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OBJECTIVES OF SERVICE QUALITY The subject of service quality has aroused considerable recent interest amongbusiness people and

academics. Of course, buyers have always been concernedwith quality, but the increasing competitive market for many services has ledconsumers to become more selective in the services they choose. Conceptualizingthe quality for services is more complex than for goods. Because of the absence of tangible manifestations, measuring service quality can be difficult but there arepossible research approaches. Comprehensive models of service quality and therelimitations can be studied. Understanding just what dimensions of quality are of importance to customers is not always easy in their evaluation process. It is notsufficient for companies to set quality standards in accordance with misguidedassumptions of customers expectations. A further problem in defining servicequality lies in the importance which customers often attach to the quality if theservice provider is distinct from its service offers the two cannot be separated asreadily as in the case of goods. Finally, issues relating to the setting of qualitystandards and implementation of quality management should be studied.INTRODUCTION TO SERVICE QUALITYQuality improvement and adherence to accepted norms of quality are central to themodern concept of marketing of services. The quality of service delivery results incustomer satisfaction and their retention as it reinforces the perception that thevalue of the service received is greater that the price paid for it. Some importantconcepts are:Modern quality concepts result in better profitability, which is the main goal of allthe business.Quality control has much to do with changing the frame of min d and psychology of the service provider and particularly the front-end and back-end employees actuallyproviding the services. We need to know how this fundamental change in attitudecan be brought about. Traditionally, most service providers have felt that they know all there is to knowabout the customers and their requirements. This smug or self-satisfied approachneeds to be changed.Development of feedback systems is very essential part of the quality improvement.How this can be used to develop better quality standards is an issue of immenseimportance.Goal setting and adherence to the goals are both essential to ensure continuousimprovement in the quality standards.CUSTOMER RETENTION THROUGH QUALITY IMPROVEMENT The focus of the modern marketers has shifted away from a onetime sale tomaking repeated sales to the same customer. Increasing attention is being paid tomedium and long term perspectives, rather than just the short-term perspective. This has been a major revolution in thinking in the field of marketing. Customerretention usually pays dividends by way of:Lifetime value of the customer. If the customer remains loyal to the company,naturally, the repeated purchases represent a cumulative value which is quitesubstantial compared to any single transaction.Reduced costs. It costs much more to acquire a new customer than to retain an oldcustomer. Therefore, the focus of marketing has shifted away from the goal of merecustomer acquisition to customer retention in order to substantially reducemarketing costs.Benefit from wider opportunities to market more products and services tocustomers who are already loyal to you. The key differentiator between customerretention is customer satisfaction.Satisfaction results when the customer feels that the value of a service received byhim is substantially higher than the price he paid for acquiring the service.Customer satisfaction can be largely attributed to the quality of the service orproduct. Thus, delivery of high quality service is crucial to the high service valueperception. When the major marketing goal of a company is customer retention, thequality of service delivery is, undeniably, the key differentiator.LINK BETWEEN SERVICE QUALITY AND PRODUCTIVITY The approach towards quality has changed quite drastically during the past few years. Previously people thought in terms of quality control. Quality is defined asthe ability of the service provider to satisfy customer needs. Customer perception,service quality, and profitability are interdependent values. The idea of control

wasthat the manufacturer decided to find the reasonable number of defects that acustomer would accept without demur. The goal of the exercise was to restrict thenumber of defects in order to be called a high-quality producer. This approach wasbased on two assumptions:Other producers under similar marketing conditions would adhere to similar normsof non-compliance or transgression of quality. Thus the issue of competition drivingup the quality was not taken seriously. Live and let live was the motto that mostlarge producers adhere to. The lack of serious quality improvement translates intosavings in production costs as elaborate effort for improvement was not done.Almost every customer assumed that the service or product received by them willnot be perfect in every respect. Customers took it for granted that luck was involvedin receiving high-quality goods and services. Thus, people would avoid carsassembled on Fridays or Mondays. It was assumed that during the preweekendphase, when the employees where focused on the forth coming weekend, and thepostweekend phase , when the employees were physically and mentally tired fromtheir weekend exploits, they paid less attention to work. It was thus assumed thaton Fridays and Mondays, nobody would stop the assembly line for just a bolt notfitted at the appropriate place. People preferred cars which were driven from thefactory to the dealers premises rather than carried by trucks to the delivery points.Customers believed that inherent defects were bound to be uncovered during thispre-delivery phase, and, therefore they would be duly identified and rectified beforecustomer delivery. The total service quality management [TSQM] emphasizes different policies.Statements such as the following demonstrate the approach:Quality is free. It is the non-quality that costs money. Non-quality means thateverything is not done right from the beginning.About 35% of the companys costs are due to faults and their corrections.Quality enhancement usually improves profitability by 5 to 10%. This is a sizable jump in the overall profitability. To get a similar increase in profitability with qualityimprovement, the company will need to increase the turnover by 20 to 25%, whichis quite a sizable task. The costs of the quality improvement are roughly divided into two groups: cost of conformance and cost of non-conformance.Cost of Conformance This includes costs incurred to adhere or stick to the existing established standardsor norms. This is the maintenance and improvement of the quality. Preventive costs: these include staff training cost and costs of the robust design orrobustness built into the service. Cost of Control: to continuously maintain the high quality, it is necessary to carryout surveys and obtain feedback from the customers to ensure that the delivery isas per the planned level of service and quality standards.Cost of non-conformance The non-conformance to the established standards results in additional cost of customer dissatisfaction, complaints and warranty claims. The costs are forreplacement, correction or compensation of the faulty delivery of services or goods.DEFINING SERVICE QUALITYQuality is an extremely difficult concept to define in a few words. At its most basic,quality has been defined as conforming to requirements .This implies thatorganizations must establish requirements and specifications; once established, thequality goal of the various function of an organization is to comply strictly withthese specifications. Many analyses of service quality have attempted to distinguishbetween objective measures of quality and measures which are based on the moresubjective perceptions of customers.A development of this idea by Gronroos identified technical and functional qualityas being the two principle components of quality. Technical quality refers to therelatively quantifiable aspects of a service which consumers receive in theirinteractions with a service firm. Because it can easily be measured by bothcustomer and supplier, it forms an important

basis for judging service quality.Examples of technical quality include the waiting time at a supermarket checkout and the reliability of train services. This, however, is not the only element thatmakes up perceived service quality. Because services involve direct consumer-producer interaction, consumers are also influenced by how the technical quality isdelivered to them. This is what Gronroos describes as functional quality and cannotbe measured as objectively as the elements of technical quality. In the case of thequeue at a supermarket checkout, functional quality is influenced by such factors asthe environment in which queuing takes place and consumers perceptions of themanner in which queues are handled by the supermarkets staff. Gronroos also seesan important role for a service firms corporate image in defining customersperception of quality, with corporate image being based on both technical andfunctional quality.Service quality is a highly abstract construct, in contrast to goods where technicalaspects of quality predominate. Many conceptualizations of service quality thereforebegin by addressing the abstract expectations that consumers hold in respect of quality. Consumers subsequently judge service quality as the extent to whichperceived service delivery matches up to these initial expectations. In this way, aservice which is perceived as being of mediocre standard may be considered of highquality when compared against low expectations, but of low quality when assessedagainst high expectations. Analysis of service quality is complicated by the fact thatproduction and consumption of a service generally occur simultaneously, with theprocess of service production often being just as important as the service outcomes.Gronroos pointed out that a buyer of manufactured goods only encounters thetraditional marketing mix variables of a manufacturer, i.e. the product, its price, itsdistribution and how these are communicated to him or her. Usually productionprocess are unseen by consumers and therefore cannot be used as a basis forquality assessment. By contrast, service inseparability results in the productionprocess being an important basis for assessing quality.A further problem in understanding and managing service quality flows from theintangibility, variability and inseparability of most services which results in a seriesof unique buyer-seller exchanges with no two services being provided in exactly thesame way. It has been noted that intangibility and perceived risk ness affectsexpectations, and in one study of a long-distance phone service, a bookstore and apizza shop service, it was concluded that intangibility had some role in servicequality expectations. Managing customers expectations can be facilitated bymeans of managing the risks a consumer perceives when buying a particularservice.SERVICE QUALITY DIMENSIONSService quality is a perception of the customer. Customers, however, form opinionsabout service quality not just from a single reference but from a host of contributingfactors. Service marketers need to understand all the dimensions used bycustomers to evaluate service quality.David Garvin in the article Competing on the Eight Dimensions of Quality identified and the reliability of train services. This, however, is not the only element thatmakes up perceived service quality. Because services involve direct consumer-producer interaction, consumers are also influenced by how the technical quality isdelivered to them. This is what Gronroos describes as functional quality and cannotbe measured as objectively as the elements of technical quality. In the case of thequeue at a supermarket checkout, functional quality is influenced by such factors asthe environment in which queuing takes place and consumers perceptions of themanner in which queues

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

problems of his or her own. Whilethe front-end employee may have been trained or equipped to deliver standardizedservices, the customers want them to go beyond this limit. It is the willingness tohelp the customer or willingness to go that extra distance that is responsiveness.Example: A customer calls room service to find out if they would pack a Jain lunch. Itis not the hotels normal policy to cook such specialty and customized meals.However, the customer being very religious minded would be very pleased if thehotel could pack it for him to carry and eat. This may impose some strain on thekitchen. However, the hotel may be rewarded in two different ways if it agreed toprovide the meal. The customer would be very pleased with the service and is verylikely to recommend the hotel to his friends and acquaintances. In addition, thehotel could charge extra commensurate with the extra efforts. He is unlikely tomind paying more. The second aspect of responsiveness is speedy response to a customer request.When response is delayed customers usually loses interest. Many salesrepresentatives respond on the phone, I will call you back. The call is never returned. The customer draws his or her own conclusion about the quality of servicehe is likely to receive in the future.c. AssuranceIt defined as the ability of the company to inspire trust and confidence in the servicedelivery. It refers to knowledge and courtesy of the service firms employees andtheir ability to inspire trust and confidence in the customer toward the company. This dimension is considered vital for services that involve high risk as customersmay not be able to evaluate all the uncertainties involved in the process by them.Example: Medical services requiring complex uncommon procedures, sales /purchase of financial securities, investment issues, legal affairs, etc. demand thisservice quality dimension. There are property developers/builders who provide a list of previous buyers of flatsor apartments to potential buyers. The evaluation of construction services is beyondtechnical capabilities of most buyers. However, the prospective customers are freeto call the previous customers. When prospective customers hear from them aboutthe company and its satisfactory delivery, they feel assured and develop a morepositive attitude towards the company.d. EmpathyIt refers to the caring, individualized attention the service firm provides eachcustomer. When service provider puts himself in the shoes of the customers, hemay see the customers viewpoint better. When customers feel t5hat the provider ismaking his best effort to see their viewpoint, it may be good enough for most.Example: a lady customer with a young child arrives slightly late at the check-incounter and requests the agent for a seat along the aisle and near the toilet. Even if all such seats have already been taken up, the agent and the airline may makeeven effort to request another passenger to exchange seats and meet the customerdemand. The lady passenger would be delighted if her request could be honoreddespite the last minute checking in, and even if she does not get such a seat, shewould be grateful for their effort.e. TangiblesIt refers to physical facilities, equipment, and appearance of a service firmsemployees. The job of the tangible and physical evidence of a service ismultifunctional. When a patient in the waiting room of a clinic sees the doctorscertificate, he becomes aware of the quality of service he is about to receive. If adental clinic provides patients with clean rubber footwear and freshly launderedbibs or coats before the actual service, the patients and their accompanyingrelatives or friends will be impressed. A dentist dressed in a spotless white coat islikely to impress, them even further. Tangibles provide the customer proof of thequality of service MEASURING SERVICE QUALITYWhen evaluating service quality, consumers examine five dimensions: tangibles,reliability, responsiveness, assurance and empathy.Using SERVQUAL to Measure Service Quality The SERVQUAL instrument was based on the premise that service quality is thedifference between customers expectations and their evaluation of the service theyreceived. The first part of the

questionnaire asks customers to indicate the level of service they would expect from a firm in a particular industry. The second part of the questionnaire asks customers to evaluate the service performed by a specificservice firm. Gap Theory is the method for calculating service quality that involvessubtracting a customers perceived level of service received from what wasexpected.SERVQUAL uses 21 questions to measure the five dimensions of tangibles,reliability, responsiveness, assurance and empathy. Through SERVQUAL, firms canmeasure customers evaluations of their service performance. For example, if customers consistently give firm low scores for one dimension, such as reliability,then the firms management can take steps to improve that particular dimension of their service offering.Problems with SERVQUALAlthough SERVQUAL is an excellent instrument for measuring service quality,managers must be aware of potential problems with the instrument, as well as withthe gap theory methodology on which it is based. An understanding of theseproblems may prevent service companies from misinterpreting the results anddeveloping inappropriate marketing plans. The SERVQUAL instrument has three potential problems. First, SERVQUAL measurescustomers expectations of the ideal firm in a particular service industry. This mayor may not be relevant to the capabilities of a particular service firm or the set of service firms available to a consumer. For example, consumers may indicate thatphysicians should provide their services at the time they promised. Seldom dopatients see the doctor at the scheduled time. No one likes waiting after theirappointment time, yet, because of excess demand, patients will continue to wait. The second problem with SERVQUAL is its generic nature. Since its not industryspecific, it does not measure variables that may be important for a particularindustry. For example, in the airline business, on-time arrival is a very important dimension to travelers, but SERVQUAL does not measure travelers perceptions of this variable. The third problem with problem with SERVQUAL deals with the gap theorymethodology used for measuring the level of service quality. Measuring consumerexpectations after a service has been provided will bias consumers responses. If customers had a positive experience at Blockbuster, they will tend to report lowerscores for their expectations, so there is a measurable gap between what theyexpected and the actual service they received.Correct Use of Gap TheoryManagers can use the gap theory methodology for measuring service qualityperformance if precautions are taken to reduce the problems just discussed. If SERVQUAL is used, the instrument should be modified to apply to the specificindustry for which it is being used. Additional variables should be added that arerelevant and important to customers. When interpreting the results, managers mustremember that respondents are comparing their firm with the ideal firm in theindustry. To prevent biases from interfering with the gap scores, consumerexpectations should be measured prior to the service and service perceptions afterthe service. Because consumers are affected by advertising and word-of-mouthcommunications, the time between measuring expectations and measuring thequality of service received should be relatively close.Service Quality - A Key to Success in the Services Sector"Service with a smile", "You can count on XXXX for prompt delivery", "With ABCmobile phones you can reach anyone, anywhere, anytime", "ZZZ Airlines - we flyyou everywhere" these are some punch lines of ad campaigns that are currentlysplashed across media - print, television and hoardings. How many of us canhonestly claim to have experienced this service - consistently, day after day,purchase after purchase, transaction after transaction? Yet, this is the age of the service sector, an era for excelling in quality of serviceprovided. The service sector is growing in spread and depth to encompass alltransactions involving buying and selling - be it in the tangible or intangible form. The examples below underscore how the service sector has transgressed allboundaries.Companies

across the country and the world are seeking to outsource many of their cost centers - the resultant surge in service providers like security services, indoorplants and decorative, cleaning and housekeeping and even secretarial services isphenomenal.Dual-income, nuclear households are getting to be the norm in urban India. In citieslike Mumbai, families are experiencing a burning new need - more time.Overstressed with work and travel, they find it impossible to grapple with routineeveryday tasks. This has given rise to hitherto unconventional new services.Housewives now make a cool sum with selling idli / dosa batter and homemadefood. Telephonic orders and home delivery are now passed with grocers andvegetable vendors. Supermarkets sell packaged vegetables, which are chopped andcleaned waiting to be cooked. The makeover is apparent even in traditionalservices like retailing and banking. These service providers have added peripheralservices to reduce transaction time and improve service delivery. Turn to product marketing - tangible products like television sets, air conditioners,microwave ovens and refrigerators, pagers and mobile phone sets and even carsare being sold on the promise of after sales service. Buyers are not just conscious of the necessity of services after the purchase has been made - they demand it.Having tasted the joys of greater and enhanced services in all walks of life, urbanIndians are clamoring for more. They now want an improvement in the quality of service offered. Service quality therefore is the latest buzzword - in corporateboardrooms, the local bania's siesta conversation with his neighbors and in theking's lair - the urban household.How then is the service provider to go about the difficult task of analyzing hisbusiness operations for chinks in delivery of quality service? What tool wouldindicate to him that he has misunderstood his customer? Where would he seek aconsultant for rectifying this fatal error? The Gaps model of service quality looks into the gaps in service quality. It is a readyreckoned to service providers to analyze their existing service delivery system andrectify matters before the company has lost the attention of the customer. THE GAPS MODEL OF SERVICE QUALITY The Customer Gap: The difference between customer perceptions and expectationsCustomer perceptions are subjective assessment of actual service experiencecustomer perceptions and customer expectations play an important role in servicemarketing. Customer expectations are the standards if or reference e point of performance against which service experiences are compared, and oftenformulated in terms of what a customer believes should or will happen. Forexample, when you visit a fast-food restaurant you expect a certain level of service,one that is considerably different from the level you would expect in an expensive

restaurant. The sources of customer expectations consist of marketer controlled factors as wellas factors that the marketer has a limited ability to affect (innate personal needs,word-of-mouth communications, competitive offerings). In a perfect world,expectations and perceptions would be identical: customers would perceive thatthey receive what they thought they would and should. In practice these conceptsare often, even usually, separated by some distance. Broadly, it is the goal of service marketing to bridge this distance. The assumptions appears to be thatservices , if not identical to goods, are at least similar enough in the consumersmind that that they are chosen and evaluated in the same manner. The gaps model is useful as it allows management to make an analyticalassessment of the cause of poor service quality. If the first gaps are great, the taskof bridging the subsequent gaps becomes greater, and indeed it could be said thatin such circumstances quality service can only be achieved by good luck rather thangood management.GAPs model of service quality restaurant. The

sources of customer expectations consist of marketer controlled factors as wellas factors that the marketer has a limited ability to affect (innate personal needs,word-of-mouth communications, competitive offerings). In a perfect world,expectations and perceptions would be identical: customers would perceive thatthey receive what they thought they would and should. In practice these conceptsare often, even usually, separated by some distance. Broadly, it is the goal of service marketing to bridge this distance. The assumptions appears to be thatservices , if not identical to goods, are at least similar enough in the consumersmind that that they are chosen and evaluated in the same manner. The gaps model is useful as it allows management to make an analyticalassessment of the cause of poor service quality. If the first gaps are great, the taskof bridging the subsequent gaps becomes greater, and indeed it could be said thatin such circumstances quality service can only be achieved by good luck rather thangood management.GAPs model of service quality

Gap 1: Not knowing what Customers ExpectNot knowing what customers expect is one of the root causes of not delivering tothe customer expectations gap 1 is the difference between customer expectationsof the service and company understanding of those expectations. Examples aboundforeign banks were right in thinking that customer expectation in terms of ambience was not being met. So they brought in some good ambience and morepresentable executives and thought they had bridged the gap. But what they didnot understand was that the customer was taking note of the lack of ambiencebecause there was a wait when he was twiddling his thumbs and looking around fora place to sit. In other words, he was really complaining about the lack of speed andease of operations. Result: Fancy ambience and higher cost attached to the sameslow and indifferent service - albeit by better looking personnel in better surrounds.Private sector banks understood the problem a mite better - but they too slipped upas business grew. They lost out on sustainability of the service promise.Example: A contractor using an electrical subcontractor for the first time mayexpect the subcontractor to use a certain grade of wire conduit in all of theirconstruction sites they subcontractor, however, may think the contractor wants touse the lowest grade to keep the cost down. Unless the contractor clearly delineateshis expectations, he will probably be dissatisfied because the subcontractor did notdo what was expected. The reverse may also occur. Management can provide a service they thinkcustomers expect without conforming customer expectations. Although on thesurface this sounds good because customer expectations will probably beexceeded, there are two dangers. First, if customer expectations are consistentlyexceeded, in time, these expectations will rise to meet the service being provided.Example: If customers do not expect their cars to be vacuumed and cleaned insidewhen the oil is changed at Quik Lube, then at first they will be pleased with thisextra touch. But the next time they use Quik Lube, their expectations increase and after a few times of receiving this special touch, it will become a permanent part of their expectations. Failure to vacuum and clean the interior of the car will thenresult in a negative gap since the vacuuming and the cleaning of the interiorbecomes something customers expected. The second danger is that the firm maybe spending money on providing services that the customers do not expect orperhaps even care about, thus yielding a negative impact on profit.Causes of Gap One: No direct interactions with customers. When people with the authority andresponsibility for setting priorities do not fully understand customers serviceexpectations, they may trigger a chain of bad decisions and suboptimal resourcesallocations that result in perceptions of poor service quality. One example of displaced priorities stemming from an inaccurate understanding of customersexpectations is spending far too much money on buildings and appearance of acompanys physical facilities when customers may be

much more concerned withhow convenient, conventional and functional the facilities are. Another example isillustrated by the management of Sears in the early 1990s, when the companyfailed to understand that the customers had changed there desires and modes of shopping. The company kept its traditional catalogue store long after customershad decided to take their business elsewhere. In the mid-1990s, Sears managementrediscovered its customers, now defined primarily as women, and began once againto be profitable and satisfying to customers. The service providers see themselvesas indifferent or superior to customers. This typically happens in government-runservices such as railways or postal departments where they would not want to knowwhat customer desires. Unwillingness to ask customers about expectations. Service providers may thinkthat they know what is best for their customers. This is the patronizing attitudetowards the customers. In todays changing organizations, the authority to makeadjustments in service delivery is delegated to empowered teams and front linepeople. For example, when AT&T asked its long-distance operators to improve theirservice to customers, the team identified key customer segments and conducted itsown customer research to determine expectations. Gap one was closed withoutinvolving management as it is traditionally defined. Unprepared ness to address the expectations. The service provider may be awareof the Shortfalls but may be unprepared to address the issue in the mistaken belief that the customers may be tolerant or that the lapse is unlikely to loss of customerpatronage. Another trend related to Gap One involves current company strategiesto retain customers and strengthen relationships with them. The term relationshipmarketing is used to describe this approach, which emphasizes strengthening thebonds with existing customers. When customers have strong relationships with theircustomers, gap 1 is less likely to occur. Lack of market segmentation to understand the needs are such segment. Marketsegmentation is the grouping of customers sharing similar requirements,expectations and demographic or psychographic profiles. Segmentation is usuallydone to understand the needs of customers more elaborately or distinctly. While segmentation has been used by marketers for decades, it may be more criticaltoday than any other time. Customers are no longer satisfied by homogenousproducts and services for the mass market; now, more than ever before, theyseeking and buying services that fit their unique configuration of needs. If the needsare not precisely understood due to lack of segmentation, quality perception islikely to be poor.Strategies for Reducing Gap One:Service firms have four strategies available to them to reduce the size of gap one. These strategies are: communicating with the customers, conducting marketingresearch, encouraging upward communication in the organization, and decreasingthe number of layers of management. By talking to customers, management willlearn what buyers expect in terms of service quality and how they feel about theservice they received. Contact and communication between customers andmanagement is common in small business because the owner is often the serviceoperator.Buyer may not always be honest in their communication with management of service firm. To ensure open, honest communication, service firm can usemarketing research, which can either be performed by third parties or, in case of large cooperation, by the marketing department. To be effective, the marketingresearch much focus on service quality issues and consumer expectations of theservice.For firms where management is separated from the customer contact personnel,upward communication is vital in reducing the size of Gap One. Service contactpersonnel must be encouraged to communicate with management in an open, nonthreatening environment. To be effective, upward communication must berequested by top management. Ideas for improvement should not only be soughtfrom service contact personnel, but employees should be rewarded for productiveideas.As the layers of management increase, the chances of management having acorrect understanding of what customer want in terms of service quality becamemore difficult. Many service firms, therefore, are seeking means to reduce thenumber of management layers.For much small business, service quality is the major issue in the selection of theirtelecommunications provider. According to Tony Parella,

executive vice-president of Allegiance telecom of Dallas, People buy from us because they dont necessarilyfeel appreciated by regional Bell carrier. The goal of Allegiance management is toprovide customers with personalized service. To ensure management hears aboutcustomer concerns and to ensure Allegiance communicate effectively to customers,Allegiance has instituted a customer Bill of Rights and place a customer servicemanager in each branch. These actions have been a major step for Allegiance inreducing the size of Gap One and ensuring a high level of customer satisfaction.Formal and informal methods to capture information about customer expectationscan be developed through

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involving a variety of
market research. Techniques

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