes
ethr
ees
teps
,
empl
oyeeswi
llnor
mal
lyac
tres
pons
ibl
yandmeetover
allc
ompanygoal
s.

 Empl
oyee-
Empl
oyeeConf
li
ct
Mos
tconf
li
ctsamongs
ervi
ceempl
oyeesoc
curbet
weenc
ust
omer
-cont
actper
sonnel
ands
uppor
tper
sonnel
.Manyr
eas
onsc
anbes
ight
edf
ort
hes
e.Theyar
e:
1.t
hel
ackofc
learc
ommuni
cat
ionbet
weent
het
woper
sonnel
2.t
hepr
obl
emofdef
ini
ngandac
cept
ingwhot
hebos
sis
3.per
sonal
it
ycl
ashes
4.c
ompet
iti
onf
orc
ust
omer
sift
her
eisanyt
ypeofc
ommi
ssi
onorbonuspai
don
s
ales
5.c
onc
erni
ngwor
kloadr
espons
ibi
li
ti
es

Reduc
ingc
onf
li
ctamongempl
oyeesr
equi
ress
kil
lf
ulmanagement
.Itf
oll
owst
he
f
oll
owi
ngs
teps
.
1.As
cer
tai
nthec
aus
eoft
hec
onf
li
ctbyc
ommuni
cat
ingwi
thal
lpar
tiesi
nvol
ved.
Gat
heri
nfor
mat
ionf
rombot
hpar
tiesandnonpar
tiesoft
hec
onf
li
ct.
2.Expl
oreal
lpos
sibl
esol
uti
ons
.
3.Leteac
hpar
tyi
nvol
vedi
nthec
onf
li
ctt
oagr
eet
othes
olut
ion.
4.Fol
low up t
o ens
uret
hatt
he c
onf
li
cthasbeen r
esol
ved and t
hatt
he

64
 i
ndi
vidual
sinvol
vedi
nthec
onf
li
cthavekeptt
hei
rpar
toft
heagr
eement
.

i
i.
Conf
li
ctsf
acedbyc
ust
omer
s
Thet
ypesofc
onf
li
ctf
acedbyc
ust
omer
sar
e:c
ust
omer
-cus
tomerc
onf
li
ct,c
ust
omer
r
olec
onf
li
ctandc
ust
omer
-or
gani
zat
ionc
onf
li
ct.

 Cus
tomer
-Rol
eConf
li
ct
Oc
cas
ional
lyt
her
eisac
onf
li
ctbet
weent
hec
ust
omer
sandt
hei
rexpec
tedr
oles
.
Pr
ofes
sionals
ervi
cess
uchasac
count
ant
sandat
tor
neyswi
lloc
cas
ional
lyf
acet
his
s
ituat
ion.
Thec
lienti
stoas
sumeas
pec
ifi
crol
e,whi
chi
sof
tent
hatofani
nfor
mat
ion
pr
ovi
der
.However
,thec
lientoc
cas
ional
lywi
llwantt
otakec
ont
roloft
hes
ituat
ion
andt
ellt
heat
tor
neyhowt
ohandl
ethec
ase.Her
ethec
ust
omerdoesnotf
ulf
il
lthe
r
olet
hati
sexpec
ted.

 Cus
tomer
-Or
gani
zat
ionConf
li
ct
Conf
li
ctsbet
weent
hec
ust
omerandt
heor
gani
zat
ionar
ecommon.Mos
toft
hes
e
s
ituat
ionsoc
curasar
esul
toft
hepol
ici
esoft
hes
ervi
ceor
gani
zat
ion.I
nmos
tcas
es,
t
hei
ndi
vidual
'sc
onf
li
cti
swi
tht
heor
gani
zat
ionandnotwi
tht
hes
ervi
ceper
sonnel
;
c
ust
omer
sus
ual
lybl
amec
ompanypol
ici
est
hant
hos
ewhoac
tual
lydot
hej
ob.

Deal
ingwi
thc
ust
omer
-or
gani
zat
ionc
onf
li
cti
sdi
ff
icul
ttoal
levi
atebec
aus
emos
t
or
gani
zat
ionsdonotwantt
ochangepol
ici
es.I
fexpec
tat
ionsar
emadef
orone
c
ust
omer
,theni
tisdi
ff
icul
ttot
ellt
henextc
ust
omert
hatanexc
ept
ionwi
llnotbe
madef
orhi
m orher
.Ser
vic
eor
gani
zat
ionsoc
cas
ional
lyhavet
omakeadec
isi
on
bet
weenenf
orc
ingpol
ici
esands
ati
sfyi
ngt
hei
rcus
tomer
.

 Cus
tomer
-Cus
tomerConf
li
ct
Conf
li
ctss
omet
imesar
isebet
weenc
ust
omer
swhent
heyar
eser
veds
imul
taneous
ly
orwhenonec
ust
omeri
sser
vedi
nthepr
esenc
eofot
herc
ust
omer
s.Conf
li
ctsc
an
oc
curdur
ings
por
tingevent
ssuc
hasf
oot
bal
lgames
,amongs
pec
tat
orsatmus
ical
c
onc
ert
s,and among c
ust
omer
swho havedi
ff
erentexpec
tat
ions
.Forexampl
e,
c
ust
omert
ocus
tomerc
onf
li
ctar
isesasyous
howf
oot
bal
lgamest
hroughDSTV.One
gr
oupmaypr
efert
owat
chagamebet
weenc
ert
aint
eamsandt
heot
hergr
oupmay

65
pr
efert
owat
chanot
hergamebutt
hrought
hes
amel
ineandTV.Handl
ingc
onf
li
cts
amongc
ust
omer
sisdi
ff
icul
t.Empl
oyeesofal
ltypesofs
ervi
cess
houl
dbet
rai
nedt
o
handl
ecus
tomer
-to-
cus
tomerc
onf
li
ctandhowt
omi
nimi
zes
uchc
onf
li
ct.

i
ii
.Empl
oyee-
Cus
tomerConf
li
ct
Conf
li
ctmayoc
curbet
weenempl
oyeesandc
ust
omer
swhenei
therpar
tydoesnot
f
oll
owt
heexpec
tedr
ole.I
fdi
ff
erenc
esar
isebet
weenwhatac
ust
omerexpec
tsf
rom
aper
sonnelandwhatt
heper
sonnelexpec
tsf
romt
hec
ust
omerc
onf
li
ctar
ises
.

Empl
oyeest
end t
oac
qui
rear
ightofowner
shi
p overt
hei
rwor
kpl
aceand i
fa
c
ust
omerdes
troyswhatt
heempl
oyeec
aresabout
,thec
onf
li
ctar
ises
.Forexampl
e,
t
hej
ani
torof
tenf
eelt
hef
aci
li
tyt
heyc
leani
sthei
rsandt
heygetver
yups
etwhen
s
omeones
pil
lss
omet
hingont
hec
arpetormakesanunus
ualmes
s.

Anot
hert
ypeofempl
oyee-
cus
tomerc
onf
li
cti
nvol
vesbehavi
or.Bot
hcus
tomer
sand
s
ervi
ceper
sonnelar
eexpec
tedt
obehavei
nac
cor
danc
ewi
tht
hei
rrol
esc
ript
s.When
behavi
ordevi
atesf
rom t
hes
cri
pt,
aconf
li
ctwi
llar
ise.Tor
educ
eempl
oyee-
cus
tomer
c
onf
li
ct,
bot
hcus
tomer
sands
ervi
cepr
ovi
der
smus
tunder
standt
hei
rrol
es,
company
per
sonnels
houl
dins
truc
tnewc
ust
omer
saboutt
hei
rrol
esandmayneedt
oremi
nd
c
urr
entc
ust
omer
soc
cas
ional
ly.
Teac
hingempl
oyeeshowt
odealwi
thdi
ff
erentt
ypes
ofc
ust
omer
sandt
hei
rbehavi
orc
anal
sobebenef
ici
al.

3.
7.4.
6.Met
hodsofDeal
ingwi
thConf
li
cts
Cus
tomer
sandempl
oyeesr
espondt
oconf
li
cti
noneoff
ourways
.Themos
tcommon
met
hodi
stheavoi
danc
eofc
ont
act
.Theot
hert
hreemet
hodsi
ncl
udeps
ychol
ogi
cal
wi
thdr
awalc
onf
ront
ati
on,
andr
etal
iat
ion.

a.
Avoi
danceofCont
act
I
findi
vidual
sinvol
ved i
nconf
li
ctf
eelt
hey ar
e hel
ples
stor
esol
ve i
tand i
f
c
onf
ront
ati
oni
snotaf
eas
ibl
eopt
ion,t
heymays
impl
ywi
thdr
aw andavoi
dthe
s
our
ceoft
hec
onf
li
ct.Anempl
oyeewhohasac
onf
li
ctwi
thhi
sorherr
olewi
lls
tar
t
c
all
ingi
nsi
ckandavoi
dingwor
k.Anempl
oyeewhohasac
onf
li
ctwi
thac
ust
omer

66
wi
llt
ryt
oavoi
dthec
ust
omer
.Inabus
ines
s-t
o-bus
ines
sset
ting,f
iel
dsal
espeopl
e
wi
llei
thermi
nimi
zec
ont
actwi
tht
hec
ust
omerorwi
llas
kanot
hers
ales
per
sont
o
c
ont
actt
hec
ust
omer
.Wi
thei
thers
trat
egy,
cus
tomers
ervi
ces
uppor
tisr
educ
ed.

I
fcus
tomer
shavec
onf
li
ctswi
thot
herc
ust
omer
s,t
hes
ervi
cer
ole,
ort
heor
gani
zat
ion,
t
hent
heywi
llof
tenpat
roni
zeanot
herf
ir
m.Thi
sisanavoi
danc
est
rat
egy.
Onl
ywhen
noot
herf
irmsar
eavai
labl
eort
hes
wit
chi
ngc
ost
sar
etoohi
ghwi
llt
heys
taywi
tha
f
ir
mwher
etheyar
eexper
ienc
ingac
onf
li
ct.

b.
Psychol
ogi
calWi
thdr
awal
Her
eindi
vidual
swi
llnotphys
ical
lywi
thdr
awbutwi
llment
all
ywi
thdr
aw.Theywi
ll
c
ont
inuet
opar
tic
ipat
eint
hes
ervi
cebuti
twi
llbet
hroughaut
omat
icbehavi
or.Thi
s
appr
oac
hcanbever
ydamagi
ngt
oaf
ir
m bec
aus
ecus
tomer
swi
lls
ens
etheper
son
per
for
mingt
hes
ervi
cedoes
n'tc
areaboutt
hem.Ther
esul
twi
llbeahi
ghl
evelof
c
ust
omerdi
ssat
isf
act
ionandf
ir
m-s
wit
chi
ngbehavi
or.

c.
Dir
ectConf
ront
ati
on
Mos
templ
oyeeswi
llonl
yus
ethi
sappr
oac
hwhenot
heref
for
tshavenotr
educ
edt
he
l
evelofc
onf
li
ct.Cus
tomer
s,however
,mayadoptt
hismet
hod.Fort
hem,t
her
eis
not
hingt
olos
esi
ncet
heyc
anpat
roni
zeanot
herf
irmi
fthi
sappr
oac
hfai
lst
opr
ovi
de
t
hes
olut
iont
heywant
.

d.
Ret
ali
ati
on
Empl
oyeeswhobec
amebi
tteraboutt
hewayaf
ir
mtr
eat
sthem mayt
ryt
ofi
ndways
t
ogeteven.Empl
oyeesnor
mal
lydonotus
ethi
sappr
oac
hunl
esst
heyar
epl
anni
ng
t
oqui
tandt
her
eisnot
hingt
olos
e.Forexampl
e,anempl
oyeeofaf
ast
-food
r
est
aur
antwhowasdi
ssat
isf
iedwi
tht
hec
ompanyl
eftt
hewal
kinf
reez
eropenon
pur
pos
eal
lowi
ngf
oodt
ospoi
loradi
ssat
isf
iedempl
oyeemaydi
ssemi
nat
enegat
ive
i
nfor
mat
ionaboutt
hec
ompany.Cus
tomer
sar
eus
ingr
etal
iat
ionwhent
heyt
ell
ot
her
saboutt
hei
rbadexper
ienc
es.

e.
Dif
fer
encesbet
weenempl
oyeesandcus
tomer
sinhandl
ingconf
li
ct
I
nal
mos
tal
lconf
li
cts
ituat
ions
,indi
vidual
swi
llr
eac
tinoneoft
hes
efourways
.

67
Empl
oyeesus
ual
lyus
etheavoi
danc
eappr
oac
hfi
rst
.Ifi
tdoesnotr
eli
evet
hes
tres
s
ort
heempl
oyeec
annotus
ethi
sappr
oac
h,t
hen t
heps
ychol
ogi
calwi
thdr
awal
t
echni
quei
snor
mal
lyus
ed.Bec
aus
eoft
her
iskofl
osi
ngt
hei
rjobs
,mos
templ
oyees
us
ethec
onf
ront
ati
onappr
oac
honl
yaf
tert
heyhaveuns
ucc
ess
ful
lyt
riedt
hef
irs
t
t
womet
hods
.For
tunat
ely,
fors
ervi
cef
ir
ms,
thef
our
tht
echni
queofr
etal
iat
ioni
sthe
l
astt
obeus
edandi
nmos
tcas
esi
sneverus
ed.

Cus
tomer
sfol
low adi
ff
erents
equenc
einhandl
ingc
onf
li
cts
.Themos
tcommon
t
echni
quei
savoi
danc
e.Theydot
hist
hroughpat
roni
zi
nganot
herf
irm.I
naddi
ti
ont
o
t
heavoi
danc
est
rat
egy,c
ust
omer
swi
llof
tenus
eret
ali
ati
oni
nthef
orm ofnegat
ive
wor
d-of
-mout
h.Theyal
sous
edi
rec
tconf
ront
ati
oni
ftheyar
epl
anni
ngt
oswi
tch
vendor
sandt
heyhavenot
hingt
olos
e.Ps
ychol
ogi
calwi
thdr
awalandaut
omat
ic
behavi
ori
sus
edbyc
ust
omer
sonl
ywhent
heyar
efor
cedt
ost
aywi
thas
ervi
cef
irm.

Byunder
standi
ngt
hes
emet
hodsofdeal
ingwi
thc
onf
li
ct,manager
scanr
ecogni
ze
c
onf
li
ctatanear
lys
tageandc
anf
indt
hes
our
ceoft
hec
onf
li
ct.

3.
7.5TheSer
vic
eOper
ati
on/
Proc
ess
I
ndus
tri
ali
zat
ion i
nthes
ervi
ces
ect
ori
smor
edi
ff
erentt
han f
ormanuf
act
uri
ng
bec
aus
e oft
he c
har
act
eri
sti
csofi
ntangi
bil
it
y,per
ishabi
li
ty,i
nsepar
abi
li
ty and
var
iabi
li
ty.I
naddi
ti
on,t
hemanuf
act
uri
ngands
ervi
cesar
edi
ff
erentandar
eal
ready
di
scus
sedi
ntheot
herpar
toft
hismat
eri
al.

3.
7.5.
1Es
tabl
ishi
nganOper
ati
onalPos
iti
on
Manuf
act
uri
ngpr
oces
sesc
anbec
las
sif
iedi
ntooneoft
hreec
ategor
ies
:uni
tors
mal
l
bat
ch,l
argebat
chormas
scons
umpt
ionandc
ont
inuouspr
oces
s.Theuni
tors
mal
l
bat
chi
scus
tom madet
oac
ust
omer
'ss
pec
ifi
cat
ionsori
smadei
nsmal
lquant
iti
es.
Thel
argebat
chormas
spr
oduc
tioni
stheas
sembl
yli
nepr
oces
swher
emanyoft
he
s
amei
temsar
epr
oduc
edatt
hes
amet
imeandi
nlar
gequant
iti
es.Thec
ont
inuous
pr
oces
ssys
tem i
sus
edpr
imar
il
ybyoi
lindus
trywher
ether
eexi
stsa24hour
saday
ands
evendaysaweekpr
oces
sing.

Li
kewi
se,s
ervi
cesc
anbec
las
sif
iedi
ntooneoft
hreeoper
ati
onalpos
iti
ons
:cos
t

68
ef
fi
ci
enc
y,s
ervi
ce qual
it
y,and c
ust
omi
zat
ion.Cos
tef
fi
ci
enc
yisan oper
ati
onal
appr
oac
hforas
ervi
cet
hatemphas
izesi
ndus
tri
ali
zat
ionpr
ocedur
est
oreduc
ecapi
tal
i
nves
tment
s,l
aborandoper
ati
ngc
ost
s.Cus
tomi
zat
ioni
sanoper
ati
onalappr
oac
h
wher
ethes
ervi
cei
sdes
ignedt
omeetac
ust
omer
'spar
tic
ularneeds
.Ser
vic
equal
it
y
i
sanoper
ati
onalappr
oac
hwher
ethes
ervi
cei
sdes
ignedt
omeetac
ust
omer
's
par
tic
ularneeds-emphas
izesas
uper
iorl
evelofs
ervi
cequal
it
y.Thedes
ignoft
he
s
ervi
ceoper
ati
onwi
llvar
ydependi
ngonwhi
chpos
iti
ont
hef
irmwi
shest
oemphas
ize
whi
lebui
ldi
ngac
ompet
iti
vepar
tyi
ntheot
hert
oo.

Compani
esemphas
izi
ngc
ostef
fi
ci
enc
yst
rivet
oreduc
ecos
tsands
treaml
inet
hei
r
oper
ati
ons
.Thegoali
stoof
fert
hes
ervi
ceatal
owerpr
icet
hant
hec
ompet
iti
on.
Pr
ofi
tsar
eat
tai
nedt
hrought
heus
eofef
fi
ci
entpr
oces
sest
hatenabl
eahi
gher
vol
umeofs
ervi
ce.

Compani
est
hatf
ocusons
ervi
cequal
it
yst
rivet
opr
ovi
deahi
gherqual
it
yofs
ervi
ce
t
hant
hec
ompet
itor
s.Super
iorqual
it
ycanbepr
esent
edbyei
therf
unc
tionalqual
it
y
ort
echni
calqual
it
y.Func
tionalqual
it
yst
res
sest
hemanneri
nwhi
chc
ust
omer
sar
e
t
reat
ed i
nter
msofr
espons
ivenes
s,as
sur
anc
e,and empat
hy.Tec
hni
calqual
it
y
f
ocus
eson t
heout
comeoft
hes
ervi
ceands
uchs
ervi
cequal
it
ydi
mens
ionsas
t
angi
blec
uesandr
eli
abi
li
ty.Cus
tomi
zat
ion i
staken asapos
iti
on i
nthateac
h
c
ons
ult
ingpr
ojec
tisdes
ignedt
omeett
hepar
tic
ularneedsoft
hec
lient
.Wi
tht
his
oper
ati
onalappr
oac
h,c
ostef
fi
ci
enc
yisdi
ff
icul
ttoat
tai
nsi
nceeac
hjobi
scus
tom
des
ign.

3.
7.5.
2.Pos
iti
onMappi
ng
Aus
efult
oolt
oser
vic
emanager
sist
hepos
iti
onmap.Thepos
iti
onmaps
howst
he
appr
oxi
mat
eloc
ati
onofeac
hcompet
itoront
heoper
ati
onalmap.Thi
smadeby
eval
uat
ingt
her
elat
iveemphas
isofc
ompet
itor
sint
ermsofc
ostef
fi
ci
enc
y,s
ervi
ce
qual
it
yandc
ust
omi
zat
ionbyc
ons
ider
ingbot
htec
hni
calandf
unc
tionalqual
it
ies
.
Taki
ngt
hepos
iti
onofc
ompet
itor
sac
ompanyc
ant
akei
tspos
iti
oni
nthemar
ket
.

3.
7.5.
3.Bl
uepr
int
ingofSer
viceOper
ati
ons
Af
terdec
idi
ngt
heoper
ati
onalpos
iti
onabus
ines
swant
stooc
cupy
,thenexts
tepi
sto

69
bl
uepr
intt
hes
ervi
ceoper
ati
on.Bl
uepr
int
ingi
sthepr
oces
sofdi
agr
ammi
ngt
he
s
ervi
ceoper
ati
oni
nas
ervi
cef
ir
m.

Toi
ncr
eas
epr
oduc
tivi
ty,bus
ines
sess
houl
dbl
uepr
intt
hei
roper
ati
onbyc
alc
ulat
ing
pr
oces
sti
mesf
oreac
hst
epandmaxi
miz
eout
putperhour
.Abl
uepr
intal
lowsf
irms
t
oloc
atec
apac
itybot
tlenec
ksi
nthei
roper
ati
ons
.Capac
itybot
tlenec
ksar
ethe
poi
ntsi
nanoper
ati
ont
hatr
est
ric
tthemaxi
mum out
putofas
ervi
ceoper
ati
on.To
i
ncr
eas
ecos
tef
fi
ci
enc
y,t
hec
ostoft
hes
ervi
ceoper
ati
onateac
hst
epoft
hepr
oces
s
i
scal
cul
atedaswel
last
heaver
ages
ervi
cec
ostperc
ust
omer
.

Thebl
uepr
ints
howst
woac
tivi
ti
es.Ac
tivi
ti
esvi
si
blet
ocus
tomer
sar
ecal
ledt
he
c
ust
omerc
ont
actc
omponentoft
hes
ervi
ceoper
ati
on.Thepar
tsoft
hes
ervi
cenot
vi
si
blet
othec
ust
omerar
ecal
ledt
hes
uppor
tcomponentoft
heoper
ati
on.The
oper
ati
ngpr
ocedur
eus
edi
nthec
ust
omerc
ont
actc
omponentwi
llbedi
ff
erentt
han
f
ort
hes
uppor
tcomponent
.

3.
7.5.
4.Di
ver
genceandCompl
exi
ty
The oper
ati
onalpr
oces
scan be des
cri
bed i
nter
msofi
tsdi
ver
genc
e and i
ts
c
ompl
exi
ty.Compl
exi
tyr
efer
stot
henumberofs
tepsands
equenc
esi
nas
ervi
ce
pr
oces
s.Di
ver
genc
eist
hevar
iabi
li
tyandl
ati
tudei
nthos
est
epsands
equenc
es.A
s
ervi
cewi
thl
ow c
ompl
exi
tyhasas
mal
lnumberofs
tepsands
equenc
es.Ser
vic
es
hi
ghi
ndi
ver
genc
ecanbeexec
utedi
nmanydi
ff
erentways
.Ift
hes
ervi
cei
slow i
n
di
ver
genc
e,t
her
eisonl
yoneoraver
yli
mit
ednumberofwayst
hes
ervi
cec
anbe
exec
uted.

Pr
ofes
sionals
ervi
cess
uch asmedi
cal
,legal
,and c
ons
ult
ing ar
e hi
gh i
n bot
h
di
ver
genc
eandc
ompl
exi
ty.
Eac
hinvol
vesahi
ghnumberofs
tepsands
equenc
eswi
th
s
ever
aladdi
ti
onalopt
ionsateac
h.

Ser
vic
ess
uchashot
elsandt
elephonec
ompani
esar
ehi
ghi
ncompl
exi
tybutl
owi
n
di
ver
genc
e.Eac
hinvol
vesahi
ghnumberofs
tepsands
equenc
esbutt
hevar
iabi
li
ty
ateac
hst
epi
slowast
heyhaves
tandar
diz
edandaut
omat
edmanyoft
heoper
ati
ng
pr
ocedur
es.

70
3.
7.5.
5.Oper
ati
onalDes
ign
Des
igni
nganef
fi
ci
entoper
ati
oni
nvol
vesdec
isi
onsaboutoper
ati
onalgoal
s,f
aci
li
ty
l
ocat
ion,f
aci
li
tyl
ayoutand j
ob des
ign.The s
ervi
ce oper
ati
on des
ign s
houl
d
ac
compl
isht
hreegoal
s.Fi
rst
,theoper
ati
onaldes
ign s
houl
dsuppor
tthef
irm'
s
t
arget
edoper
ati
onalpos
iti
on.
Sec
ond,
theoper
ati
onaldes
igns
houl
dloweruni
tcos
ts.
Thi
rd,t
heoper
ati
onaldes
igns
houl
dpr
ovi
dec
ust
omer
swi
thamor
euni
for
m and
c
ons
ist
ents
ervi
cequal
it
y.

a)Cos
tef
fi
ci
encyoper
ati
onalpos
iti
on
Bus
ines
sesc
hoos
ingt
hec
ostef
fi
ci
enc
yappr
oac
hwi
llwantt
oreduc
ethel
evelof
c
ompl
exi
tyanddi
ver
genc
eint
hei
roper
ati
on.Themos
tcos
tef
fi
ci
entoper
ati
onwi
ll
bei
nthel
owc
ompl
exi
tyandl
owdi
ver
genc
equadr
ant
.

b)Cus
tomi
zat
ionoper
ati
onalpos
iti
on
Bus
ines
sesc
hoos
ingt
hec
ust
omi
zat
ionappr
oac
hwi
llbehi
ghi
nbot
hdi
ver
genc
eand
c
ompl
exi
ty.Pr
ofes
sionals
ervi
cess
uchasmedi
cal
,legal
,andc
ons
ult
ingt
endt
o
l
ocat
eint
hiss
ect
ori
nthateac
hser
vic
etr
ans
act
ioni
sdes
ignedes
pec
ial
lyf
ort
he
c
lientorpat
ient
.

c)Ser
vicequal
it
yoper
ati
onalpos
iti
on
Thes
ervi
cequal
it
yappr
oac
hcanemphas
izeei
thert
heout
comeoft
hes
ervi
ceort
he
pr
oces
sbywhi
cht
hes
ervi
cei
sper
for
med.Ser
vic
espi
cki
ngt
het
echni
calpar
tof
s
ervi
cequal
it
yshoul
dbel
ow i
ndi
ver
genc
eandhi
ghi
ncompl
exi
ty.Pr
oduc
tionsof
hi
ghqual
it
yout
comesr
equi
reas
pec
ial
izat
ionappr
oac
hint
hemar
ket
plac
e.Thes
e
f
ir
mss
houl
dmi
nimi
zec
ust
omeropt
ions
.

Fi
rmswi
shi
ngt
oemphas
izet
hef
unc
tionalpar
tofs
ervi
cequal
it
ywi
llt
akej
ustt
he
oppos
iteappr
oac
h.Thes
efi
rmswi
llwantt
obehi
gh i
n di
ver
genc
ebutl
ow i
n
c
ompl
exi
ty.
Eff
ici
enc
yisgai
nedt
hroughr
educ
ingt
henumberofs
tepsands
equenc
es
i
nthepr
oces
swhi
leof
fer
ingc
ust
omer
smor
eoper
ati
onsandl
ati
tudei
nsel
ect
ion.
Wi
tht
hisappr
oac
h,s
ervi
cef
ir
mswantt
oinc
reas
ethequal
it
yoft
hei
nter
act
ionwi
th

71
c
ust
omer
s,whi
chi
ssi
mil
art
othec
ust
omi
zat
ionoper
ati
onalappr
oac
hbutwi
th
r
educ
edc
ompl
exi
tyofoper
ati
on.

72
UNI
T4:THEPURCHASEPROCESSFORSERVI
CES

Cont
ent
s
4.
0Ai
msandObj
ect
ives
4.
1.I
ntr
oduc
tion
4.
2.Cons
umpt
ionVal
ue
4.
3.APur
chas
eModelf
orSer
vic
es
4.
3.1.
ThePr
e-Pur
chas
ePhas
e
a.
TypesofRi
sksi
nvol
vedi
nCons
umerPur
chas
eDec
isi
on
b.
Ris
kReduc
tionSt
rat
egi
esUs
edbyCons
umer
s
c
.Ri
skReduc
tionSt
rat
egi
esUs
edbySer
vic
eFi
rms
4.
3.2.
TheSer
vic
eEnc
ount
erPhas
e
a.
Rol
eTheor
y
b.
Scr
iptTheor
y
c
.TheSer
vic
eTheor
y
d.
Ser
vic
ePer
sonnel
e.
Suppor
tSer
vic
es
4.
3.3.
Pos
t-Pur
chas
ePhas
e
a.
Evol
uti
onofSer
vic
eQual
it
y
b.
Cus
tomerSat
isf
act
ion
c
.At
tri
but
ionTheor
y
d.
Fut
ureBehavi
or

4.
0AI
MSANDOBJ
ECTI
VES

Att
heendoft
hisuni
tyouar
eexpec
tedt
o:
-i
dent
if
ythec
ons
umpt
ionval
uest
hati
nfl
uenc
epur
chas
edec
isi
ons
.
-di
ff
erent
iat
ethet
hreepar
tsoft
hepur
chas
epr
oces
s.
-l
istt
hef
act
orst
hati
nfl
uenc
ethepr
e-pur
chas
ephas
eoft
hepur
chas
e
pr
oces
s.
-expl
aint
hec
omponent
sandt
ypesofr
iski
nvol
vedi
nthepur
chas
eofs
ervi
ces
.

73
 -out
li
net
hes
trat
egi
ess
ervi
cef
ir
msc
anus
etor
educ
epur
chas
eri
sk.
-s
pec
ifyt
hef
act
orst
hati
nfl
uenc
ethes
ervi
ceenc
ount
erphas
eoft
hepur
chas
e
pr
oces
s.
-expl
aint
hef
act
orst
hatmakeupt
hepos
t-pur
chas
ephas
eoft
hepur
chas
e
pr
oces
s.

4.
1INTRODUCTI
ON

Thepur
chas
epr
oces
sofs
ervi
cesi
smuc
hmor
ecompl
exanddi
ff
erentf
rom t
he
pur
chas
e pr
oces
s of goods bec
aus
e of t
he c
har
act
eri
sti
cs of i
ntangi
bil
it
y,
i
nsepar
abi
li
tyvar
iabi
li
ty,andper
ishabi
li
ty.Henc
ethi
suni
tisdes
ignedt
odealwi
th
t
hepur
chas
epr
oces
sfol
lowedi
nser
vic
emar
ket
ingf
irms
.Thef
irs
tpar
twi
lldi
scus
s
aboutt
hec
ons
umpt
ionval
uest
hataf
fec
tpur
chas
edec
isi
onsofc
ust
omer
s.The
s
econdpar
twi
lldi
scus
sthepur
chas
emodel
sfors
ervi
ceswhi
chi
ncl
ude:t
hepr
e-
pur
chas
ephas
e,t
hes
ervi
ceenc
ount
erphas
eandt
hepos
t-pur
chas
ephas
e.
I
naddi
ti
on,
themaj
orel
ement
sineac
hphas
ewi
llbedi
scus
sed.
WEWI
SHYOUTOHAVEAVERYGOODSTUDY!
!!!
!

4.
2.CONSUMPTI
ONVALUE

Cons
umpt
ionval
uemeansaper
cei
vedval
ueorut
il
it
yani
ndi
vidualbel
ievesas
pec
ifi
c
c
hoi
cewi
llpr
ovi
de.Cons
umer
spur
chas
egoodsands
ervi
cesbec
aus
etheys
ati
sfy
c
ert
ainneedsorwant
sint
hei
rli
ves
.Bus
ines
sespur
chas
egoodsands
ervi
cesf
ort
he
s
amebas
icr
eas
ons
:tos
ati
sfyt
heneedsandwant
soft
hems
elvesort
hei
rcl
ient
s.Due
t
oti
meandf
inanc
ialr
est
rai
nts
,cons
umer
smus
tmakec
hoi
cesi
nthei
rpur
chas
e
dec
isi
ons
.Suppos
eani
ndi
viduali
scons
ider
ingwhatt
ododur
ingt
heupc
omi
ng
weekend.Shec
oul
dgowat
ers
kii
ngwi
ths
omeofherf
riendsors
hec
oul
dgot
oa
r
ecr
eat
ionalt
hemepar
kwi
ths
omeofherf
ri
endsors
hec
oul
dgot
oar
ecr
eat
ional
t
hemepar
kwi
thot
herf
ri
ends
.Bec
aus
eoft
imec
ons
trai
nts
,shemus
tchoos
eoneor
t
heot
her
.

I
naddi
ti
ont
ochoos
ingagoodors
ervi
cec
ategor
y,c
ons
umer
sandbus
ines
sesar
e
f
acedwi
thc
hoos
ingapar
tic
ularvendorf
orm whi
cht
opur
chas
ethatgoodors
ervi
ce.

74
Thes
etypesofc
hoi
cesar
einf
luenc
edbyc
ons
umpt
ionval
uesort
heper
cei
vedval
ue
orut
il
it
yani
ndi
vidualorbus
ines
sbel
ievesas
pec
ifi
cchoi
cewi
llpr
ovi
de.Thes
e
c
ons
umpt
ionval
uesi
ncl
udef
unc
tionalval
ue,
soc
ialval
ue,
emot
ionalval
ue,
epi
stemi
c
val
ue,andc
ondi
ti
onalval
ue.I
tmus
tbekepti
nmi
ndt
hatt
hes
eval
uesar
enot
mut
ual
lyexc
lus
ive;apar
tic
ularc
hoi
cemaypr
ovi
demul
ti
plec
ons
umpt
ionval
ues
.

a)Func
tionalVal
ue:i
stheper
cei
ved ut
il
it
yac
qui
red when apar
tic
ularc
hoi
ce
pr
ovi
desut
il
it
ari
anorf
unc
tionalbenef
it
sfort
hec
ons
umer
.Thes
ebenef
it
sar
e
bas
edont
heat
tri
but
esapar
tic
ularc
hoi
cepos
ses
sesandt
hebenef
it
sthos
e
at
tri
but
espr
ovi
det
hec
ons
umer
.
b) Soc
ialVal
ue:i
stheper
cei
vedut
il
it
yac
qui
redf
rom maki
ngapur
chas
edec
isi
on
t
hati
sas
soc
iat
edwi
thapar
tic
ularr
efer
enc
egr
oup.
Thi
sgr
oupc
oul
dbef
riendsor
i
tcoul
dbebas
edondemogr
aphi
csuc
hasage,s
ex,et
hni
cor
igi
n,orr
eli
gion.
Cul
tur
alf
act
orss
uchasac
onc
ernf
ort
heenvi
ronmentmayal
soi
mpac
tpur
chas
e
dec
isi
ons
.The des
irabi
li
ty ofa par
tic
ulars
ervi
cec
ategor
y orvendort
oa
c
ons
umermaybedependentupont
her
efer
enc
egr
oupwi
thwhi
chi
tisas
soc
iat
ed.
)Emot
c ionalVal
ue:i
sobt
ainedwhent
hec
hoi
ces
timul
atesf
eel
ingsandemot
ions
wi
thi
nthe c
ons
umer
.Formany s
ervi
ces
,es
pec
ial
ly ent
ert
ainments
ervi
ces
,
per
cei
vedemot
ionalut
il
it
yisani
mpor
tantmot
ivat
ingf
act
ori
nthepur
chas
e
dec
isi
on.Commonr
eas
onsgi
venf
orget
tingt
att
oosar
easameansofs
elf
-
expr
ess
ionorr
ebel
li
on,
bot
hofwhi
char
epr
oduc
tsoft
hec
ons
umer
'semot
ions
.
d)Epi
stemi
cVal
ue:i
sac
qui
redwhenapur
chas
edec
isi
oni
sper
cei
vedt
osat
isf
ya
des
iref
orknowl
edge,pr
ovi
denovel
ty,orar
ous
ecur
ios
ity.Epi
stemi
cval
uei
s
of
ten t
he mot
ivat
ion behi
nd a s
eni
orc
iti
zen goi
ng bac
ktoc
oll
ege ora
homemakert
aki
ngapai
nti
ngorar
tcour
se.
e)Condi
ti
onalVal
ue:i
stheper
cei
vedut
il
it
ypr
ovi
dedwhenanal
ter
nat
ivei
schos
en
bec
aus
eoft
empor
arys
ituat
ionalf
act
orst
hatwi
llenhanc
eoneoft
heot
her
c
ons
umpt
ionval
ues
.Fi
nanc
esmaybeat
empor
arys
ituat
ionalf
act
ort
hatwoul
d
al
terapur
chas
edec
isi
on.
4.
3.APURCHASEMODELFORSERVI
CES

Thepur
chas
emodelf
ors
ervi
ceshast
hreedi
sti
nctphas
es.
Theyar
e:t
hepr
e-pur
chas
e

75
phas
e,t
hes
ervi
ceenc
ount
erphas
eandt
hepos
t-pur
chas
ephas
e.

4.
3.1.
ThePr
e-pur
chas
ePhas
e
I
toc
cur
sbef
oret
hec
ons
umerdec
idest
opur
chas
ethes
ervi
ceandus
ual
lyi
nvol
vesa
dec
isi
onmaki
ngpr
oces
s.I
tisaphas
ewhenpur
chas
eopt
ionsar
econt
empl
atedand
dec
isi
onsar
eac
tual
lymade.

Dur
ingt
hisphas
e,c
ons
umer
swei
ght
heal
ter
nat
ivesavai
labl
etot
hem andt
he
benef
it
sofeac
hal
ter
nat
ive.Cons
umer
spur
chas
edec
isi
oni
sinf
luenc
edbyf
our
di
ff
erentf
act
ors
:int
ernalf
act
ors
,ext
ernalf
act
ors
,fi
rm-
produc
ed f
act
ors and
per
cei
vedr
isk.

a)I
nter
nalFac
tor
s
Fouri
nter
nalf
act
orsi
mpac
tac
ons
umer
'sdec
isi
ondur
ingt
hepr
e-pur
chas
ephas
e.
Thes
efac
tor
sar
eindi
vidualneedsand want
sofc
ons
umer
s,pas
texper
ienc
e,
expec
tat
ionsandl
evelofi
nvol
vement
.
)I
i ndi
vidualneedsandwant
sofcons
umer
s.
I
never
ypur
chas
edec
isi
on,
themos
timpor
tantf
act
ori
sthepar
tic
ularneedsand
want
soft
hei
ndi
vidual
.Notonl
ydot
hes
eneedsandwant
svar
yfr
om oneper
son
t
oanot
herbutt
heyal
sovar
yforeac
hindi
vidualc
ons
umert
hrought
ime.
i
i)Pas
texper
ience.
I
fone'
spas
texper
ienc
ewi
thapar
tic
ulars
ervi
cef
irm hasbeenpos
iti
ve,t
he
l
ikel
ihoodonewi
llpur
chas
ethes
ervi
ceagai
nfr
om t
hes
amef
irmi
sgr
eat
ly
i
ncr
eas
ed.I
fone'
spas
texper
ienc
ewasnegat
ive,i
tishi
ghl
ypr
obabl
ethatone
wi
llc
hoos
eanewf
irmf
ort
henextpur
chas
eorevenadi
ff
erents
ervi
cec
ategor
y.
i
i)Cons
i umerExpect
ati
on
Theexpec
tat
ionsc
ons
umer
shaveofas
ervi
cef
irmi
sanot
herf
act
oraf
fec
tingt
he
pur
chas
e dec
isi
on.Thes
e expec
tat
ions ar
e bas
ed on s
ucht
hings as pas
t
exper
ienc
e,wor
d-of
-mout
hcommuni
cat
ions
,andpr
omot
ionalmat
eri
als
.
v)TheLevelofI
i nvol
vement

Thel
evelofi
nvol
vementort
hel
evelofment
alandphys
icalef
for
texer
tedbya
c
ons
umeri
nsel
ect
ingagoodors
ervi
cei
sanot
herf
act
ort
hataf
fec
tspur
chas
e

76
 dec
isi
on.
Inhi
gh-
invol
vementpur
chas
edec
isi
ons
,cons
umer
sspendmor
eti
mei
n
t
hei
nfor
mat
ions
ear
ch,bot
hint
ernalandext
ernalandi
ncl
inedt
ospendmor
e
t
imei
ndel
iber
ati
ngandwei
ghi
ngt
heal
ter
nat
ives
.Inc
ont
ras
t,l
owi
nvol
vement
pur
chas
edec
isi
onst
endt
obec
omehabi
tuali
nnat
ure,
wit
hmi
nimalr
esear
chand
del
iber
ati
on.

Thel
evelofi
nvol
vementi
saf
fec
ted byt
hreef
act
ors
:theknowl
edgeand
exper
ienc
ethec
ons
umerhaswi
thas
ervi
cec
ategor
y,t
hef
inanc
ialr
iski
nvol
ved,
andt
hes
oci
alvi
si
bil
it
yoft
hes
ervi
ce.Soc
ialvi
si
bil
it
yref
erst
ohow vi
si
blea
s
ervi
ceorgoodi
stoot
heri
ndi
vidual
s.Asknowl
edgeandexper
ienc
ewi
tha
s
ervi
cec
ategor
yinc
reas
es,
thel
evelofi
nvol
vementdec
reas
es.Ast
hemonet
ary
out
layandt
hes
oci
alvi
si
bil
it
yofas
ervi
ceors
ervi
ceout
comei
ncr
eas
es,
thel
evel
ofi
nvol
vemental
soi
ncr
eas
es.

b) Ext
ernalFac
tor
s
Thr
eeext
ernalf
act
orsi
nfl
uenc
ethepur
chas
edec
isi
on dur
ingt
hepr
e-pur
chas
e
phas
e:t
hec
ompet
iti
veopt
ionsavai
labl
etot
hec
ons
umer
,thes
oci
alc
ont
extoft
he
pur
chas
e,andwor
d-of
-mout
hcommuni
cat
ions
.
i
)Thecompet
iti
veopt
ionsavai
labl
etot
hecons
umer
.
Thegr
eat
ert
henumberofc
ompet
iti
veopt
ionst
hec
ons
umerhast
hebet
ter
hi
s/herdec
isi
onwi
llbeandvi
cever
sa.
i
i)Thes
oci
alcont
extoft
hepur
chas
e.
I
naddi
ti
ont
othenumberofc
ompet
iti
veopt
ions
,thes
elec
tionofas
ervi
cei
s
i
nfl
uenc
edbyt
hes
oci
alc
ont
extoft
hepur
chas
e.Forexampl
e,ar
est
aur
antt
hati
s
s
uit
abl
eforaqui
etl
unc
hmaynothavet
het
ypeofat
mos
pher
edes
irabl
efora
c
elebr
ati
ons
uchasabi
rthdayoranni
ver
sar
y.
i
ii
)Wor
d-of
-mout
hcommuni
cat
ions
Wor
d-of
-mout
hcommuni
cat
ionshaveaver
ysi
gni
fi
canti
mpac
ton pur
chas
e
dec
isi
ons
.Ins
elec
tingas
ervi
cevendor
,cons
umer
sof
tenas
kot
herpeopl
efor
t
hei
rrec
ommendat
ionsort
hei
reval
uat
ionsofs
pec
ifi
cvendor
s.

c
) Fi
rm-
Produc
edFac
tor
s
Pr
omot
ions
,pr
ici
ng,andt
hedi
str
ibut
ions
yst
em ar
efi
rm-
produc
edf
act
orst
hat

77
 i
mpac
tthepur
chas
edec
isi
on.
i
)Pr
omot
ions
Pr
omot
ionsi
ncl
udeadver
tis
ing,per
sonals
ell
ing,ands
alespr
omot
ionss
uchas
c
oupons
,pr
emi
ums
,sweeps
takes
,andc
ont
est
s.Al
loft
hes
epr
omot
ionalef
for
ts
ar
edes
igned t
oper
suadec
ust
omer
stopur
chas
epar
tic
ulars
ervi
cesf
rom a
s
pec
ifi
cser
vic
epr
ovi
der
.

i
i)Pr
ici
ng
Pr
ici
ngi
sanot
heri
mpor
tantel
ementoft
hepr
e-pur
chas
eeval
uat
ionpr
oces
s.
Cons
umer
sof
tenc
ompar
ethepr
icesofs
ever
alvendor
swhendec
idi
ngwhi
ch
s
ervi
cepr
ovi
dert
ous
e.Pr
ici
ngi
sus
ual
lyc
ons
ider
edi
nthec
ont
extofs
ever
al
ot
herel
ement
soft
hes
ervi
ceof
fer
ingt
odet
ermi
net
hebes
tover
allval
uef
ort
he
c
ons
umer
.

i
ii
)Di
str
ibut
ions
yst
em
I
nthes
ervi
cei
ndus
try,di
str
ibut
ioni
sdef
inedast
heavai
labi
li
tyandac
ces
sibi
li
ty
ofas
ervi
cet
ocons
umer
s.I
twoul
dinc
ludes
ucht
hingsasphys
icall
ocat
ion,
hour
s
ofoper
ati
on,andac
ces
savai
labi
li
ty.Forexampl
e,abankhasamai
nof
fi
cebuti
t
mayal
sooper
atebr
anc
hesandpl
aceaut
omat
edt
ell
ermac
hines(
ATM)atvar
ious
l
ocat
ions
,of
tent
elephoneandc
omput
eri
zedbanki
ngs
ervi
cest
hatper
mitt
he
c
ust
omert
otr
ans
actbus
ines
sfr
omhi
sorherof
fi
ce,
vehi
cleorhome.

d) Per
cei
vedRi
sk
Ser
vic
es ar
econs
ider
ed exper
ient
iali
n nat
ure and as s
uch ar
e per
cei
ved by
c
ons
umer
stohaveahi
gherpur
chas
eri
skt
hangoods
.Ri
ski
stheexpos
ureoft
he
c
ons
umert
othec
hanc
eofi
njur
y,l
oss
,ordamager
esul
ti
ngf
rom t
hepur
chas
e
dec
isi
on.Cons
umer
sseekmeanst
oreduc
ethi
sri
skt
hrought
heus
eoft
hei
nter
nal
f
act
ors
,theext
ernalf
act
ors
,andt
hef
ir
m-pr
oduc
edf
act
orsdi
scus
sedabove.

Ri
sk has t
wo c
omponent
s:unc
ert
aint
y and c
ons
equenc
es.Unc
ert
aint
yist
he
pr
obabi
li
tyt
hatapar
tic
ularout
comeorc
ons
equenc
ewi
lloc
cur
.Cons
equenc
esar
e
t
hedegr
eeofi
mpor
tanc
eanddangeroft
heout
comei
tsel
f.

78
TypesofRi
sksi
nvol
vedi
nCons
umerPur
chas
eDeci
si
on
Whenpur
chas
ingas
ervi
ce,
ther
ear
esevent
ypesofr
iskt
hatar
epot
ent
ial
lyi
nvol
ved
i
nthec
ons
umer
'sdec
isi
onmaki
ngpr
oces
s.Thes
ear
eper
for
manc
eri
sk,
financ
ialr
isk,
t
imel
ossr
isk,
oppor
tuni
tyr
isk,
psyc
hol
ogi
calr
isk,
soc
ialr
iskandphys
icalr
isk.

o Per
for
mancer
isk:i
sthec
hanc
ethatt
hes
ervi
cewi
llnotper
for
m or
pr
ovi
det
hebenef
itf
orwhi
chi
twaspur
chas
ed.
o Fi
nanci
alr
isk:i
stheamountofmonet
aryl
ossi
ncur
redbyt
hec
ons
umeri
f
t
hes
ervi
cef
ail
s.Pur
chas
ings
ervi
cesi
nvol
vesahi
gherdegr
eeoff
inanc
ial
r
iskt
hanpur
chas
inggoodsbec
aus
efewers
ervi
cef
irmshavemoneybac
k
guar
ant
eesorwar
rant
iesofanyki
nd.
o Oppor
tuni
tyr
isk:r
efer
stot
her
iski
nvol
vedwhenc
ons
umer
smus
tchoos
e
ones
ervi
ceoveranot
heranddeal
swi
tht
hel
ostoppor
tuni
tyac
ons
umer
exper
ienc
es when he or s
he makes a dec
isi
on bet
ween t
he t
wo
oppor
tuni
ti
es.
o Ps
ychol
ogi
calr
isk:i
sthec
hanc
ethatt
hepur
chas
eofas
ervi
cewi
llnotf
it
t
hei
ndi
vidual
'ss
elf
-conc
ept
.Ser
vic
est
hathaveahi
ghdegr
eeofi
mpac
t
oni
ndi
vidual
s's
elf
-conc
eptorar
ehi
ghi
nepi
stemi
candemot
ionalval
ue
t
endt
ohaveahi
ghdegr
eeofps
ychol
ogi
calr
isk.Ser
vic
eswi
thahi
gh
ps
ychol
ogi
calr
iski
ncl
udeeduc
ati
on,ent
ert
ainment
,fi
tnes
sfac
ili
ti
esand
r
eli
giousor
gani
zat
ions
.
o Soc
ialr
isk:r
efer
stot
hepr
obabi
li
tyt
hatas
ervi
cewi
llnotmeett
he
appr
ovalofot
her
swhoar
esi
gni
fi
cantt
othec
ons
umermaki
ng t
he
pur
chas
e.Ser
vic
eswi
th hi
gh vi
si
bil
it
y,s
uch asr
est
aur
ant
s,hai
rand
beaut
ysal
ons
,tendt
obehi
ghi
nsoc
ialr
isk.
o Phys
icalr
isk:i
sthec
hanc
ethatas
ervi
cewi
llac
tual
lyc
aus
ephys
ical
har
mtot
hec
ust
omer
.Manys
ervi
cesc
ont
ains
omedegr
eeofphys
icalr
isk.
Forexampl
e,goi
ngt
othephys
ici
an,pur
chas
ingpubl
ict
rans
por
tat
ion
mi
ghti
nvi
tes
omef
ormofr
isk.

79
Ri
skReduct
ionSt
rat
egi
esUs
edbyCons
umer
s
Dur
ingt
hepr
e-pur
chas
ephas
e,c
ons
umer
seval
uat
ethet
ypeandext
entofr
isk
i
nvol
vedi
nthepur
chas
edec
isi
on.Theyof
tenc
ompar
eser
vic
esands
ervi
cef
irmst
o
s
eehow muc
hri
ski
sinvol
vedwi
theac
hopt
ion.Whenc
ompar
ings
ever
alvendor
s
wi
thi
nas
ervi
cei
ndus
try,c
ons
umer
snor
mal
lyl
ookatt
heunc
ert
aint
ycomponentof
r
isks
inc
ethec
ons
equenc
ecomponenti
sthes
ame.

How doc
ons
umer
sandbus
ines
sesr
educ
ether
iskofapur
chas
e?Thef
oll
owi
ng
s
trat
egi
es/
met
hodsc
anbeappl
ied.

1st.Exami
net
hei
rownper
sonalexper
ienc
es.Theyhavet
ocont
inuet
hei
rrel
ati
ons
wi
tht
hec
urr
entbus
ines
ses
;ot
her
wis
e,t
her
ewi
llbear
iskwi
tht
henewf
irm.
2nd.Seekt
heopi
nionofot
her
ssuc
hasf
ri
ends
,rel
ati
ves
,bus
ines
sas
soc
iat
es,l
ocal
opi
nionl
eader
s,orexper
tsi
nthef
iel
d.
3rd.Ser
vic
e-pr
oduc
eds
our
cesofi
nfor
mat
ion.Thepr
imar
ysour
ceofi
nfor
mat
ioni
s
adver
tis
ing,
promot
ions
,andt
hei
nter
net
.

Ri
skReduct
ionSt
rat
egi
esus
edbySer
viceFi
rms
Ser
vic
efi
rmss
houl
dbeawar
eoft
her
iski
nvol
vedi
nthepur
chas
eoft
hei
rser
vic
es
and us
e appr
opr
iat
est
rat
egi
es t
oreduc
ethe per
cei
ved r
isk of c
ons
umer
s.
Fur
ther
mor
e,t
her
ear
edi
ff
erents
trat
egi
est
oreduc
etheunc
ert
aint
ycomponentof
r
iskt
hanwoul
dbeus
edt
oreduc
ethec
ons
equenc
ecomponentofr
isk.

 Tor
educ
etheunc
ert
aint
ycomponentofr
isk.Ser
vic
efi
rmsmus
treduc
ethe
per
cei
vedpr
obabi
li
tyofas
ervi
cef
ail
ure.
Thel
owert
heper
cei
vedpr
obabi
li
tyofa
s
ervi
cef
ail
ure,
themor
eli
kel
ythec
ons
umerwi
llpur
chas
ethes
ervi
ce.
 Tor
educ
etheunc
ert
aint
yofper
for
manc
eri
sk.Ser
vic
efi
rmsmus
tinc
reas
ethe
per
cei
vedpr
obabi
li
tyt
hes
ervi
cewi
llper
for
m asc
ons
umer
s’des
ire.Thi
scanbe
donet
hroughc
ommuni
cat
ion,
brandi
ngandc
ert
if
icat
ion.
 Tor
educ
ethec
ons
equenc
esofper
for
manc
eri
sk.Fi
rmss
houl
dens
uret
hatt
he
s
ervi
cepr
ovi
der
sfol
low uni
for
m qual
it
ycont
rols
tandar
dsandpr
ocedur
es.By
doi
ngt
his
,thec
hanc
esofs
ervi
cef
ail
urear
ereduc
ed.Per
for
manc
eri
skc
anal
so
ber
educ
edbyof
fer
ingwar
rant
iesandguar
ant
ees
.

80
 Fi
nanc
ialr
isks c
an be r
educ
ed by of
fer
ing t
rialpur
chas
es,s
ampl
ing,and
pr
omot
ionali
ncent
ives
.Inc
ent
ivess
uchasc
oupons
,pr
emi
ums
,andpr
ice-
off
deal
scanal
sobeus
edt
ost
imul
atec
ons
umer
stot
ryas
ervi
ce.
 Tor
educ
ethec
ons
equenc
esoff
inanc
ialr
isk,s
ervi
cef
irmsc
anof
fermoneybac
k
guar
ant
eest
houghi
tisr
arei
nthes
ervi
ces
ect
or.
Theunc
ert
aint
yoft
imel
ossr
isk
andoppor
tuni
tyr
iskc
anber
educ
edbybr
andi
ng.
 Tor
educ
ethec
ons
equenc
esoft
imel
ossr
isk,
ser
vic
efi
rmsc
anof
fers
omet
ypeof
c
ompens
ati
oni
nthec
aseofs
ervi
cef
ail
ure,s
uchasf
inanc
ialr
eimbur
sementf
or
t
imel
ostorc
ouponsf
orf
utur
epur
chas
es.
 Foroppor
tuni
tyr
isk,t
he f
ir
m mus
tens
uret
hatt
her
e ar
e qual
it
ycont
rol
s
tandar
dsand pr
ocedur
esi
n pl
ace and t
hatt
hes
e ar
efol
lowed bys
ervi
ce
per
sonnel
.Ifc
ons
umer
srec
eivet
hes
ervi
ceexpec
tedt
heywi
llnotf
eelt
heyl
ost
anoppor
tuni
ty.
 Theunc
ert
aint
yofps
ychol
ogi
calands
oci
alr
iskc
anber
educ
edbybr
andi
ngand
c
ommuni
cat
ion.Rec
ogni
zedbr
andnamesands
alesands
ervi
ceper
sonnelc
arr
y
t
heas
sur
anc
etot
hec
ons
umert
hatt
hes
ervi
cewi
llc
oinc
idewi
tht
hec
ons
umer
's
s
elf
-imageandwi
llbewel
lrec
eivedbyhi
sorherr
elevants
oci
algr
oup.
 Thec
ons
equenc
esofps
ychol
ogi
calands
oci
alr
iskc
anber
educ
edbyf
oll
owi
ng
s
tri
ctqual
it
ycont
rols
tandar
dsandpr
ocedur
es,andt
husr
educ
ingvar
iabi
li
tyof
s
ervi
ce.i
fcons
umer
srec
eivet
hes
ervi
ceexpec
ted,t
hec
hanc
esoft
hes
ervi
ce
out
comebei
ngunac
cept
abl
etot
hems
elvesort
oot
her
swi
thi
nthei
rsoc
ialc
irc
le
ar
egr
eat
lyr
educ
ed.Phys
icalr
iski
sreduc
edbys
ervi
cepr
ovi
der
sadher
ingt
o
s
tri
cts
afet
yst
andar
ds,
ins
truc
tion,
andc
ommuni
cat
ion.Thec
ons
equenc
esoft
he
phys
icalr
iskofr
educ
edbyes
tabl
ishi
ngandf
oll
owi
ngs
afet
yst
andar
dsandgi
ving
c
ons
umer
sins
truc
tionst
oreduc
ethec
hanc
esofphys
icali
njur
yoc
cur
ring.

4.
3.2.
TheSer
vic
eEnc
ount
er
Thi
sist
heac
tuali
nter
act
ionpoi
ntbet
weent
hec
ust
omerandt
hes
ervi
cepr
ovi
der
.
Thes
ervi
cei
sper
for
medorpr
ovi
dedt
othec
ust
omeratt
hiss
tat
e.Thepr
imar
y
di
ff
erenc
ebet
weenpur
chas
inggoodsandpur
chas
ings
ervi
cesi
sthats
ervi
cest
endt
o
bei
nsepar
abl
eint
hes
ens
ethatt
hes
ervi
cec
annotbeper
for
medwi
thoutbot
hthe
s
ervi
cepr
ovi
derandt
hec
ons
umerpr
esentatt
hes
amet
ime.Thequal
it
yoft
his

81
s
ervi
ceenc
ount
er,
regar
dles
soft
henat
ureoft
hei
nter
act
ion,
isdependentuponf
ive
f
act
ors
.Thes
efac
tor
sar
e:r
olet
heor
y,s
cri
ptt
heor
y,s
ervi
ceenvi
ronment
,ser
vic
e
per
sonnelands
uppor
tser
vic
es.

a.
Rol
eTheor
y
I
nthepur
chas
ingofs
ervi
ces
,cons
umer
sands
ervi
cepr
ovi
der
spl
ayc
ert
ainr
olei
n
t
het
rans
act
ionpr
oces
s,ac
onc
eptr
efer
redt
oasr
olet
heor
y.I
ndi
vidual
sar
ehi
redt
o
pl
ayac
ert
ainr
ole.Forexampl
e,whenget
tingahai
rcut
,thec
ust
omerandt
hehai
r
s
tyl
isteac
hhaveauni
quer
olet
heyar
eexpec
tedt
opl
ay.
Ther
olesofc
ust
omer
sand
s
ervi
ceper
sonnelvar
ydependi
ngupont
het
ypeandnat
ureoft
rans
act
ionsand
ac
tivi
ti
es.

Thequal
it
yoft
hes
ervi
ceenc
ount
erandt
heens
uri
ngeval
uat
ionofs
ati
sfac
tionwi
th
t
hes
ervi
cear
ehi
ghl
ydependentupon t
hequal
it
yofi
nter
act
ion bet
ween t
he
c
ust
omerandt
hes
ervi
cepr
ovi
der
.Bot
hthec
ust
omerands
ervi
cepr
ovi
dermus
t
per
for
mthei
rrol
espr
oper
ly.
Ifnot
,whati
sknownasr
oleambi
gui
tyorc
onf
usi
onmay
r
esul
t.

Rol
eambi
gui
tyorc
onf
usi
onoc
cur
swhenei
thert
hec
ust
omerort
hes
ervi
cepr
ovi
der
doesnotf
ull
yunder
standhi
sorherr
olei
nthes
ervi
ceenc
ount
er.
Thi
sambi
gui
tymay
r
esul
tfr
om al
ackofexper
ienc
ewi
thapar
tic
ulars
ervi
cepr
ovi
deroral
ackof
c
ommuni
cat
ionbet
weent
hepar
ties
.Ift
hec
ust
omerdoesnotunder
standt
oper
for
m
hi
sorherr
olepr
oper
ly,
thequal
it
yoft
hes
ervi
cemaybeadver
sel
yaf
fec
ted.

b.
Scr
iptTheor
y
Her
ethes
ervi
ceper
sonnelandc
ust
omer
shavepr
esc
ribeds
cri
ptst
hatt
heyar
e
expec
tedt
ofol
low.
Scr
ipt
sar
eal
ear
neds
equenc
eofbehavi
orst
hati
sexpec
tedf
rom
s
ervi
ce per
sonnel and c
ust
omer
s obt
ained t
hrough exper
ienc
e or t
hrough
c
ommuni
cat
ionwi
thot
her
s.I
tiss
imi
lart
oas
cri
ptus
edi
nthepr
oduc
tionofamovi
e.
Thes
cri
ptpr
ovi
dedbot
htheac
tionsandwor
dst
obeus
ed.
Int
hes
ervi
cei
ndus
try,
the
s
cri
ptpr
ovi
dest
hedet
ail
edac
tionst
hatar
eexpec
tedofs
ervi
ceper
sonneland
c
ust
omer
s.

Themor
eexper
ienc
eani
ndi
vidualhaswi
thas
ervi
cef
irm,t
hemor
econc
ret
ethe

82
s
cri
ptbec
omes
.Ifhehasdonei
tsomanyt
imest
hatl
it
tleornot
houghti
srequi
red.
Henc
e,i
tisus
ual
lyeas
ytos
potaf
ir
st-
timec
ust
omeratac
asuals
ervi
cepr
ovi
der
.

Under
standi
ngt
hes
cri
ptexpec
tedofc
ust
omer
sal
lowsf
irmst
ofl
owc
har
tthei
r
oper
ati
on.The f
lowc
har
tthen hel
pst
o det
ectoper
ati
onalf
lowsand pr
ovi
des
i
nfor
mat
ionf
ors
tandar
diz
ati
onofoper
ati
onsandenhanc
ementofpr
oduc
tivi
ty.

Al
ter
ings
cri
ptsi
sfr
ust
rat
ingt
obot
hcus
tomer
sandt
oser
vic
eper
sonnel
.Thi
sleads
t
ohi
ghl
evel
sofdi
ssat
isf
act
iont
ocus
tomer
sandi
ncompet
enc
etobes
ucc
ess
fuland
t
oac
compl
isht
hedes
iredr
esul
tsbyt
hes
ervi
ceper
sonnel
.Ther
efor
e,whenc
hangi
ng
t
hec
ust
omer
s's
cri
pt,s
ervi
cef
ir
msmus
tbes
ureal
lser
vic
eper
sonnelunder
stand
t
henews
cri
ptandt
hebenef
it
sitpr
ovi
desandmus
ttaket
imet
oins
truc
tandhel
p
c
ust
omer
sthr
ought
henews
cri
ptbyas
signi
ngext
ras
ervi
ceper
sonnel
.

c
.TheSer
vic
eEnvi
ronment
Tangi
bleel
ement
soft
hef
aci
li
ty,
thef
ir
m'sat
mos
pher
eandot
herc
ust
omer
spr
esent
ar
epar
toft
hisenvi
ronment
.Thes
eel
ement
swi
lli
mpac
tthec
ust
omer
'sexpec
tat
ions
dur
ingt
hes
ervi
ceaswel
last
hei
reval
uat
ionaf
tert
hes
ervi
cei
scompl
eted.

Tangi
bleel
ement
sinc
ludet
heequi
pmentandt
ool
sbei
ngus
edt
oper
for
mthe
s
ervi
ce,ot
herequi
pmenti
nthe f
aci
li
ty,t
he f
urni
tur
e,t
he of
fi
ce déc
or,t
he
c
leanl
ines
soft
hef
aci
li
ty,
andt
het
ypesanddens
ityofr
elat
eds
mel
lsands
oundsand
ot
herc
ust
omer
s.

d.
Ser
vic
ePer
sonnel
When s
ervi
ceper
sonnelandc
ust
omer
shavef
ace-
to-
fac
eint
erac
tion,t
hemos
t
c
rit
icalel
ementoft
heexper
ienc
ebec
omest
hec
onduc
toft
hes
ervi
ceper
sonnel
.
Cus
tomer
sexpec
tthes
ervi
ceper
sonnelt
oper
for
mspec
ifi
crol
esandf
oll
owc
ert
ain
s
cri
pts
.Ifempl
oyeesdepar
tfr
om t
her
olesors
cri
pts
,ser
vic
equal
it
yandc
ust
omer
s
ati
sfac
tionof
tenwi
llbeadver
sel
yaf
fec
ted.

e.
Suppor
tSer
vic
es
Suppor
tser
vic
esi
ncl
udeal
loft
heac
tivi
ti
esandmat
eri
alss
ervi
ceper
sonnelneedt
o
per
for
mthei
rwor
kpr
oper
ly.Thepr
imar
yres
pons
ibi
li
tyofs
uppor
tser
vic
esi
sto

83
pr
ovi
det
heequi
pmentands
uppl
iesneededt
oper
for
mthes
ervi
ce.

4.
3.3Pos
t-Pur
chas
ePhas
e
Dur
ingt
hisphas
e,c
ust
omer
smakeaneval
uat
ionoft
hes
ervi
cequal
it
ytheyr
ecei
ved,
t
hel
evelofs
ati
sfac
tion ordi
ssat
isf
act
ion,and f
utur
epur
chas
eint
ent
ions
.For
s
ati
sfi
ed c
ust
omer
s,pos
t-pur
chas
e ac
tionsi
ncl
ude r
epeatpur
chas
es,c
ust
omer
l
oyal
ty,andpos
iti
vewor
d-of
-mout
hcommuni
cat
ions
.Ther
ever
sewi
llbet
ruef
ora
di
ssat
isf
iedc
ust
omer
.

a)Eval
uat
ionofSer
vic
eQual
it
y
Twoc
omponent
soft
hes
ervi
cear
egener
all
yeval
uat
ed:t
het
echni
calqual
it
yandt
he
f
unc
tionalqual
it
y.Forbot
h,y
ouc
ompar
ewhatyouper
cei
veyour
ecei
vedt
owhat
youexpec
tedt
orec
eive.I
fyourexpec
tat
ionswer
emetorexc
eeded,
youwi
llbel
ieve
your
ecei
vedhi
ghqual
it
yser
vic
e.I
fyourexpec
tat
ionswer
enotmet
,youwi
llf
ellt
he
qual
it
yofs
ervi
cewaspoor
.

b)Cus
tomerSat
isf
act
ion
Sat
isf
act
ionordi
ssat
isf
act
ionhasbeenc
all
edonepi
sodi
cmeas
urei
nthati
trel
ates
t
othel
asts
ervi
ceexper
ienc
e.Ser
vic
equal
it
yisagl
obaleval
uat
ionofal
lpas
tser
vic
e
exper
ienc
es.Res
ear
chhasf
oundt
hatc
ust
omer
s'per
cei
vedeval
uat
ionsofs
ervi
ce
qual
it
yhaveani
mpac
tont
hei
rlevelofs
ati
sfac
tion.Ther
efor
e,s
ervi
cequal
it
y
eval
uat
ioni
sanant
ecedentt
ocus
tomers
ati
sfac
tion.

c
)At
tri
but
ionTheor
y
At
tri
but
iont
heor
yref
erst
othepr
oces
sofdec
idi
ngt
hec
aus
eofas
ervi
cef
ail
ure.I
f
t
hec
ust
omerf
eel
sthes
ervi
cef
ail
urei
sduet
ocondi
ti
onsbeyondt
hec
ont
roloft
he
f
ir
mthent
hel
evelofdi
ssat
isf
act
ionwi
llbel
ow.I
f,however
,thec
ust
omerf
eel
sthe
s
ervi
cef
ail
urewasdonet
ocont
rol
labl
efac
tor
sthatc
oul
dhavebeenpr
event
ed,
then
t
heywi
llexper
ienc
eahi
ghl
evelofdi
ssat
isf
act
ionwi
tht
hec
ompany
/ser
vic
epr
ovi
der
.

Cont
rol
labl
eandunc
ont
rol
labl
efac
tor
sar
esi
tuat
ionali
nnat
ureandwi
llvar
yfr
om
onec
ons
umert
oanot
her
.Cus
tomer
ssomet
imesat
tri
but
est
othes
ervi
cef
ail
ure
whi
chmaybec
ont
rol
labl
eorunc
ont
rol
labl
e.However
,unders
uchc
ondi
ti
onst
he
f
ir
mcoul
dhavepr
event
edt
heoc
cur
renc
eofs
uchf
act
ors
.Ser
vic
efi
rmsc
anr
educ
e

84
t
hel
evelofdi
ssat
isf
act
ionofc
ust
omer
sthr
oughc
ont
rol
li
ngt
hes
efac
tor
s.
Forexampl
e,t
hinkofami
ddl
e-agedc
oupl
egoi
ngoutt
oadec
enthot
el.Theyar
e
s
eat
ed nearayoung c
oupl
e wi
ths
ever
alunr
ulyc
hil
dren.The c
hil
dren ar
eso
di
srupt
ivet
hati
tisdi
ff
icul
tfort
hemi
ddl
e-agedc
oupl
etohaveac
onver
sat
ion.So
whi
let
hef
oodwasgood,t
hemi
ddl
e-agedc
oupl
edi
dnothavet
hepl
eas
anteveni
ng
t
heyhadant
ici
pat
ed.

Ont
hebas
isofat
tri
but
iont
heor
y,t
hec
oupl
e'sl
evelofdi
ssat
isf
act
iont
owar
dst
his
hot
elwi
lldependentont
woques
tions
.
1.Wast
hehot
elr
espons
ibl
efort
hemnothavi
nganenj
oyabl
eexper
ienc
e?
2.Coul
dthehot
elhavepr
event
edt
hebadexper
ienc
e?

I
fthec
oupl
e'sbel
ievet
hatt
heans
weri
s'yes
'forbot
hques
tionsbutf
ailt
odos
o.
Thei
rdi
ssat
isf
act
ionwi
llbehi
gh;ot
her
wis
e,i
twi
llbel
ess
.However
,thehot
elc
an
r
educ
ethel
evelofdi
ssat
isf
act
ionbyt
aki
ngs
ever
alac
tionsonc
eitbec
ameawar
e
t
hatt
hec
oupl
ewasunhappywi
tht
hes
ituat
ion.

1.Thehot
elper
sonnels
houl
dhaveapol
ogi
zedf
ort
hes
ituat
ion.
2.Thehot
elc
oul
dhavemovedt
hec
oupl
etoanot
hert
abl
e,i
fther
eisf
rees
pac
e.
3.Thehot
elc
oul
dhaveof
fer
edt
hec
oupl
efr
eedes
ser
ts.
4.Thehot
elc
oul
dhaveof
fer
edt
hemaf
reemeali
nthef
utur
e.

d)Fut
ureBehavi
or
Res
ear
chhass
hownt
hatonl
y1outofever
y25di
ssat
isf
iedc
ust
omer
scompl
aint
o
t
hef
irm.Ther
emai
ning24s
howt
hei
rdi
spl
eas
urebyengagi
ngi
nwhati
sknownas
f
ir
m-s
wit
chi
ngbehavi
orornegat
ivewor
d-of
-mout
hcommuni
cat
ion.I
tises
timat
ed
t
hatanunhappyc
ust
omerwi
llt
ellbet
ween10t
o11ot
herpeopl
eaboutt
hei
rbad
exper
ienc
e.Thec
ostofc
ust
omerdi
ssat
isf
act
iont
oaf
irmi
sreal
lyqui
tebi
gger
.

Whathappenswhenc
ust
omer
sar
esat
isf
iedwi
tht
hes
ervi
cet
heyr
ecei
ved?Thr
ee
f
utur
ebehavi
orsar
eobs
erved:r
epeatpur
chas
es,f
irml
oyal
ty,andpos
iti
vewor
d-of
-
mout
hcommuni
cat
ion.Sat
isf
iedc
ust
omer
sof
tenr
etur
ntot
hes
ames
ervi
cevendor
.
I
ffut
ureenc
ount
erspr
ovet
obegoodexper
ienc
es,f
irml
oyal
tyus
ual
lydevel
ops
.On
aver
age,
asat
isf
iedc
ust
omerwi
llt
ellt
hreeot
her
soft
hei
rexper
ienc
e.

85
UNI
T5:CONSUMEREXPECTATI
ONSOFSERVI
CES

Cont
ent
s
5.
0Ai
msandObj
ect
ives
5.
1Int
roduc
tion
5.
2Meani
ngofCons
umerExpec
tat
ions
5.
3Ant
ecedent
sofCons
umerExpec
tat
ions
5.
4Rol
eofCons
umerEx
pec
tat
ions
5.
5Managi
ngCons
umerExpec
tat
ions
5.
0AI
MSANDOBJ
ECTI
VES

Af
teryouc
ompl
etet
hisuni
tyouar
eexpec
tedt
o:
-i
dent
if
ywhatc
ust
omer
sexpec
tfr
oms
ervi
cef
irms
-i
dent
if
ythedi
ff
erentl
evel
sofc
ust
omer
’sexpec
tat
ions
.
-l
istt
heant
ecedent
sofc
ons
umerexpec
tat
ions
-i
dent
if
yther
oleofc
ust
omer
s’expec
tat
iononpur
chas
edec
isi
onsofc
ust
omer
-des
cri
bet
hemet
hodsofmanagi
ngc
ust
omerexpec
tat
ions

5.
1INTRODUCTI
ON

Thi
s uni
tis des
igned t
oint
roduc
e and des
cri
be t
he meani
ng ofc
ust
omer
s
expec
tat
ions
, ant
ecedent
s of c
ust
omer
s expec
tat
ions
,level
s of c
ust
omer
s
expec
tat
ions
,met
hodsofmanagi
ngc
ust
omer
sexpec
tat
ion.Thef
act
orst
hataf
fec
t
t
hec
ust
omer
sexpec
tat
ionswi
llal
sobedi
scus
sed.

5.
2MEANI
NGOFCONSUMEREXPECTATI
ONS

Cons
umerexpec
tat
ionsar
epr
etr
ialbel
ief
sac
ons
umerhasaboutt
heper
for
manc
eof

86
as
ervi
cet
hatar
e us
ed as t
he s
tandar
d orr
efer
enc
e agai
nstwhi
chs
ervi
ce
per
for
manc
eisj
udged.
Anunder
standi
ngoft
hel
evel
sofc
ons
umerexpec
tat
ionswi
ll
hel
pcompani
est
oens
uret
hatc
ust
omerexpec
tat
ionsar
emet
.

Cons
umerex
pec
tat
ionsc
ons
istoff
ivel
evel
s:i
deals
ervi
cel
evel
,des
ireds
ervi
cel
evel
,
adequat
eser
vic
elevel
,pr
edi
cteds
ervi
cel
evel
,andz
oneoft
oler
anc
e.I
noper
ati
nga
s
ervi
ce,
iti
simpor
tantt
ounder
standt
her
elat
ions
hipsamongt
hes
edi
ff
erentl
evel
s.
1.I
deals
ervi
cel
evel
:
Thei
deals
ervi
cel
eveli
sdef
inedast
he'
wis
hedf
or'l
evelofs
ervi
cec
ons
umer
s
woul
dli
ke.
2.Des
ireds
ervi
cel
evel
:
Thedes
ireds
ervi
cel
eveli
sthel
evelofper
for
manc
ethec
ust
omerwant
sorhopes
t
orec
eivef
rom t
hes
ervi
ce.
Thi
slevelofexpec
tat
ionmaybel
esst
hanorequalt
o
t
hei
deals
ervi
cel
evel
.Itdependsonwhatt
hec
ons
umerknowsoft
hei
ndus
try.
3.Adequat
eser
vicel
evel
:
Theadequat
eser
vic
eleveli
sthemi
nimum l
evelofs
ervi
cet
hec
ons
umerwi
ll
t
oler
ateandac
ceptwi
thoutbei
ngdi
ssat
isf
ied.
4.Thez
oneoft
oler
ance
Thez
oneoft
oler
anc
eist
hear
eabet
weent
headequat
elevelofs
ervi
ceandt
he
des
iredl
evelofs
ervi
ce.Ser
vic
esper
for
medbel
owt
headequat
elevelofs
ervi
ce
andout
sidet
hez
onewi
llnotbeac
cept
abl
e.
5.Pr
edi
cteds
ervi
cel
evel
:
Thi
sist
hel
astl
evelofc
ons
umerexpec
tat
ions
.Thepr
edi
cteds
ervi
cel
eveli
sthe
l
evelofs
ervi
cec
ons
umer
sac
tual
lyexpec
tfr
om t
hes
ervi
cef
irm.Thepr
edi
cted
l
evelofs
ervi
cec
anr
angef
rom t
hei
deall
evelofs
ervi
cet
otheadequat
elevelof
s
ervi
ce.

5.
3ANTECEDENTSOFCONSUMEREXPECTATI
ONS

87
Theant
ecedent
sofc
ons
umerexpec
tat
ionsi
ncl
udet
hef
act
orsdi
scus
sedi
nthepr
e-
pur
chas
ephas
eint
heot
herc
hapt
er.
Inaddi
ti
onc
ons
umerexpec
tat
ionsar
eimpac
ted
byani
ndi
vidual
'sper
sonalphi
los
ophyofs
ervi
ce,s
ituat
ionalf
act
orsandt
hef
irm-
pr
oduc
edf
act
orsofs
ervi
ceper
sonnel
,tangi
blec
ues
,ot
herc
ust
omer
s,f
irmi
mage
andpr
e-s
ervi
cewai
ti
ng.

Ant
ecedent
sofCons
umerExpec
tat
ions

I
nternal Ext
ernal Situati
on Fir
m
Fact
ors Factor
s Factors Produced
Factor
s

- Indivi
dualneeds - Competit
ive - Reasonfor - Promot ions
- Levelsof opti
ons purc
hase - Pri
ce
involvement - Soci
alcontext - Consumermood - Distr
ibut i
on
- Pastexperienc
e - Word-of-
mout h - Wealth - Service
- Service communications - Ti
mec onst
rai
nts personnel
philosophy - Emergency - Tangiblec ues
- Otherc ustomers
- Fir
mi mage
- Pre-service
waiti
ng

a)I
nter
nalFact
ors
I
nter
nalf
act
orsi
mpac
ting a c
ons
umer
'sexpec
tat
ionsofa s
ervi
cei
ncl
ude t
he
c
ons
umer
's
per
sonalneeds
,levelofi
nvol
vement
,pas
texper
ienc
e,ands
ervi
cephi
los
ophy.
Thes
e
f
act
orswi
lli
mpac
taper
son'
sideal
,des
iredandadequat
elevel
sofexpec
tat
ions
.

i
.I
ndi
vidualNeeds
Theper
sonalneedsofc
ons
umer
sar
ebas
edonMas
low'
sHi
erar
chyofNeedsmodel
.
Ac
cor
dingt
oMas
low,
lower
-or
derneedsmus
tbef
ull
yoratl
eas
tpar
tial
lys
ati
sfi
edi
n
as
equent
ialor
derbef
orehi
gher
-or
derneedswi
llaf
fec
thumanbehavi
or.

Themos
tel
ement
aryneedsofhumansar
ethephys
iol
ogi
calneedsoff
ood,s
hel
ter
,
andc
lot
hing.
Onc
ethes
eneedsar
esat
isf
ied,
indi
vidual
swi
llmovet
othes
econdl
evel

88
ofneeds
,whi
char
esaf
etyneeds
,suc
hass
ecur
ity,
prot
ect
ionf
romphys
icalhar
m,and
audi
enc
eoft
heunexpec
ted.Atl
evelt
hreei
sthes
oci
albel
ongi
ngnes
sneedort
he
des
iret
obeac
cept
edbymember
sofone'
sfami
ly,
soc
ialgr
oups
,andot
heri
ndi
vidual
s.

Thet
wohi
gher
-or
derneedsofs
elf
-es
teem ands
elf
-ac
tual
izat
ionar
emor
edi
ff
icul
t
t
osat
isf
y.Sel
f-es
teem needsi
ncl
udet
hedes
iref
ors
tat
us,es
teem andr
espec
tfr
om
ot
her
s.Sel
f-ac
tual
izat
ioni
sani
ndi
vidual
'sat
tai
nmentofal
lheors
hec
anbe.Sel
f
ac
tual
izat
ioni
sthepi
nnac
leofhumanneedsandi
srar
elyac
hievedonl
ywhent
he
l
ower
-or
derneedshavebeens
ati
sfi
edwi
lli
ndi
vidual
smovet
othes
ehi
gheror
der
needs
.Forexampl
e,i
fAt
oZemenuhasnoteat
enf
ors
ever
alhour
s,hi
spr
imar
yneed
maybeatt
hephys
iol
ogi
call
evel
.Ifs
o,hewi
llbemor
econc
ernedaboutt
hequant
ity
off
oodandt
het
imel
ines
swi
thwhi
chi
tiss
ervedr
athert
hant
hequal
it
yandt
he
at
mos
pher
eoft
her
est
aur
ant
.

Suppos
eins
teadofaphys
iol
ogi
calneed,At
oZemenut
akeshi
swi
fet
oabi
ghot
elt
o
f
ulf
il
lthet
hir
dlevelofneed-
soc
ialbel
ongi
ngnes
sneed.Hi
sexpec
tat
ionswi
llbe
qui
tedi
ff
erent
.Thequal
it
yoft
hef
oodandt
heat
mos
pher
eoft
her
est
aur
antar
enow
mor
eimpor
tantt
hant
hequant
ityands
peedofdel
iver
y.I
nfac
t,hemaypr
efers
lower
s
ervi
ces
oheandhi
swi
fec
anhavet
imet
ochat
.

I
fAt
oZemenuwant
stof
ulf
il
lsel
f-es
teem needs
,hewi
llpr
obabl
ychoos
eahi
gher
-
c
las
shot
el.Di
ningatanups
cal
ehot
elwi
llal
lowhi
mtohaveaf
eel
ingofs
tat
usand
s
elf
-es
teem.Asar
esul
t,hi
sexpec
tat
ionsoft
hehot
elwi
llc
hangeandhewi
llexpec
t
mor
efr
omt
hehot
el.

i
i.
LevelofI
nvol
vement
I
nvol
vementhast
woef
fec
tsonexpec
tat
ions
.Fi
rst
,ast
hel
evelofi
nvol
vement
i
ncr
eas
es,t
hegapbet
weent
hei
deall
evelofs
ervi
ceandt
hedes
iredl
evelofs
ervi
ce
nar
rows
.Sec
ond,ast
he l
evelofi
nvol
vementi
ncr
eas
es,t
he z
one oft
oler
anc
e
dec
reas
es.Cons
umer
sar
eles
stol
erantwhen as
ervi
cei
sles
sthan i
deal
.The
adequat
elevelofs
ervi
ce,t
hedes
iredl
evelofs
ervi
ce,andt
hei
deall
evelofs
ervi
ce
ar
eal
mos
tthes
ame.Low i
nvol
vements
ervi
cesar
ejus
ttheoppos
ite.Thez
oneof
t
oler
anc
eiswi
derwi
tht
hei
deal
,des
ired,andadequat
elevel
sofexpec
tat
ionsbei
ng

89
f
urt
herapar
t.

i
ii
.Pas
tExper
ience
The mos
timpor
tantf
act
oraf
fec
ting c
ons
umerexpec
tat
ionsofa s
ervi
cei
sa
c
ons
umer
'spas
texper
ienc
e.Pas
texper
ienc
einc
ludesexper
ienc
ewi
thapar
tic
ular
s
ervi
ce vendor
,exper
ienc
e wi
th ot
hervendorwi
thi
nthe s
ame i
ndus
try,and
exper
ienc
ewi
thr
elat
eds
ervi
ces
.

i
v.Ser
vicePhi
los
ophy
Cons
umer
'sexpec
tat
ionsar
eaf
fec
tedbyhi
sorherper
sonalphi
los
ophyc
onc
erni
ng
t
hedel
iver
yofs
ervi
ces
.Somec
ons
umer
s,bynat
ure,
havehi
ghs
tandar
dsc
onc
erni
ng
t
he qual
it
y ofs
ervi
ce del
iver
y and ver
yli
ttl
etol
eranc
efordevi
ati
on.Ot
her
c
ons
umer
shavel
owers
tandar
dsandt
endt
obemor
etol
erantofs
ervi
cedevi
ati
ons
.

I
ndi
vidual
sdevel
opt
hei
rper
sonals
ervi
cephi
los
ophyt
hroughac
ombi
nat
ionoft
wo
i
nput
s:her
edi
tar
yandpas
texper
ienc
e.A maj
orpar
tofhow i
ndi
vidual
slookat
s
ervi
cesi
sinher
itedorwhatt
heyexpec
tfr
om s
ervi
cesi
sbas
edont
hei
rper
sonal
it
y
andt
emper
ament
.However
,pas
texper
ienc
emol
dsandt
emper
stheper
sonal
it
y.I
n
ear
lyc
hil
dhood,
indi
vidual
slear
nfr
om obs
ervi
ngot
her
s.Lat
eri
nli
fe,
theyl
ear
nfr
om
t
hei
rownexper
ienc
es.

b)Ext
ernalFact
ors
Thet
hreeext
ernalf
act
orst
hataf
fec
tcons
umerexpec
tat
ionsar
ecompet
iti
veopt
ions
,
s
oci
alc
ont
ext
,and wor
d-of
-mout
hcommuni
cat
ions
.Thes
efac
tor
scan havean
i
mpac
tonal
lfourl
evel
sofexpec
tat
ions
.However
,thepr
imar
yimpac
tisont
he
pr
edi
ctedl
evel
.

i
.Compet
iti
veOpt
ions
Thel
evelofs
ervi
cec
ons
umer
sexpec
tfr
omapar
tic
ulars
ervi
cevendori
simpac
tedby
t
heal
ter
nat
ivesavai
labl
etot
hec
ons
umer
.Inmanyc
ases
,expec
tat
ionsofs
ervi
ces
wi
llnotonl
ybeaf
fec
tedbyot
hervendor
sint
hes
amei
ndus
trybutbywhati
s

90
avai
labl
einot
hers
ervi
cei
ndus
tri
es.

i
i.
Soci
alCont
ext
Ac
ons
umer
'ss
oci
als
ituat
ionc
anhaveani
mpac
tonhi
sorherexpec
tat
ionsofa
s
ervi
ce.
Peopl
e’sdes
iredl
evelofexpec
tat
ionswi
llof
teni
ncr
eas
ewhent
heyar
ewi
th
ot
her
swhoar
eimpor
tantt
othem,
whi
let
hei
rzoneoft
oler
anc
eisnor
mal
lyr
educ
ed.

i
ii
.Wor
d-of
-Mout
hCommuni
cat
ions
I
tist
hes
tronges
tsour
ceofi
nfor
mat
ionus
edbyc
ons
umeri
nfor
mingexpec
tat
ions
.
Cons
umer
swi
llof
tens
eekt
heopi
nionofot
her
sbef
orepur
chas
ingas
ervi
ce.
Wor
d-of
-
mout
hcommuni
cat
ion c
an movef
rom t
hrees
our
ces
:per
sonals
our
ces
,exper
t
s
our
ces
,andder
iveds
our
cesandi
sus
edt
osol
idi
fyores
tabl
isht
hepr
edi
ctedl
evelof
s
ervi
ce.Fors
ervi
ceswi
thwhi
chc
ons
umer
shavel
it
tleknowl
edgeorexper
ienc
e,
wor
d-of
-mout
hcommuni
cat
ionsc
anbeus
edt
oes
tabl
isht
hedes
iredandi
deall
evel
s
ofs
ervi
ce.

Per
sonals
our
cesi
ncl
udef
ri
ends
,rel
ati
vesandwor
kas
soc
iat
es.Exper
tsour
cesar
e
s
omet
imess
oughtout
,es
pec
ial
lyf
orhi
ghi
nvol
vementpur
chas
es.Cons
umer
sof
ten
bel
ieveexper
tswi
llpr
ovi
debet
teri
nfor
mat
ion t
han per
sonals
our
ces
.Der
ived
s
our
cesofi
nfor
mat
ionar
eobt
ainedandus
edt
ofor
m expec
tat
ions
.Der
iveds
our
ces
ar
ethi
rdpar
tys
our
cesi
.e.
,as
tat
ementmadebyaper
sonaboutanot
herper
son'
s
pur
chas
eexper
ienc
e.

c)Si
tuat
ionalFact
ors
Cons
umerexpec
tat
ionsofas
ervi
cear
eaf
fec
tedbys
uchs
ituat
ionalf
act
orsast
he
r
eas
onf
ort
hepur
chas
e,t
hec
ons
umer
'smood,t
heweat
her
,ti
mec
ons
trai
ntsand
whet
hert
hes
ervi
cei
sanemer
genc
y.Si
tuat
ionalf
act
orsar
etempor
aryc
hangesi
n
t
henor
mals
tat
eoft
hings
.Thes
etempor
aryc
hangesi
mpac
twhatc
ons
umer
sexpec
t
f
romas
ervi
ce.

i
.Reas
onsf
orPur
chas
e
Ther
eas
ont
hes
ervi
cei
spur
chas
edc
anal
terc
ons
umerexpec
tat
ions
.Forexampl
e:
c
oupl
eswhohasdr
ivenl
ongdi
stanc
eonapar
tic
ulardayandanot
herl
ongdi
stanc
e

91
dr
ivenextdaywi
sht
ohaveac
omf
ort
abl
ehot
elt
otakeac
omf
ort
abl
esl
eep.Ont
he
ot
herhandt
hes
ecoupl
esmayc
hoos
eac
omf
ort
abl
ehot
elwhi
let
heyar
eawayf
or
t
he weekend and s
pend s
ome t
ime i
nthe s
un.Thei
rexpec
tat
ionsf
rom t
his
c
omf
ort
abl
ehot
elwi
llbedi
ff
erent
.

i
i.
Cons
umerMood
Cons
umermoods
tat
eswi
lli
mpac
texpec
tat
ions
.Indi
vidual
sinagoodmoodt
endt
o
bemor
etol
erantofs
ervi
ceper
sonnel
.Thei
rzoneoft
oler
anc
eisgr
eat
erandt
hei
r
expec
tat
ion l
evelof adequat
eser
vic
eisl
ower
.Indi
vidual
sin a bad mood
demons
trat
ether
ever
sec
har
act
eri
sti
cs.Thet
oler
anc
ezonei
sreduc
edandt
he
expec
tat
ionl
evelofadequat
eser
vic
eishi
gher
.

Real
izi
ngt
hei
mpor
tanc
eofmoods
tat
eonc
ust
omerexpec
tat
ions
,manys
ervi
ce
bus
ines
seshavet
akenac
tives
tepst
oenhanc
eagoodmood,
suc
hasat
trac
tivedéc
or,
mus
ic,
appeal
ings
mel
ls,
andf
ri
endl
yser
vic
eper
sonnel
.

i
ii
.Weat
her
Weat
heral
sopl
aysar
olei
ncons
umerexpec
tat
ions
.Innor
malweat
her
,pas
senger
s
expec
tai
rl
inest
oar
riveont
ime,
buti
nbadweat
her
,pas
senger
sreal
izet
her
emaybe
adel
ay.Thedes
iredl
evelofs
ervi
cer
emai
nst
hes
amebutt
hepas
senger
'spr
edi
cted
l
evelofs
ervi
cei
sreduc
edduet
othei
ncl
ementofweat
herc
ondi
ti
ons
.

i
v.Ti
meCons
trai
nts
Ti
mec
ons
trai
ntsal
soi
mpac
tcons
umerexpec
tat
ions
.Fi
rmswhous
emanpowerf
or
t
empor
arywor
ker
smodi
fyt
hei
rexpec
tat
ionswhenf
acedwi
tht
imec
ons
trai
nts
.Ifa
f
ir
mneedshel
pimmedi
atel
y,t
heywi
llexpec
tmanpowert
obeabl
etomeett
heneed,
butt
heywi
llnor
mal
lyl
owert
hei
rpr
edi
ctedexpec
tat
ionsoft
heper
son'
swor
kabi
li
ty.
Thei
rzoneoft
oler
anc
ewoul
dbewi
ders
inc
emanpowerwoul
dnothaves
uff
ici
ent
t
ime t
oloc
atet
he bes
tindi
vidual
.Ifgi
ven s
ever
aldaysnot
ice,f
irmsexpec
t
manpowert
oloc
ateaper
sonwhof
it
sthej
obs
pec
ifi
cat
ions
.Thei
rzoneoft
oler
anc
e
i
sles
sandt
hei
rpr
edi
cteds
ervi
ceexpec
tat
ionsnor
mal
lyc
oinc
idewi
tht
hei
rdes
ired
s
ervi
ceexpec
tat
ions
.

v.
Emer
genci
es

92
Emer
genc
iesandc
atas
tropheshaveani
mpac
tonc
ons
umerexpec
tat
ions
.Inan
emer
genc
y,i
ndi
vidual
sexpec
thos
pit
alst
o ac
timmedi
atel
y and t
hei
rzone of
t
oler
anc
eisver
ysmal
l.Theemer
genc
yroomc
anhaves
ever
als
eri
ousc
ases
,buti
fan
i
ndi
vidualbel
ieveshi
sorherc
asei
sser
ious
,theper
sonexpec
tst
hehos
pit
alt
ohave
as
taf
flar
geenought
opr
ovi
dei
mmedi
atec
are.However
,ift
hepat
ienthass
topped
att
heemer
genc
yroom f
oras
ituat
iont
hati
snots
eri
ousorl
if
e-t
hreat
eni
ng,heor
s
hewi
llbemor
etol
erantandwi
llnotexpec
timmedi
ates
ervi
cei
fmor
eser
iousc
ases
ar
ebei
nghandl
ed.

d)Fi
rmPr
oducedFact
ors
Cons
umerexpec
tat
ionsar
eaf
fec
ted bypr
omot
ions
,pr
ices
,di
str
ibut
ion,s
ervi
ce
per
sonnel
,tangi
blec
ues
,ot
herc
ust
omer
s,f
ir
mimage,andpr
e-s
ervi
cewai
ti
ng.Thi
s
wi
llbedi
scus
sedasf
oll
ow.

i
.Pr
omot
ions
Pr
omi
sesmadei
nadver
tis
ement
sands
alespr
omot
ionswi
llbeus
edbyc
ons
umer
sin
f
ormi
ngt
hei
rpr
edi
ctedl
evelofs
ervi
cef
orapar
tic
ularf
irm.Adver
tis
ingc
anal
so
modi
fyac
ons
umer
'sdes
iredl
evelofs
ervi
ce,adequat
elevelofs
ervi
ceandz
oneof
t
oler
anc
e.

Sal
espr
omot
ionss
uchasc
ouponsandi
ntr
oduc
tor
yof
fer
swi
llaf
fec
tcons
umer
expec
tat
ions
.Couponsnor
mal
lyr
educ
ethel
evelofpr
edi
cteds
ervi
cec
ons
umer
s
expec
tandwi
dent
het
oler
anc
ezone.

Sal
esper
sonnelhavean i
mpac
ton c
ons
umerexpec
tat
ions
.Bot
hthepr
edi
cted
s
ervi
ceexpec
tat
ionsandz
oneoft
oler
anc
ewi
llbeaf
fec
tedbyt
hes
alesper
son'
s
pr
omi
ses
.

i
i.
Pri
ci
ng
Cons
umerexpec
tat
ionsar
eaf
fec
tedbyt
hepr
iceoft
hes
ervi
ce.t
hegener
alr
ulesi
s
t
hatt
hehi
ghert
hepr
ice,
thehi
ghert
hec
ons
umer
'sexpec
tat
ionsofas
ervi
ceandt
he
nar
rowert
hez
oneoft
oler
anc
e.Det
ermi
nat
ionofahi
ghorl
ow pr
ice,however
,is
r
elat
ivet
othec
ompet
iti
onandt
oot
hers
ervi
ceal
ter
nat
ives
.Al
thought
hepr
edi
cted
l
evelofs
ervi
cei
sdi
rec
tlyr
elat
edt
othepr
ice,t
hewi
dthoft
hez
oneoft
oler
anc
e

93
t
endst
obei
nver
sel
yrel
ated,
wit
hthec
ons
umerbec
omi
ngl
esst
oler
antast
hepr
ice
oft
hes
ervi
cer
ises
.Ser
vic
efi
rmsmus
tal
sobec
ogni
zantoft
hepr
ici
ngs
truc
tur
eof
al
ter
nat
ives
ervi
ces
.

i
ii
.Di
str
ibut
ion
Di
str
ibut
ionhasani
mpac
tons
ervi
ceexpec
tat
ions
.Pr
edi
ctedexpec
tat
ionsofc
hai
n
oper
ati
onswi
thmul
ti
pleout
let
sar
eus
ual
lymor
esol
idi
fi
ed.Cus
tomer
sbel
ieveeac
h
br
anc
hfac
ili
tywi
llof
ferappr
oxi
mat
elyt
hes
amel
evelofs
ervi
cebec
aus
etheyar
eal
l
r
unundert
hes
amec
orpor
atebr
andname.Theavai
labi
li
tyandac
ces
sibi
li
tyofa
s
ervi
cet
ocus
tomer
shasani
mpac
tont
hei
rexpec
tat
ions
.

i
v.Ser
vicePer
sonnel
Conver
sat
ionswi
ths
ervi
ceper
sonnelal
sohaveani
mpac
tonexpec
tat
ions
.Ift
he
empl
oyeeofac
ompanyt
ell
sac
ust
omert
hathe/
shewi
llhaveani
cet
anof
fert
en
s
ess
ions
,the c
ust
omerwi
llexpec
tthatt
o oc
cur
.Henc
e,t
he expec
tat
ion ofa
c
ust
omerdependsonwhatt
hes
ervi
ceper
sonneli
nfor
mshi
m/her
.

v.
Tangi
bleCues
Tangi
blec
uesar
eimpor
tantant
ecedent
sofc
ons
umerexpec
tat
ions
.Tangi
blec
ues
c
ons
istofs
ucht
hingsast
heappear
anc
eoft
hei
nter
iorandext
eri
oroft
hef
aci
li
ty,
t
hef
urni
tur
e,t
heequi
pmentus
edi
nthes
ervi
ce,i
nter
iordéc
or,c
leanl
ines
s,poi
ntof
pur
chas
edi
spl
aysandt
heappear
anc
eoft
hef
ir
m'sper
sonnel
.

vi
.Ot
herCus
tomer
s
Expec
tat
ionsofas
ervi
cec
anbeaf
fec
tedbyot
herc
ust
omer
s.I
fac
ust
omerobs
erves
anot
herc
ust
omerr
ecei
vingper
sonalat
tent
ion,hemayexpec
tthes
amet
ypeof
t
reat
ment
.He wi
llpr
obabl
ybe di
sappoi
nted i
fhe doesnotr
ecei
ve t
he s
ame
at
tent
ionevent
houghhemaynothaveexpec
tedi
tor
igi
nal
ly.

Anot
herwayot
herc
ust
omerc
ani
mpac
tac
ons
umer
'sexpec
tat
ionsofas
ervi
cei
sby
demons
trat
ingademandf
ort
hes
ervi
ce.
Ifac
ust
omerobs
ervesl
ongl
inesofvi
si
tor
s
ofagi
venhot
els
ever
alt
imes
,hewoul
dremar
k"Ther
emus
tbeagr
eatpl
acet
oeat
.
Ther
eisal
waysal
ongl
ine.
"Theexpec
tat
ionoft
hec
ust
omerwi
llbehi
gh.
Ift
her
ewas

94
neveral
ineandt
henumberofc
ust
omer
swass
mal
l,i
ndi
vidual
swoul
dtendt
othi
nk
t
hequal
it
yoff
oodors
ervi
cewaspoorandpr
edi
ctedexpec
tat
ionswoul
dbel
ower
.

vi
i.
Fir
mImage
Thei
magec
ons
umer
shaveofaf
irm wi
llhaveani
mpac
tont
hei
rexpec
tat
ionsoft
he
s
ervi
ce.
ift
heyhaveahi
ghi
mageoft
hef
ir
m,t
heywi
llhavehi
ghexpec
tat
ions
.Ift
he
i
magei
slow,
expec
tat
ionswi
llbel
ow.

Thepr
edi
ctedl
evelofs
ervi
cei
sthepr
imar
ylevelofc
ons
umerexpec
tat
ionsaf
fec
ted
byac
ons
umer
'si
mageofac
ompany.Thei
mageac
ons
umerhasc
anal
soaf
fec
tthe
z
oneoft
oler
anc
e.I
ndi
vidual
swi
llbemor
etol
erantofs
ervi
cedevi
ati
onsi
ftheyhave
ahi
ghi
mageoft
hef
irmt
hani
ftheyhaveal
owi
mage.Somet
imesf
irmi
magec
an
haveani
nfl
uenc
eonac
ons
umer
'sdes
iredl
evelofexpec
tat
ions
.

vi
ii
.Pr
e-s
ervi
ceWai
ti
ng
Ac
ust
omervi
si
ti
nghi
sst
ockbr
okermayexpec
ttowai
ttenmi
nut
e.I
fthewai
tis
t
went
yort
hir
tymi
nut
esi
nst
ead,t
hec
ust
omerwi
llpr
obabl
ybel
esst
oler
antofany
s
ervi
cedevi
ati
onsbel
owt
hedes
iredl
evel
.Thec
ust
omermayr
ati
onal
ize,
"Si
nceIhad
t
owai
tsol
ong,
thei
nves
tmentadvi
cebet
terbegood!
"

Ont
heot
herhand,i
fthec
ust
omerf
eel
sthatt
hewai
ti
ngwasnott
hef
aul
toft
he
s
ervi
cef
irm,t
henheors
hewi
llbemor
etol
erant
.Anot
herwaywai
ti
ngf
oras
ervi
ce
af
fec
tsc
ons
umerexpec
tat
ionsi
sthr
oughi
tsi
mpac
tonmood.I
fcus
tomer
sfeelt
he
wai
ti
ngi
sunnec
ess
aryandc
oul
dhavebeenpr
event
edorr
educ
edbyt
hes
ervi
cef
irm,
t
heyt
endt
obei
nabadmood.Cus
tomer
sinabadmoodar
emor
ecr
iti
caloft
he
s
ervi
ceandhavehi
gheradequat
eser
vic
ethr
eshol
ds.Rai
si
ngt
headequat
eser
vic
e
t
hres
hol
dreduc
esc
ust
omer
s'z
onesoft
oler
anc
e.

5.
4ROLEOFCONSUMEREXPECTATI
ONS

Cons
umer
s’expec
tat
ionsar
eimpor
tantdur
ingal
lthr
ees
tagesoft
hepur
chas
e
pr
oces
s:t
hepr
e-pur
chas
ephas
e,t
hes
ervi
ceenc
ount
er,
andt
hepos
t-pur
chas
ephas
e.
Under
standi
ng t
he r
ole ofc
ons
umerexpec
tat
ionsi
n eac
h oft
hes
e phas
esi
s
i
mpor
tant t
o s
ervi
ce bus
ines
s. Dur
ing t
he pr
e-pur
chas
e phas
e, c
ons
umer

95
expec
tat
ionswi
lli
nfl
uenc
ewhi
chf
ir
mispat
roni
zed.Dur
ingt
hes
ervi
ceenc
ount
er,
c
ust
omer
swi
llc
ompar
ethes
ervi
cet
heyar
erec
eivi
ngt
owhatt
heyexpec
ted.I
nthe
pos
tpur
chas
ephas
e,f
utur
epat
ronagedec
isi
onswi
llbebas
edonhow c
los
elyt
he
s
ervi
ceexper
ienc
emett
heexpec
tat
ionsofc
ust
omer
s.

a)Dur
ingt
hePr
e-Pur
chas
ePhas
e
Cons
umerexpec
tat
ionsi
nfl
uenc
ethe dec
isi
onsofi
ndi
vidual
sdur
ing t
he pr
e-
pur
chas
ephas
e.Thehi
ghert
heexpec
tat
ionsac
ons
umerhasf
oras
pec
ifi
ccompany
,
t
hegr
eat
ert
hepr
obabi
li
tyt
hatheors
hewi
llpur
chas
efr
om t
hatf
irm.Ofc
our
se,
ot
herf
act
orss
uch aspr
ice,l
ocat
ion,andpas
texper
ienc
ewi
llal
soi
mpac
tthe
pur
chas
edec
isi
on.

I
tmus
tbekepti
nmi
ndt
hatexpec
tat
ionsofs
ervi
cesdur
ingt
hepr
e-pur
chas
e
pr
oces
sar
erel
ati
vet
owhati
savai
labl
e.Bec
aus
eser
vic
esar
eexper
ient
iali
nnat
ure,
c
ons
umer
stendt
opat
roni
zet
hes
amef
ir
msbec
aus
etheyknowwhatt
oexpec
t.

b)Dur
ingt
heSer
vic
eEnc
ount
erphas
e
Cus
tomerexpec
tat
ions ar
e of
ten modi
fi
ed dur
ing t
he s
ervi
ce enc
ount
er.The
pr
edi
ctedl
evelofs
ervi
ce,t
headequat
elevelofs
ervi
ce,andt
hez
oneoft
oler
anc
e
mayc
hange.Sel
dom wi
llt
hedes
iredl
evelofs
ervi
ceort
hei
deall
evelofs
ervi
ce
c
hange.
Thez
oneoft
oler
anc
ecanal
sobemodi
fi
eddur
ingt
hes
ervi
ceenc
ount
er.

Ther
e ar
e manyf
act
orst
hataf
fec
tcus
tomer
sexpec
tat
ionsdur
ing t
he s
ervi
ce
enc
ount
erasal
ready di
scus
sed above.However
,the maj
orf
act
ori
nfl
uenc
ing
expec
tat
ionsdur
ingt
hes
ervi
ceenc
ount
eri
stheac
tionsofs
ervi
ceper
sonnel
.Ast
hey
c
ommuni
cat
ewi
tht
hec
ust
omer
,expec
tat
ionsmayc
hange.

c
)Dur
ingt
hePos
t-Pur
chas
ePhas
e
Evenaf
tert
hes
ervi
cehasbeenper
for
med,c
ons
umerexpec
tat
ionsc
anbeal
ter
ed.
Cons
umerexpec
tat
ionsar
ethebi
asesf
oreval
uat
ings
ervi
cequal
it
y.I
fexpec
tat
ions
ar
emetorexc
eeded,
cons
umer
sar
esat
isf
ied.
Ifexpec
tat
ionsar
enotmet
,cons
umer
s
ar
edi
ssat
isf
ied.Overt
ime,t
hez
oneoft
oler
anc
eandt
hepr
edi
ctedl
evelofs
ervi
ce
wi
llc
hangedependi
ngont
hel
evelofs
ervi
cequal
it
ypr
ovi
dedbyas
ervi
cef
irm.

96
I
ffi
rst
-ti
mec
ons
umerexpec
tat
ionsar
eexc
eeded,t
her
emaybever
yli
ttl
echangei
n
expec
tat
ionsf
ort
henextpur
chas
es.However
,ifexpec
tat
ionsar
eexc
eededdur
ing
addi
ti
onalpur
chas
er,
thel
evelofpr
edi
ctedexpec
tat
ionswi
lli
ncr
eas
e.Nor
mal
ly,
the
z
oneoft
oler
anc
ewi
llr
emai
nthes
amef
orawhi
le.Onl
yaf
teranew l
evelof
pr
edi
cteds
ervi
cehasbeenf
ir
mlyes
tabl
ishedwi
llt
headequat
eser
vic
elevels
hif
t
upwar
d.Overt
imet
hes
ervi
cet
hathasc
ons
ist
ent
lyexc
eededc
ons
umerexpec
tat
ions
wi
llbec
omet
hepr
edi
ctedl
evelofs
ervi
ce.

Themor
eac
ust
omerus
esas
ervi
cevendor
,themor
econc
ret
ethepr
edi
cted
expec
tat
ionswi
llbec
ome.I
naddi
ti
on,t
het
oler
anc
ezonebet
weendes
iredand
adequat
eser
vic
ewi
llnar
row overt
ime.Cons
umer
swi
llt
oler
atef
ewerdevi
ati
ons
f
romt
heexpec
tedaf
ters
ever
als
imi
larexper
ienc
eswi
tht
hes
amef
irm.

I
fcus
tomerexpec
tat
ionsar
enotmetbyas
ervi
ce,i
tisunl
ikel
ythef
irm wi
llbeus
ed
agai
n.Buti
fthec
ons
umerdoesus
ethef
ir
magai
n,t
hepr
edi
ctedl
evelofpr
icewi
llbe
l
owerandt
heac
cept
abl
eser
vic
erangeus
ual
lybec
omesnar
rower
.Thes
ervi
cef
irm
mus
tpr
ovei
tsel
fandmus
tper
for
m att
hepr
edi
ctedl
evelorabove.However
,ift
he
poors
ervi
cewasduet
osomet
hingt
hatwasnotwi
thi
nthec
ont
roloft
hef
irm,
expec
tat
ionsus
ual
lyr
emai
nunc
hanged.

5.
5MANAGI
NGCONSUMEREXPECTATI
ONS

The pat
ronage dec
isi
onsar
e bas
ed on c
ons
umerexpec
tat
ions
.The hi
ghert
he
expec
tat
ions
,thegr
eat
ert
hepr
obabi
li
tyofpur
chas
eandt
hel
owert
heexpec
tat
ions
t
he l
owert
he pr
obabi
li
ty ofpur
chas
e.Al
so,r
emembert
hatt
he hi
ghert
he
expec
tat
ions
,thegr
atert
hec
hanc
est
hatt
hes
ervi
cef
irm wi
llnotbeabl
etomeet
c
ons
umerexpec
tat
ionsandt
hatt
hec
ust
omerwi
llbedi
ssat
isf
ied.
Ther
ever
sei
str
ue
f
orl
owerexpec
tat
ions
.

Ser
vic
efi
rmsf
acet
hiss
trangedi
lemma.Pr
omot
inghi
ghexpec
tat
ionswi
lli
ncr
eas
e
pat
ronage butal
soi
ncr
eas
ethe c
hanc
esofpr
oduc
ing di
ssat
isf
ied c
ust
omer
s.
Pr
omot
ingl
owerexpec
tat
ionswi
llens
ures
ati
sfi
edc
ust
omer
s,butt
hec
hanc
esof
get
tingc
ust
omer
stobuyt
hes
ervi
cear
egr
eat
lyr
educ
ed.
Ther
efor
e,t
hei
dealgoali
s

97
t
opr
omot
etheexac
tser
vic
ecus
tomer
swi
llr
ecei
veandt
opr
oduc
etheexac
tser
vic
e
c
ust
omer
sexpec
t.I
ffi
rmsc
an mat
ch expec
tat
ionsand s
ervi
ce,c
ust
omer
sar
e
s
ati
sfi
ed.

Managi
ngc
ust
omerexpec
tat
ionsi
sac
rit
icalc
omponenti
nthemar
ket
ingpl
anofa
s
ervi
cebus
ines
s.Cons
umerexpec
tat
ionsmus
tbemanageddur
ingt
hepr
e-pur
chas
e
phas
e,t
he s
ervi
ce enc
ount
er,and t
he pos
t-pur
chas
e phas
e.How c
ust
omer
expec
tat
ionsc
anbemanageddur
ingeac
hphas
eoft
hepur
chas
epr
oces
swi
llbe
di
scus
sedasf
oll
ows
.

a)Dur
ingt
hePr
e-Pur
chas
ePhas
e
Managi
ngc
ust
omerexpec
tat
ionsdur
ingt
hepr
e-pur
chas
ephas
econs
ist
soft
hree
s
teps
.
1st.
Lear
nwhatc
ust
omer
sexpec
t.
2nd.
Tel
lcus
tomer
swhatt
heyc
anexpec
t
3rd.
cons
ist
ent
lypr
ovi
det
hes
ervi
cet
hatc
ust
omer
sexpec
t

Ther
ear
ethr
eewayst
olear
naboutc
ust
omerexpec
tat
ions
.Fi
rsti
sthr
ought
hei
r
s
alesc
all
smadebys
alesper
sonnel
,dur
ingwhi
cht
heypi
ckupi
nfor
mat
ionabout
whatc
ust
omer
sexpec
t.Sec
ondi
sthr
oughs
ervi
ceper
sonnel
.Whenc
ust
omer
shave
pr
obl
ems
,ser
vic
eper
sonnelhearaboutt
hes
ervi
cest
hatdi
dnotmeetexpec
tat
ions
.
Thi
rdi
sthr
oughmar
ketr
esear
ch,s
uchasc
onduc
tingt
elephoneormai
lsur
veysof
c
ust
omer
sand non c
ust
omer
sordevel
opi
ng f
ocusgr
oups
.Lear
ning c
ust
omer
expec
tat
ionsdur
ingt
hepr
e-pur
chas
ephas
erequi
resc
ommuni
cat
ion.

Thes
econds
trat
egyf
ormanagi
ngc
ust
omerexpec
tat
ionsdur
ingt
hepr
e-pur
chas
e
phas
eist
otel
lcus
tomer
swhatt
heyc
anexpec
t.Adver
tis
ing,
sal
es,
per
sonnel
,ser
vic
e
per
sonnel
,tangi
blec
ues
,pai
ntofpur
chas
edi
spl
ays
,ands
alespr
omot
ionsar
esome
oft
hemet
hodst
hatc
anbeus
ed.

Ser
vic
efi
rmsmus
tbec
aref
ul,however
,toc
ommuni
cat
eac
cur
atei
nfor
mat
ion.Sal
es
per
sonnelar
eof
tent
empt
edt
opr
omi
ses
ervi
cest
hatt
hef
irm doesnotorc
annot
pr
ovi
de.Sal
espeopl
ehavel
ear
nedt
hatbyi
ncr
eas
ingexpec
tat
ionst
heywi
lli
ncr
eas
e

98
t
hel
ikel
ihood ofapur
chas
e.Thes
amet
empt
ati
on i
sfac
ed byt
headver
tis
ing
depar
tment
.Adver
tis
ersknow t
hatt
oinc
reas
epur
chas
es;t
heymus
tmaket
he
s
ervi
cef
irm at
trac
tive.Bus
ines
sesmus
tres
istt
het
empt
ati
ont
ooverpr
omi
seand
s
houl
dpr
omi
seonl
ywhatc
anandwi
llbepr
ovi
ded.

Thet
hir
dst
rat
egyc
ons
ist
sofpr
ovi
dingc
ons
ist
ents
ervi
ce.Pas
texper
ienc
eandwor
d
ofmot
har
etwoc
rit
icalvar
iabl
esus
edbyc
ons
umer
sinmaki
ngpur
chas
edec
isi
ons
.
Bypr
ovi
dingc
ons
ist
ents
ervi
ce,c
ust
omer
sfor
mconc
ret
eexpec
tat
ionsandt
endt
o
c
ont
inuepat
roni
zi
ngt
hes
amef
ir
m.

b)Dur
ingt
heSer
vic
eEnc
ount
er
Thr
ees
trat
egi
esc
anbeus
eddur
ingt
hes
ervi
ceenc
ount
ert
omanagec
ust
omer
expec
tat
ions
.Fi
rst
,ser
vic
eper
sonnelmus
tcommuni
cat
ewi
tht
hec
ust
omerdur
ing
t
hes
ervi
ceenc
ount
er.Sec
ond,i
fpos
sibl
e,s
ervi
cepr
ovi
der
sshoul
d modi
fyt
he
s
ervi
cet
omeett
hec
ust
omer
'sexpec
tat
ions
.Thi
rd,
ift
hes
ervi
cec
annotbemodi
fi
ed,
t
hes
ervi
ceper
sonnels
houl
dex
plai
nwhyt
hec
ust
omer
'sexpec
tat
ionsc
annotbemet
.
Thegoaldur
ingt
hisphas
eist
oens
uret
hes
ervi
cebei
ngpr
ovi
dedmat
chest
he
c
ons
umer
'sexpec
tat
ions
.

c
)Dur
ingt
hePos
t-Pur
chas
ePhas
e
Managi
ngc
ons
umerexpec
tat
ionsdoesnots
topaf
tert
hes
ervi
cei
sper
for
med.
Ser
vic
efi
rmshave t
hree s
trat
egi
est
hey c
an us
e af
tert
he s
ervi
ce hasbeen
c
ompl
eted.

Fi
rst
,compani
ess
houl
dcommuni
cat
ewi
thc
ust
omer
simmedi
atel
yaf
tert
hes
ervi
ce
i
scompl
etedt
oseei
fexpec
tat
ionswer
emet
.Sec
ond,f
irmsc
anus
eaf
oll
ow up
pr
ogr
am,s
uchasaneval
uat
ions
urveys
entt
othec
ust
omert
hrought
hemai
lora
phonec
all
.Thi
rd,c
ompani
ess
houl
dhaveapr
ocedur
efordeal
ingwi
thdi
ssat
isf
ied
c
ust
omer
sthatwi
llas
sis
tinmanagi
ngf
utur
eexpec
tat
ions
.Thegoaldur
ingt
his
phas
eist
wof
old.Thepr
imar
ygoali
stoc
ommuni
cat
ewi
thc
ust
omer
stos
eei
f
expec
tat
ionswer
emet
.Thes
econdar
ygoali
stomodi
fyf
utur
eexpec
tat
ionst
o
i
ncr
eas
ethec
hangesofr
epeatpur
chas
es.

Upont
hec
ompl
eti
onofas
ervi
ce,s
ervi
ceper
sonnels
houl
dtal
kwi
thc
ust
omer
s

99
aboutt
hes
ervi
ce.
Somes
ervi
cesar
edi
ff
icul
tforc
ust
omer
stoeval
uat
eimmedi
atel
y,
s
ofol
low-
upc
all
sar
ean ef
fec
tivewayt
omanagec
ust
omerexpec
tat
ions
.The
pr
imar
ypur
pos
eoft
hec
alli
stoens
urec
ust
omerexpec
tat
ionswer
emet
.

I
fcus
tomerexpec
tat
ionshavenotbeenmet
,thes
ervi
cepr
ovi
dedwasbel
ow t
he
adequat
eser
vic
elevelandout
sideoft
het
oler
anc
ezone.Fut
ureexpec
tat
ionsoft
he
f
ir
m andf
utur
epat
ronagewi
lldependupon how t
hef
irm handl
esdi
ssat
isf
ied
c
ust
omer
s.Thegoaloft
hes
ervi
cef
ir
mist
omovet
hec
ust
omer
'spr
edi
ctedl
evelof
s
ervi
cebac
kint
othez
oneoft
oler
anc
eandasc
los
etot
hedes
iredl
evelofs
ervi
ceas
pos
sibl
e.Dur
ingt
hedi
scus
sionoft
hes
ervi
cef
ail
ure,
ser
vic
eper
sonnelof
tenhavean
oppor
tuni
tyt
oexpl
ainwhyt
hes
ervi
cedi
dnotmeett
hec
ust
omer
'sexpec
tat
ions
.if
t
hec
ust
omerf
eel
sthec
aus
eoft
hes
ervi
cef
ail
urewasout
sidet
hec
ont
roloft
hef
irm,
t
heywi
llof
tenbewi
ll
ingt
ocomebac
kandt
hei
rfut
urepr
edi
ctedexpec
tat
ionswi
ll
be r
est
ric
ted.However
,cus
tomer
smays
til
lneed t
o be of
fer
ed s
ome t
ype of
c
ompens
ati
ondependi
ngonhowmuc
hthes
ervi
cef
ail
edt
omeetexpec
tat
ions
.

100
UNI
T6:MANAGI
NGSUPPLY,
DEMANDANDPRODUCTI
VITYOFSERVI
CES
Cont
ent
s
6.
0.Ai
msandObj
ect
ives
6.
1. I
ntr
oduc
tion
6.
2. Suppl
yofAndDemandf
orSer
vic
es
6.
3. Det
ermi
ningt
heDemandPat
ter
nforSer
vic
es
6.
4. As
ses
stheCaus
esoft
heVar
iat
ionsi
nDemand
6.
5.Managi
ngSuppl
y
6.
5.1Hi
ri
ngpar
t-Ti
meEmpl
oyees
6.
5.2Empl
oyeeswor
kingOver
time
6.
5.3Peak-
TimeOper
ati
ngPr
ocedur
es
6.
5.4Cr
osst
rai
ningofEmpl
oyees
6.
5.5I
ncr
eas
eCus
tomerPar
tic
ipat
ion
6.
5.6Shar
edFac
ili
ty
6.
5.7Out
sour
cing
6.
6.Managi
ngDemand
6.
6.1Shi
ftUs
age
6.
6.2Reduc
eDemanddur
ingPeakPer
iods
6.
6.3St
imul
ateDemanddur
ingSl
owPer
iods
6.
7.Tool
sforManagi
ngDemand
6.
7.1Res
ervat
ionSys
tem
6.
7.2Di
ff
erent
ialPr
ici
ng
6.
7.3Communi
cat
ion
6.
8.Enhanc
ingPr
oduc
tivi
ty
6.
9.I
mpor
tanc
eofCus
tomerBehavi
or
6.
0.AI
MSANDOBJ
ECTI
VES

Att
heendoft
hisuni
tyouar
eexpec
tedt
o:
-expl
ainwhyi
tisi
mpor
tantt
omanages
uppl
yanddemand
-i
dent
if
ythet
echni
quess
ervi
cemar
ket
ersc
anus
etomanages
uppl
y
-i
dent
if
ythes
trat
egi
ess
ervi
cemar
ket
ersc
anus
etomanagedemand
-i
dent
if
ythet
ool
savai
labl
etomanagedemand

101
 -l
istt
hemet
hodsf
irmsc
anus
etoi
mpr
ovepr
oduc
tivi
tyi
nthes
ervi
ces
ect
or
-expl
ainhowf
irmsc
angai
ncus
tomerac
cept
anc
eofs
ervi
cei
nnovat
ions
.

6.
1.I
NTRODUCTI
ON

Thi
sUni
tisdes
igneds
oast
odi
scus
sthemai
nideasr
elat
edwi
thdemandands
uppl
y
andt
hemet
hodsofmanagi
ngdemandands
uppl
yofs
ervi
ces
.Thes
epoi
ntsi
ncl
ude:
Suppl
yofAndDemandf
orSer
vic
es;Det
ermi
ningt
heDemandPat
ter
nforSer
vic
es;
As
ses
smentoft
heCaus
esoft
heVar
iat
ionsi
nDemand;Managi
ngSuppl
y;Managi
ng
Demand;Tool
sforManagi
ng Demand;Tool
sforManagi
ng Demand;Enhanc
ing
Pr
oduc
tivi
ty;I
mpor
tanc
eofCus
tomerBehavi
or.

Thedi
ff
erentmet
hodsofmanagi
ngs
uppl
yinc
ludes
:Hi
ri
ngpar
t-Ti
meEmpl
oyees
;
Empl
oyeeswor
kingOver
time;Peak-
TimeOper
ati
ngPr
ocedur
es;Cr
osst
rai
ningof
Empl
oyees
;Inc
reas
eCus
tomerPar
tic
ipat
ion;Shar
edFac
ili
ty;andOut
sour
cing.

Demandf
ors
ervi
cesc
anal
sobemanagedt
hroughus
ingt
hef
oll
owi
ngmet
hods
:Shi
ft
Us
age;Reduc
eDemanddur
ingPeakPer
iods
;andSt
imul
ateDemanddur
ingSl
ow
Per
iods
.Thedi
ff
erentt
ool
sformanagi
ngdemandal
soi
ncl
udes
:Res
ervat
ionSys
tem;
Di
ff
erent
ialPr
ici
ng,andCommuni
cat
ion.Themet
hodsofenhanc
ingpr
oduc
tivi
tyand
t
hei
mpor
tanc
eofc
ust
omerbehavi
orwi
llbedi
scus
sedatt
heend.

Fi
nal
lyt
her
ewi
llbec
hec
kyourpr
ogr
essques
tionsandr
evi
ew ques
tions
.Fort
he
c
hec
kyourpr
ogr
essques
tionss
ampl
eans
wer
sar
egi
venandyouar
eexpec
tedt
o
f
ini
sht
her
emai
ningques
tionsandt
oans
wert
her
evi
ewques
tions
.

6.
2SUPPLYANDDEMANDFORSERVI
CES

Bec
aus
eser
vic
esar
eper
ishabl
e,t
heyc
annotbei
nvent
ori
edors
tor
ed.I
fdemand
exc
eedss
uppl
y,c
ust
omer
swi
llbe t
urned away.Conver
sel
y,i
fsuppl
yexc
eeds
demand,
capi
talr
esour
cesar
ebei
ngunder
uti
li
zed.
Forexampl
e,anai
rpl
anewi
th175
s
eat
smus
ttur
ncus
tomer
sawayi
f210i
ndi
vidual
swantt
otakeas
pec
ifi
cfl
ightandi
f
onl
y90t
ravel
ersbuyt
icket
sforanai
rpl
ane,t
hef
li
ghtwi
llt
akeof
fwi
th85empt
y

102
s
eat
s.I
naddi
ti
ont
otheunder
uti
li
zat
ionofc
api
talr
esour
ces
,ther
evenuet
hatc
oul
d
havebeengai
nedf
romt
hos
e85s
eat
sisl
ostandc
anneverber
egai
ned.

Thec
apac
ityofaf
irmi
sthemaxi
mumnumberofc
ust
omer
sthatc
anbes
ervedatone
t
ime.Forexampl
e,ar
est
aur
antt
hathas80c
hai
rshasac
apac
ityof80,anai
rpl
ane
t
hathas175s
eat
shasac
apac
ityof175.Empt
ychai
rsands
eat
sar
elos
trevenue.
However
,whenever
yseati
sfi
ll
edandever
ychai
risf
il
led,i
tist
oughert
opr
ovi
de
at
tent
ives
ervi
cet
othec
ust
omer
.Mos
tser
vic
eshaveanopt
imaloper
ati
ngc
apac
ity.

Theopt
imalc
apac
ityi
sthepoi
ntatwhi
chc
ust
omer
scanbes
ervedadequat
elybyt
he
s
taf
fandc
rowdi
ngdoesnotadver
sel
yaf
fec
tcus
tomerbehavi
or.Formos
tser
vic
es,
t
heopt
imalc
apac
ityi
sbet
ween70% and90% ofmaxi
mum c
apac
ity.Whenf
aci
li
ti
es
exc
eedt
heopt
imalc
apac
itypoi
nt,
ser
vic
equal
it
ytendst
odec
line.

Whendemandexc
eedsmaxi
mum c
apac
ity,bus
ines
sisl
ost
.Ifdemandr
egul
arl
y
exc
eedsc
apac
ity,c
ust
omer
swi
llt
urnt
ocompet
itor
s.I
fdemandexc
eedsopt
imal
c
apac
itybuti
sles
sthan maxi
mum c
apac
ity,s
ervi
ce qual
it
ynor
mal
lydec
lines
.
Cus
tomer
sar
enotf
ull
ysat
isf
iedands
ervi
ces
taf
fof
tenf
eel
sover
wor
ked.I
fdemand
i
slowert
hanopt
imalc
apac
ity,r
esour
cesar
ebei
ngwas
ted.Ser
vic
eswoul
dli
kef
or
demandt
oal
waysf
allbet
weenopt
imalc
apac
ityandmaxi
mumc
apac
ity.

Mat
chi
ngs
uppl
yanddemandc
anbec
hal
lengi
ngf
oravar
iet
yofr
eas
ons
.
a.Lac
kofi
nvent
oryors
tor
age:i
tmeanst
hats
ervi
ceshaveadi
rec
tli
nkaget
o
demand.Ser
vic
esar
epr
oduc
edwhent
heyar
ewant
ed.Thel
evelofout
puti
s
di
rec
tlyt
iedt
odemandatanypoi
nti
nti
me.
b.Demandf
luc
tuat
ion:i
tisdi
ff
icul
ttoknow how t
ost
affas
ervi
ces
uchasa
r
esor
tsot
hatopt
imalpr
oduc
tivi
tyi
sobt
ained.Thef
actt
hats
ervi
cesar
e
pr
oduc
edi
nrealt
imemakest
hes
uppl
yanddemands
ituat
ionevenmor
e
di
ff
icul
t.

Det
ermi
ning maxi
mum and opt
imalc
apac
ityi
snotal
wayseas
y,es
pec
ial
lyf
or
pr
ofes
sionalandbus
ines
s-t
o-bus
ines
sser
vic
es.
Yet
,det
ermi
ningc
apac
ityl
evel
sisan
es
sent
ialc
omponentofmanagi
ngt
hes
uppl
yanddemandf
unc
tion.Thef
oll
owi
ng
s
tepsar
eappl
iedi
nmanagi
ngs
uppl
yanddemandf
ors
ervi
ces
.

103
 a.
Det
ermi
net
hedemandpat
ter
n
c
.As
ses
sthec
aus
esoft
hevar
iat
ionsi
ndemand
d.Devel
opmet
hodsf
ormanagi
ngs
uppl
y
e.Devel
opmet
hodsf
ormanagi
ngdemand

6.
3.DETERMI
NINGTHEDEMANDPATTERN

Toef
fec
tivel
ymanages
uppl
yanddemand,
fir
msmus
tkeepar
ecor
doft
hei
rdemand.
Ti
mesand dat
esofpur
chas
eshave t
o be r
ecor
ded.I
fthe pur
chas
e and t
he
c
ons
umpt
ion oft
he s
ervi
ce ar
esepar
ate event
s,r
ecor
ds ofbot
hshoul
d be
mai
ntai
ned.Fr
om hi
stor
icaldat
a,f
ir
msc
andet
ermi
net
het
imeswhendemandi
s
l
ikel
ytoexc
eedc
apac
ity.Theyc
anal
sodet
ermi
newhendemandi
sli
kel
ytobel
ow
andr
esour
ceswi
llbeunder
uti
li
zed,knowi
ngwhen,whyandhowdemandf
luc
tuat
es
al
lowsf
irmst
omanaget
hes
uppl
yanddemandf
unc
tionmor
eef
fi
ci
ent
ly.

6.
4.ASSESSTHECAUSESOFTHEVARI
ATI
ONSI
NDEMAND

Knowi
ngt
her
eas
onsf
ordemandf
luc
tuat
ionpr
ovi
desi
nfor
mat
iononhow t
obes
t
managet
hes
uppl
yanddemandf
unc
tion.Thei
nfor
mat
ionwi
llhel
pfi
rmsoper
ate
nearopt
imalc
apac
ityatal
lti
mes
.Demandc
anf
luc
tuat
eformanyr
eas
ons
.Suc
has
:
a)Seas
onalvar
iat
ion:-Thedemandf
ors
ervi
cesvar
iesdependi
ngon
s
eas
ons
.Thes
ervi
cesdemandeddur
ingt
hes
ummert
imevar
yfr
om t
he
s
ervi
cesdemandeddur
ingt
hewi
ntert
ime.
b)I
nfl
ow of(
recei
ving)i
ncome:-Asi
ncomei
ncr
eas
est
hedemandf
or
s
ervi
cesi
ncr
eas
es.Dur
ingr
ecei
vingani
ncomet
hedemandf
ors
ervi
ces
i
ncr
eas
esandasi
ncomedec
reas
est
hedemandf
ors
ervi
cesdec
reas
es.
)Fes
c tivet
imes
:-Dur
ingf
est
ivet
imes
,thedemandf
orc
ert
ains
ervi
ces
s
uchast
rans
por
tat
ion,
hai
rst
yli
stsandr
est
aur
ant
sandbar
s,i
ncr
eas
es
d)Ec
onomi
csi
tuat
ions
:-Ast
heec
onomi
ccondi
ti
oni
mpr
ovest
hedemand
f
ors
ervi
cesal
soi
ncr
eas
es.Thes
tagnat
ionoft
heec
onomi
ccondi
ti
on
l
eadst
owar
dadec
linei
nthedemandf
ors
ervi
ces
.
e)Hol
idaysandweekends
:-Dur
ings
ucht
imespeopl
etendt
ogetmor
e

104
 andmor
eser
vic
esi
nor
dert
ocar
ryoutt
hei
rac
tivi
ti
esi
nthec
eremony.

6.
5.MANAGI
NGSUPPLY

Managi
ngs
uppl
yinvol
vesal
ter
ingt
heout
putc
apabi
li
ti
esofaf
irm.Athi
ghdemand
t
imes
,fi
rmswantt
oinc
reas
ethei
rsuppl
ylevelt
omeett
hei
ncr
eas
eddemand.
Atl
ow
demandper
iods
,fi
rmswantt
odec
reas
ethei
rsuppl
ylevelt
oreduc
ewas
te.The
opt
imalpos
iti
onf
oraf
irmi
stos
uppl
yexac
tlywhati
sdemanded.
Ser
vic
eshaves
even
met
hodst
heyc
anus
etomanages
uppl
y:(
a)hi
ri
ngpar
t-t
imeempl
oyees
,(b)havi
ng
empl
oyeeswor
kover
time,(
c)us
ing peakt
imeoper
ati
ng pr
ocedur
es,(
d)c
ros
s-
t
rai
ningofempl
oyees
,(e)i
ncr
eas
ingc
ust
omerpar
tic
ipat
ioni
nthes
ervi
ce,
(f)s
har
ing
f
aci
li
ti
eswi
thot
herf
irms
,and(
g)out
sour
cing.

6.
5.1 Hi
ri
ngPar
t-t
imeEmpl
oyees
Dur
ingpeakdemandper
iods
,manyf
ir
mshi
readdi
ti
onalpar
t-t
imeempl
oyees
.Thi
sis
oneoft
hepr
imar
ymet
hodsf
ir
msus
etomanages
uppl
y.Hi
ri
ngpar
t-t
imei
ndi
vidual
s
pr
ovi
desc
ompani
eswi
ths
ever
albenef
it
s.
i
. I
treduc
est
hec
ostofoper
ati
on.Par
t-t
imeempl
oyeesar
enor
mal
lypai
dles
s
perhourt
hanf
ull
-ti
meempl
oyees
,al
lowi
ngf
irmst
oavoi
dover
timepay.
Par
t-
t
imeempl
oyeeshavef
ewerbenef
it
sthanf
ull
-ti
meempl
oyees
.
i
i. I
tal
lowsaf
irmt
oinc
reas
eit
scapac
ityatami
nimalc
ost
.

Fr
om amar
ket
ingper
spec
tive,s
ervi
cesmus
tbeawar
eofs
omel
iabi
li
ti
esr
elat
edt
o
t
heus
eofpar
t-t
imeempl
oyees
.Par
t-t
imeempl
oyeesmayl
ackt
het
rai
ningt
hati
s
gi
vent
oful
l-t
imei
ndi
vidual
s,whi
chc
anr
esul
tinl
owerl
evel
sofper
for
manc
e,dec
line
i
nthef
irm'
spr
oduc
tivi
ty,dec
linei
ncus
tomers
ati
sfac
tiondi
spl
ayofpoorat
tit
ude,
andat
endenc
ytos
tol
ethef
ir
m(bec
aus
ethepar
tti
mehel
pfel
tmanagement
t
reat
edt
hemdi
ff
erent
lyt
hant
heydi
dthei
rful
l-t
imeempl
oyees
).

Cus
tomer
sal
sohaves
omec
onc
ernsaboutpar
tti
meempl
oyees
.Cus
tomer
sfeelt
hat
par
t-t
imeempl
oyeesar
eles
sknowl
edgeabl
e,s
omet
imespr
ovi
deal
owerl
evelof
s
ervi
cet
othec
ust
omer
,pr
ovi
deal
owerl
evelofper
sonal
izat
iont
othec
ust
omer
sand
of
tendi
spl
ayhi
ghert
urnover
.Togett
hemos
toutofpar
tti
meempl
oyees
’ser
vic
e
or
gani
zat
ionsneedt
odot
hreet
hings
.

105
1s
t,t
heymus
ttr
eatt
hei
rpar
tti
mehel
paswel
last
heydot
hei
rful
l-
timeempl
oyees
.
2nd,
theymus
tof
fers
omemeani
ngf
ulbenef
it
stot
hei
rpar
tti
meempl
oyees
.
3r
d,t
heymus
tpr
ovi
depar
tti
meempl
oyeeswi
thadequat
etr
aini
ng.

6.
5.2 Empl
oyeesWor
kingOver
time
Manyoft
hedi
sadvant
agesofus
ingpar
t-t
imeempl
oyeesc
anbeover
comebyhavi
ng
c
urr
entempl
oyeeswor
kover
time.Cur
rentempl
oyeesar
eknowl
edgeabl
eaboutt
he
bus
ines
s,t
heyknowt
hef
ir
m'sc
ust
omer
s,andc
anpr
ovi
det
hes
ervi
cel
eveldes
ired.
Theyar
emor
eef
fi
ci
entt
hanpar
tti
meempl
oyees
.However
,theys
til
lenc
ount
er
c
ert
aindi
sadvant
ages
.Thedi
sadvant
agesofover
timeempl
oyeesar
e:
1.I
tiscos
ty:Becaus
epaymenti
smadenor
malpayi
ngpl
usahal
fordoubl
eti
mei
s
mor
ecos
tlyt
hanpar
tti
mepay.
2.Loweri
npr
oduct
ivi
ty:pr
oduc
tivi
tydec
linesduet
oempl
oyeef
ati
gue.
3.Lowerl
evelofs
ervi
cequal
it
y:duet
oempl
oyeef
ati
gue.

6.
5.3 Peak-
TimeOper
ati
ngPr
ocedur
es
Peak-
time oper
ati
ng pr
ocedur
esar
e when empl
oyeesper
for
m c
ert
ainf
unc
tion
dur
ingpeakdemandt
imeswhi
lel
eavi
ngot
herr
espons
ibi
li
ti
esf
oras
lowert
ime.For
exampl
e,amedi
call
abwi
llnor
mal
lywai
tunt
ilni
ghtoras
lowt
imet
ononr
out
ine
t
est
s,ar
est
aur
antt
hathass
elf
-di
spens
ings
oftdr
inkmac
hines
,wi
llgetdr
inksf
or
c
ust
omer
sdur
ings
low t
imesbutwi
llhavec
ust
omer
sgett
hei
rowndur
ingpeak
demand.
Theadvant
agesofus
ingpeak-
timeoper
ati
ngpr
ocedur
ear
e:
o I
tal
lowsf
irmst
okeept
hei
roper
ati
onatornearmaxi
mum c
apac
itywi
thout
ups
ett
ingc
ust
omer
s.
o I
tinc
reas
est
hepr
oduc
tivi
tyoft
hes
ervi
ceandmaxi
miz
esr
evenue.
Themar
ket
ingc
onc
ernwi
llbet
hepr
obl
em ofi
dent
if
yingpr
ior
ityandnonpr
ior
ity
pr
ocedur
es.Thepr
ocedur
ethati
sanonpr
ior
itymayt
urnoutt
oaf
fec
tthequal
it
yof
s
ervi
cesbec
aus
etheyar
eimpor
tantt
ocus
tomer
s.Cus
tomerc
onc
erni
nthi
smet
hod
i
saboutt
hel
ackofper
sonalat
tent
ion.Thedi
sadvant
agesofus
ing peak-
time
oper
ati
ngpr
ocedur
ear
e:
o t
hepr
obl
em ofi
dent
if
yingpr
ior
ityandnonpr
ior
itypr
ocedur
es.Bec
aus
e,t
he
pr
ocedur
ethatar
eanonpr
ior
itymayt
urnoutt
oaf
fec
tthequal
it
yofs
ervi
ce

106
 asi
tisi
mpor
tantt
ocus
tomer
s.
o c
ust
omer
smayf
eelt
heyar
enotget
tingt
heper
sonalat
tent
iont
heywant
.
o c
ust
omer
smayf
eelt
hef
ir
misnotpr
ovi
dingac
ompl
etes
ervi
ce.
o c
ust
omer
smayexper
ienc
eac
rowded f
aci
li
tyt
hati
sabove t
he opt
imal
c
apac
ityl
evel
.
o c
ust
omer
smayf
eelt
heyhavebeenc
heat
ed.

6.
5.4Cr
oss
-Tr
aini
ngofEmpl
oyees
I
tal
lowsf
irmst
okeepoper
ati
onsnearmaxi
mum c
apac
ity.Empl
oyeesc
anbeus
ed
wher
evert
heyar
eneededt
okeepbot
tlenec
ksf
rom s
lowi
ngdownaf
irm'
sout
put
c
apac
ity.I
naddi
ti
on,i
tas
sur
est
hatt
rai
nedper
sonnelar
eavai
labl
ewhenot
her
empl
oyeesar
eabs
entf
romwor
k.Ot
heradvant
agesar
e:
o i
ndi
vidual
swho ar
ecr
oss
-tr
ained bec
ome mor
e avai
labl
etot
he s
ervi
ce
or
gani
zat
ion
o t
hei
rknowl
edgeal
lowst
hef
ir
mmor
esc
hedul
ingf
lexi
bil
it
ytoadj
usts
uppl
y
o hel
psempl
oyeest
ounder
standt
het
asksofc
owor
ker
s
o hel
psempl
oyeest
oseet
hebi
gpi
ctur
ebec
aus
etheyc
an s
eehow eac
h
empl
oyee'
sjobf
it
sint
opr
ovi
dingbet
terc
ust
omers
ervi
ce.

6.
5.5I
ncr
eas
eCus
tomerPar
tic
ipat
ion
Af
if
ths
trat
egyf
orexpandi
ngs
uppl
yist
oinc
reas
ecus
tomerpar
tic
ipat
ioni
nthe
s
ervi
cedur
ingpeakdemandper
iodst
hroughs
elf
-ser
vic
e.I
nor
dert
ous
ethi
smet
hod
mor
eef
fec
tivel
ythef
oll
owi
nggui
del
inesar
efor
war
ded:
o Us
eper
cept
ionmanagementandoper
ati
onmanagementt
echni
ques
o Us
ingc
ust
omeri
nput
,ident
if
ywhi
cht
asksmus
tbeper
for
medandwhi
ch
t
asksc
anbeputof
f.
I
ncr
eas
ingc
ust
omerpar
tic
ipat
ionof
fer
sthebenef
itofi
ncr
eas
ingpr
oduc
tivi
tyand
maxi
miz
ingc
apac
ity.
However
,formanys
ervi
cesi
tisnotaf
eas
ibl
est
rat
egy.
Ser
vic
es
oper
ati
ngwi
thas
ervi
cequal
it
yorc
ust
omi
zat
ionappr
oac
hhavet
obever
ycar
eful
abouti
ncr
eas
ingc
ust
omerpar
tic
ipat
ion.
Bec
aus
e:
o Fi
rst
,cus
tomer
slac
kexper
tis
eformos
tser
vic
esi
nthes
etwos
ect
ors
.
o Sec
ond,mos
tcus
tomer
sfeelt
heyar
epayi
ngt
hes
ervi
cet
oper
for
mthet
asks

107
 andt
opar
tic
ipat
eint
hes
ervi
cei
sac
onf
li
ctofr
oles
.Cus
tomer
sus
ual
lyf
eel
t
heys
houl
dmothavet
oper
for
m anyt
askt
hati
sint
hes
ervi
cepr
ovi
der
's
s
cri
pt.
o Thi
rd,havi
ngc
ust
omer
sdopar
toft
hes
ervi
cemayac
tual
lydec
reas
ecapac
ity
oft
hef
irm,
ift
hec
ust
omeri
ssl
ow.

6.
5.6Shar
edFac
ili
ty
Asamet
hodt
omanages
uppl
y,s
ervi
cef
ir
msc
ans
har
eaf
aci
li
tyorequi
pmentwi
thi
n
t
hes
ervi
ceorwi
thot
herc
ompany.Thi
swi
llpr
ovi
des
omebenef
it
stot
hes
ervi
ce
f
ir
mss
uchas
:
o I
treduc
esc
api
tali
nves
tmentc
ost
s
o I
tmaxi
miz
esus
ageoft
hes
har
edf
aci
li
ty

Whens
ervi
cess
har
efac
ili
ti
esorequi
pment
,car
emus
tbet
akent
oens
urepr
oper
s
chedul
ing.Eac
hfi
rm mus
thaveac
ces
stot
hes
har
ed i
tem butal
so mus
tbe
c
ogni
zantoft
he ot
herf
ir
msus
ing t
he f
aci
li
ty orequi
pment
.Thr
ough pr
oper
s
chedul
ingt
hef
aci
li
tyorequi
pmentc
anbekeptnearmaxi
mum c
apac
ity,whi
ch,i
n
t
urn,
reduc
est
hec
ostperf
ir
m.

6.
5.7Out
sour
cing
Out
sour
cing(
ors
ub-
cont
rac
ting)c
anbeaver
yef
fec
tivemeansf
orf
irmst
oexpand
t
hei
roper
ati
ngc
apac
ity.
Forexampl
e,ac
ater
ings
ervi
cec
anexpandt
hei
rcapac
ityby
out
sour
cingt
oot
herr
est
aur
ant
scer
tai
ndi
shesormeal
sorempl
oyments
ervi
cesf
or
per
sonnelt
oser
vemeal
satc
ater
edevent
s.Al
lthes
ehel
pst
hes
ervi
cef
irm'
stor
ais
e
r
evenues
.Out
sour
cinghasi
tsdi
sadvant
ages
.Thes
edi
sadvant
agesmaybes
eenf
rom
bot
hthef
irm'
sandc
ust
omer
'sper
spec
tives
.Theyar
e:
o t
heout
sour
cingf
ir
m maynotpr
ovi
det
hes
amel
evelofs
ervi
cequal
it
yast
he
or
igi
nalf
irm orc
ust
omer
smaynotr
ecei
vet
hequal
it
yofs
ervi
cest
hey
expec
ted
o t
hisl
eadst
ocus
tomerdi
ssat
isf
act
ion
o t
hes
ubc
ont
rac
tormays
tealt
hebus
ines
snextt
imei
tappear
sor
o t
hec
ust
omer
smaynotf
eelc
omf
ort
abl
edoi
ngbus
ines
swi
thas
ubc
ont
rac
tor

108
 whent
heyhi
redt
hef
ir
mtodot
hewor
k

Out
sour
cingper
ipher
alors
uppor
tser
vic
esc
anf
reeupc
ompanyr
esour
cest
ofoc
us
ont
hef
irm'
scor
ebus
ines
s.

6.
6.MANAGI
NGDEMAND

I
naddi
ti
ont
omanagi
ngs
uppl
y,s
ervi
ceor
gani
zat
ionsal
soneedt
omanagedemand.
Thet
hreepr
imar
ymet
hodsofmanagi
ngdemandar
etos
hif
tdemandf
rom apeak
per
iodt
oal
ow per
iod,r
educ
edemanddur
ingpeakper
iods
,ands
timul
atedemand
dur
ings
lowper
iods
.Thes
trat
egys
elec
teddependsont
hepat
ter
nofdemandandt
he
c
aus
eofdemandvar
iat
ions
.

1.
6.1 Shi
ftDemand/
Usage
Thei
deals
trat
egyf
ormanagi
ngdemandi
stos
hif
tsomeoft
heus
agedur
ingpeak
t
imet
oper
iodsofl
ow demand.Sever
aladvant
agesar
eevi
dentwi
tht
hiss
trat
egy.
Theyar
e:
1.Bus
ines
sisnotl
ossbec
aus
edemandexc
eedsc
apac
ity
2.Ser
vic
equal
it
yisnotadver
sel
yaf
fec
ted.
Inf
act
,theover
allqual
it
yofs
ervi
cemay
i
mpr
ove.
3.I
ncomei
snotl
ostbec
aus
ecus
tomerpur
chas
esar
eshi
ft
edr
athert
hanr
educ
ed.
4.I
ncr
eas
edef
fi
ci
enc
yofoper
ati
onbec
aus
ethes
ervi
cec
anoper
ateatamor
est
abl
e
l
evelwi
thoutwi
def
luc
tuat
ionsi
ndemand.

Tobeabl
etos
hif
tdemandf
rom hi
ght
olowus
ageper
iodsr
equi
resanunder
standi
ng
oft
hedemandpat
ter
n.Fi
rmsmus
tbeabl
etopr
edi
ctwhenpeakands
lac
kdemands
oc
cur
.Inaddi
ti
ont
ounder
standi
ngt
hepat
ter
nofdemand,
knowl
edgeoft
hec
aus
eof
t
hevar
iat
ionsi
ses
sent
ial
.Demandc
anbes
hif
tedi
fthec
aus
eoft
hevar
iat
ioni
s
wi
thi
nthec
ont
rolofc
ust
omer
s.I
fcus
tomer
shavenoc
ont
rolovert
hec
aus
eof
demandf
luc
tuat
ions
,ther
eisl
it
tlet
hatc
anbedonet
oshi
ftdemandt
oas
lower
per
iod.

Shi
ftus
age/
demands
trat
egyhass
omedi
sadvant
ages
.Theyar
e
o Cus
tomer
smaynotwantt
oshi
ftt
hei
rus
age

109
 o Cus
tomer
smaynotbeabl
etos
hif
tthei
rus
age.
Liket
het
axis
ervi
cesi
nAddi
s.
I
nthemor
ningandl
atei
ntheaf
ter
noonasempl
oyeesgot
othei
rof
fi
cesand
bac
khomet
hedemandf
ort
axis
ervi
cesbec
omehi
ghandl
ow att
heot
her
t
imes
o I
tcanbeus
edonl
yifc
ust
omer
shavec
ont
roloverwhent
heyus
ethes
ervi
ce.

6.
6.2Reduc
eDemandDur
ingPeakPer
iods
I
fdemandc
annotbes
hif
ted,or
gani
zat
ionss
omet
imeshavet
olookf
orwayst
o
r
educ
eus
agedur
ingpeakdemand.
Thi
smet
hodhass
omebenef
it
ssuc
has
:
o i
mpr
oveds
ervi
cequal
it
y
o i
ncr
eas
edef
fi
ci
enc
yofoper
ati
on

I
tal
somani
fes
tss
omedi
sadvant
ages
.Someoft
hes
ear
e:
o l
ostr
evenuef
romc
ust
omer
swhodonotus
ethes
ervi
ce
o dec
reas
edpr
ofi
tfort
hef
ir
mint
hel
ongr
un
o dec
reas
edt
henumberofc
ust
omer
swhoar
epus
hedawayandf
orc
edt
olook
f
orot
hers
ervi
cepr
ovi
der
s.

6.
6.3St
imul
ateDemandDur
ingSl
owPer
iods
Tor
educ
ewas
te,mos
tser
vic
eor
gani
zat
ionswoul
dli
ket
ost
imul
ateaddi
ti
onal
demanddur
ings
lowt
imes
.Thi
sst
rat
egyhass
omeadvant
agesanddi
sadvant
ages
.
Theadvant
agesar
e:
o i
ncr
eas
edef
fi
ci
enc
yofoper
ati
on
o i
ncr
eas
edi
ncome
o bet
terus
eoft
hef
aci
li
tyandi
ncr
eas
einover
allpr
oduc
tivi
ty.

Thedi
sadvant
agesar
e:i
t
o maynotbepr
ofi
tabl
eifus
agedur
ingl
owdemandper
iodsi
stool
ow
o mayc
aus
esomec
urr
entc
ust
omer
stos
hif
tus
aget
her
ebyr
educ
ingi
ncomei
f
pr
icesar
elowerdur
ingl
ow-
demandper
iod.

110
6.
7.MANAGI
NGCUSTOMERWAI
TINGANDQUEUES

Bec
aus
eoft
henat
ureoft
hes
ervi
cei
ndus
try,c
ust
omer
sof
tenwai
ttor
ecei
vea
s
ervi
ce.Get
tingahai
rcutof
tenr
equi
resac
ust
omerwai
ti
ngunt
ilt
hehai
rst
yli
sti
s
f
ree.How s
ervi
cepr
ovi
der
smanaget
hiswai
ti
ngandc
ust
omerqueueswi
lli
mpac
t
c
ust
omers
ati
sfac
tion wi
tht
he s
ervi
ce and c
ust
omer
s'dec
isi
ons aboutf
utur
e
pat
ronage.
Al
thoughr
educ
ingac
tualwai
ti
ngt
imei
simpor
tant
,itmaybemor
eimpor
tantt
o
r
educ
ethec
ust
omer
'sper
cei
vedwai
ti
ngt
ime.
Ifc
ust
omer
sper
cei
vet
hewai
ti
ngt
ime
f
oras
ervi
cei
sles
s,t
heywi
llbemor
esat
isf
iedwi
tht
hes
ervi
ce.r
educ
ingt
heac
tual
wai
ti
ngt
imemayormaynotac
compl
isht
hes
amer
esul
ts.

a)Managi
ngWai
ti
ngTi
mes
I
nmanagi
ngc
ust
omerwai
ti
ngt
ime,s
ervi
cess
houl
dkeepi
nmi
ndt
hef
oll
owi
ng
pr
inc
ipl
es:
- Fi
rst
,unoc
cupi
edwai
ti
ngt
imeappear
stobel
ongert
hanoc
cupi
edwai
ti
ngt
ime.
- Pr
e-s
ervi
ce wai
tss
eem l
ongert
ocus
tomer
sthan wai
tsdur
ing t
he s
ervi
ce
enc
ount
er.
- Cus
tomeranxi
etymakeswai
ti
ngappeart
obel
onger
.
- I
fcus
tomer
sdonotknowhowl
ongt
heywi
llbewai
ti
ng,i
tseemsl
ongert
hani
f
t
hel
engt
hofwai
tisknowni
nadvanc
e.
- Wai
tst
hatar
eexpl
ainedt
ocus
tomer
sar
eper
cei
vedt
obes
hor
tert
hanwai
tst
hat
ar
enotexpl
ained.
- I
fcus
tomer
sfeelt
hei
rwai
ti
ngi
sunf
air
,itwi
lls
eem t
obel
ongert
hanawai
tthey
f
eeli
sfai
randequi
tabl
e.
- Themor
eexpens
iveandt
hemor
eimpor
tantt
hes
ervi
cei
stot
hec
ust
omer
,the
l
ongert
hec
ust
omeri
swi
ll
ingt
owai
t.
- Cus
tomer
swai
ti
ngbyt
hems
elveswi
llper
cei
vet
hewai
ti
ngt
obel
ongert
hanwi
ll
c
ust
omer
swai
ti
ngi
nagr
oup.

Cus
tomer
swai
ti
ng and queuesc
an be managed us
ing t
wo di
ff
erentt
ypesof

111
t
echni
ques
:Oper
ati
onsManagementandPer
cept
ionsManagement
.

Oper
ati
onsmanagementi
nvol
vesac
tual
lyr
educ
ingt
heamountoft
imec
ust
omer
s
wai
tthr
oughal
ter
ingt
hewayt
hef
ir
m oper
ates
.Per
cept
ionsmanagemental
ter
s
c
ust
omer
'sper
cei
vedwai
ti
ngt
ime.
Theac
tualwai
ti
ngt
imedoesnotc
hange.
b) Oper
ati
onsManagementTechni
ques
I
fatal
lpos
sibl
e,t
hes
ervi
cepr
ovi
ders
houl
dgetc
ust
omer
soutofqueuesorwai
ti
ng
ar
eas
.Di
ff
erents
trat
egi
esc
anbeus
edt
oac
hievet
hisgoal
.Thebes
tst
rat
egyi
sto
havet
hem maker
eser
vat
ionsr
athert
hanj
ustdr
oppi
ng.Anot
hers
trat
egyi
sto
enc
our
agec
ust
omer
stoc
onduc
tbus
ines
sbyt
elephoneort
hroughon-
li
nei
nter
net
c
onnec
tions
.

Anot
hermet
hodbus
ines
sesc
anus
etogetc
ust
omer
soutofqueuesi
senc
our
agi
ng
t
hem t
ous
ethef
aci
li
tydur
ing non pac
kti
mes
.Si
gnspos
ted att
hebus
ines
s,
adver
tis
ing,andc
ouponsc
anal
lbeus
edt
oal
terc
ust
omer
stononpeakoper
ati
ng
t
imes
.

Al
thoughc
ust
omer
sdonotl
iket
owai
t,mos
tunder
standi
fthef
irmi
sfai
r.Cus
tomer
s
bec
ome ver
y unhappy when t
he f
ir
st-
come,f
irs
tser
ved pr
inc
ipl
eisvi
olat
ed.
Cus
tomer
sexpec
tser
vic
eper
sonnelt
ocal
lcus
tomer
sac
cor
dingt
oar
rivalt
ime.I
f
f
ir
msoper
atewi
thadi
ff
erentt
ypeofqueui
ngs
yst
em,
theymus
tbec
aref
ulhowi
tis
done.Bus
ines
sest
hatoper
atebyr
eser
vat
ion andor
der
-of
-ar
rivalmus
thavea
met
hod f
ordeal
ing wi
th wai
ti
ng t
hati
sper
cei
ved asf
airbyt
hec
ons
umer
.If
appoi
ntment
scannotbes
epar
atedf
rom wal
k-i
ncus
tomer
s,t
henwal
kinsmus
tbe
gi
venanexpl
anat
ionoft
hequeui
ngs
yst
em.

c)Per
cept
ionManagementTechni
ques
Si
nceunoc
cupi
edt
imef
eel
slongert
hanoc
cupi
edwai
ti
ngt
ime;keepi
ngc
ust
omer
s
oc
cupi
edc
anr
educ
eper
cei
vedwai
ti
ng.
Alt
hought
heac
tualwai
ti
ngt
imemaynotbe
r
educ
ed,t
he c
ust
omer
'sat
tit
ude t
owar
dthe wai
twi
llbe i
mpr
oved.Di
ff
erent
met
hodsc
anbeus
edt
oac
hievet
hisgoal
.Suc
has
:hor
osc
opesandt
abl
oidheadl
ines
onanel
ect
roni
cnewsboar
d,ent
ert
ainmenti
nfor
mat
ionandnews
-typeheadl
ines
.
Thekeyi
stot
aket
hec
ust
omer
'smi
nd of
fofwai
ti
ng.Byof
fer
ing c
ust
omer
s

112
s
omet
hingt
olookat
,theamountofwai
ti
ngi
sper
cei
vedt
obel
ess
.Mor
eimpor
tant
,
t
hec
ust
omer
'sat
tit
udet
owar
dwai
ti
ngi
mpr
oves
,res
ult
ingi
ngr
eat
erc
ust
omer
s
ati
sfac
tion.
Si
ncepr
e-s
ervi
cewai
ti
ngs
eemsl
ongert
hanwai
ti
ngdur
ingt
hes
ervi
ce,s
ervi
ces
s
houl
dst
rivet
oreduc
epr
e-s
ervi
cewai
ti
ng.Cus
tomer
sres
pondbet
terwhenmade
awar
e ofhow l
ong t
hey wi
llbe wai
ti
ng es
pec
ial
ly when c
ust
omer
stend t
o
over
est
imat
etheamountofwai
ti
ngt
imeandwhenc
ust
omer
sar
eunc
ert
ainhow
l
ongt
hewai
ti
ngwi
llbe.Fi
rms
,however
,mus
tbec
aref
uli
ntel
li
ngc
ust
omer
show
l
ongt
hewai
twi
llbe.
Thet
imes
houl
dneverbeunder
est
imat
ed.
Buti
fcus
tomer
swai
t
l
esst
hanwhati
sinf
ormed,
theywi
llbes
ati
sfi
ed.

I
fcus
tomer
s exper
ienc
e unexpec
ted del
ays
,expl
anat
ions s
houl
d be gi
ven.
Pas
senger
swhower
etol
dwhyaf
li
ghtwasdel
ayedi
ndi
cat
edhi
ghers
ati
sfac
tion
t
hanpas
senger
swhower
enott
old.Thes
amet
okenwor
ksi
not
hers
ervi
cest
oo.
Anxi
etyal
somakeswai
ti
ngs
eem l
onger
.Cus
tomeranxi
etyi
sof
tenpr
esentwi
th
pr
ofes
sionals
ervi
cess
uch asdoc
tor
sand at
tor
neys
.Pr
ovi
ding i
nfor
mat
ion t
o
c
ust
omer
swi
llhel
preduc
ethi
sanxi
ety.

6.
7TOOLSFORMANAGI
NGDEMAND

Ser
vic
emar
ket
ershaves
ever
alt
ool
stheyc
anus
etomanagedemand.Thes
etool
s
ar
e:r
eser
vat
ion s
yst
ems
,di
ff
erent
ialpr
ici
ng,and c
ommuni
cat
ion f
rom s
ervi
ce
per
sonnel
,sal
ess
taf
f,adver
tis
ing,s
alespr
omot
ions
,andot
herc
ust
omer
s.Theywi
ll
bedi
scus
sedasf
oll
ows
.

6.
7.1 Res
ervat
ionSys
tem
Themos
tef
fec
tivet
oolf
ors
tabi
li
zi
ngdemandi
sus
ings
omet
ypeofr
eser
vat
ion
s
yst
em.Res
ervat
ions
yst
em wi
lls
hif
tdemandf
rom peakt
imest
ononpeakt
imes
.
Res
ervat
ion s
yst
emsenabl
efi
rmst
o devel
op a s
teady f
low ofc
ust
omer
s,t
o
maxi
miz
etheus
eoft
hef
aci
li
ty,andt
omaxi
miz
epr
oduc
tivi
tyandef
fi
ci
enc
yof
oper
ati
on.
Mos
tpr
ofes
sionals
ervi
cess
uchasat
tor
neys
,doc
tor
s,andc
ons
ult
ant
sand
nonpr
ofes
sionals
ervi
cess
uchashot
els
,ai
rl
ines
,andr
est
aur
ant
sus
eres
ervat
ion
s
yst
emst
omanagedemand.

113
6.
7.2 Di
ff
erent
ialPr
ici
ng
I
nmos
tsi
tuat
ions
,di
ff
erent
ialpr
ici
ngi
nvol
vesus
ingal
owerpr
icef
orl
ow demand
per
iodst
hanf
orpeakdemand.Thi
sst
rat
egyi
sus
edt
oshi
ftdemandf
rom ahi
gh-
demandper
iodt
oal
ow-
demandper
iodbyc
har
gingl
essatl
ow-
demandt
imes
.Itc
an
al
sobeus
edt
oreduc
edemandatpeakt
imesbyi
ncr
eas
ingpr
ices
.Hi
gherpr
iceswi
ll
di
scour
ageus
ageandi
fcus
tomer
scannotus
ethes
ervi
ceatot
hert
imes
,over
all
us
agewi
lldec
line.
Itc
anal
sobeus
edt
ost
imul
atedemandatl
owper
iods
.Byhavi
ng
l
owerpr
icesatnonpeakt
imes
,cons
umer
swhowoul
dnotnor
mal
lybuyt
hes
ervi
ce
maybeper
suadedt
odos
o.However
,shi
ft
ingdemandmaynotpos
sibl
eins
ome
bus
ines
sesl
ikes
kir
esor
ts.

Di
ff
erent
ialpr
ici
ng i
ncr
eas
esef
fi
ci
enc
yofoper
ati
on and pr
oduc
tivi
ty,i
mpr
oves
over
alls
ervi
cequal
it
ydel
iver
yandi
ncr
eas
eus
eoff
aci
li
tydur
ingl
ow demand
per
iods
.

6.
7.3 Communi
cat
ion
Communi
cat
ionc
anbeus
edt
oac
compl
ishanyoft
het
hrees
trat
egi
esf
ormanagi
ng
demand:s
hif
tdemand,dec
reas
edemandors
timul
atedemand.Ser
vic
eper
sonnel
ands
aless
taf
fcanc
ommuni
cat
ewi
thc
ust
omer
s.Whi
lec
utt
ings
omeone'
shai
r,ahai
r
s
tyl
istc
ani
nfor
mthec
ust
omerast
owhent
hef
aci
li
tyi
snotasbus
y.Thepur
pos
eof
c
ommuni
cat
ingt
hisi
nfor
mat
ioni
stos
hif
tdemandf
rom ahi
gh-
usaget
imet
oal
ower
-
usaget
ime.Car
emus
tbet
aken,however
,nott
oconveyt
hei
deat
hatc
ust
omer
s
r
ecei
veal
owerl
evelofs
ervi
cequal
it
ydur
ingpeakt
imes
.

Sal
ess
taf
fwi
llof
tenc
ommuni
cat
einf
ormat
iont
ocus
tomer
sandpot
ent
ialc
ust
omer
s
t
hatwi
llal
terdemand.Sal
ess
taf
fcanbei
nst
rument
ali
nst
imul
ati
ngdemandwi
th
nonc
ust
omer
sfors
lowper
iods
.

Adver
tis
ingi
sof
tenus
edt
oal
terdemand.Adver
tis
ingc
anhi
ghl
ightt
ous
erswhena
s
ervi
cei
snotasbus
y,at
imewhenaf
aci
li
tyi
sopenf
orus
eandper
suadec
ust
omer
s
whent
ous
eit
.Thegoaloft
hist
ypeofadver
tis
ementmaybet
ost
imul
ates
ales
dur
ingl
owper
iods
.Oc
cas
ional
ly,
adver
tis
ingi
sus
edt
odi
scour
ageus
ageofas
ervi
ce
dur
ingpeakdemandt
imes
.

114
Sal
espr
omot
ionsc
anal
sobeus
edt
oal
terdemand.Ot
herc
ust
omer
sar
eanot
her
c
ommuni
cat
iont
oolt
hatc
anal
terdemand.Cus
tomer
scanal
soc
ommuni
cat
eto
ot
her
saboutwhenus
agei
ssl
ow.Wor
dofmout
hcommuni
cat
ionsf
rom c
ust
omer
s
c
anac
compl
ishal
lthr
eeoft
hedemandmanagements
trat
egi
es.

6.
8ENHANCI
NGPRODUCTI
VITY

Theot
herwayf
irmsc
ani
ncr
eas
ethei
rpr
ofi
tsi
sbyenhanc
ingpr
oduc
tivi
ty.Ser
vic
es
haves
evenwayst
heyc
ani
ncr
eas
epr
oduc
tivi
ty.
a.I
mpr
ovi
ngt
hequal
it
yoft
hewor
kfor
ce
b.I
nves
tingi
nmor
eef
fi
ci
entc
api
talequi
pment
c
.Aut
omat
ingt
asksper
for
medbyl
abor
d.Changi
ngt
hewayc
ust
omer
sint
erac
twi
ths
ervi
cepr
ovi
der
s
e.Separ
ati
ngc
ust
omerc
ont
actc
omponent
sfr
oms
uppor
tcomponent
s
f
.Inc
reas
ings
elf
-ser
vic
eopt
ions
,and
g.Us
ings
ubc
ont
rac
tingorout
sour
cing

a.
Impr
ovi
ngt
heQual
it
yoft
heLaborFor
ce
I
mpr
ovi
ngt
hequal
it
yoft
hel
aborf
orc
esi
ses
pec
ial
lybenef
ici
alt
olabori
ntens
ive
s
ervi
ces
.Goodempl
oyeespr
ovi
des
ever
albenef
it
stof
irms
,suc
has
:hi
ghers
ervi
ce
qual
it
y,f
ewerc
ust
omerc
ompl
aint
s,andl
owerempl
oyeet
urnover
s.

Moonl
ight
ersar
etheot
hers
our
cesofpar
tti
mewor
ker
sfors
ervi
cec
ompani
es.
Moonl
ight
ersar
eindi
vidual
swhohol
djobswi
tht
woormor
eempl
oyer
s.Compar
edt
o
f
ullt
imeempl
oyees
,moonl
ight
erst
endt
obeyounger
,mor
efr
equent
lymal
e,pr
imar
y
wageear
ner
sint
hei
rfami
ly,s
trongwor
ket
hic
,putl
essemphas
ison wor
king
c
ondi
ti
ons
,les
sef
fec
tedbypr
obl
emst
hatoc
curatwor
k.I
mpr
ovi
ngpayandbenef
it
s
pac
kagei
sakeyt
odevel
opi
ngaqual
it
ywor
kfor
cei
nthes
ervi
cei
ndus
try.

b.
Inves
tingi
nCapi
talEqui
pment
As
econdmet
hodf
ori
mpr
ovi
ngpr
oduc
tivi
tyi
sinves
tmenti
nmor
eef
fi
ci
entc
api
tal
equi
pment
.Itof
fer
sthef
oll
owi
ngbenef
it
s:r
educ
elaborc
ost
s,i
mpr
ovet
hequal
it
yof
s
ervi
ce,i
ncr
eas
ethe numberofc
ust
omer
sthatc
an be s
erved and i
mpr
ove

115
c
ons
ist
enc
yofs
ervi
ce.

c
.Aut
omat
ionofTas
ks
Aut
omat
ion oft
asksgener
atesc
ert
ain benef
it
ssuc
h as
:impr
oved pr
oduc
tivi
ty,
r
educ
ecos
ts,
impr
ovec
ons
ist
enc
yofs
ervi
ces
,inc
reas
ethenumberofc
ust
omer
sthat
c
an bes
erved.Forexampl
e,t
heus
eofATM bybankswi
llof
fert
hef
oll
owi
ng
oppor
tuni
ti
es:l
essc
ostt
hanahumant
ell
er,avai
labl
e24hour
saday,s
evendaysa
weekandpr
ovi
desac
ons
ist
entl
evelofs
ervi
cequal
it
y.

d.
Modi
fyCus
tomerSer
vic
eInt
erac
tion
Changi
ng how c
ust
omer
s and s
ervi
ce pr
ovi
der
sint
erac
tcan of
ten enhanc
e
pr
oduc
tivi
ty.
Forexampl
e,banksc
anus
eadr
iveupf
aci
li
ti
esandonl
ines
ervi
ces
.

Dr
iveupf
aci
li
ti
esof
ferc
ust
omer
sthebenef
itofdoi
ngt
hei
rbanki
ngwi
thouthavi
ng
t
oleavet
hei
rcar
,wi
thoutwor
ryi
ngaboutf
indi
ngandpar
kingpl
aceandgoi
ngi
nsi
de
t
hebankandwi
thoutf
acet
ofac
econt
act
.Theys
peedups
ervi
ce.Onl
ines
ervi
ces
al
lowc
ust
omer
scomput
erac
ces
stot
hei
rac
count
sandot
hers
ervi
cesandel
imi
nat
e
t
heneedf
orhumani
nter
act
ion.I
tspeedupt
rans
act
ionsandi
ncr
eas
ethenumberof
c
ust
omer
stobes
erved.

e.
Separ
ateCus
tomerCont
actandSuppor
tFunc
tions
Ef
fi
ci
enc
yofoper
ati
onc
anbei
ncr
eas
edbys
epar
ati
ngc
ust
omerc
ont
actf
unc
tions
f
rom s
uppor
tfunc
tions
.Cus
tomerpr
esenc
enor
mal
lys
lowsdownt
heper
for
manc
eof
as
ervi
ce.
Alt
houghc
onver
sat
ionwi
thc
ust
omer
sisanes
sent
ialpar
toft
hef
unc
tional
c
omponentofs
ervi
ce qual
it
y,i
tdoess
low down t
he pr
oces
s.Ser
vic
esc
annot
el
imi
nat
etheper
sonalt
ouc
hwi
thc
ust
omer
s;however
,toenhanc
epr
ofi
ts,s
ervi
ces
mus
tinc
reas
ethei
ref
fi
ci
enc
y.Byphys
ical
lys
epar
ati
ngt
hes
uppor
tandc
ust
omer
c
ont
actc
omponent
s,t
hequal
it
yandef
fi
ci
enc
yofbot
hcanbei
mpr
oved.I
tinc
reas
es
qual
it
yofs
ervi
ceandenhanc
equal
it
yofc
ust
omer
/empl
oyeei
nter
act
ions
.

f
.Inc
reas
ingSel
f-Ser
vic
eOpt
ions
Fi
rms c
an i
mpr
ove pr
oduc
tivi
ty by s
hif
ti
ng s
ome oft
he s
ervi
ce oper
ati
on t
o
c
ust
omer
s.Thi
sst
rat
egyi
ssuc
ces
sfuli
fsel
f-s
ervi
cedoesnoti
mpedeot
herc
ust
omer
s

116
andi
fital
lowst
hes
ervi
cef
ir
mtor
educ
est
aff
.Bot
hbenef
it
sres
ultwhenbanks
i
nst
allATMsandonl
inec
omput
erbanki
ng.
Itr
educ
esc
ost
sandi
ncr
eas
est
henumber
ofc
ust
omer
sthatc
anbes
erved.

g.
Usi
ngSubc
ont
rac
tingorOut
sour
cing
As
ervi
cet
rans
act
ionc
ons
ist
soff
ourpr
imar
ycomponent
s:i
nfor
mat
ion,
res
ervat
ions
,
payment
s,andc
ons
umpt
ion.
Outs
our
cingwi
tht
hir
dpar
tiesors
ubc
ont
rac
tor
scanbe
us
edf
oranyoft
hes
efourc
omponent
s.Forexampl
e,s
ervi
cess
uchasai
rl
inesus
e
t
hir
dpar
tiest
oimpr
ovet
hei
rpr
oduc
tivi
ty.Theyus
etr
avelagent
s;t
ravelagent
scan
per
for
mthr
eeoft
hec
omponent
soft
hes
ervi
ce.
Theyc
anpr
ovi
dei
nfor
mat
ions
uchas
pr
icesands
chedul
est
ocus
tomer
s,maker
eser
vat
ionsf
orc
ust
omer
s,andc
oll
ect
payment
s.

6.
9IMPORTANCEOFCUSTOMERBEHAVI
OR

Cus
tomerbehavi
ori
simpor
tantt
oanypr
oduc
tivi
tygai
nsi
nthes
ervi
ces
ect
orf
or
t
hreer
eas
ons
.
1st.c
ust
omer
sar
eus
ual
lyi
nvol
ved i
nthepr
oduc
tion oft
hes
ervi
ce.I
mpr
ovi
ng
pr
oduc
tivi
tywi
llr
equi
rec
ust
omerpar
tic
ipat
ion.
2nd.Bec
aus
eoft
hei
nsepar
abi
li
tyofs
ervi
ces
,pr
oduc
tivi
tygai
nswi
llr
equi
ret
hat
empl
oyeesbec
omemor
eef
fi
ci
enti
ndeal
ingwi
thc
ust
omer
s.
3rd.Pr
oduc
tivi
tyi
sti
mebound wi
th noi
nvent
ory.Pr
oduc
tivi
tygai
nsc
annotbe
r
eal
izedbymas
spr
oduc
ingt
hes
ervi
cei
nadvanc
ewhent
hec
ust
omeri
snot
pr
esent
.

Wi
thi
nthel
astmanyyear
s,mos
tgai
nsi
nser
vic
epr
oduc
tivi
tyhavebeenduet
o
t
echnol
ogyus
eint
hes
uppor
tcomponent
.Asmac
hinesandc
omput
ershaver
epl
aced
t
asksper
for
medbyhumans
,pr
oduc
tivi
tyhasi
ncr
eas
ed.Fewpr
oduc
tivi
tygai
nshave
beenmadeont
hehumans
ide.Themaj
orr
eas
onf
ort
hisf
ail
urehasbeent
hel
ackof
s
ens
iti
vit
ytoc
ust
omerneeds
.Fur
therpr
oduc
tivi
tygai
nsi
nthes
ervi
ces
ect
orr
equi
re
c
ust
omeri
nvol
vementandamodi
fi
cat
ionofc
ust
omerbehavi
or.

117
Manys
ervi
cef
irmst
hatt
ryt
ochanget
hei
rser
vic
epr
oces
sfac
edf
ail
ureduet
olac
kof
par
tic
ipat
ionf
rom c
ust
omer
s.I
fcus
tomer
sfeelt
hec
hangei
snotappr
opr
iat
ethey
wi
llr
eac
tnegat
ivel
ytot
hef
ir
m’si
ntent
ion.Ther
efor
e,f
irmspl
anni
ngt
oimpl
ement
c
hangei
nthei
rser
vic
epr
oces
sshoul
dfol
lowt
hef
oll
owi
ngs
evens
teps
.
a.
devel
opc
ust
omert
rus
t
b.
under
standc
ust
omerhabi
ts
c
.pr
etes
tinnovat
ionorequi
pment
d.
teac
hcus
tomer
showt
ous
ethei
nnovat
ionorequi
pment
e.
promot
ethebenef
it
stot
hec
ust
omer
f
.st
imul
atet
rialus
age,
and
g.
moni
torandeval
uat
etheper
for
manc
eoft
hei
nnovat
ionorequi
pment
.
Whi
lef
oll
owi
ng t
his pr
ocedur
e does notens
ures
ucc
ess
,itwi
lli
ncr
eas
ethe
pr
obabi
li
tyt
hatt
hes
ervi
cemodi
fi
cat
ionwi
llbeac
cept
edbyt
hec
ust
omerandwi
ll
i
ncr
eas
epr
oduc
tivi
tyf
ort
hef
ir
m.

118