bimtech sm2 understanding service

8/2/2019 BIMTECH SM2 Understanding Service

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The Service Concept

Two definitions to put the concept of service

and the service industry in the right

perspective:

There are no such things as Service industries.There are only industries whose service

components are greater or less than those of other

industries. Everybody is in Service.

Theodore Levitt


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The 4 Ps of Services Marketing

The 4 Ps of Services Marketing are :

People, People, People, People( Richard Dow)

Exaggerated ? Perhaps.

But the emphasis is rightly placed.


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Why the concern with Service?

The rapid growth of service sectors all over the

world and the deregulation of many serviceindustries have lead researchers with an interest

in quality issues to the importance of acquiring

more understanding about service quality.


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Reason for Interest

It is recognized that high quality service is essential

for firms that want to be successful in their business

It leads to

Customer loyalty

Higher profitability

and Lower Cost.


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The Service Challenge

However, the existing knowledge about product

quality is insufficient to deal with service quality

This is because of the intangibility, heterogeneity

perishability and inseparability characteristics of

service industry outputs. Service quality is

recognized by a number of authors as both

abstract and elusive


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Definition of Service

A service is any act or performance that one

party can offer to another that is essentiallyintangible and does not result in the

ownership of anything. Its production may

or may not be tied to a physical product.


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Kinds of service

A pure tangible good- eg Soap or Tobacco

A tangible good plus services eg Anautomobile with warranty and an instructions

manual. A major service with accompanying minor

goods and serviceseg Railways, Airlines

A pure service such as a psychiatrist provides


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Generalization not easy

Since there is such a wide variance in thegoods toservice mix no generalization iseasy. The difficulty is compounded by services

further varying according to:

Whether they are people or equipment based

Whether the clients presence is required ornot ( Brain surgery vs Car repair)


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Whether they meet a personal or a business

need Eg Physicians process personal and

company clients differently

Their objectives - Whether profit or non

profit oriented.


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All Service Marketing programmes

depend on 4 basic characteristics

Intangibilty

Inseparability

Variability ( Heterogeneity)

Perishability

These constitute the challenge to the Services

Marketer


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Intangibility

Services cannot be seen, smelled, tasted

heard or felt before they are brought. The

Service Marketers task is therefore to

manage the evidence or tangibilize the

intangible.Thus while a product marketer has

to put his product concept in words or give it

an abstract image a services ,marketer has todo the reverse ie, concretize the abstract.


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Inseparabilty

Unlike products,services are typicallyproduced and consumed at the same time.

They cannot be inventorized. Provider- client

interaction is a special feature of Services

Marketing.


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Variability

Services are highly variable. Thus they dependon who provides them and when and where

they are provided. Thus maintaining quality is

a perennial challenge.


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Perishabilty

A service cannot be stored. Service value

exists only at a particular time as in the case

of a newspaper.


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Elements of services marketing

Service marketing owing to its complex naturerequires not only the 4 Ps of traditional

external marketing but also two other

marketing thrusts, namely internal marketing

and interactive marketing.


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Thus while external marketing addressesitself to the task of the normal work of the

company such as pricing distribution and

promoting the services of the company

Internal marketing consists of training and

motivating its internal customers, namelyits customer contact and supporting

service personnel to work as a team

towards providing customer satisfaction


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Thus the most important contribution themarketing department can make is to be

exceptionally clever in getting everyone else in

the organization to practice marketing.


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Interactive marketing describes the employees

skill in handling customer contact. In services

marketing the service quality is inextricably

wound up with the service deliverer. ServiceQuality is judged not only by technical quality

but also by functional quality.


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Task before Service Companies

The primary tasks before Service Companies in

addition to managing the intrinsic service

characteristics described earlier is :

1) Increasing competitive differentiation

2) Service Quality

3) Productivity.


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Services Require An Expanded

Marketing Mix

Marketing can be viewed as:

A strategic and competitive thrust pursued by top management

A set of functional activities performed by line managers

A customer-driven orientation for the entire organization

Marketing is the only function to bring operating revenuesinto a business; all other functions are cost centers.

The 7 Ps of services marketing are needed to create viablestrategies for meeting customer needs profitably in acompetitive marketplace


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3 more Ps in the Service Industry Marketing Mix

Marketing has always being fond of Ps andcompetitive differentiation in service delivery is nodifferent. It can be achieved by adding 3 more Ps

to the traditional 4.


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People

All human actors who play a part in the

service delivery and thus influence the buyers

perspective :

The firms personnel

The customerOther customers in the service environment


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Physical Evidence

The environment in which the service isdelivered and where the firm and customer

interact, and any tangible components that

facilitate performance or communication of

the service.


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Process

The actual procedures, mechanisms and flowof activities by which the service is delivered -

the service delivery and operating systems


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(Productivity and Quality)

Productivity and quality are 2 sides of the

same coin.

The best strategies are those which improve

productivity and quality simultaneously

Advances in technology must be user friendly

and deliver benefits that customers will value


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People

Employees :

Recruiting

Training

Motivation Rewards

Teamwork

Customers :

Education

Training


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Physical Evidence

Facility design

Equipment

Signage

Employee dress

Other tangibles :

Reports

Business cards

Statements

Guarantees


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Process

Flow of activities :

Standardized

Customized

Number of steps:

Simple

Complex

Customer Involvement


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Services Pose Distinctive Marketing

Challenges

Marketing management tasks in the service sector differ from those in

the manufacturing sector.

The eight common differences are:

Most service products cannot be inventoried

Intangible elements usually dominate value creation

Services are often difficult to visualize and understand

Customers may be involved in co-production

People may be part of the service experience

Operational inputs and outputs tend to vary more widely

The time factor often assumes great importance

Distribution may take place through nonphysical channels


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Differences, Implications, and

Marketing-Related Tasks (1) (Table 1.1)

Difference

Most service products

cannot be inventoried

Intangible elementsusually 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 evaluateservice & 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 smoothdemand; work with ops tomanage capacity

Emphasize physical clues,employ metaphors and vividimages in advertising

Educate customers on

making good choices; offer

guarantees

Develop user-friendly

equipment, facilities &

systems; train customers,

provide good support


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Implications

Behavior of service

personnel & customers

can affect satisfaction

Hard to maintain quality,consistency, reliability

Difficult to shieldcustomers 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 toreinforce service concept

Shape customer behavior

Redesign for simplicity andfailure proofing

Institute good servicerecovery procedures

Find ways to compete onspeed of delivery; offer

extended hours

Create user-friendly,secure websites and freeaccess by telephone

Differences, Implications, and

Marketing-Related Tasks (2) (Table 1.1)


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Service Quality

Better service quality can be obtained through

a mix of improving access, communication,

competence, courtesy, credibility, reliability,

responsiveness, security, tangibles,

understanding the customer.


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Excellence in Service

With respect to Service Quality various studies

have shown that excellently managed service

companies share a number of common

practices


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1. A Strategic concept

2. A History of Top Management Commitmentto Quality

3. The Setting of High Standards

4. Systems for measuring Service Performance

5. Systems for Satisfying ComplainingCustomers.

6. Satisfying the Employees as well as the

Customers.


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Managing Productivity

1. Have Service providers work harder , failing which

work more skillfully or work smarter, through better

training and selection procedures.

2. Increase quantity of service through surrendering

some quality This needs a very careful balance.

3. Industrialize the service by adding equipment andstandardizing production.


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5. Design a more effective service.

6.Present customers with incentives to

substitute their own labour for company

labour, such as self-service counters


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The Service Edge

In todays world companies which succeed have

what is known as the service edge over thecompetition. Such companies have succeeded in

creating Distinctive Service. It is important to

understand that creating anything is a willful

management act- an act of leadership.


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What is it that successful companies do to

achieve customer delight ?


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According to psychiatrists Leonard and NatalieZunin there is a short moment in time, a 4

minute window of opportunity when

satisfying human contacts will be establishedor denied. This threshold exists in commercial

as well as private affairs. it is as critical to

customer satisfaction as it is to friendships oreven marital relations.


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Moment of truth

Jan Carlzon ,CEO of SAS exposited the concept of

managing the customers moments of truth- thetransactions the customer has with the organization.

A moment of truth occurs any time the customer

comes in contact with some aspect of theorganization and uses that opportunity to judge thequality of service the organization is providing.


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Application of Moment of Truth

The first 15 second encounter between a

passenger and the frontline people, from

ticket agent to flight attendant sets the tone

of the entire company in the mind of the

customer.

This for Carlzon is the moment of truth


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Moments of truth are not all createdequal . Some have more impact than others. In aparticular hotel a survey was conducted about thequality of service they had experienced with

reference to several previously identified momentsof truth.

The one moment of truth that cropped up as the

most important determinant for most as to whetheror not they would stay in the same hotel again wascustomer encounters at the front desk.


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To manage efficiently and effectively,therefore we must have a way of deciding thepecking order of the different identified

moments of truth.

This is critical for the resource allocationprocess , the trade-offs we make as we devisea service strategy and design the deliverysystems to implement it.


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The Service Encounter

is the moment of truth occurs any time the customer interacts with the firm

can potentially be critical in determining customersatisfaction and loyalty

types of encounters: remote encounters, phone encounters, face-to-face

encounters

is an opportunity to:

build trust reinforce quality

build brand identity

increase loyalty

A Service Encounter Cascade for a


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Check-In

Request Wake-Up Call

Checkout

Bellboy Takes to Room

Restaurant Meal

A Service Encounter Cascade for a

Hotel Visit

A S i E t C d f


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Sales Call

Ordering Supplies

Billing

Delivery and Installation

Servicing

A Service Encounter Cascade for an

Industrial Purchase


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Critical Service Encounters Research

GOAL: understanding actual events and behaviors that cause

customer dis/satisfaction in service encounters

METHOD:

Critical Incident Technique

DATA:

stories from customers and employees

OUTPUT: identification of themes underlying satisfaction and

dissatisfaction with service encounters

S l Q ti f C iti l I id t


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Sample Questions for Critical Incidents

Technique Study

Think of a time when, as a customer, you had aparticularly satisfying (dissatisfying) interaction with anemployee of ______________.

When did the incident happen?

What specific circumstances led up to this situation?

Exactly what was said and done?

What resulted that made you feel the interaction wassatisfying (dissatisfying)?

C Th i C i i l


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Common Themes in Critical

Service Encounters Research

Recovery: Adaptability:

Spontaneity:Coping:

employee responseto service delivery

system failure

employee responseto customer needs

and requests

employee responseto problem customers

unprompted andunsolicited employeeactions and attitudes


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Carlzons modus operandi

He arrived at SAS at a time of crisis. He

concluded that service and the frontline

people who delivered were the success levers.

He shifted focus from the plane as a physicalasset to the customer.

Carlzon and his team mounted 147 serviceimprovement projects at a cost of about USD

50 million.


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What he actually did

He gave the service people the opportunity to

provide the service that they had always

wanted to provide. He smartened their

uniforms, transferred autonomy to the field

and encouraged people not to take no for an

answer.


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Twin mantras adopted

Empowerment of frontline people

Leadership honouring intuition, emotion andshowmanship.

The leaders role being that of understanding

and effecting change. The leader to be alistener, communicator and educator creating

a secure working environment that fosters

flexibility and innovation


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Brass tacks employed

The leaders tools are a clear .concise vision

and consummate leadership skills with soul.

Loyalty to the vision, not the details of

execution, is a must. People shine only if thedemands are sky high.

Part and parcel is rigorous, honest

measurement. Tough, visible goals, aimed at serving the

customer and measured so as to engender

unit versus unit competition


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Jan Carlzon Sayings

Everyone needs to know and feel that he isneeded

Everyone wants to be treated as an individual

Giving someone the freedom to takeresponsibility releases resources that would

otherwise remain concealed

An individual without information cannot takeresponsibility ; an individual who is given

information cannot help but take

responsibility


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The Result

Jan Carlzon took over SAS in 1981 following

USD 30 million losses in 1979 and 1980

A year later a sick airlines punctuality becamethe best in Europe

SAS returned to profitability in just a year

while other international airlines tallied arecord USD 2 billion loss


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Five specific operating principles

Five specific operating principles for

building and managing extraordinarylevels of customer satisfaction andloyalty or what we call customer delightare :


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1. Listening, understanding and responding to Customers

often in unique and creative ways to the evolving needs

and constantly shifting expectations of their customers

2. Defining Superior Service and communicating that vision

to employees at every level and ensuring that service

quality strategy is personally and positively important to

all in the organization.

3. Setting concrete Standards of Service quality and

regularly measuring Performance against 100 %

performance goal.

4. Selecting, training extensively in areas of knowledge and

skills to achieve service standards and empoweringEmployees to work for the Customer

5. Recognizing and rewarding Service Accomplishment s, either

individually or of groups, in particular ,celebrating the success of

employees who go the extra mile for their customers


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The Servqal Model

The most eminent instrument in attempting tosystematize the service quality is The gap

model of service or Servqal developed by

Parshuraman et al (1985). This conceptual framework was developed

initially to measure customer perception of

service quality for the financial service sectors

but later extended to sectors such as

hospitality, , telecommunications and

healthcare.

Th B i f th S l M d l


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The Basis of the Servqual Model

The Gaps

The Key Service Dimensions

Causes & Solutions to Gaps


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Purposes of SERVQAL

To determine average gap score ( betweencustomers perceptions and expectations) for each

service attribute.

To assess a companys service quality along each of

the 5 SERVQAL dimensions

To track customers expectations and perceptions

over time


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To compare a companys SERVQAL scores

against competitors

To identify and examine customer segments

that differ significantly in their assessment of a

companys service performance

To assess internal service quality

(interdepartmental comparison)


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The Five Key Service Dimensions

ASSURANCE - a combination of the following :

Competence - having the requisite skills and knowledge

Courtesy - politeness, respect, consideration and

friendliness of contact staff

Credibility - trustworthiness, believability and honesty of staff

Security - freedom from danger, risk or doubt


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TANGIBLES - the appearance of physicalfacilities, equipment, personnel andinformation material

RELIABILITY - the ability to perform the serviceaccurately and dependably

RESPONSIVENESS - the willingness to helpcustomers and provide prompt service


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EMPATHY - a combination of the following:

Access (physical and social) - approachability and ease of contact

Communication - keeping customers informed in a language they

understand and really listening to them

Understanding the customer - making the effort to get to know customers

and their specific needs

EMPATHYSERVQUAL Att ib t


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n Providing service as promised

n Dependability in handling customersservice problems

n Performing services right the first time

n Providing services at the promised time

n Maintaining error-free records

n Keeping customers informed as towhen services will be performed

n Prompt service to customers

n Willingness to help customers

n Readiness to respond to customersrequests

RELIABILITY

RESPONSIVENESS

n Employees who instill confidence incustomers

n Making customers feel safe in theirtransactions

n Employees who are consistently courteous

n

Employees who have the knowledge toanswer customer questions

ASSURANCE

n Giving customers individual attention

n Employees who deal with customers in acaring fashion

n Having the customers best interest at heart

n Employees who understand the needs oftheir customers

n Convenient business hours

EMPATHY

n Modern equipment

n Visually appealing facilities

n Employees who have a neat,professional appearance

n Visually appealing materials associatedwith the service

TANGIBLES

SERVQUAL Attributes

G M d l f S i Q lit


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Perceived

Service

Expected Service

CUSTOMER

COMPANY

Customer

Gap

Gap 1

Gap 2

Gap 3

ExternalCommunications to

CustomersGap 4Service

Delivery

Customer-Driven ServiceDesigns and Standards

Company Perceptions ofConsumer Expectations

Gaps Model of Service Quality


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Customer Gap: difference between customer expectations and perceptions

Provider Gap 1 (The Knowledge Gap):

not knowing what customers expect

Provider Gap 2 (The Service Design & Standards Gap): not having the right service designs and standards

Provider Gap 3 (The Service Performance Gap):

not delivering to service standards

Provider Gap 4 (The Communication Gap): not matching performance to promises


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The Customer Gap

Expectedservice

Perceivedservice

Customer Gap


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The Customer Gap

The difference between what customers

expect of a service and what they actually

receive

Customer Expectations are standards orreference points that the customers bring into

the service experience.

Customer perceptions are subjectiveassessments of actual service experiences


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The sources ofcustomer expectations are

Market controlled factors such as pricing,advertising, sales promises, as well as factors which

the marketer has limited ability to control such as

personal needs, word of mouth communications,

competitive offerings.

In a perfect world Expectations = Perceptions

Key Factors Leading


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Key Factors Leading

to the Customer Gap

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

Customer

Expectations

CustomerPerceptions

Customer

Gap

Key Factors Leading to Provider Gap


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Customer-Driven Service Designsand Standards

Management Perceptions ofCustomer Expectations

Poor service designUnsystematic new service development processVague, undefined service designs

Failure to connect service design to service positioning Absence of customer-driven standards

Lack of customer-driven service standardsAbsence of formal process for setting service quality goals

Inappropriate physical evidence and servicescapeFailure to develop tangibles in line with customer expectationsServicescape design that does not meet customer and

employee needsInadequate maintenance and updating of the servicescape

y g p

2

Gap

2



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Service Delivery

Customer-Driven Service

Designs and Standards

Deficiencies in human resource policiesIneffective recruitmentRole ambiguity and role conflictInappropriate evaluation and compensation systemsLack of empowerment, perceived control, and teamwork

Customers who do not fulfill rolesCustomers who lack knowledge of their roles and responsibilitiesCustomers who negatively impact each other

Problems with service intermediariesChannel conflict over objectives and performanceDifficulty controlling quality and consistencyTension between empowerment and control

Failure to match supply and demand

Failure to smooth peaks and valleys of demand

y g p

3

Gap

3



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Service Delivery

Lack of integrated services marketing communicationsTendency to view each external communication as independentAbsence of strong internal marketing program

Ineffective management of customer expectationsAbsence of customer expectation management through all forms of

communicationLack of adequate education for customers

OverpromisingOverpromising in advertisingOverpromising in personal sellingOverpromising through physical evidence cues

Inadequate horizontal communicationsInsufficient communication between sales and operations

Insufficient communication between advertising and operationsDifferences in policies and procedures across branches or units

External Communications to

Customers

y g p

4

Gap

4


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Measurement

Measurement is on the basis of two sets of

statements in groups according to the five key

service dimensions



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Perceived

Service

Expected Service

CUSTOMER

COMPANY

Customer

Gap

Gap 1

Gap 2

Gap 3

ExternalCommunications to

CustomersGap 4Service

Delivery

Customer-Driven ServiceDesigns and Standards

Company Perceptions ofConsumer Expectations



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Measuring electronic service quality


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Measuring electronic service quality

on websites

Parshuram, Zeithaml and Malhotra created a

22 item scale called E- S-QUAL reflecting 4 key

dimensions :


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Efficiency ( Easy navigation, quick transactions,

website loads quickly)

System availability (site always available, it launches

right away, it is stable and doesnt crash)

Fulfilment ( orders are delivered as promised, and

offerings are described truthfully)

Privacy ( information privacy is respected and

personal information is not shared wth other sites.)


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Servqual Data - How Useful is it?

We can assess service quality from the customersperspective

We can track customer expectations and perceptionsover time and the discrepancies between them

We can compare a set ofServqual scores againstthose of competitors or best practice examples


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We can compare the expectations and perceptions of

different customer groups - this is particularly useful

in the public sector

We can assess the expectations and perceptions of

internal customers - eg other departments or services

we deal with.


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The Railway Scenario

Allen and DiCesare considered that quality of service forpublic transport industry contained two categories: user

and non-user categories. Under the user category, itconsists of speed, reliability, comfort, convenience, safety,special services and innovations.


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Traditionally, the performance indicators

for public transport industry are dividedinto two categories: efficiency andeffectiveness.

Under the efficiency category, themeasures are concerned with the processesthat produce the services while themeasures in the effectiveness category are

used to determine how well the servicesprovided are with respect to the objectivesthat are set for them (Pullen, 1993).


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Quality of service is one of the performanceindicators under the effectiveness category. It

is composed of accessibility, reliability,

comfort, convenience and safety (Silcock,1981).


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Relationship between Perceived Service Quality and

Overall Satisfaction Perceived quality and satisfaction are two different

constructs. Consumers will use the predictive level of

expected service in their comparison.

Customer satisfaction is affected by both non-quality

and quality factors. When we combine all the

elements of the above discussion, we derive the

extended SERVQUAL model shown in Figure 1 for this

study of service quality and customer satisfaction


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It combines the basic SERVQUAL dimensions with threeadditional dimensions, specific to the industry. It includes

the more recent measure of expectation, including desiredand adequate, and takes the view that quality factors areantecedents of satisfaction.

The survey includes questions in the style of otherSERVQUAL questions. For the convenience dimension, thequestion will read:A railwaycompanys ability to providesservices that are convenient to its customers (e.g. officehours at ticket office, ticket acquisition, adequate parking

facilities at railway stations, information acquisition, andavailability of seating) is not at all important..extremely important.

Conceptual Framework for Railway Passenger Service


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Conceptual Framework for Railway Passenger Service

Quality and Passenger Satisfaction

zone oftolerance

tangiblesreliability

responsivenessassurancesempathy

convenience

expected service

perceived

service quality

overall

passenger

satisfaction

desired service

adequate

comfort

speed

perceived

service

Fi di


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Findings

Assurance, Responsiveness and Empathy had

significant effects on overall service quality.

Assurance was the dominant predictor of

overall customer satisfaction.


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An important feature of the extended

SERVQUAL model is its diagnostic value in

terms of zone of tolerance and expectation

management. It helps managers to analysis

the effectiveness of the service quality and

identify those problem areas that are

needed to be improved.


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The perceived quality rating relative to the minimum and

desired level of expected services help the managers todevelop their long-term and short-term strategy planning.

The short term improvement plan may include thoseaspects that are below the zone of tolerance.

The long term improvement plan may be formulated byreferencing the relative position of the perceived qualitypointer within the zone of tolerance and by considering

the width of the zone of tolerance (Kettinger and Lee,1997). The narrower the zone, the more attention isneeded.


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In reality, it is unlikely to fulfil all theideal service quality requirements fromthe customers.

Therefore it is necessary for themanagers to manage customer

expectation by the adequacy level ofexpectation so as to widen the zone oftolerance (Kettinger and Lee, 1997).


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Finally, the zones of tolerance provideinformation about what areas and

attributes that are need to improve but not

how to improve them. Future research onfinding, examining and measuring the

determinants of expectation would add

value in monitoring service quality.

Companies with a Service Edge


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Companies with a Service Edge

Better understand and affect service customerbehavior

Create marketing messages that effectively

highlight service quality dimensions thatconsumers value

Achieve loyalty through greater attention to

customer feelings in service encounters


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Develop innovative and profitable loyalty programs

Benefit from yield management and capacityutilization techniques

Manage and motivate service marketers formaximum customer and employee satisfaction

Learn how to interpret customer satisfactionmeasures

Successfully recover and learn from service failures

Importance of a Service Strategy


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Importance of a Service Strategy

It functions as an internal focus of effort- a singlevision throughout the organization.

It is based on an understanding of a combination oforganizational values, customer expectations ofproducts and services,customer expectations of theprocess of doing business with the company, and anin-depth analysis of the strength and weakness ofthe organization as it confronts the threats andopportunities in the market place.

Service strategy


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Service strategy

Is a non trivial statement of intent

Noticeably differentiates you from others

Has value in your customers eyes

Is deliverable by the Organization

Must answer three questions


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Must answer three questions

What is our unique contribution?

To whom do we provide this service?

What key value do you want them to perceive

about us?

Service Strategy for BIMTECH


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Service Strategy for BIMTECH

You are a part of the BIMTECH Management team.Kindly give 15 minutes of thought and then writedown the service strategy you would like BIMTECH tofollow in the following format

Our Service Strategy framework :To provide ( Our uniquecontribution)..to . (customer).so that we are perceived by

them as( Key value).

bimtech sm2 understanding service

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