SQ Exam Revision (October 2013)

Exam Revision: October

2013

Service Quality MKTG 1268

1

July 2013 Semester

Note: all students are to understand that these notes are

provided as a guideline on how to prepare more

effectively for the examination. It is NOT intended to be

a ‘spotting exercise’ or model answers- all students must

read the text and your lecture notes in the first instance.

The lecturer has mentioned many times in class that it is

the responsibility of students to READ THE ASSIGNED

TEXT CHAPTERS IN FULL. Those who rely completely on

studying from the PowerPoint slides may end up under-

performing in the exams.

Please take note of this carefully before you start your

revision

Sections in the Paper

• There are THREE Parts in the SQ Exam Paper

• Part A consists of 10 multiple choice questions worth 2 marks. (= 20 marks)

• Part B consists of two 'Discussion Questions' worth 20 marks each (=40 marks)

• Part C consists of two Applied Theory Cases - questions related to each case totals to 20 marks each (i.e., section totals 40 marks)

Coverage and Focus

• In terms of the examinable chapters... MCQs cover chapters 7 to 15

• For the discussion and case questions (Sections B and C), they cover chapters 1, 2, 4, 8, 10, 11, 12, 13, 14

• The exam is more applied in nature: – Mere regurgitation of theory is NOT enough

– You need to apply the concepts of SQ to the case or scenarios

The cases for Section C

• There are TWO cases in Section C

• One is a one-paragraph scenario and there are two questions (two questions totaling to 20 marks) related to that case/scenario.

• The other, student will need to read a newspaper article then answer all the questions associated with the case (four questions totaling to 20 marks).

Take around 20 -25 minutes to finish these 2 questions

These will be short answers, be concise, get to the point and APPLY. Estimate around 5 minutes to answer each question.

Techniques for doing well in mini-cases

• Read the case in detail

• Pick out the key issues; try to assess WHICH area of SQ is it referring to – there are so many areas that is possible. The questions will give you the hints of course.

• Apply the relevant SM (service marketing) concept BUT do not elaborate too much on what the concept is BUT how it is RELEVANT to the case study issues. Application more important than regurgitation of theory!

Time management

• Do justice to each Part; don’t over-write on one area even if you know a lot because you will sacrifice the quality of later questions

• Write the content in proportion to the marks

• Assuming you take 15 minutes to finish MCQ then you have 105 minutes to do Parts A and B; proportion half for each part – around 50 minutes

• Part B – 2 Discussion Questions 20 marks each; take 25 minutes to finish each question

• Part C – Two Case Studies (take 50 minutes to finish this part)

7

Here is a sample of what a case study from a newspaper

cutting might look like (this is NOT coming out for your exam)

You can see that this case is about the SQ gaps. So questions will appear on that. But more importantly, read the case in detail, find out what are the problems. Can you link these to any of the service 4 characteristics? Is the service high or low contact? Which box does it belong to in the Lovelock matrix? Who are the target customers and what is the buyer behavior? What aspect of the 7 Ps are relevant in your case study and why? Are there any special SM issues such as CRM, Change Leadership, Capacity Management and Queues, etc, etc can be applied here. THINK – THINK – APPLY!

The following are just extract of slides from my lectures

DO NOT interpret these as being

the only content that you need to

read!!

COVER all the text chapters AND my lecture

notes on the exam-assigned chapters of the text

And practice the end of chapter questions + the

sample exam questions that have been given.

Review of content from the key chapters 8

Chapter One – Introduction to Services Marketing

9

You must also know:

Characteristics of services

The Lovelock Classification Model

The External Factors affecting the Service Industry

Be prepared to give good examples for each

Marketing Mix element

And show how each element helps to address one

or more of the characteristics of service

Government

Policies

Business

Trends

Social

Changes Advances

in IT

Globalization

Innovation in service products & delivery systems, stimulated by better technology

Customers have more choices and exercise more power

Success hinges on:

● Understanding customers and competitors

● Viable business models

● Creation of value for customers and firm

● New markets and product categories

● Increase in demand for services

● More intense competition

Forces Transforming the Service Economy

10

Four Categories Of Services (Fig 1.10)

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11

Characteristics of Services

Compared to Goods

Intangibility

Perishability

Simultaneous Production

and Consumption

Heterogeneity

Learn the meaning of

each of these terms

well!

Services Pose Distinctive Marketing Challenges

Marketing management tasks in the service sector differ from those in

the manufacturing sector.

The eight common differences are:

1. Most service products cannot be inventoried

2. Intangible elements usually dominate value creation

3. Services are often difficult to visualize and understand

4. Customers may be involved in co-production

5. People may be part of the service experience

6. Operational inputs and outputs tend to vary more widely

7. The time factor often assumes great importance

8. Distribution may take place through nonphysical channels

13

Differences, Implications, and

Marketing-Related Tasks (1) (Table 1.2)

Difference

Most service products

cannot be inventoried

Intangible elements

usually dominate

value creation

Services are often

difficult to visualize &

understand

Customers may be

involved in co-

Production

Implications

Customers may be

turned away

Harder to evaluate

service & distinguish

from competitors

Greater risk &

uncertainty perceived

Interaction between

customer & provider;

but poor task execution

could affect satisfaction

Marketing-Related Tasks

Use pricing, promotion, reservations to smooth demand; work with ops to manage capacity

Emphasize physical clues, employ metaphors and vivid images in advertising

Educate customers on

making good choices; offer

guarantees

Develop user-friendly

equipment, facilities &

systems; train customers,

provide good support

14

14

Implications

Behavior of service

personnel & customers

can affect satisfaction

Hard to maintain quality, consistency, reliability

Difficult to shield customers from failures

Time is money;

customers want service

at convenient times

Electronic channels or

voice telecommunications

Difference

People may be part of

service experience

Operational inputs and

outputs tend to vary

more widely

Time factor often

assumes great

importance

Distribution may take

place through

nonphysical channels

Marketing-Related Tasks

Recruit, train employees to

reinforce service concept

Shape customer behavior

Redesign for simplicity and failure proofing

Institute good service recovery procedures

Find ways to compete on speed of delivery; offer

extended hours

Create user-friendly, secure websites and free access by telephone

Differences, Implications, and

Marketing-Related Tasks (2) (Table 1.2) 15

15

Traditional 4 Ps Applied to Services (1)

Product elements Service products are at the heart of services marketing

strategy

Marketing mix begins with creating service concept that offers value

Service product consists of core and supplementary elements

Core products meet primary needs

Supplementary elements are value-added enhancements

16 Note: as part of your preparations

make sure you understand all the 7

Services Marketing Ps


Place and time Service distribution can take place through physical and

non-physical channels

Some firms can use electronic channels to deliver all (or at least some) of their service elements

Information-based services can be delivered almost instantaneously electronically

Delivery Decisions: Where, When, How

Time is of great importance as customers are physically present

Convenience of place and time become important determinants of effective service delivery

17


Price and other user outlays From the firm’s perspective, pricing generates income and creates profits

From the customer’s perspective, pricing is key part of costs to obtained wanted benefits

Marketers must recognize that customer costs involve more than price paid to seller

Identify and minimize non-monetary costs incurred by users:

Additional monetary costs associated with service usage (e.g., travel to service location, parking, phone, babysitting, etc.)

Time expenditures, especially waiting

Unwanted mental and physical effort

Negative sensory experiences

Revenue management is an important part of pricing

18


Promotion and Education Plays three vital roles:

Provide information and advice

Persuades the target customers of merit of service product or brand

Encourages customer to take action at specific time

Customers may be involved in co-production so:

Teach customer how to move effectively through the service process

Shape customers’ roles and manage their behavior

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Extended Mix for Managing the Customer Interface

(1)

Process

How firm does things may be as important as what it does

Customers often actively involved in processes, especially when acting as co-producers of service

Operational inputs and outputs vary more widely

Quality and content varies among employees, between employees

Variations can be with different customers

Variations from time of the day

Variability can be reduced by:

Standardized procedures

Implementing rigorous management of service quality

Training employees more carefully

Automating tasks

Train employees in service recovery procedures

Manage process design and “flow of customers

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(2)

Physical environment Design the servicescape and provide tangible evidence of service performances

Create and maintain physical appearances

Buildings/landscaping

Interior design/furnishings

Vehicles/equipment

Staff grooming/clothing

Sounds and smells

Other tangibles Manage physical cues carefully— can have profound impact on customer

impressions

21


(3)

People

Interactions between customers and contact personnel

strongly influence customer perceptions of service

quality

Well-managed firms devote special care to selecting, training and motivating service employees

Other customers can also affect one’s satisfaction with a service

22

How would you LINK the 4 characteristics of

services to the 7 Ps? 23

Intangibility Perishability Heterogeneity Inseparability

PRODUCT X X

PRICE X

PROMOTION X X

PLACE X

PEOPLE X

PHYSICAL EV X

PROCESS X X

This is just an illustration to show how the different elements of the marketing mix can

address the challenges of the services characteristics; the links are not necessarily

definitive but rather indicative. What do you think?

My favorite diagram: remember in whatever question

you handle in the SQ paper, whatever topic it may be,

always LINK back to one or more of the problems that

services marketing mix is trying to address.

Sample Practice Exam Essay Questions

24

1. The marketing of services is different to the

marketing of tangible goods”. Provide support for

this statement by:

(a.) Identifying and explaining the unique

characteristics of services.

(b.) Describing the expanded marketing mix for

services, highlighting how it may be different to the

“traditional marketing mix of 4Ps”.

25

2. List and describe each of the expanded marketing

mix elements and contrast the expanded marketing

mix for services to the traditional marketing mix for

tangible goods

3. List and discuss each of the four broad categories of

services.

Demonstrate your understanding of these four

categories of services by giving at least three

examples of each and highlighting the implications

of such services



26

List and explain why the unique characteristics of

services (that makes them different to tangible

goods).

Classify the following two services into

people/possession/mental-stimulus/information-

processing services and explain your selection:

Funeral service

Online dating service

27

The marketing mix for services is different to that of

tangible goods. Explain the marketing mix elements

applicable to service contexts, and highlight its

differences to the marketing mix elements of

tangible goods. Select a service that you are

familiar with, and describe its marketing mix

elements.


28

Chapter 2: Consumer Behavior in a Service Context

High and Low

Contact Service

Systems

The 3

stages of

Consumer

Decision

Making

Pre-purchase Stage

Service Encounter Stage

Post-purchase Stage

Pre-purchase Stage - Overview

Customers seek solutions to aroused needs

Evaluating a service may be difficult

Uncertainty about outcomes Increases perceived risk

What risk reduction strategies can service suppliers develop?

Understanding customers’ service expectations

Components of customer expectations

Making a service purchase decision

29 A

30

Service Attributes

Pre-purchase Stage – Evaluation of Alternatives

Service Attributes

Search attributes help customers evaluate a product before purchase Style, color, texture, taste, sound

Experience attributes cannot be evaluated before purchase—must “experience” product to know it Vacations, sporting events, medical procedures

Credence attributes are product characteristics that customers find impossible to evaluate confidently even after purchase and consumption Quality of repair and maintenance work

31


Perceived Risks

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

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Perceived Risks – Strategies for Firms to Manage Consume

Perceptions of Risk

34

•Display credentials

•Use evidence management (e.g., furnishing, equipment

etc.)

•Give customers online access to information about order

status

•Offer guarantees


Service Expectations – Factors Influencing Consumer

Expectations of Service (Fig. 2.14)

35

Pre-purchase Stage – Purchase Decision

When possible alternatives have been compared

and evaluated, the best option is selected

Can be quite simple if perceived risks are low and

alternatives are clear

Very often, trade-offs are involved. The more

complex the decision, the more trade-offs need to

be made

Price is often a key factor in the purchase decision

36

Service Encounter Stage - Overview

Pre-purchase Stage


Post-purchase Stage

● Service encounters range from high-

to low-contact

● Understanding the servuction system

● Theater as a metaphor for service

delivery: An integrative perspective

Service facilities

Personnel

Role and script theories

37

37

B

38

Service Encounter Stage : Overview


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:

“Moments of Truth” – importance of managing touchpoints

High/low contact model – extent and nature of contact points

Servuction model – variations of interactions

Theater metaphor – “staging” service performances

Distinctions between High-contact

and Low-contact Services

High-contact Services

Customers visit service facility and remain throughout service delivery

Active contact between customers and service personnel

Includes most people-processing services

Low-contact Services

Little or no physical contact with service personnel

Contact usually at arm’s length through electronic or physical distribution channels

New technologies (e.g. Web) help reduce contact levels

Medium-contact Services Lie in between These Two

40

The Servuction System (Fig 2.21)

41

41

Servuction System:

Service Production and Delivery

Servuction System – visible front stage and invisible backstage

Service Operations (front stage and backstage)

Technical core where inputs are processed and service elements created

Includes facilities, equipment, and personnel

Service Delivery (front stage)

Where “final assembly” of service elements takes place and service is delivered to customers

Includes customer interactions with operations and other customers

Other contact points

Includes customer contacts with other customers

42

43

Service Encounter Stage Theater as a Metaphor for Service Delivery

“All the world’s a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts”

William Shakespeare

As You Like It

44

Theatrical Metaphor: An Integrative Perspective

Good metaphor as service delivery is a series of events that customers experience as a performance

Service facilities

• Stage on which drama unfolds

• This may change from one act to another

Personnel

• Front stage personnel are like members of a cast

• Backstage personnel are support production team

Roles

• Like actors, employees have roles to play and behave in specific ways

Scripts

• Specifies the sequences of behavior for customers and employees

Post-encounter Stage - Overview

Pre-purchase Stage


Post-purchase Stage

Evaluation of service performance

Future intentions

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45

C

© Pearson Education South Asia Pte Ltd 2013. All rights reserved 46

Post-purchase Stage : Overview

Sample Practice Exam Question:

47

Explain each of the following:

Search, experience and credence

attributes (6 marks)

At least four out of the seven types of

perceived risks involved in the purchase

and/or use of services (4 marks)

Chapter 4 - Product 48

You should have an advantage studying this for the exam

because it was the key topic used in the writing of your group

report.

All areas need to be covered in this chapter- do NOT attempt

to spot topics

Designing a Service Product

The Flower of Service

Branding Service Products and

Experiences

New Service Development

Refer back also to the key concepts that underpin

the service product 49

Chapter one: recall and understand the implications of the 4 characteristics of the service product

Chapter two: remember that service products being intangible are assessed by customer based on three qualities – search, experience and credence qualities

Services can be high or low contact

Service can be visible (front stage) and non-visible to the customer (back stage)

Above all, the service product is derived from the positioning of the service brand.

Designing a Service Concept (1)

Core Product Central component that supplies the principal,

problem-solving benefits customers seek

Supplementary Services Augment the core product, facilitating its use and

enhancing its value and appeal

Delivery Processes Used to deliver both the core product and each of the

supplementary services

50

Designing a Service Concept (2)

Service concept design must address the following issues:

How the different service components are delivered to the customer

The nature of the customer’s role in those processes

How long delivery lasts

The recommended level and style of service to be offered

51

Integration of Core Product, Supplementary

Elements and Delivery Process (Fig. 4.3) 52

52

The Flower of Service (Fig 4.4) (1)

Core

Information

Consultation

Order-Taking

Hospitality

Payment

Billing

Exceptions

Safekeeping

Facilitating elements

Enhancing elements

KEY:

53

53

Managerial Implications

Not every core product is surrounded by supplementary elements from all eight clusters

Nature of product helps to determine:

Which supplementary services must be offered

Which might usefully be added to enhance value and ease of doing business with the organization

People-processing and high contact services tend to have more supplementary services

Firms that offer different levels of service often add extra supplementary services for each upgrade in service level

54

Make sure you have some examples ready for illustrating the

different elements of the Flower or Service (example SISTIC)

55

Efficient and

reliable event

ticket services

Online, telephone

and counter service

Hotline and counter

staff to provide advice

on best seats Payment and

billing done online-

instantaneous

transaction

Detailed website

with all event

details

Customer hotline

and email for

feedback and

after-sales

Special bookings

for corporate and

group sales

(prepare your own examples!)

(your answer?)

http://www.sistic.com.sg/portal/dt?dt.isPortletRequest=true&dt.action=process&dt.provider=PortletWindowProcessChannel&dt.windowProvider.targetPortletChannel=JSPTabContainer/sHome/Home&dt.containerName=JSPTabContainer/sHome&dt.windowProvider.currentChannelMode=VIEW&dt.window.portletAction=RENDER

Product Lines And Brands

Most service organizations offer a line of products rather than just a single product.

They may choose among 3 broad alternatives:

Single brand to cover all products and services

A separate, stand-alone brand for each offering

Some combination of these two extremes

56

Spectrum of Branding Alternatives (Fig 4.18)

Source: derived from Aaker and Joachimsthaler

57

57

A Hierarchy of New Service Categories (1)

1. Style changes

Visible changes in service design or scripts

2. Service improvements

Modest changes in the performance of current products

3. Supplementary service innovations

Addition of new or improved facilitating or enhancing elements

4. Process-line extensions

Alternative delivery procedures

58

A Hierarchy of New Service Categories (2)

5. Product-line extensions

Additions to current product lines

6. Major process innovations

Using new processes to deliver existing products with added benefits

7. Major service innovations

New core products for previously undefined markets

59

Achieving Success in Developing New Services

In developing new services,

Core product is of secondary importance

Ability to maintain quality of the total service offering is key

Accompanying marketing support activities are vital

Market knowledge is of utmost importance

60

Sample Exam Question

Draw a diagram of the Flower of Service model, distinguishing between the ‘facilitating’ and ‘enhancing’ supplementary elements. (4 marks)

Explain and give examples of each of the eight petals/elements (16 marks)

61

Practice Exam Question

List and explain the five(5) of the

seven types of a ‘new service’.

62

Practice Exam Question : A Case Situation

63

Café Rende is a small café well known among the locals for its

delicious cakes, well blended coffee and nice décor. To cater for

rising customer expectations, the owner has decided to update

her shop by painting the walls, changing the furniture and also

installing credit card payment facility because she noted that

more customers ask to pay by credit card. She also introduced,

due to popular demand, a series of cake baking classes. She also

introduced home delivery service for locations within a 3 km

radius and for purchases of more than $50.

Question for discussion:

There are seven new service development categories. Categorize

and define each of the new services introduced at Café Rende.

This is a good example of a

scenario-type applied question

Chapter 8 – Service Processes

Flowcharting Service Delivery

Blueprinting Services to Create Valued Experiences and Productive Operations

Service Process Redesign

The Customer as Co-Producer

Self-Service Technologies (SST)

64

Developing a Blueprint

Identify key activities in creating and delivering service

Define “big picture” before “drilling down” to obtain a higher level of detail

Advantages of Blueprinting

Distinguish between “front-stage” and “backstage”

Clarify interactions between customers and staff, and support by backstage activities and systems

Identify potential fail points; take preventive measures; prepare contingency

Pinpoint stages in the process where customer commonly have to wait

Blueprinting

65

Key Components of a Service Blueprint

1. Define standards for front-stage activities

2. Specify physical evidence

3. Identify main customer actions

4. Line of interaction (customers and front-stage personnel)

5. Front-stage actions by customer-contact personnel

6. Line of visibility (between front stage and backstage)

7. Backstage actions by customer contact personnel

8. Support processes involving other service personnel

9. Support processes involving IT

- Identify fail points and risks of excessive waits

- Set service standards and do failure-proofing

66

Identify ‘Fail Points’

Analysis of reasons for failure often reveals opportunities for failure proofing to reduce/eliminate future risk of errors

Need fail-safe methods for both employees and customers

Have poka-yokes to ensure service staff do things correctly, as requested, or at the right speed

Customer poka-yokes focus on preparing the customer for:

The encounter

Understanding and anticipating their roles

Selecting the correct service or transaction

See Service Insights 8.1 – Framework to prevent customer failures

67

Why Redesign?

Revitalizes process that has become outdated

Changes in external environment make existing practices obsolete and require redesign of underlying processes

Creation of brand-new processes to stay relevant

Rusting occurs internally

Natural deterioration of internal processes; creeping bureaucracy; evolution of spurious, unofficial standards

Symptoms:

- Extensive information exchange

- Data that is not useful

- High ratio of checking or control activities to value-adding activities

- Increased exception processing

- Customer complaints about inconvenient and unnecessary procedures

68

Levels of Customer Participation (2)

3 levels

Low – Employees and systems do all the work

- Often involves standardized service

- Medium – Customer helps firm create and deliver service

- Provide needed information and instructions

- Make some personal effort; share physical possessions

High – Customer works actively with provider to co-produce the service

- Service cannot be created without customer’s active participation

- Customer can jeopardize quality of service outcome (e.g. weight loss, marriage counseling)

69

Customers can influence productivity and quality of service processes and outputs

Customers not only bring expectations and needs, they also need to have relevant service production competencies

Customers also need to be recruited as they are “partial employees”. Firms need to get those with the skills to do the tasks

For the relationship to last, both parties need to cooperate with each other

Customers as Partial Employees

70

Self-Service Technologies (SSTs)

Many companies and government organizations seek

to divert customers from employee contact to Internet-

based self-service

Disadvantages:

Anxiety and stress

experienced by

customers who are

uncomfortable with

using them

Some see service

encounters as social

experiences and prefer

to deal with people

Advantages:

Time and Cost savings

Flexibility

Convenience of location

Greater control over

service delivery

High perceived level of

customization

71

Psy

cholo

gic

al Fa

ctors

Rela

ted

to U

se o

f

SSTs

• You are about to open a cafeteria business. To ensure that all your service staff understands the service process you have designed for your business, you have decided to develop a blueprint to identify key activities in creating and delivering your service.

• How would you explain the advantages of your blueprint to your service staff?

• What are the key components of a service blueprint?

• Present the service blueprint that you have developed for your cafeteria business.

72

Sample Practice Exam Essay Question:

73

Sample Practice Exam Essay Question: read the following

case study and answer the question (next page)

Question for the exam case study:

• Suggest how restructured hospitals can reduce the bed crunch using the following service process redesign strategies

a) Getting rid of non-value added steps

b) Redesign the physical aspects of the service process

c) Offering direct service

74

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a) What are SSTs?

b) Give two examples of how SST have replaced traditional forms of delivery of core products, and two examples of how SST have replaced traditional forms of delivery of supplementary services

c) What are some of the advantages and disadvantages of SSTs?

Sample Practice Exam Essay Question:

(a) Identify and describe three clearly different uses of Self-Service Technologies (SSTs). Give real-life examples of each. (12 marks)

(b.) What are the benefits of SSTs for customers and the service organization? (8 marks)

76

Another Sample Practice Exam Essay

Question on SSTs:

Chapter 10 : Crafting the Service Environment

Physical environment Design the servicescape and provide tangible evidence of

service performances Key point to note: when the service is intangible, the

strategy is to create a tangible or physical environment in which service delivery takes place

Create and maintain physical appearances

Buildings/landscaping

Interior design/furnishings

Vehicles/equipment

Staff grooming/clothing

Sounds and smells

Other tangibles

Manage physical cues carefully— can have profound impact on customer impressions

77 Key Issues

1. Shape customers’ experience and their behavior

Message-creating medium: symbolic cues to communicate the distinctive nature and quality of the service experience

Attention-creating medium: make servicescape stand out from competition and attract customers from target segments

Effect-creating medium: use colors, textures, sounds, scents and spatial design to enhance desired service experience

2. Support image, positioning and differentiation

3. Part of the value proposition

4. Facilitate service encounter and enhance productivity

Purpose of Service Environments

78

Physical surroundings help shape appropriate feelings and reactions in customers and employees

Servicescapes form a core part of the value proposition Banyan Tree (consider all the different stimuli that

help to create the total luxury spa experience)

The Transformers Ride at Universal Studios

Servicescape as Part of Value Proposition

79

The Russell Model of Affect (Fig. 10.8)

80

80

An Integrative Framework: Bitner’s Servicescape Model (Fig. 10.9)

81

81

An Integrative Framework:

The Servicescape Model 82

83

Design

elements in

a retail store

environment

PUTTING IT ALL TOGETHER

84

Selection of Environmental Design Elements

Consumers perceive service environments holistically

Design with a holistic view

Servicescapes have to be seen holistically: No dimension of design can be optimized in isolation, because everything depends on everything else

Holistic characteristic of environments makes designing service environment an art

Must design from a customer’s perspective

85


86

Describe four core purposes of service environment

(8 marks)

Explain the effects of the service environment on

consumer behaviour using the servicescape model.

Suggest 4 ways in which ambient conditions can be

used to improve the service experience of a

customer in a spa service. (12 marks)

(Total = 20 marks)

Practice Exam Questions

87

The servicescape of a service outlet serves

several important functions (in terms of

influencing buyer/customer behavior). What

are they?

Draw the Bitner servicescape model, and

explain each of its component. Using real-life

examples, contrast ‘good’ and ‘bad’

servicescape designs.

Chapter 11 : Managing People for Service

Advantage

People

Interactions between customers and contact personnel

strongly influence customer perceptions of service

quality

Well-managed firms devote special care to selecting, training and motivating service employees; HR function

Empowerment for improving customer service

Other customers can also affect one’s satisfaction with a service; customers are considered part of the ‘people’ element

88 Key Issues

Overview of Chapter 11

Service Employees Are Extremely Important

Frontline Work Is Difficult and Stressful

Cycles of Failure, Mediocrity, and Success

Human Resources Management – How To Get It Right?

Service Leadership and Culture

89

Importance of Service Personnel

Help maintain firm’s positioning. They are:

A core part of the product

The staff represent the service firm

The staff are a core part of the service brand

Frontline is an important driver of customer loyalty

Anticipate customer needs

Customize service delivery

Build personalized relationships

Key driver of productivity of frontline operation

Generate sales, cross-sales and up-sales

90

Front Line in Low-Contact Services

Many routine transactions are now conducted without involving front-line staff, e.g., ATMs (Automated Teller Machines)

IVR (Interactive Voice Response) systems

Websites for reservations/ordering, payment etc.

Though technology and self-service interface is becoming a key engine for service delivery, front-line employees remain crucially important

“Moments of truth” affect customer’s views of the service firm

91

Boundary Spanning and Role Stress

Boundary spanners link the organization to outside

world

Multiplicity of roles often results in service staff having

to pursue both operational and marketing goals

Consider management expectations of service staff:

delight customers

be fast and efficient in executing operational tasks

do selling, cross selling, and up-selling

enforce pricing schedules and rate integrity

Boundary Spanning and Role Stress

Boundary spanners link inside of organization to outside world and often experience role stress from multiple roles they have to perform

3 main causes of role stress: a) Organization vs. Client: Dilemma whether to follow

company rules or to satisfy customer demands

This conflict is especially acute in organizations that are not customer oriented

b) Person vs. Role: Conflicts between what jobs require and employee’s own personality and beliefs

c) Client vs. Client: Conflicts between customers that demand service staff intervention

93

Emotional Labor

“The act of expressing socially desired emotions during service transactions” (Hochschild, The Managed Heart)

Occurs when there is gap between what employees feel inside, and emotions that management requires them to display to customers

Performing emotional labor in response to society’s or management’s display rules can be stressful

Good HR practice emphasizes selective recruitment, training, counseling, strategies to alleviate stress

94

Cycle of Failure (1) (Fig 11.6)

95

Cycle Of Mediocrity (1) (Fig. 11.9)

96

Cycle of Success (1) (Fig. 11.11)

97

The Service Talent Cycle for

Service Firms (Fig. 11.12)

98

Service employees need to learn:

Organizational culture, purpose and strategy Get emotional commitment to core strategy and core

values

Get managers to teach “why”, “what” and “how” of job

Interpersonal and technical skills Both are necessary but neither alone is enough for

performing a job well

Product/service knowledge Staff’s product knowledge is a key aspect of service

quality

Staff must explain product features and help consumers make the right choice

Train Service Employees Actively

99

Is Empowerment Always Appropriate?

Empowerment is most appropriate when: Firm’s business strategy is based on personalized,

customized service and competitive differentiation Emphasis on extended relationships rather than short-

term transactions Use of complex and non-routine technologies Service failures are non-routine and cannot be

designed out of the system Business environment is unpredictable, consisting of

surprises Managers are comfortable letting employees work

independently for benefit of firm and customers Employees seek to deepen skills, like working with

others, and have good interpersonal and group process skills

100

Suggestion involvement

Employee make recommendation through formalized programs

Job involvement

Jobs redesigned

Employees retrained, supervisors reoriented to facilitate performance

High involvement

Information is shared

Employees skilled in teamwork, problem solving etc.

Participate in management decisions

Profit sharing and stock ownership

Levels of Employee Involvement

101

Motivate And Energize The Frontline

Use full range of available rewards effectively, including:

Job content People are motivated and satisfied knowing they are

doing a good job

Feedback and recognition People derive a sense of identity and belonging to an

organization from feedback and recognition

Goal achievement Specific, difficult but attainable and accepted goals

are strong motivators

102

SERVICE LEADERSHIP

AND CULTURE

103

Service Leadership and Culture

Charismatic/transformational leadership:

Change front line’s values, goals to be consistent with firm

Motivate staff to perform their best

Service culture can be defined as:

Shared perceptions of what is important

Shared values and beliefs of why they are important

A strong service culture focuses the entire organization on the frontline and top management is informed and actively involved

104

The Inverted Organizational Pyramid (Fig. 11.25)

105

Sample Practice Exam Essay Question

106

The owner of “Tasty Restaurant” noticed that profits had been

decreasing over the last year. Staff turnover had also been

particularly high. In an effort to ‘fix’ this situation, he decided to hire a

marketing manager (i.e. you) for advice. As the newly appointed

marketing manager of this restaurant, you found out that the owner

had been focusing on cost-cutting to maximize revenues.

(a) Drawing on the most appropriate services marketing theories, what

will you say to this owner to convince him of the links between investing

in human resources and profitability, and vice-versa (i.e. the link

between poor human resource management and negative profit

performance)?

(b) How will you implement Human Resource Management (HRM) to

move the restaurant towards success as a service organization

(Describe five clearly different HR tasks to be implemented)?

Sample Exam Question:

107

Draw and explain in detail all the three of the

HRM cylces (eg Cycle of Success, Cycle of

Mediocrity and Cycle of Failure). Why is good

HRM (Human Resource Management) important

within service organizations? Give examples of

good HRM practices.

Chapter 12 : Managing Relationships and Building

Loyalty

The Search for Customer Loyalty The Wheel of Loyalty Building a Foundation for Loyalty Strategies for Developing Loyalty Bonds with

Customers Strategies for Reducing Customers Defections CRM: Customer Relationship Management

Systems What a Comprehensive CRM Strategy

Includes

108

Why Is Customer Loyalty Important to A

Firm’s Profitability?

Customers become more profitable the longer they remain with a firm:

Increase purchases and/or account balances

Customers / families purchase in greater quantities as they grow

Reduced operating costs

Fewer demands from suppliers and operating mistakes as customer becomes experienced

Referrals to other customers

Positive word-of-mouth saves firm from investing money in sales and advertising

Price premiums

Long-term customers willing to pay regular price

Willing to pay higher price during peak periods

109


Assessing the Value of a Loyal Customer

• Must not assume that loyal customers are always

more profitable than those making one-time

transactions

Large customers may expect price discounts in return for

loyalty

Revenues don’t necessarily increase with time for all types

of customers

• Tasks:

Determine costs and revenues for customers from different

market segments at different points in their customer

lifecycles

Predict future profitability

Customers stay loyal when we create value for them

Value can be created for customers through

Confidence benefits

Confidence in correct performance

Ability to trust the provider

Lower anxiety when purchasing

Knowing what to expect and receive

Why are Customers Loyal? (1) (Service Insights 12.1)

111

Why are Customers Loyal? (2) (Service Insights 12.1)

Social benefits

Mutual recognition and friendship between

service provider and customer

Special treatment

Better price

Discounts not available to most customer

Extra services

Higher priority when there is a wait

112

The Wheel of Loyalty (Fig. 12.6)

113

113

Learn all sections

of this model!

114

Service companies should consider the financial value to the

firm of each customer, rather than just count how many

customers can be served. Heavy users (who buy more

frequently and in larger volumes) are generally more

profitable than occasional users. And because customers

interact with each other in many services, managers need to

think about whether different target segments are compatible

with one another.

Attracting the right customers is important as they bring in

long-term revenues, continued growth in referrals, etc. Emphasis

must also be given to prevent attracting the wrong customers

that typically results in costly churn, a diminished company

reputation and disillusioned employees.

Targeting the Right Customers and

Searching for Value, Not Volume

Effective Tiering of Service :The Customer Pyramid (Fig 12.8)

115

115

116

Service tiering, building loyalty bonds, and creating membership programs are three of the strategies.

Customer tiers can be developed around different levels of profit contribution, needs (including sensitivities to variables such as price, comfort, and speed), and identifiable personal profiles such as demographics. Each customer tier requires significantly different service levels based on customer requirements and customer value to the firm.

Slicing the customer base per se allows the firm to see clearly where the profits and the loss making segments are and tailor their marketing accordingly in response.

Effective Tiering of Service :The Customer Pyramid (Fig 12.8)

Read up on the four tiers of customers (platinum, gold, iron

and lead (page 369)

Relationship between Satisfaction and Loyalty

117

The satisfaction-loyalty relationship can be divided

into three zones:

zone of defection—occurs at low satisfaction levels

zone of indifference—found at moderate

satisfaction levels

zone of affection—occurs at very high satisfaction

where customers do not find the need to seek

alternative service providers

The Customer Satisfaction Loyalty Relationship (Fig. 12.10)

118

118

Strategies for Developing Loyalty Bonds with

Customers (1)

Deepening the relationship

Bundling/Cross-selling services makes switching a major effort that customer is unwilling to go through unless extremely dissatisfied with service provider

Customers benefit from buying all their various services from the same provider

One-stop-shopping, potentially higher service levels, higher service tiers etc

119

Strategies for Developing Loyalty Bonds

with Customers (2)

Reward Based Bonds Can be financial or non-financial bonds or a

combination of both Financial bonds

Discounts on purchases, loyalty program rewards (e.g. frequent flier miles), cash-back programs

Non-financial rewards

Priority to loyalty program members for waitlists and queues in call centers; higher baggage allowances, priority upgrading, access to airport lounges for frequent flyers

Intangible rewards

Special recognition and appreciation

Reward-based loyalty programs are relatively easy to copy and rarely provide a sustained competitive advantage

120

See example of rewards used by British

Airways in Service Insights 12.4 on page

375 of the text (see Table 12.1)

121

Serv

ice Insi

ght 12.4

Strategies for Developing Loyalty Bonds

with Customers (3)

Social Bonds Based on personal relationships between providers

and customers

Harder to and takes a longer time to build, but also harder to imitate and thus, better chance of retention in the long term

Customization Bonds Customized service for loyal customers

e.g. Starbucks

Customers may find it hard to adjust to another service provider who cannot customize service

122

Analyze Customer Defections and Monitor

Declining Accounts

Understand reasons for customer switching

Churn Diagnostics common in mobile phone industry

Analysis of data warehouse information on churned and declining customers

Exit interviews:

Ask a short set of questions when customer cancels account; in-depth interviews of former customers by third party agency

123

What Drives Customers to Switch? (Fig 12.14)

124

124

Address Key Churn Drivers

Deliver quality service

Reduce inconvenience and non-monetary costs

Have fair and transparent pricing

Industry specific drivers

Cellular phone industry: handset replacement a common reason for subscribers discontinuing services – offer handset replacement programs

Take active steps to retain customers

Save teams: specially trained call center staff to deal with customers who want to cancel their accounts

Be careful about how save teams are rewarded (see Service Insights 12.5)

125

Other Ways to Reduce Churn

Implement Effective Complaint Handling and Service Recovery Procedures

Increase Switching Costs Natural switching costs

e.g. Changing primary bank account – many related services tied to account

Can be created by instituting contractual penalties for switching

Must be careful not to be perceived as holding customers hostage

High switching barriers and poor service quality likely to generate negative attitudes and bad word of mouth

126

Common Applications Of CRM Systems (1) (Service Insights 12.6)

Data collection

Customer data such as contact details, demographics, purchasing history, service preferences, and the like

Data analysis Data captured is analyzed and categorized

Used to tier customer base and tailor service delivery accordingly

Sales force automation

Sales leads, cross-sell and up-sell opportunities can be effectively identified and processed

Entire sales cycle from lead generation to close of sales and after- sales service can be tracked and facilitated through CRM system

127

Common Objectives Of CRM Systems (2) (Service Insights 12.6)

Marketing automation

Mining of customer data enables the firm to target its market

Goal to achieve one-to-one marketing and cost savings, often in the context of loyalty and retention programs

Results in increasing the ROI on its marketing expenditure

CRM systems also allows firms to judge effectiveness of marketing campaigns through the analysis of responses

Call center automation

Call center staff have customer information at their finger tips and can improve their service levels to all customers

Caller ID and account numbers allow call centers to identify the customer tier the caller belongs to, and to tailor the service accordingly

For example, platinum callers get priority in waiting loops.

128


What a Comprehensive CRM Strategy Includes Integrated Framework for CRM Strategy Development

Strategy Development

• Assessment of business strategy

• Business strategy guides

development of customer strategy

Implementation of CRM- key questions to ask when

defining customer relationship strategy:

How should our value proposition change to increase customer loyalty?

How much customization or one-to-one marketing and service delivery is appropriate and profitable?

What is the increase in profit from increasing share-of-wallet with current customers? How much does this vary by customer tier and/or segment?

How much time and resources can we provide to CRM right now?

If we believe in customer relationship management, why haven’t we taken more steps in that direction in past?

What can we do today to develop customer relationships without spending on technology?

130

Practice Examination Questions

131

The implementation of profitable service strategies

can include building relationships and customer

loyalty as well as putting effective complaint

handling/service recovery processes in place.

Describe the various strategies for building customer

loyalty (10 marks) and complaint handling/service

recovery (10 marks)

Practice Examination Question

132

As a graduate who has undertaken and successfully completed the MKTG 1268 Service Quality course, and a potential manager and owner of your own service business, you know the importance of building customer loyalty for the long-term success of your business, as well as good service recovery strategies when ‘things go wrong’. Recall and list the key theories and concepts you have learnt that are important to building customer loyalty and implementing good service recovery, and give examples of how these may be implemented.


133

Café Rende is a small café well known among the locals for its delicious

cakes, well blended coffee and nice décor. To cater for rising customer

expectations, the owner has decided to update her shop by painting the

walls, changing the furniture and also installing credit card payment

facility because she noted that more customers ask to pay by credit

card. She also introduced, due to popular demand, a series of cake

baking classes. She also introduced home delivery service for locations

within a 3 km radius and for purchases of more than $50.

Question: Discuss the customer feedback collection took from which the

owner’s service improvement ideas evolved and suggest TWO other

feedback collection tools that can potentially be implemented in the

future (by a small business like Café Rende), identifying each of their

strengths and weaknesses.

This is a good example of a

scenario-type applied question

Chapter 13: Service Recovery

Customer Complaining Behavior

Customer Responses to Effective Service Recovery

Principles of Effective Service Recovery Systems

Service Guarantees

Discouraging Abuse and Opportunistic Customer Behavior

134

Customer satisfaction formula: linking the topics

135

Service Quality

(chapter 14) This chapter (13) Chapter 12

Customer response to service failures

1. Do nothing

2. Complain in some form to the service firm

3. Take some kind of overt action with a third

party (e.g. complain to a consumer claims

tribunal)

4. Defect and simply not patronise this firm again

136

Customer Response Categories to Service Failures (Fig. 13.3)

137

Why do customers complain?

Compensation for a monetary loss—either in the

form of a refund and/or by having a service

performed again.

Complain to rebuild self-esteem. When customers

feel service employees have mistreated them,

their self-esteem, self-worth, or sense of fairness

may be negatively affected.

Help to improve the service

Because of concern for others

138

The types of ‘justices’ (see page 342 and Figure

13.7) 139

Procedural justice

Concerns policies and rules that customer has to go

through in order to seek service recovery

Interactional justice

Dealing with employees of the firm; their behaviors

towards the aggrieved customer

Outcome justice

Compensation received by the customer

3 Dimensions of Perceived Fairness in Service Recovery

Process (Fig. 13.6)

140

Dealing with Complaining Customers and

Recovering from Service Failure

Take complaints professionally and not personally

Be prepared to deal with angry customer who may

behave in an insulting way to service personnel who

may not be at fault

Take the perspective that customer complaints allow

firm a chance to

Correct problems,

Restore relationships

Improve future satisfaction for all

Develop effective service recovery procedures

141

Service recovery

Service recovery involves actions taken

by the organisation to put things right

for the customer following a service

(core or supplementary) failure.

142

Importance of Service Recovery

Plays a crucial role in achieving customer satisfaction

Tests a firm’s commitment to satisfaction and service quality Employee training and motivation is highly

important

Impacts customer loyalty and future profitability Complaint handling should be seen as a profit

center, not a cost center

143

The Service Recovery Paradox

Customers who experience a service failure that is satisfactorily resolved may be more likely to make future purchases than customers without problems (Note: not all research supports this paradox)

If second service failure occurs, the paradox disappears—customers’ expectations have been raised and they become disillusioned

Severity and “recoverability” of failure (e.g., spoiled wedding photos) may limit firm’s ability to delight customer with recovery efforts

Best strategy: Do it right the first time

144

Principles of effective service recovery systems

145

Table 13.1 recommends some strategies companies can adopt to reduce customer complaint barriers. The activities suggested have three main objectives;

(1) Making feedback easy and convenient—make feedback tools easily accessible to customers,

(2) reassuring customers that their feedback would taken seriously and acted upon—publish feedback from customers and subsequent actions in company newsletters/publications, and

(3) make the feedback process a positive experience for the customers—training frontline staff to make customers feel comfortable giving feedback; thanking customers for feedback.

Strategies to Reduce Customer Complaint Barriers (Table 13.1)

146

146

How to Enable Effective Service Recovery

Be proactive On the spot, before customers complain

Plan recovery procedures Identify most common service problems and have

prepared scripts to guide employees in service recovery

Teach recovery skills to relevant personnel

Empower personnel to use judgment and skills to develop recovery solutions

147

The Power of Service Guarantees

• Force firms to focus on what customers want

• Set clear standards

• Require systems to get & act on customer

feedback

• Force organizations to understand why they fail

and to overcome potential fail points

• Reduce risks of purchase and build loyalty

148

How to Design Service Guarantees

Unconditional

Easy to understand and communicate

Meaningful to the customer

Easy to invoke

Easy to collect

Credible

149

See Service Insights

13. 3 on page 408

Types of Service Guarantees

150

151

Seven Types of Jaycustomers: (1)

The Cheat and Thief

The Cheat: thinks of various way to cheat the firm

The Thief: No intention of paying--sets out to steal or pay less

Services lend themselves to clever schemes to avoid payment

e.g., bypassing electricity meters, circumventing TV cables, riding free on public transportation

Firms must take preventive actions against thieves, but make allowances for honest but absent-minded customers

152


The Rulebreaker

Many services need to establish rules to guide customers safely through the service encounter

Government agencies may impose rules for health and safety reasons

Some rules protect other customers from dangerous behavior

e.g. ski patrollers issue warnings to reckless skiers by attaching orange stickers on their lift tickets

Ensure company rules are necessary, not should not be too much or inflexible

153

Shouts loudly, maybe mouthing insults, threats and curses

Service personnel are often abused even when they are not to be blamed

Confrontations between customers and service employees can easily escalate

Firms should ensure employees have skills to deal with difficult situations


The Belligerent

Confrontations between Customers and Service Employees Can Easily Escalate

In a public environment, priority is to remove person from other customers

May be better to support employee’s actions and get security or the police if necessary if an employee has been physically attacked

154

Family Feuders: People who get into arguments with other customers – often members of their own family

The Vandal:

Service vandalism includes pouring soft drinks into bank cash machines; slashing bus seats, breaking hotel furniture

Bored and drunk young people are a common source of vandalism

Unhappy customers who feel mistreated by service providers take revenge

Prevention is the best cure

Seven Types Of Jaycustomers: (4)

Family Feuders And Vandals 155

Seven Types Of Jaycustomers: (5)

The Deadbeat

Customers who fail to pay (as distinct from “thieves” who never intended to pay in the first place)

Preventive action is better than cure--e.g., insisting on prepayment; asking for credit card number when order is taken

Customers may have good reasons for not paying

- If the client's problems are only temporary ones, consider long-term value of maintaining the relationship

156

Consequences of Dysfunctional Customer Behavior

Employees:

Mood or temper negatively affected

Long-term psychological damage

Staff morale will fall, affecting productivity

Other Customers:

Positive – rally to support an employee who is perceived to

be abused

Negative – Contagious bad behavior might escalate the

situation

157


158

You are the chief marketing officer at XCel Pte Ltd.

From your perspective, for the benefit of the

organization, it is worthy to have service guarantees in

place. However, you need approval from the executive

board before you proceed with designing the service

guarantees. Explain to the executive board:

(a) the power of service guarantees

(b) how to design a service guarantee

(c) present the different types of service guarantees to the

board for consideration

Practice Examination Question

159

As a graduate who has undertaken and successfully completed the MKTG 1268 Service Quality course, and a potential manager and owner of your own service business, you know the importance of building customer loyalty for the long-term success of your business, as well as good service recovery strategies when ‘things go wrong’. Recall and list the key theories and concepts you have learnt that are important to building customer loyalty and implementing good service recovery, and give examples of how these may be implemented.

Practice Examination Question:

160

Research suggests that many dissatisfied

customers never complain but simply defect to

a competitor. What are the management

implications of this finding and how might

managers try to minimise such defections?

Practice Examination Question:

161

Using the most appropriate theory/conceptual

model taught in this course, explain why a

customer may be ‘satisfied’ with consistently

poor levels of service (quality) they experience

from the same service provider.

Chapter 14 – Service Quality and Productivity

Integrating Service Quality and Productivity Strategies

What is Service Quality?

The GAP Model – A Conceptual Tool to Identify and Correct Service Quality Problems

Measuring and Improving Service Quality

Learning From Customer Feedback

162

Overview of Chapter 14 (cont’d)

Hard Measures of Service Quality

Tools to Analyze and Address Service Quality Problems

Return on Quality

Defining and Measuring Productivity

Improving Service Productivity

163

Productivity and quality in a service context

164

Service managers need to focus on both productivity and quality from the customer’s point of view to ensure long-term financial success. Service quality is the extent to which a service meets or exceeds customer expectations.

Productivity measures how efficiently a service firm can turn inputs into outputs. Productivity and quality were historically seen as issues for operations managers, so companies focused on making internal process improvements that were not necessarily linked to customer service priorities. Continuing efforts to understand and improve quality reinforces the idea that quality is customer defined.

Integrating Service Quality and

Productivity Strategies

Quality and productivity are twin paths to creating value for both customers and companies

Quality focuses on the benefits created for customers; productivity addresses financial costs incurred by firm If service processes are more efficient and increase

productivity, this may not result in better quality experience for customers

Getting service employees to work faster to increase productivity may sometimes be welcomed by customers, but at other times feel rushed and unwanted

Marketing, operations and human resource managers need to work together for quality and productivity improvement

165

5 Dimensions of Service Quality

Responsiveness: Promptness; helpfulness

Tangibles: Appearance of physical elements

Reliability: Dependable and accurate performance

Assurance: Competence, courtesy, credibility, security

Empathy: Easy access, good communication,

understanding of customer

166

166

167

Table 14.1 Dimensions of Service Quality

Six Service Quality Gaps (Fig. 14.5)

168

168

Summary of the 6 Gaps

169

Gap 1, the Knowledge Gap relates to a lack of management

understanding of what customers expect.

Gap 2, the Standards Gap is a failure to translate managers’ perceptions

of customer expectations into the quality standards established for service

delivery.

Gap 3, the Delivery Gap is the difference between specified delivery

standards and the firm’s actual performance.

Gap 4, the Communications Gap is the difference between what the

company communicates and what is actually delivered to the customer.

Gap 5, the Perceptions Gap is the difference between what the company

has actually delivered and what the customer perceives s/he has received

(note this perception may be wrong due to difficulty in evaluating the

service).

Gap 6 (the overall gap) or the Service Gap is the difference between what

the customer perceives and his/her original expectations.

Suggestions for Closing the

6 Service Quality Gaps (1) (Table 14.2)

170

170



171

171



172

172


6 Service Quality Gaps (4) (Table 14.2) 173

173

Soft and Hard Measures of Service Quality

Soft measures —not easily observed, must be collected by talking to customers, employees or others Provide direction, guidance and feedback to

employees on ways to achieve customer satisfaction

Can be quantified by measuring customer perceptions and beliefs

e.g. SERVQUAL, surveys, and customer advisory panels

Hard measures —can be counted, timed or measured through audits Typically operational processes or outcomes

Standards often set with reference to percentage of occasions on which a particular measure is achieved

174

SERVQUAL – See Appendix 14.1 (also see Table14.4 on page 396)

175

Service-based components: The SERVQUAL Scale

SERVQUAL (Appendix 14.1) is a survey research

instrument based on the premise that customers can

evaluate a firm’s service quality by comparing their

service perceptions with their prior expectations.

In its basic form, the scale contains 21 perception

items and 21 expectation items, reflecting five

dimensions of service quality:

Key Objectives of Effective Customer Feedback

Systems 176

Together, these allow the

company to understand

where it stands against the

best in the market, how it is

perceived by its customers,

and help improve its service

offering to satisfy (if not

delight) its customers.

Customer Feedback Collection Tools

Total market surveys

Annual surveys

Transactional surveys

Service feedback cards

Mystery shopping

Unsolicited customer feedback

Focus group discussions

Service reviews

177

Hard Measures of Service Quality

Service quality indexes Embrace key activities that have an impact on customers

Control charts to monitor a single variable Offer a simple method of displaying performance over

time against specific quality standards

Enable easy identification of trends

Are only good if data on which based are accurate

178

Tools to Analyze and Address

Service Quality Problems

Fishbone diagram

Cause-and-effect diagram to identify potential causes of problems

Pareto Chart

Separating the trivial from the important. Often, a majority of problems is caused by a minority of causes (i.e. the 80/20 rule)

Blueprinting

Visualization of service delivery, identifying points where failures are most likely to occur

179

Covered in Chapter 8

Cause-and-Effect Chart for

Flight Departure Delays (Fig. 14.10)

180

180

Customer-driven Ways to Improve Productivity

Change timing of customer demand

By shifting demand away from peaks, managers can make better use of firm’s productive assets and provide better service

Involve customers more in production

Get customers to self-serve

Encourage customers to obtain information and buy from firm’s corporate Websites

Ask customers to use third parties

Delegate delivery of supplementary service elements to intermediary organizations

181

Backstage and Front-Stage Productivity Changes: Implications for

Customers

Backstage changes may impact customers Keep track of proposed backstage changes, and

prepare customers for them

e.g., new printing peripherals may affect appearance of bank statements

Front-stage productivity enhancements are especially visible in high contact services Some improvements only require passive acceptance,

while others require customers to change behavior

Must consider impacts on customers and address customer resistance to changes

See Service Insights 14.3 : Managing Customers’ Reluctance to Change

182

Practice Exam Essay Question:

183

List and describe each of the five service

quality (e.g. SERVQUAL) dimensions.

How does/can your lecturer for MKTG1268

Service Quality (i.e. the provider of education

as a form of service), demonstrate each of

these five dimensions

184

Sample Practice Exam Essay Question: read the following

case study and answer the question (next page)

Question for the exam case study:

185

• Using the GAPs model, identify THREE gaps that explain why there is a difference in the satisfaction levels between subsidized and unsubsidized patients at the restructured hospitals. Suggest FOUR ways restructured hospitals can close the gaps.

Chapters 5 – 7 ? (the remaining

Service MM elements not tested)

Now what about the other chapters? 186

These should be read as an overview because there will be a

question about applying the 7Ps - so, in that regards, the students

probably need to know those chapters to the extent of being

able to explain most of the 7Ps, and to generally know what is

involved in terms of the marketing decisions related to each of

those P

Chapter 5: Distributing Services Through Physical

and Electronic Channels

Place and time

Service distribution can take place through physical and non-physical channels

Some firms can use electronic channels to deliver all (or at least some) of their service elements

Information-based services can be delivered almost instantaneously electronically

Delivery Decisions: Where, When, How

Time is of great importance as customers are physically present

Convenience of place and time become important determinants of effective service delivery

There are distribution channels for services – travel agency, medical, education etc.

187 Key Issues

Chapter 6 : Setting Prices and Implementing

Revenue Management

Price and other user outlays From the firm’s perspective, pricing generates income and creates profits

From the customer’s perspective, pricing is key part of costs to obtained wanted benefits. Marketers must recognize that customer costs involve more than price paid to seller.

Factors affecting pricing of services

Identify and minimize non-monetary costs incurred by users:

Additional monetary costs associated with service usage (e.g., travel to service location, parking, phone, babysitting, etc.)

Time expenditures, especially waiting

Unwanted mental and physical effort

Negative sensory experiences

Revenue management is an important part of pricing

Rate fencing

188 Key Issues

Chapter 7: Promoting Services and Educating

Customers

Difficulty of marketing communication because of intangibility issue

Promotion and Education Plays three vital roles:

Provide information and advice

Persuades the target customers of merit of service product or brand.

Encourages customer to take action at specific time

The promotions mix used in services marketing Customers may be involved in co-production so:

Teach customer how to move effectively through the service process

Shape customers’ roles and manage their behavior

189 Key Issues

And Finally….

190

The best of luck !!

Go out there and SCORE!!

SQ LO1 Class of April 2013