Download - Group 2 Alpha
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Batch Alpha - Group 2
Jamnalal Bajaj Institute of Management Studies
Service Quality
Gap and
Strategies to Fill
Up Service
Quality Gap
MMS 1
Ankit Kumar
Harshavardhan Chavan
Jyotirmoy Mukherjee
Nikhil Kasat
Sanket Madavi
Umesh Mahajan
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Service Quality Gap and Strategies
to Fill Up Service Quality Gap
Service Quality Gap
Service quality is a term which describes a comparison of expectations with
performance. Service quality is a business administration term used to describe
achievement in service. It reflects at each service encounter. Customers form
service expectations from past experiences, word of mouth and advertisement.
In general Customers compare perceived service with expected service in which
if the former falls short of the latter the customers are disappointed.
A customer's expectation of a particular service is determined by factors such as
recommendations, personal needs and past experiences. The expected service
and the perceived service sometimes may not be equal, thus leaving a gap.
Customer perception of the firm and its offer are shaped by word of mouth
publicity like recommendation of friend, relative, neighbour and peer at
workplace, personal experience on the part of the customer, personal need of
individual customers, external communication like the publicity of the firm in
the media and its advertisements and other corporate communication. Study
shows that customer assessed the service of firm on the following parameter.
Tangible or the appearance of physical facilities, equipment, personneland communication material.
Reliability or the ability to perform the desired service dependably andaccurately
Responsiveness or the willingness to help customers and prompt service Assurance as measured by the competence of the firm in delivering the
promised service, courtesy extended to the customer, the firms
creditability and the extent to which customer feels secure.
Empathy or the caring, individualized attention that the firm provides tocustomer. Customer perceived reliability, assurance tangibility
responsiveness and empathy in order to determine the service quality ofthe firm.
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When positive perceptions are not confirmed by the actual performance of the
firm, a gap occurs, and this has been called the Service Quality Gap
There are four major gaps in the service quality concept.
Gap 1: Customers expectations versus management perceptions: as aresult of the lack of a marketing research orientations inadequate upward
communication and too many layers of management.
Gap 2: Management perceptions versus service specification: as a resultof inadequate commitment to service quality, a perception of unfeasibility
inadequate task standardization and an absence of goal settings.
Gap 3: Service specification versus service delivery: as a result of roleambiguity and conflict poor employee- job fit and poor technology job fit,
inappropriate supervisory control systems lack of perceived control and
lack of team work.
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Gap 4: Service delivery versus external communication: as a result ofinadequate horizontal communication and propensity to over promise
Gap 5 : Gap between a customer's perception of the experience and thecustomer's expectation of the service - Customers' expectations have been
shaped by word of mouth, their personal needs and their own past
experiences. Routine transactional surveys after delivering the customer
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experience are important for an organization to measure customer
perceptions of service.
Organizations take when service quality gaps are encountered
Service quality is a deliberate strategic choice exercised by winner firms. When
the firms encounter service quality gaps, has to focus on the following critical
areas:
Developing a shared service vision:The starting point is that of developing a shared service vision, a service
concept, and operating strategy which communicated to everyone in the
organization. Through open communication companies has continued to refine
its service concept. By understanding what their target customer want and how
they perceive firms competitors. The firm has achieved its goal through strategy
and system integration, where in HRD, up gradation of technology, and service
delivery points have played a pivotal role. Training and decentralization of
decision making, and accessibility of top management contact personnel and acustomer have helped firms to emerge a winner in the financial service industry.
It is not only important to have service vision but it is equally critical to plan
and implement a service quality strategy. Here the firm has to set before itself
the goal of 100 per cent customer satisfaction. Though on the face of it, this
looks impossible, in reality it has been found to be a motivating, challenging
and even achievable goal. Dissatisfaction is as contagious as satisfaction and
therefore the firm should work to achieve 100 per cent customer satisfaction.
Locating service point near the customer:Taking service to the customer is one of the useful tools in improving in
improving service quality. The option demands that instead of the
customerhaving to seek out service outlets, the firms service centres should
seek out the customer. Service which is done at hand, at the time customer
wants it.
Making delivery point user friendly:
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It is important to have service point user friendly. Cleanliness, friendly
environment and courteous people, warm hospitality shown in both verbally and
non-verbally, and using technology can make service delivery point
customer friendly.
Reducing the time gap between services sought and delivered:A firm should work to reduce the time gap between the customer asking for
service and being delivered. The firm should aim at providing any service to the
customer in least possible time.
Product design :The firm should also take a close look at its product design and examine how
technology can help better serve customer. Technology today offers
opportunities to the firm to provide a highly dependable, zero defect products.
Unconditional guarantee:The firm must also plan to give unconditional guarantee to its customer.
Especially when commitment to customer service is pledge by none else than
the Chief Executive of the firm. Customer confidence in the firm and its product
goes up.
Role clarity and empowering people:Role clarity and inter-role linkage helps motivate service provider to deliver
good quality service to the customer. Often when role of an individual
employee is not clear defined and role overlapping are a common phenomenon
in the organization, confusion occurs. Individual have to appreciate that without
support from other individuals or department it is difficult to achieve 100 per
cent customer satisfaction. Decentralization decision making, encouraging twoways communication, and letting the individual employee take calculated risk is
important. Organization will need to be flat so as to enable them to respond
faster to customer needs and problems.
Performance measurement and reward systems:To create excellence in service quality it is necessary to reinforce the positive
behaviour of service providers. Their performance should be assessed on the
basis of their contribution in creating a satisfied customer. Corporate reward
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system should encourage such employees and the firm should show case them
so that others, too feel motivated to deliver quality service.
Research and training of people:A firm needs to continuously monitor customer satisfaction and for this it needs
to have a customer feedback and intelligence system in place. It should also
occasionally conduct market research to understand people changing customer
perception and expectations. Firm need to educate and train their employee in
delivering quality service. They have to be sensitive to customer needs and
expectations. Employees will also have to educated or trained in using state of
art technology to service customers.
Case Studies
1. GATIAhead in Reach
Among top five players in the country Best logistics company award
Network reaches up to 580 districts out of 590 districts Also into international operations
Service Quality Gaps
Knowledge Gap:
Improper field level education Business intelligence not available for decision making at all levels Least attention paid to small customers
Solutions:
o Customers information is collected through feedback formso Appointment of executives to cater all types of customers
Standard Gap:
No proper service design for customers Fluctuation in fuel prices No insurance for goods
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Improper allocation of fundsSolutions:
o Sharing the burden of increasing fuel priceso Insurance for goods
Delivery Gap:
Poor employee-technology job fit Delay in delivering the service Over pricing to match demand
Solutions:
o Employees are properly trainedo Promptness in delivery
Communication Gap:
Improper horizontal communication Customer enquiry constraints Absence of strong internal marketing
Lack of adequate education for customer
Solutions:
o Toll Free Number available to provide information to the customerso Online tracking system on Gati.net
Perception Gap: Indifferent attitude towards customers Improper design leading to negative perception Improper information transparency to their supply chain partners to
maintain competitiveness
Solutions:
o Should have a positive attitude towards the customero Proper market research to change design accordingly
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Interpretation Gap:
Overpromise, under delivery Main customers - Corporate customers. Hence interpretation of a
local customer varies differently
Solutions:
o Should focus on B to C advertising apart from B to B advertisingo Provide services as promised
Service Gap:
Value added services Ware housing facility Reverse logistics
Solutions:
o Started giving value added services in some areas2. McDonaldsA Story of Service Recovery
Background Note:
The McDonald brothers, Richard and Maurice opened a drive-inrestaurant in San Bernardino, California, in 1937. By the late 1990s, after years
of declining earnings and poor customer ratings, McDonalds Corp., the largest
fast food chain in the world, seemed to have lost its claim to providing the
Great American Meal. The company, which was once the favorite destination
of fast food lovers around the world, had been receiving low ratings on quality
and customer satisfaction since the early 1990s. However, under the leadership
of Jim Cantalupo, who was made CEO in early 2003, and Charlie Bell, the
President, McDonalds managed a relatively quick turnaround. Under theturnaround plan, McDonalds introduced substantial system wide changes that
overhauled the companys products, operations and marketing. The new plan
eliminated the negative elements in the system, while retaining and building on
the positive aspects.
No Longer the Great American Meal:
Through the decades, McDonald had promoted itself as the provider of
the Great American Meal. However, by the1990s, it was clear that thecompany has lost its claim to that title. Changing customer eating habits,
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increased competition and complacence on the part of the company and its
franchises, were the main reasons for the difficulties experienced by it. The
1990s saw an increasing interest in healthy living and physical fitness in the US.
People realized that regular consumption of fast food could play havoc with
their health by increasing their intake of Cholesterol and fat, and lead to a spate
of problems related to obesity and heart disease. Instead of fast food, which
comprised mainly of burgers, fries and soda, people switched to sandwiches and
salads, which were perceived as healthier foods. Consequently, companys like
Subway and Panera Bread, which offered sandwiches and salads in a casual
dining atmosphere, began to take over the customer base of fast food chains like
McDonalds.
These restaurants created a new subcategory in the industry and were
called fast casual outlets. In an attempt to recover their lost customers,
McDonald Start including healthier items like salad and sand witches in their
menu. For instance, McDonald introduced the McLean Deluxe Burger in the
early 1990s a 91% fat free patty, as a substitute for the Big Mac. However,
people hated its taste and McDonalds was forced to phase out the product a
couple of years after it was launched. Mc Donald also attempted to shift to low
fat frying oil in2002, but it was not able to give the trademark McDonalds taste,
and customers rejected the change.
Considering people's perception of fast food, it did not take long for the
industry to become the target of lawsuits filed by people who blamed the fast
food industry for their obesity. Activists published statistics showing that
McDonalds food had a high proportion of unhealthy fats, and reports also made
public the unhygienic careless way in which the food was being prepared.
Although none of the lawsuits filed against the company were successful,
analysts said that they generated a large amount of bad publicity. Despite the
protests and the accusations against the industry, analysts noted that customer
behavior in the fast food industry was paradoxical. People realized that junk
food was unhealthy and criticized companies for serving it, but when healthier
alternatives were made available, customers did not like them.
Apart from increasing public aversion to fast food, increased competition
also harmed McDonalds adversely. McDonalds had to face competit ion not
only from fast food chains like Burger King, Wendys and Pizza Hut, but also
from chains like Subway, Cosi and Panera Bread, which dealt in salads and
sandwiches. McDonald focused on building more stores, consumers were
demanding better food and more variety. Acc. To a survey conducted by
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Business week, consumers who ate fast food at least once a month rated both
Wendys and burger king better than McDonalds, as far as the quality of food
was concerned. McDonalds continuous expansion and failing franchisee
relations had an adverse effect on service and quality, which had been its USP
for many years. In 1990s, McDonalds stopped grading its franchisees by
mystery shoppers on parameters such as cleanliness, speed and service. In 1992
McDonalds introduced made for you kitchens to counter custom-made food
systems at Wendys and Burger King, but it extended the time required to serve
instead of speeding it up. Research also found that slow service and rude
professional employees were major sources of customers complaints. Acc. to a
survey, Wendys took 127 seconds to serve its customers while V took 163
seconds. Besides, McDonalds products had become stale and the company had
failed to come out with successful product launches since the early 1980s.
Although it attempted in the 1990s, to introduce 40 food items but most of them
failed to appeal to customers.
The Golden Arches Rise Again:
After McDonalds announced its first quarterly loss in38 years in 2003,
the board realized that big changes were required in the companys strategy and
direction. The board ousted Greenberg and installed Cantalupo as the CEO.
Soon after taking over, Cantalupo prepared the plan to win, which outlined
McDonalds strategy for the next three years. The plan stream lined the
companys operations and aimed to create a McDonalds that was more geared
to the new conditions in the fast food industry. The cornerstone of the
turnaround plan was the improvement of comparable sales, which could be
increased by improving the quality of service and operations in existing
restaurants, instead of funneling capital spending into new openings. Towards
this end, the company made several improvements designed to help the
restaurants function more efficiently. For instant, it reduced the number of
shelf-keeping units by 84, which reduced inventory, and designed new menu
boards that would include more pictures to make ordering easy. It also
introduced new automated drink dispensers, French fry bins, and a hydraulic
vegetable-oil-delivery system that would save time in the kitchen.
The menu was simplified and included a greater number of healthy
options, while doing away with slow moving products. For instance, instead of
selling separately a Double Cheeseburger meal, a Quarter Pounder meals, and a
Two-Cheeseburger meal, McDonalds planned to sell only the Quarter Pounder.
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The number of items in a Value Meal was also pared down from 13 to 8. In a
move to offer a healthier menu McDonalds Increased it's focused on salads and
sandwiches. In 2003, it introduced entre-sized salads, along with items like
McGriddles breakfast sandwiches, white-meat chicken nuggets and chicken
nuggets and chicken strips, which were reasonably successful. It also began
offering fruit with Happy meals.
In early 2004, McDonalds began phasing out its super size portions of
fries and soft drinks. It also launched the Adult Happy meal, which was a meal
designed for grown-ups that included a salad, bottled water, a pedometer and a
booklet of walking tips. Soon after introducing this concept, comparable store
sales increased 10.5%. Some McDonalds outlets were also diversifying into
coffee. Some Australian franchisees were testing a concept called McCafe in
over 500 outlets in Australia. McDonalds was also on a drive to improve
quality of service and maintenance standards in its restaurants. In 2003,
Cantalupo reinstalled the grading system by mystery shoppers to identify,
improve, or eliminate underperforming restaurants and to check whether the
franchisees were maintaining the expected high standards of hygiene and
cleanliness. Under the turnaround plan, the company decided that each
restaurant would be visited by mystery shoppers- anonymous visitors paid to
observe restaurants- at least 16 times a year. In 2004, the company introduced
the travel path which required that a staff member, in a restaurant, had to walk
around at regular intervals during the day to ensure that everything was in order.
Surveys conducted by the company in the early 2000s revealed that Ronald
McDonalds was one of the best recognized icons in the US, ranking just behind
Santa Claus. McDonalds began to showing signs of turning around by early
2004. Number of satisfied customers increased by more than 2 million over
2003-2004.