INTRODUCTION TO SERVICE FAILURES

• Service failure occurs when the perceptions of the customer

fall below their expectations in the delivery of service.
• A gap that exists between customer expectations
and service performance. 
• When a firm or service supplier fails to meet customer
anticipations resulting in displeasure during service delivery.
• Potential problems resulting from variability of services while
they are performed
• EXAMPLE : ONLINE SHOPPING FAILURES, HOTELS SERVICES,
 LET’S UNDERSTAND WITH EXAMPLES!

• McDonald's manager yell at a customer

after he asks for a refund. Mr. Tom waited
for almost 15 mins for his order and then
asked for refund which the worker refused.
“Make your own cheeseburger! Teach your
son how to cook a f****** hamburger,” the
manager yelled.
• Woman charged $7,000 for Amazon toilet
paper delivery gets refund — more than
two months later.
 WHY FAILURES?
Not keep up with trends and innovations in your field

Dispense with quality after-sales

Ignoring important communication channels

Dispense with quality after-sales

Not solving your customer’s problem

Expired, Sensitive, or Obsolete Product

Don’t value customer timing

improper training
 IMPACT OF SERVICE FAILURE
Low profits

Decreasing customer loyalty

Negative word of mouth

Informal Dissatisfaction

Negative image in the market

RECOVERY
 EXAMPLE
• KLM, the Royal Dutch Airline, automatically offers
coupons for food and beverages for delays longer than
three hours through their app. They also do an amazing
job at sending timely updates on the status of your flight,
acknowledging the sense of urgency you feel while
waiting for your flight information
Take advantage of the bad situations! When you implement
a strong customer recovery strategy, your organization
will be able to turn unhappy customers into loyal ones,
and ultimately become more customer-centric.
 MEANING OF PRODUCT FAILURE-

• A product is a failure when its presence in the market leads to:

• The withdrawal of the product from the market for any reason.
• The inability of a product to achieve the anticipated life cycle
as defined by the organization due to any reason.
• The ultimate failure of a product to achieve profitability.
 Reasons for the Product failure

• Failure to Understand Consumer Needs and Wants

• Targeting the Wrong Market
• Incorrect Pricing
• Weak Team and Internal Capabilities
• Delayed Market Entry
• Poor Execution
 Causes of Product failure

• inadequate market analysis

•   product defects
• lack of effective marketing effort
• higher costs than anticipated and competitive reaction
• inability to support fast sales growth
• Lack of demand and supply
• no clear market for need for the product.
 Strength & weakness of product

STRENGTH WEAKNESS
• Unique product features • Limited product range
• Superior product design • Low quality products
• Easy-to-use product • Products seen as hard-to-use
• High quality products • Awareness is not present
regarding the products
 Examples of Product Failures
• In 2008, Indian car manufacturer Tata Motors launched the Tata Nano for the
domestic Indian market
• Tata Motors launched the Nano with motorcyclists in mind. To appeal to them, Tata
manufactured the Nano as inexpensively as possible, the Nano was priced at
100,000 rupees.
• The company hoped the Nano’s compact design and low price would make it a
popular choice with residents of urban areas.
• Reports of Nanos bursting into flames after rear collisions were common in the
months after the vehicle’s debut.
• Tata ultimately sold fewer than 8,000 Nanos before pulling the vehicle from the
market entirely.
 Reasons for the failure of Tata Nano

• Positioning as Cheap
• Emotionally Disconnected Advertising
• Production Issues
• looks factor
EXAMPLE OF PRODUCT FAILURE
New Coke
The Coca-Cola Company had always
maintained the lion’s share of the cola
market, easily outselling Pepsi five to one in
the 1950s.
• After that Pepsi positioned them as a
relative newcomer as the young person’s
drink. 
• By the early 1980s, Coke had lost its grip
on the soda market and only controlled 24
percent of the market share.
REASONS FOR FAILURE OF COKE

• Poor taste of coke been found in market research.

• Customers are motivated by more than just taste like habits ,loyalty
as well.
• New Coke wasn’t a choice. 
• Researchers only focused on the physical characteristics like taste and
branding.
 Product failure
• 1. Lack of product uniqueness: Any product that does not satisfy a unique need
of consumers, fails to dislodge more established brands available. Customers
must comprehend the new product’s advantages. 
•  Poor planning:Companies must have a game-plan that carries them through
every stage and aspect of product’s life. The plan is to care for consumers.
• Poor timing: The market success depends, to a large extent, on the ability of the
company to launch the product at a time when consumer demand is at its
highest
• Misguided enthusiasm:On several occasions, it so happens that there will be
either an under-estimation of the strength of competitors or an over-estimation
of one’s own capabilities resulting in over-optimistic calculations which will be
shattered very soon by the actual product performance. Therefore, planners
should rely on only authentic and unbiased information for reading the future
which is uncertain.
•  Product deficiencies:Many a times, technical product deficiencies are the
common cause of new product failure. Engineers and product technocrats are
capable of giving the best laboratory products by over- engineering. This is a
good so far as technical superiority is concerned over competitors.
 Service failure
• Failure to fix a problem quickly
• There is nothing more frustrating than having to wait for weeks to have a problem fixed. I had the experience of receiving a damaged
product, and then being required to return it before the company would ship me a replacement. This added weeks to the original delivery
time, and I still remember it now three years later.
• Doing too much with one package
• With the pressure to provide free shipping, many operations try to put as much as they can in a single box. I recently ordered several books,
and found them thrown in a box with no cushioning, and the lightweight box and tape didn’t hold up well on the trip. The corners of my
new books were bent and the box was nearly burst open when I received it. Make sure that you don’t overdo it, and don’t mix incompatible
items such as heavy and fragile products, without proper protection. You may have to bite the bullet and pay for an extra package, or put a
package within a package to provide better protection in transit. Talk to your carrier about its policy for discounts for multiple boxes to a
single address on a single day.
• Inadequate item packaging
• Some items may be loose or poorly protected in the packaging received from your supplier. The lack of good vendor packaging may result
in product damage during shipment, or simply give a bad impression of your brand. Either ask for changes from your supplier, or perform a
value-added function to improve the packaging of these items yourself. For example, you might spend the time to fold, bag, and label a shirt
to demonstrate to the customer the inherent value of the product.
• Expired, Sensitive, or Obsolete Product
• There is no better way to anger a customer than to send them a product that is expired, almost expired, one that has diminished in quality, or
one that is no longer the most recent version. Care should be taken both in inventory control, and in verification of items prior to shipping to
prevent old or obsolete product from being accidentally shipped. If you have items that are sensitive to heat/cold, consider ways to protect
them better in storage, or eliminate them from your offerings.
• Failure to communicate with customer
• Nowadays your competition may send four or more e-mails telling the customer the status of the order. Companies that don’t communicate
what is happening with a customer’s order aren’t playing any longer on a level playing field. In particular, you should be able to update the
customer on a tracking number, and on any exceptions or problems that occur on the order.
 Nature of complaining
behaviour
Complaint behaviour is a set of consumer dissatisfaction responses. It is an explicit expression of
dissatisfaction, but dissatisfaction is only one determinant of this behaviour. Complaint
behaviour can be analysed as various types of response but also as a process. This paper
proposes an integrated framework of the various theories of complaint behaviour leading
toward a unified ontology and to interpreting it from a new perspective. CCB really constitutes a
subset of all possible responses to perceived dissatisfaction around a purchase episode, during
consumption or during possession of the good (or service). In fact, the notion of ‘complaint
behaviour’ includes a more general terminology which also involves the notions of protest,
communication (word of mouth) or recommendation to third parties21 and even the notion of
boycott. This notion is conceptually inserted
Initiating factors of CCB

• Dissatisfaction
• Psych sociological factors
• Sociocultural factors
 DISSATISFACTION

ACTION NO ACTION

PRIVATE ACTION PUBLIC ACTION

COMPLAINTS TO
WARN FAMILY AND DECIDE TO STOP
BUSINESS, PRIVATE TAKE LEGAL ACTION
FRIENDS ABOUT BUYING THE
OR TO OBTAIN
THE PRODUCT AND PRODUCT OR
GOVERNMENTAL REDRESSAL
THE SELLER BRAND
AGENCIES