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Unit -2

Customer Decision Making in services


1. Consumer Decision Making in Services
2. Customer Expectations and Perceptions
3. Defining and Measuring Service Quality
4. Customer Satisfaction,
5. Servqual
6. House of Quality
7. GAPs Model
8. Service Recovery.
Customer Decision Making: The Three-Stage
Model of Service Consumption
Pre-purchase Stage
Need Arousal
1. Decision to buy or use a service is triggered by
need arousal
2. Triggers of need
- Unconscious minds (e.g., personal identity and
aspirations)
- Physical conditions (e.g., hunger )
- External sources (e.g., a service firms marketing
activities)
3. Consumers are then motivated to find a solution for
their need!
Information Search
1. Need arousal leads to attempts to find a
solution
2. Evoked set a set of products and brands
that a consumer considers during the
decision-making process that is derived
from past experiences or external sources
3. Alternatives then need to be evaluated before
a final decision is made
Evaluating Alternatives Service Attributes
Search attributes help customers evaluate a product
before
Purchase.
E.g., type of food, location, type of restaurant and price.
Experience attributes cannot be evaluated before
purchase.
The consumer will not know how much s/he will enjoy
the food, the service, and the atmosphere until the
actual experience.
Credence attributes are those that customers find
impossible to evaluate confidently even after purchase
and consumption.
E.g., hygiene conditions of the kitchen and the
healthiness of the cooking ingredients
How Product Attributes Affect Ease of
Evaluation
Perceived Risks of Purchasing and
Using Services
Functional unsatisfactory performance outcomes!

Financial monetary loss, unexpected extra costs!

Temporal wasted time, delays leading to problems!

Physical personal injury, damage to possessions!

Psychological fears and negative emotions!

Social how others may think and react!

Sensory unwanted impact on any of five senses


How Might Consumers Handle Perceived Risk?
Seek information from respected personal sources

Compare service offerings and search for independent


reviews and ratings via the Internet

Relying on a firm with good reputation

Looking for guarantees and warranties

Visiting service facilities or going for trials before purchase


and examining tangible cues or other physical evidence

Asking knowledgeable employees about competing services


Strategic Responses to Managing Customer
Perceptions of Risk
Understanding Customers Service
Expectations!
Customers evaluate service quality by
comparing what they expect against what they
perceive.
Situational and personal factors also
considered.
Expectations of good service vary from one
business to another, and differently positioned
service providers in same industry.
Expectations change over time!
Factors Influencing Customer Expectations
of Service
Components of Customer Expectations
Purchase Decision!
Purchase Decision: Possible alternatives are
compared and evaluated, whereby the best option is
selected.
Simple if perceived risks are low and alternatives
are clear
Complex when trade-offs increase.
Trade-offs are often involved.
After making a decision, the consumer moves into
the service encounter stage.
Service Encounter Stage
Service Encounter Stage!
Service encounter a period of time during which a
customer interacts directly with the service provider
Might be brief or extend over a period of time (e.g.,
a phone call or visit to the hospital)
Models and frameworks:
1. Moments of Truth importance of managing
touch points
2. High/low contact model extent and nature of
contact points
3. Servuction model variations of interactions
4. Theatres metaphor staging service performances
Moments of Truth
[W]e could say that the perceived quality is realized
at the moment of truth, when the service provider
and the service customer confront one another in
the arena. At that moment they are very much on
their own It is the skill, the motivation, and the
tools employed by the firms representative and the
expectations and behaviour of the client which
together will create the service delivery process."
Richard Normann
Distinctions between High-Contact
and Low-Contact Services
High-Contact Services Low-Contact Services!
Customers visit service Little or no physical
facility and remain contact.
throughout service delivery. Contact usually at arms
Active contact. length through electronic or
Includes most people physical distribution
processing services! Channels.
Facilitated by new
Technologies.
The Servuction System:
Service Production and Delivery
Servuction System: visible front stage and invisible
backstage
Service Operations.
Technical core where inputs are processed and service
elements created.
Contact people
Inanimate environment.
Service Delivery.
Where final assembly of service elements takes place
and service is delivered.
Includes customer interactions with operations and
other customers.
Theater as a Metaphor for
Service Delivery
All the worlds a stage and all the men
and women merely players. They have
their exits and their entrances and each
human in his time plays many parts.

William Shakespeare!
Theatrical Metaphor: an Integrative
Perspective
Implications of Customer
Participation in Service Delivery.
Greater need for information/training
Help customers to perform well, get desired
results
Customers should be given a realistic service
preview in advance of service delivery
This allows them to have a clear idea of their
expected role and their script in this whole
experience
Manages expectations and emotions
Post-Encounter Stage
Customer Satisfaction with
Service Experience
Satisfaction: attitude-like judgment following a service
purchase or series of service interactions
Whereby customers have expectations prior to
consumption, observe service performance, compare it
to expectations.
Satisfaction judgments are based on this comparison!
Positive disconfirmation (better)
Confirmation (same)
Negative disconfirmation (worse)
Customer Delight: Going Beyond
Satisfaction
Research shows that delight is a function of three
Components
Unexpectedly high levels of performance
Arousal (e.g., surprise, excitement)
Positive affect (e.g., pleasure, joy, or happiness)
Strategic links exist between customer satisfaction
and corporate performance
By creating more value for customers (increased
satisfaction), the firm creates more value for the
owners!
Understanding customer
expectations and perceptions
introduction
Despite a genuine interest in meeting customer
expectations, many companies miss the mark by thinking
inside out- they believe they know what customers should
want and deliver that, rather than finding out what do want
Many companies provide services that do not match
customer expectations
Important features are left out and the levels of
performance on features that are provided are inadequate
a far better approach involves thinking outside in-
determining customer expectations and then delivering to
them
Thinking outside in involves using marketing research to
understand customers and their requirements fully
Marketing research consists of a portfolio of
listening strategies that allow the company to
deliver to expectations

CUSTOMER Expected Service

GAP 1

Company
COMPANY Perceptions of
Consumer
Expectations

Part 2 Opener
Using marketing research to understand
customer expectations
Finding out what customers expect is essential to
providing service quality
Marketing research is a key vehicle for
understanding customer expectations and
perceptions of services
If a firm in service does not carry out marketing
research ,it will not understand its customers
a firm that does marketing research but not on the
topic of customer expectations, may fail to know
what is needed to stay in tune with changing
customer requirements
Cont..
Marketing research should focus on service issues such as
what features are most important to customers, what
levels of these features customers expect
What customers think the company can and should do
when problems occur in service delivery
Even when a service firm is small and has limited resources
to conduct research, avenues are open to explore what the
customers expects
Common Research Objectives
for Services
To identify dissatisfied customers
To discover customer requirements or expectations
To monitor and track service performance
To assess overall company performance compared to
competition
To assess gaps between customer expectations and
perceptions
To gauge effectiveness of changes in service
To appraise service performance of individuals and teams
for rewards
To determine expectations for a new service
To monitor changing expectations in an industry
To forecast future expectations
Research objectives for service
The first step in designing services marketing research is
critical:
Defining the problem and research objectives: this is where
the services marketer poses the questions to be answered
or problems to be solved by the research
Does the company want to know how customers view the
services provided by the company, what customer
requirements are, how customers will respond to a new
service introduction or what customers will want from the
company five years from now?
It is essential to devote time and resources to define the
problem thoroughly and accurately
Many marketing research studies are initiated without
adequate attention to objectives
Research objectives translate into action questions
Common research objectives in service
To identify dissatisfied customers, so that service recovery
can be attempted
To discover customer requirements or expectations for
service
To monitor and track service performance
To assess overall company performance compared with
that of competition
To assess gaps between customer expectations and
perceptions
To gauge effectiveness of changes in service delivery
To appraise the service performance of individuals and
teams for evaluation, recognition and rewards
Cont
To determine customer expectations for a new service
To monitor changing customer expectations in an industry
To forecast expectations of customers
These research objectives are similar in many ways to the
research conducted for physical products
Service research, however, incorporates additional elements
that require specific attention
Service research should continually monitor and track
service performance because performance is subject to
human variability and heterogeneity
A major focus of services research involves capturing
human performance-at the level of the individual employee,
the team, the branch, the organization as a whole and the
competition
Cont
another focus of services research is documenting the
process by which service is performed
Even when service employees are performing well, a
service provider must continue to track performance
because the potential for variation in service delivery is
always present
a second distinction in services research is the need to
consider and monitor the gap between expectations and
perceptions
This gap is dynamic because both perceptions and
expectations can fluctuate
Eg does the gap exist because performance is declining,
because performance varies with demand and supply level
or because expectations are escalating?
Criteria for An Effective Services Research
Program

Includes
Perceptions
and
Expectations
Occurs of
Customers
with
Appropriate Research Includes
Frequency Measures
Objectives of
Loyalty or
Behavioral
Measures Intentions
Priorities
or
Importance
Includes
Statistical
Validity
When Necessary
Criteria for an effective services research
program
a services research program can be defined as the
composite of separate research studies and types
needed to address research objectives and execute an
overall measurement strategy
Many types of research could be considered in a
research program
Understanding the criteria for an effective services
research program will help a company evaluate different
types of research and choose the one most appropriate
for its research objectives
Cont
Qualitative and quantitative research: marketing research is
not limited to surveys and statistics
Some forms of research are exploratory and preliminary
called qualitative research are conducted to clarify problem
definition and prepare for more formal empirical research
Quantitative research in marketing, on the other hand is
designed to describe the nature, attitudes or behaviors of
customers empirically and to test specific hypotheses that a
service marketer wants to examine
Both types of research are important and need to be
included in services marketing research programmes
Cont
Insights gained through qualitative methods such as
customer focus groups, informal conversations with
individual customers, critical incidents research and
observation of services transactions
Show the marketer the right questions to ask of consumers
Qualitative research also gives managers the perspective
and sensitivity that are critical in interpreting the data and
initiating improvement efforts
Quantitative research clearly is important in assessing and
improving service delivery and design.
Quantitative research gives managers data from which they
can broad inferences about customer groups
Cont
These studies are essential for quantifying customer
satisfaction, the importance of service attributes, the
extent of service quality gaps and perceptions of
value
they also provide managers with yardsticks to
evaluate and track the firm`s service performance
and show how the firm compares with competitors
Results from empirical studies often trigger the need
to conduct further qualitative research
Empirical data can highlight specific service
deficiencies for deeper qualitative probing
Perceptions and expectations of customers
Expectations serve as standards or reference points
for customers
In evaluating service quality, customers compare
what they perceive they get in a service encounter
with their expectations of that encounter
Measurement programmed that captures only
perceptions of service is missing a critical part of
service quality equation
Companies need to incorporate measures of
customer expectations
Measurement of expectations can be included in a
research programme in multiple ways
Cont
First basic research relates to customer
requirements-that identifies the service features or
attributes that matter to customers
Research on levels of customer expectations is also
needed.
Assessment of the cost of research compared with
its benefits or value to the company is important
Customers have many service requirements, but not
all are equally important. There is therefore a need
to measure priorities and importance
Because customer expectations and perceptions are
dynamic, companies need to institute a service
quality research process not just do isolated studies
Cont
An important trend in services research involves
measuring the positive and negative consequences
of service quality along with overall satisfaction or
service quality scores
Elements in affective services marketing
research program
Complaint solicitation: firms use complaints as research
to collect and document them, then use the
information to identify dissatisfied customers, correct
individual problems where possible
Critical incident studies: where by customers provide
verbatim stories about satisfying and dissatisfying
service encounters they have experienced
Requirement research: involves identifying the benefits
and attributes that customers expect in a service. This
type of research is very basic and essential because it
determines the type of questions that will be asked in
surveys and ultimately the improvements that will be
attempted by the firm
Relationship and servqual surveys
One category of survey could appropriately be named
relationship surveys because they pose questions about all
elements in the customer`s relationship with the
company[including service, product and price]
This comprehensive approach can help a company diagnose
its relationship strengths and weaknesses
These surveys typically monitor and track service
performance annually with initial survey providing baseline
One of the first measures to be developed specifically to
measure service quality was SERVQUAL survey
The SERVQUAL scale involves a survey containing 21 service
attributes, grouped into the five service quality dimensions
of reliability, responsiveness, assurance, empathy and
tangibles
The survey often asks customers to provide two different
rating on each attribute
Customer satisfaction and
service quality

Md.Badruzzaman 50
Definition of Customer Service
You never want to hear this when you own a business:
"Our customers are revolting! They are demanding more
for less and want world class products and services
and they want it now. If we can't provide what they
want, they will find some one who can. We must
provide great customer service."
One of the best customer service definitions I have come
across is:

excellent customer service (is) the ability of an


organization to constantly and consistently exceed the
customer's expectations

Md.Badruzzaman 51
Customer Customer
Customer is the most
important person
Mission or Goals of Company??? He is not depend on us ,
rather we depend him
He is never an interruption
to work rather he is the
Customer Satisfaction
purpose

In serving him the


company does no favor to
Expectation-Perception him rather he obliges by
providing an opportunity
to serve him/her.
Quality of Service
He is not someone to argue
bcz no one can win
argument to him

Md.Badruzzaman 52
Customer satisfaction
Definition: what customer expects and how he
perceives that service received lived up to those
expectations.
Service satisfaction=(customer) expectation-
perception (of customer)
Objective satisfaction is reduction of the discrepancy
between the current situation and the desired
situation
Depend more on customer & his style than technology
or system
Md.Badruzzaman 53
Customer satisfaction cont....

Overall post purchase evaluation lead to satisfaction/dissatisfaction

A state of experience: intellectual & emotional patron-centered


personal reaction/response depend on (1) perception (2) view point
(3) experience (4) expertise

Satisfying a person differs from satisfying a need : long term customer


satisfaction is the aim.

Md.Badruzzaman 54
Customer satisfaction cont....

Perception is a conscious thought process, it consist of sensory


perception, association, evaluation & decision

Individual perception is all encompassing (hopes, fear, upper limits)


and all powerful.

User perception goes deep and when it comes to perception feelings


are facts
Customers exceptions tell what to sell and serve (user requirement)

Customers perceptions of service tell how to sell, serve and satisfy


users behaviors, attitude, preference, e.t.c) as they vary over time
and from person it has to be on continuous basis

Md.Badruzzaman 55
Customer satisfaction cont....
People like to hold on old ideas and beliefs as though they were valued
personal possessions. It requires original thinking which hurts because of
considerable effort, self-analysis and risk to adopt new idea.

People who do not rethink their past have habitual behavior. The only
people who can change their mind are those who use it

Satisfaction has a linear relation to loyalty and repeat purchase.

Measuring satisfaction is part of research method. Psychometric factors,


practical considerations, choice of scales, administration of questionnaire,
etc are used.

Md.Badruzzaman 56
Customer satisfaction in Orgz.
1. Expectation
Image of symphony helps to determine exception
Advertisement & casual conversations affect image
Image is redefined based on immediate impact when service is
approached
Previous experience has powerful influence
Regular customers have more realistic expectations
2. Perception
Single incident can changes in other interactions
To improve: involve customers genuinely
Strives for a service wide image of consistency and efficiency

Md.Badruzzaman 57
Customer satisfaction in Orgz
3. Demand
Satisfaction and demand are closely linked
Good service generate greater use from limitless pool of latency
demand
Satisfaction is adaptive: good service over stretched causes drop in
satisfaction ;poor service retain some customers who are persistent,
rarely satisfied and having low expectations.
The rating further go down as service improves because of attracting
more customers, who are more critical, want even higher level of
service, & more knowledgeable

Md.Badruzzaman 58
Types of customers & reasons for
Major reason for
dissatisfaction
customer Customer Types of Why customers
dissatisfaction behavior in customers quit???
-service provided in a response to
careless & unsatisfactory -Happy-go-lucky - Die
unprofessional service
manner -Know-it-all Move away
experience
-treated like an object -Proud and in a -From other
rather than individual -decided to quit hurry friendship
-service not -warned family
performed correctly -angry and -Product service
for the first time
and friends anxious dissatisfaction
Service performed -contacted the -Nervous Indifferent
incompletely with company to attitude of
harmful results complain service
-things were worse
after service than personnel/emplo
before yee
-treated with extreme
rudeness

Md.Badruzzaman 59
What do complaining customers want???
To be taken seriously and to be treated with respect
Immediate action feeling or words from your heart
Compensation apology
Clear up the problem
To be listened to
Expectation of your customers (96%) are reasonable
Listen to them
You will Fight for them
You will Feel for them
Customer service
Customer service-your best sale tool
Customers must be given the best possible service
Customer satisfaction requires a professional work culture
Advertise makes promises, but only people can keep them.
Md.Badruzzaman 60
How to make Customer Happy?(How to sell, serve, & satisfy customers)
Selling Customer wants answers &
Have empathy solutions to their problems
Customer is boss Fight for your customer
Customer is profit not overhead Satisfying
Give importance to people Listen
(service employees & customers) Visit customer
Create customers Check employees attitude
Communicate continuously towards customers
Serving Solve the problems
Focus on Learn from dissatisfied
Be customer oriented customers.
Develop customer oriented
policies
Give best possible service Md.Badruzzaman 61
What is Service Quality ?
Quality = Excellence. Recognized only through
Transcendent: experience

Product-based: Quality is precise and measurable

User-based: Quality lies in the eyes of the beholder

Manufacturing-based: Quality is in conformance to the firms developed


specifications

Md.Badruzzaman 62
COMPONENTS OF SERVICE QUALITY

Reliability

Responsive
ness
Service
Assurance
Quality

Empathy

Tangibles
Md.Badruzzaman 63
The 5 Dimensions Defined
After extensive research, Zeithaml, Parasuraman and Berry found five
dimensions customers use when evaluating service quality. They named
their survey instrument SERVQUAL.
In other words, if providers get these dimensions right, customers will hand
over the keys to their loyalty. Because theyll have received service
excellence. According to whats important to them.
The five SERVQUAL dimensions are:

TANGIBLES-Appearance of physical facilities, equipment, personnel, and


communication materials
RELIABILITY-Ability to perform the promised service dependably and
accurately
RESPONSIVENESS-Willingness to help customers and provide prompt
service
ASSURANCE-Knowledge and courtesy of employees and their ability to
convey trust and confidence
EMPATHY-Caring, individualized attention the firm provides its customers

Md.Badruzzaman 64
Whats this mean for service
#1 Just Do It
providers?
RELIABILITY: Do what you say youre going to do when you
said you were going to do it.
Customers want to count on their providers. They value that
reliability. Dont providers yearn to find out what
customers value? This is it.Its three times more important
to be reliable than have shiny new equipment or flashy
uniforms.
Doesnt mean you can have ragged uniforms and only be
reliable. Service providers have to do both. But providers
first and best efforts are better spent making service
reliable.
Whether its periodic on schedule, on-site response within
Service Level Agreements (SLAs), or Work Orders
completed on time.

Md.Badruzzaman 65
#2 Do It Now
RESPONSIVENESS: Respond quickly, promptly,
rapidly, immediately, instantly.
Waiting a day to return a call or email doesnt make
it. Even if customers are chronically slow in
getting back to providers, responsiveness is more
than 1/5th of their service quality assessment.
Service providers benefit by establishing internal
SLAs for things like returning phone calls, emails
and responding on-site. Whether its 30 minutes,
4 hours, or 24 hours, its important customers feel
providers are responsive to their requests. Not
just emergencies, but everyday responses too.
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#3 Know What Your Doing
ASSURANCE: Service providers are expected to be the
experts of the service theyre delivering. Its a given.
SERVQUAL research showed its important to communicate
that expertise to customers. If a service provider is highly
skilled, but customers dont see that, their confidence in
that provider will be lower. And their assessment of that
providers service quality will be lower.
RAISE CUSTOMER AWARENESS OF YOUR COMPETENCIES
Service providers must communicate their expertise and
competencies before they do the work. This can be done
in many ways that are repeatedly seen by customers. By
communicating competencies, providers can help manage
customer expectations. And influence their service quality
assessment in advance.

Md.Badruzzaman 67
#4 Care about Customers as much as the Service
EMPATHY: Services can be performed completely to
specifications. Yet customers may not feel provider
employees care about them during delivery. And this
hurts customers assessments of providers service
quality.
SERVICE DELIVERY MATTERS
Providers service delivery can be as important as how it
was done. Provider employees should be trained how
to interact with customers and their end-users. Even a
brief session during initial orientation helps. Anything
to help them understand their impact on customers
assessment of service quality.
Md.Badruzzaman 68
#5 Look Sharp
TANGIBLES: Even though this is the least important
dimension, appearance matters. Just not as much
as the other dimensions.
Service providers will still want to make certain their
employees appearance, uniforms, equipment, and
work areas on-site (closets, service offices, etc.)
look good. The danger is for providers to make
everything look sharp, and then fall short on
RELIABILITY or RESPONSIVENESS.

Md.Badruzzaman 69
The 5 Service Dimensions Customers Care About

Md.Badruzzaman 70
The
SERVQUAL
Model
Introduction
Service quality is an approach to manage business processes in
order to ensure full satisfaction of the customers & quality in
service provided. It works as an antecedent of customer
satisfaction.
If expectations are greater than performance, then perceived
quality is less than satisfactory and hence customer dissatisfaction
occurs.
SERVQUAL Is a service quality framework, developed in the
eighties by Zeithaml, Parasuraman & Berry, aiming at measuring
the scale of Quality in the service sectors.
SERVQUAL was originally measured on 10 aspects of service
quality: reliability, responsiveness, competence, access, courtesy,
communication, credibility, security, understanding the customer,
and tangibles, to measure the gap between customer expectations
and experience.
SERVQUAL as a Measuring Tool
In 1988 the 10 components were collapsed into five dimensions
(RATER). Reliability, tangibles and responsiveness remained distinct,
but the remaining seven components collapsed into two aggregate
dimensions, assurance and empathy.
Parasuraman et al. developed a 22-scale instrument with which to
measure customers expectations and perceptions (E and P) of the five
RATER dimensions. Four or five numbered items are used to measure
each dimension.
The instrument is administered twice in different forms, first to
measure expectations and second to measure perceptions.
Dimensions Scale
Reliability 4
Assurance 5
Tangibles 4
Empathy 5
Responsiveness 4
The Key Service Dimensions
The five SERVQUAL dimensions are: R-A-T-E-R:
1. RESPONSIVENESS - Willingness to help customers and
provide prompt service
2. ASSURANCE - Knowledge and courtesy of employees and
their ability to convey trust and confidence
3. TANGIBLES - Appearance of physical facilities,
equipment, personnel, and communication materials
4. EMPATHY - Caring, individualized attention the firm
provides its customers
5. RELIABILITY - Ability to perform the promised service
dependably and accurately
Conceptual Model of Service Quality

GAP 1: Not knowing


what customers expect

GAP 2: wrong service


quality standards

GAP 3: The service


performance gap

GAP 4: promises do not


match actual delivery

GAP 5: The difference


between customer
perception and
expectation
The SERVQUAL Gaps
Gap 1
Commonly know as the management perception gap
Gap 1 results from a difference between what customers expect and what
management perceives these expectations to be.
It indites a problme with the understanding of the market. This can occur, as a
result of insufficient research or communication failures.
E.g. : Management of ABC Dry cleaning Ltd perceives that a particular segment
simply expects low prices on its service, when in fact, the expectation is a value-
for-money service.

Management Expected
Perceptions Service
of Customer
Expectations
The SERVQUAL Gaps
Gap 2
Commonly known as quality specification gap.
Gap 2 results from a difference between management perceptions of what
customers expect and the specifications that management draws up when
detailing the service quality delivery actions that are required.
Service design and performance standards are pre-requisites for bridging this
gap.
E.g. : Most hotels do not do housekeeping in a room on the day the customer
is checking out. But has management realised that the customer who is
doing a late checking out wants a clean room during that day?

Service Management
Quality Perceptions
Specifications of Customer
Expectations
The SERVQUAL Gaps
Gap 3
Commonly known as the Service delivery gap.
Gap 3 results from a mismatch between the service delivery specifications required
by management and the actual service that is delivered by front line staff.
It is the difference between customer-driven service design & standards, and the
service delivery of the provider.
Managers need to audit the customer experience that their organization currently
delivers in order to make sure it lives up to the expected level.
E.g. : Usually, all restaurants need to attend to every request and orders of the
customers. But very often when customers place orders, they either do not receive
the orders at all or the waiter has confused it with that of another customer.

Service Service
Delivery Quality
Specifications
The SERVQUAL Gaps
Gap 4
Commonly known as market communication gap.
This is the gap between the delivery of the customer experience and
what is communicated to customers, i.e. the discrepancy between
actual service and the promised one
All too often organizations exaggerate what will be provided to
customers, or discuss the best case rather than the likely case, raising
customer expectations and harming customer perceptions.
E.g. A company commercialising slimming products boasts that
customers may lose up to 4-5 kgs/week. But they do not specify that a
strict diet and regular exercise must accompany the treatment for it to
have the desired effect.

Service External
Delivery Communications
to Customers
The SERVQUAL Gaps
Gap 5
Commonly known as the perceived service quality gap.
Gap 5 may be identified as the overall difference between
the expected service and the perceived service experienced.
Gap 5 results from the combination of Gaps 1 to 4
Customers' expectations have been shaped by word of
mouth, their personal needs and their own past service
experiences.
Unless Gap 5 is kept under check, it may result in lost
customers, bad reputation, negative corporate image.

Expected Perceived
Service Service
Causes for the Gaps
GAP 1 - not knowing what customers expect
E.g. : XYZ Events Ltd organised a wedding with the usual
white and blue decorations, when the customer had
expected something new and original.
Causes:
Lack of a marketing orientation to quality
Poorly interpreted information about customers
expectations
Research not focused on demand quality
Too many layers between the front line personnel &
top level management
Causes for the Gaps
GAP 2 - The wrong service quality standards
E.g. : XYZ Events Ltd perceived that the customer wanted a
very nice reception with at least 2 waiters at each table, but
management eventually decided otherwise to reduce costs.
Causes:
inadequate commitment to service quality
lack of perception of feasibility
inadequate task standardization
the absence of goal setting
Insufficient planning of procdures
Causes for the Gaps
GAP 3 - The service performance gap
E.g. : XYZ Events Ltd had promised the most exquisite
catering and wedding cake, but the food was not appreciable
and the bride didnt like the cake at all.
Causes:
Poor employee or technology fit - the wrong person or
wrong system for the job
Deficiencies in human resource policies such as ineffective
recruitment, role ambiguity, role conflict
Failure to match demand and supply
Too much or too little control
Lack of teamwork within the organisation
Causes for the Gaps
GAP 4 - When promises do not match actual delivery
E.g. : XYZ Events Ltd promised to have a Mercedes
limousine for the entry of the groom, but eventually the
latter was given a simple Nissan Sunny.
Causes:
inadequate horizontal communication
Over-promising in external communication campaign
Failure to manage customer expectations
Failure to perform according to specifications given to
customers
Causes for the Gaps
GAP 5 - The difference between customer perception of
service and the expectation they had
Usually the cause is the occurrence of the 4 other Gaps, which
results in a difference between customer perception and the
expectation they had. Ultimately the grooms experience was
way too far from what he had expected, and thus results in
dissatisfaction.
Other causes can be:
cultural background, family lifestyle, personality,
demographics, advertising, experience with similar service
information available online
Solution for the Gaps
No Solutions as such, but rather, measures that can be taken to minimize
the gaps
Gap Definitions Measures

1 Customers expectations Use of good Customer Relationship Management Techniques to profile &
versus management know customers expectations, tastes and needs
perceptions E.g: XYZ Events Ltd should conduct sample surveys to know what
customers expect nowadays
2 Management perceptions Managers need to make sure the organization is defining the level of service
versus service specifications they believe is needed.
E.g.: XYZ Events Ltd could have offered pre-set wedding packages at
different prices with different services set.
3 Service specifications Managers need to audit the customer experience that their organization
versus service delivery currently delivers in order to make sure it lives up to the expected level.
E,g.: XYZ Events Ltd needs to ask customers to give their post experience
feedbacks
4 Service delivery versus Use of good Communication skills and avoid ambiguous or fraudulent terms
external communication: to confuse or mislead the customer.
E.g.: XYZ Events Ltd should clearly inform the customer about something
that will not be possible to implement
5 The discrepancy between Application of all the above measures to make sure the service delivered
customer expectations and meets the expectations of the customer
their perceptions of the
service delivered
Criticisms to SERVQUAL
It has been criticized that SERVQUAL's 5 dimensions
(RATER) are not universals, and that the model fails to
draw on established economic, statistical and
psychological theory.
There is little evidence that customers assess service
quality in terms of Perception / Expectation gaps.
SERVQUAL focuses on the process of service delivery,
not the outcomes of the service encounter.
There is a high degree of intercorrelation between the five
RATER dimensions, thus the scores obtained cannot be
exact.
SERVQUAL; Good or Bad???
SERVQUAL remains the most complete attempt to
conceptualize and measure service quality Nyeck, et al.
(2002)
The main benefit to the SERVQUAL measuring tool is the
ability of researchers to examine numerous service
industries such as healthcare, banking, financial services,
and education
Nyeck et al. (2002) reviewed 40 articles that made use of
the SERVQUAL measuring tool and discovered that few
researchers concerned themselves with the validation of the
measuring tool, which means it is well anchored as a
trusted model.
Service Quality is widely regarded as a driver of corporate
marketing and financial performance
Advantages of Disadvantages of
SERVQUAL SERVQUAL
Enables assessing service The uniform
quality from the customers
applicability of the
perspective
method for all service
We can track customer
expectations and perceptions
sectors is difficult.
over time, together with the The use of
discrepancies between them expectations in
Servqual enables comparison measuring service
to competitors on common
quality has currently
aspects
come under a lot
We can assess the expectations
and perceptions of internal
of criticism.
customers e.g. other Does not measure
departments or services we service outcome
deal with.
perceptions.
Methodology of SERVQUAL
The method essentially involves conducting a sample survey of
customers so that their perceived service needs are understood.
For measuring their perceptions of service quality for the
organization in question, customers are asked to answer
numerous questions within each dimension that determines:
The relative importance of each attribute.
A measurement of performance expectations that would relate to
an excellent company.
A measurement of performance for the company in question.
This provides an assessment of the gap between desired and
actual performance.
This allows an organization to focus its resources where
necessary and to maximize service quality whilst costs are
controlled
Uses of SERVQUAL
To assess a company's service quality along each of the 5
SERVQAL dimensions. E.g. XYZ Events Ltd carries out the
servqual survey to know where it stands in the perception of
customers.
To track customer's expectations and perceptions over time. E.g.
XYZ Events Ltd wants to compare its score of last year against that
of the current year to know whether it has improved or has to
improve
To compare a company's SERVQUAL scores against competitors.
E.g.: XYZ Events Ltd wants to compare its score against that of
1570 Events Ltd to see who is the best.
To identify and examine customer segments that differ significantly
in their assessment of a company's service performance.
To assess internal service quality (interdepartmental comparison)
Applications of SERVQUAL
Service quality has become an important research topic
because of its apparent relationship to costs, profitability,
customer satisfaction, and customer retention
SERVQUAL has been a keyword in 41 publications which
incorporate both theoretical discussions and applications of
SERVQUAL in a variety of industrial, commercial and not-
for-profit settings.
Some of the published studies include :
Hotels ,travel and tourism
Car servicing, business schools
Accounting firms, architectural services
Airline catering
Mobile Telecommunications in Macedonia
Conclusions
SERVQUAL is considered very complex, subjective and
statistically unreliable. The simplified RATER model
however is a simple and useful model for qualitatively
exploring and assessing customers' service experiences
It is an efficient model in helping an organization shape up
their efforts in bridging the gap between perceived and
expected service
SERVQUAL is used to track customer's expectations and
perceptions over time to compare the company's
SERVQUAL scores against competitors.
Although SERVQUAL's face and construct validity are in
doubt, it is widely used in modified forms (RATER) to
measure customer expectations and perceptions of service
quality.
House of Quality
House of Quality is a diagram, resembling a
house, used for defining the relationship
between customer desires and the
firm/product capabilities.
It is a part of the Quality Function
Deployment (QFD) and it utilizes a planning
matrix to relate what the customer wants to
how a firm (that produces the products) is
going to meet those wants.
Steps to the House of Quality
Step 1: Customer Requirements - "Voice of the
Customer:
What the customer need or expects.
1.1Primary customer requirement:
Aesthetics
Performance
1.1.1 Secondary Customer Requirements Under
Aesthetics :
Low cost
Safe
Corrosion resistance
1.1.2 Secondary Customer Requirements Under
Performance :
Fast
Fuel efficiency
Reliability
Step 2 : Technical Descriptors - "Voice of the
Engineer:
How to design a product that will meet the customer
requirements.
Weight
Engine power
Cost of production
Life expectancy
Step 3: Relationship Matrix: relationship between the
technical descriptors and the customers need.
Symbols:
Strong =9
Good =3
weak =1
Step 4 : Correlation Matrix:
Relationship between the technical descriptors
impact each other. The correlation matrix is
probably the least used room in the House of
Quality; however, this room is a big help to the
design engineers in the next phase of a
comprehensive QFD project.
Symbols:
++ Strong positive (9)
+ Positive (3)
- Negative (-3)
-- Strong Negative (-9)
Step 5 : Competitive Assessment:
5.1 Customer Competitive Assessment: It is the
block of columns corresponding to each
customer requirement. The no 1 to 5 are listed
in column. 1 rating of worst and 5 for best.
5.2 Technical Competitive Assessment: It is the
block of columns corresponding to each
customer requirement. The no 1 to 5 are listed
in column. 1 rating of worst and 5 for best.
The Gaps ModelA Conceptual
Tool to Identify and Correct
Service Quality Problems
GAP Model
The Gaps Model was proposed by A. Parasuraman,
Valarie Zeithaml and LL Berry in 1985 in the Journal
Of Marketing
GAPS MODEL OF SERVICE QUALITY
PRESCRIPTIONS FOR CLOSING THE SEVEN
SERVICE QUALITY GAPS
1. Knowledge gap: Learn what customers expect
2. Standards gap: Specify SQ standards that reflect
expectations
3. Delivery gap: Ensure service performance meets
standards
4. Internal communications gap: Ensure that
communications promises are realistic
5. Perceptions gap: Educate customers to see reality of
service quality delivered
6. Interpretation gap: Pretest communications to make
sure message is clear and unambiguous
7. Service gap: Close gaps 1 to 6 to meet customer
expectations consistently
The Customer Gap
Customer gap is Difference between expectations and
perceptions.
Provider gap 1:
Not knowing what customers expect
Provider gap 2:
Not selecting the right service designs and standards
Provider gap 3:
Not delivering to service standards
Provider gap 4:
Not matching performance to promises
Key Factors Leading to Provider Gap 1
Provider Gap 2
TRANSLATION OF PERCEPTION INTO
SERVICEQUALITY SPECIFICATION

MANAGEMENT PERCEPTION OF
CUSTOMER EXPECTATIONS
Key Factors Leading to Provider Gap 2
Provider Gap 3
OR
Other model of gap
The gaps model of service quality
Consumer
Personal needs Past
Word-of-mouth experience
communications
Expected service

GAP 5
Perceived service

Service delivery External


(including pre- and post- GAP 4
communications
contacts) to consumers

GAP 3
GAP 1
Translations of
perceptions into service
quality specifications
GAP 2
Management perceptions of
consumer expectations

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Gap-1
Customers
expectations

Inadequate marketing research


Reasons orientation
for
provider Lack of upward communication
gap
I Insufficient relationship focus

Inadequate service recovery

Companys perceptions of
customer expectations
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Gap-2
Translation of perceptions into
service quality specifications

Poor service design


Reasons Absence of customer-
for defined service standards
provider
gap
2 Inappropriate physical
evidence and servicescape

Management perceptions of
customer expectations

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Gap-3
Customer-driven service
designs and standards

Reasons Poor human resource policies


for
provider
Failure to match supply and
gap
demand
3 Customer not fulfilling their roles
Problems with service
intermediaries

Service delivery
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Gap-4
External communications to
consumers

Lack of integration of marketing


Reasons communications
for
provider Inadequate management of customer
expectations
gap
4 Overpromising

Inadequate horizontal communications

Service delivery
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Gap-5 Customer
expectations

Not knowing what customers expect


Reasons Not selecting the right service
for standards and designs
Customer
Gap 5 Not delivering to service standards
Not matching performance to
promised

Customer
perceptions
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Closing the gaps
Gap 1: Learn what customers expect
Gap 2: Establish the right service quality
standards
Gap 3: Ensure that service performance meets
standards
Gap 4: Ensure that delivery matches promises

Md.Badruzzaman 139
1. : Learn what customers expect
Understand customer expectations
Improve communication between frontline staff and
management
Turn information and insights into action
2.Establish the right service quality standards
Set, communicate, and reinforce customer-oriented
service standards for all work units
Measure performance and provide regular feedback
Reward managers and employees

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3.Ensure that service performance meets standards
Clarify employee roles
Train employees in priority setting and time
management
Eliminate role conflict among employees
Develop good reward system

4.Ensure that service delivery matches promises


Seek input from operations personnel on what can be done
Reality advertising
real employees, real customers, real situations
Seek input from employees on advertising
Gain communications between sales, operations and customers
Internal marketing programs
Ensure consistent standards in multi-site operations
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