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Interview Specific Sales and Marketing Concepts
Interview Specific Salesand Marketing ConceptsSkills Development Council, Marketing Club
2012
(This document may need further refining, few corrections,
and improvements.
Hence, request you to discuss with the clubs council members
in case of any disagreement or if you would like to add more
material)
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Interview Specific Sales and Marketing Concepts
CONTENTS
1. MUST KNOW..............................................................................................................................................................1
2. PRODUCT DEVELOPMENT PROCESS ..........................................................................................................................1
3. JOB OF A BRAND MANAGER/PRODUCT MANAGER ..................................................................................................1
4. Consumer Understanding..........................................................................................................................................2
5. Conjoint Analysis .......................................................................................................................................................2
5.1 Steps in Conjoint..................................................................................................................................................2
5.2 Mathematical Representation Example ..............................................................................................................3
5.3 Summary OF Steps in Conjoint Analysis Application ............ ........... ......... ........... ........... .......... ........... ........... .....4
5.4 Applying the choice Model to calculate share of mind .......................................................................................4
5.5 Choice Modeling: How to find total share of mind for a product ........... ........... .......... .......... ............ .......... .......5
5.6 Pros and Cons of Conjoint Analysis......................................................................................................................5
6. Segmentation - only need based!..............................................................................................................................5
6.1 segmentation model-1: Cluster Analysis .............................................................................................................5
6.2 segmentation model-2: Conjoint Analysis...........................................................................................................6
7. Segmentation Discriminators ....................................................................................................................................6
8. Positioning .................................................................................................................................................................7
8.1 MDS Analysis and Semantic Analysis ...................................................................................................................7
9. Competition Analysis Models ....................................................................................................................................8
9.1 Key Success Factor Model....................................................................................................................................8
9.2 Strategic Grouping...............................................................................................................................................8
9.3 Strategic Value-Chain...........................................................................................................................................9
9.4 PARTS...................................................................................................................................................................9
10. Market Analysis .....................................................................................................................................................10
11. Environment ..........................................................................................................................................................10
12. GO TO-Market Strategy .......................................................................................................................................10
13. Product differentiation ..........................................................................................................................................10
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14. Proposition ............................................................................................................................................................10
15. Brand .....................................................................................................................................................................11
16. Pricing ....................................................................................................................................................................11
17. Placement/distribution strategy............................................................................................................................11
17.1 Selecting Channels ...........................................................................................................................................11
17.2 Managing Channels .........................................................................................................................................13
17.3 Process of selecting distribution channels:......................................................................................................13
17.4 Store Selection Process....................................................................................................................................14
18. Critical elements to measure for sales manager ...................................................................................................14
19. Promotions Integrated Marketing Communications..........................................................................................15
19.1 How to calculate Share of Voice (% Ad-spend or GRP):...................................................................................15
20. Sizing the sales force..............................................................................................................................................16
21. Resource Allocation ...............................................................................................................................................19
21.1 Market Share Identity Model for allocating resources:...................................................................................20
22. Customer Lifetime Value .......................................................................................................................................23
23. Forecasting Product Category demand (Bass Model) ...........................................................................................24
24. Estimating Maximum Willingness to pay...............................................................................................................25
25. Perceived Service Quality ......................................................................................................................................26
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1. MUST KNOW
Top 2 ads
In any advertisement:
o The evaluation steps are
Target Audience - Users or Decision makers, Demographic/Behavioral/Psychographic
Consumer Insights Brand Imperatives
Communication Objectives
Proposition or Selling Idea/Main Point/RTB
Creative Direction
o Positioning Functional, Symbolic, or Experiential
o Does it create Goose bumps
Top 2 brands
Top 2 logos
Top 2 taglines
Top 2 print ads
Top 2 products
2. PRODUCT DEVELOPMENT PROCESS
Two Funnel Model
Concept Generation and screening
o Analyze companys strength and related products that can be launched. Take those concepts. Need
gaps through primary and secondary research.
o Concept screening through confirmatory research.
Product Generation and Screening
o Internal Checks
o Take the selected products to external consumers for primary research
o Screen the product
Volume estimation
o Test Market
o Simulated Test Market
BASES
Input of Efficacy
o Product research Results (Product)
o Ad test results (Promotion)
Input of effort
o Relative price (Price)
o Distribution intensity (Place)
o Financial Bottom-line
3. JOB OF A BRAND MANAGER/PRODUCT MANAGER
BM is a mini-general manager responsible for the P&L of the brand
His job is to form a plan of action to allocate resources for maximizing value-cost leverage and gain
competitive advantage
Works across products and categories
o Common Trade-offs
Make vs outsourcing
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Intervi
Promotion vs a
New customer
Single product
Value-Cost Leveraging
Increase value to customer and
Focus on this graph: You have
4. CONSUMER UNDERSTANDI
Has three parts Preferences, Perc
Preferences are generally
Preferences lead to percep
Discuss above as much as you can
5. CONJOINT ANALYSIS
Tool used for estimating mind shar
5.1 STEPS IN CONJOINT
a. Attribute list forma
b. Data collection
c. Utility Calculation
d. Market Simulation
Conjoint (trade-off) analysis has
Research. It is used to measure th
Cost to
service
Value t
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dvertising
vs existing
vs product line
decrease your cost. Give cost advantage to consu
o increase the gap. Thats the main motive.
G
eptions, and Behavior.
ore heterogeneous than perceptions
ions about different products
ith relevant examples.
through choice modeling (first choice/share of pr
tion
ecome one of the most widely-used quantitati
e perceived values of specific product features , t
Complexity
Customer
er in few cases.
ference).
e methods in Marketing
learn how demand for a
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particular product or service is related to price, and to forecast what the likely acceptance of a product would be
if brought to market.
In contrast to simpler survey research methods that directly ask respondents what they prefer or the important
of each attribute, these preferences are derived from these relatively realistic tradeoff situations.
Each profile includes multiple conjoined product features (hence, conjoint analysis), such as:
There are different ways to show product profiles.
Respondents usually complete between 12 to 30 conjoint questions. The questions are designed carefully, using
experimental design principles of independence and balance of the features . By independently varying the
features that are shown to the respondents and observing the responses to the product profiles, the analyst can
statistically deduce what product features are most desired and which attributes have the most impact on
choice.
The result is usually a full set of preference scores (often called part-worth utilities) for each attribute leveincluded in the study. (This is obtained by running a regression). Summing up the part-worth utilities gives the
utility of the particular profile.
5.2 MATHEMATICAL REPRESENTATION EXAMPLE
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5.3 SUMMARY OF STEPS IN CONJOINT ANALYSIS APPLICATION
5.4 APPLYING THE CHOICE MODEL TO CALCULATE SHARE OF MIND
Converting utility scores for product alternatives to choice probabilities.
1. Maximum utility rule (deterministic): predict that an individual will always buy the option with the
highest fitted utility used in high involvement products
2. Logit Model (Probabilistic) predict that an individual will most likely buy the option with the highest
fitted utility, but that there is some uncertainty - used for low involvement products
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Approach:
Cluster analysis seeks to group objects such that segments are created that are as homogenous as possible
given the choices by the researcher
Cluster analysis works on the principle of maximizing the between-cluster variance while minimizing the
within cluster variance
Example: 3 clusters on 2 dimensions
6.2 SEGMENTATION MODEL-2: CONJOINT ANALYSIS
Also used for product planning, pricing decisions, and segmentation Its a model of consumer preferences
Works on the principle that Total Worth = Sum of part-worths = Utility
Now, from the data, attribute importance for different segments can be measured using conjoint analysis.
7. SEGMENTATION DISCRIMINATORS
1. Observables (model free)
Demographic Age, income, Sex, education, marital status
Geographic
2. Unobservable (need marketing model cluster analysis & conjoint for identification)
Values and Lifestyle (VALS)
Psychographic: SEC, Personality, Lifestyle
Behavioral: Occasional, Benefits, Loyalty Status, attitude towards product etc.
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9. COMPETITION ANALYSIS MODELS
Three models can be used:
1. Key Success Factors
2. Strategic Grouping3. Strategic Value Chain
4. PARTS
9.1 KEY SUCCESS FACTOR MODEL
Put name of companies along row and success factors of product (can be an output of factor analysis) along
column.
Rate each company on these success factors from 1 to 10, and find weighted average
KSFs Maruti Hyundai Honda Toyota
Pick-up
Mileage
Noise
AVERAGE
9.2 STRATEGIC GROUPING
Cluster of companies in an industry with similar competitive approach or strategic position
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Strategic Maps of the United States Airline Industry
Braniff
TWA
Eastern
United
American
Delta
WesternRepublicOzark
USAir Piedmont
FrontierAirCal
PSA
South-
west
Texas Intl
United
South-
west
America
West
InternationalInternational
NationalNational
Regional Regional
No Frills No FrillsFull Service Full Service
Quality of Service Quality of Service
GeographicScope
The Late 1970s The Early 1990s
Reno
Air
Continental
Pan
Am
North
west
Laker
WorldAmerican
TWA
Delta
USAir
NorthwestConti-
nental
Kiwi
Others
Talk about profits, intensity of competition, marketing channels etc. for above clusters
9.3 STRATEGIC VALUE-CHAIN
Compare companies on elements of primary value chain
9 .4 PARTS
Players: customers, suppliers, substitutors and complementors
Added values
o what each player brings to the game
o make your firm a more valuable player
Rules: could arise from law, custom, practicality, or contracts
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Tactics: moves used to shape the way players perceive the game and hence how they play -
Perception is Reality
Scope: describes the boundaries of the game
10. MARKET ANALYSIS
Market Potential Do market sizing and growth Porters 5 force analysis
11. ENVIRONMENT
PEST (Political, Economical, Social, and Technological factors) model
12. GO TO-MARKET STRATEGY
External Internal
Will Give
13. PRODUCT DIFFERENTIATION
A successful differentiation should: Generate customer value
Provide perceived value
Difficult to copy
How?
Brain-storm and find out three product/packaging/proposition parameters MOST IMPORTANT for
consumer
Brain storm and put across ways in which differentiation can be done in each parameter in most
profitable way
14. PROPOSITION Selling story of the brand to the consumer
Sell 4S to consumer
o Survival
o Security
o Sex
o Status
Insight
o Why behind the what?
SWOT Analysis
Business Value Chain
Analysis
Consumers STP
Competition
Market
Environment
4 Ps (Do some
differentiation
here)
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o The reason behind the observations. E.g.
Hutch Pug dog Dog is most faithful animal
Axe Every man wants to have an edge in mating game
15. B RAND
Brand key model Root Strength
Competitive Environment
Target
Insight
Benefit
Values, Beliefs, & Personality
RTB (Difficult)
Discriminator
Essence
16. PRICING
Three types Cost based, Competition based, and Value based
In case of strategic pricing, all three are taken into consideration.
Choice Share is calculated for a set of product attributes at different prices (using conjoint data and part -
worths)
Graph of Price vs Choice Share is made
Choose price to maximize profit potential as = (Price-Retail Margin-Cost) X Choice Share
17. PLACEMENT/DISTRIBUTION STRATEGY
All about Selecting and Managing channel members
17.1 SELECTING CHANNELS
Depends on Focus on pull strategy - Funds
Channel objective will give channel design 0-level vs 2-level
Service level requirement of consumer i.e., lot size, waiting and delivery time etc. to be decided
Steps:
1. Importance of channels Push vs Pull Depends on your dependence on pull
In managing channels, first decision that company has to take is how much they have to allocate resources for
Push vs Pull marketing.
Push Strategy
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Sales Force and Trade Promotions to induce intermediaries to carry, promote, and sell the produc
to end users
Appropriate when there is:
low brand loyalty in a category
brand choice is made in the store
impulse purchases in category product benefits are well understood
Pull Strategy
Manufacturer uses advertising, promotion, and other form of communications to persuade
consumers to demand the product from intermediaries, thus inducing intermediaries to keep it
Appropriate when there is:
High brand loyalty
High involvement in category
Consumers are able to perceive differences between brands
Consumers choose brand before they go to the store
Marketers have to employ both push and pull marketing in most cases.
Hybrid channels: Different channels for different consumer segment
2. Role of marketing channels Depends on objectives of channel
Channel levels based on the role of channels such as gathering information about customers, competitors,
communications etc.
0- level manufacturer to consumer
1-level manufacturer-retailer-consumer
2-level manufacturer-wholesaler-retailer-consumer
3. Channel Design Decisions Depends on consumer requirement
Customer desired output levels to be achieved
Service output levels that consumers want
Lot size
Waiting and delivery time
Spatial convenience
Product Variety level of assortment
Service Breakup
Evaluating the major alternatives
o Economic Criteria: Each channel will produce different level of sales and costs as shown in figure
below.
o Align customers and channels to generate maximum demand at lowest cost
E.g a Delhi based furniture seller wants to sell furniture in southern cities Bangalore
Hyderabd, and Cheennai Control and adaptive criteria
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17.2 MANAGING CHANNELS
Marketing Flows in Channels
17.3 PROCESS OF SELECTING DISTRIBUTION CHANNELS:
Level of channels as per the industry
o FMCG: Producer, Wholesaler, Retailer, Consumer
Purpose of channels
o Sales Volumes
o Growth
o Brand Equity
o Customer feedback
Marketing Flows Model Rank channel partners to deliver values
o From Producer to Consumer
PPO Physical Possession, Promotion, Ownership
o From Consumer to Producer
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NFR Negotiation, Financing, , Risking
OP Ordering, Payment
Additionally, use common market understanding as follows
o For our target segment which is identified by clustering, which channels do they most visit
o Through which channels are the category products most sold
o Select top Grocery Stores for category sale wise
o Also select those in which our brand is strong
o Sum the two to find total no of stores
o Decide ideal pack size
17.4 STORE SELECTION PROCESS
Elements to consider while taking decision between different store types (e.g. Grocery vs MT):
Market Dynamics
Target Shopper
Key Understanding
Solutions
Evidence Values and Personality
Differentiator
Store in a purchase
18. CRITICAL ELEMENTS TO MEASURE FOR SALES MANAGER
Sales manager handles three things:
People
Stock
Money
Critical Elements in Retailing
X
Gross Margin
-------------------
Net Sales
Net Sales
-----------------
Employees
Selling Feet
--------------------Employees
Net Sales
------------------
Selling Feet
Inventory
-------------------
Selling Feet
Net Sales
------------------
Inventory
Gross Margin
----------------------------
Employees
Gross Margin
--------------------------
Selling Feet
Gross Margin
--------------------
Inventory
GMROL
GMROS
GMROI
=
X
X
X
=
=
=
=X
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Bullwhip effect
19. PROMOTI ON S I NTEGRAT
Process of selecting IMC:
Through segmentation, w
known
IMC is allocating resourc
maximum awareness (shar
Channels are TV, Radio, Pr
Sony inside TV as channel
As brand manager, I kno
watch? What do they wat
I know the cost per slot for
I also know the reach and
category GRPs, equivalent
I can now find out cost per
Also find out how effectiv
understanding
Plot effectiveness vs cost a
19.1 HOW TO CALCULATE SHA
Share of Voice: % share of total advertisin
SOV = Dove Soap GRPs/Ski
Share of Spend:
Share of Spend (SOS): % sh
brand.
Share of Audience:
% share of audience held b
Also referred as:
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ED MARKETING COMMUNICATIONS
hich is done by cluster analysis, habits and pref
es, budget, at different channels through selec
e of mind)
int, OOH, and Digital, and vehicle inside each chan
that what the habits of watching TV of my cons
h?
different vehicles
can multiply it by frequency to calculate Target G
to share of voice or awareness
GRP to find out the most and least effective chann
is each of the medium for target segment for con
nd allocate budget accordingly
E OF VOICE (% AD-SPEND OR GRP):
weight in a product category held by a particular b
Cleansing Category GRPs
re of total advertising spend in a product category
a particular program, station or network during a
rences of consumers are
ted vehicles for creating
el could be Start Plus and
mers are. Where do they
Ps for brand as % of tota
ls
version based on category
rand
held by a particular
given time
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o Viewership Share (TV Station Share)
o Listenership Share ( For listeners of radio station )
o Readership Share ( for readers of a Print title)
Why?
o Helps compare share of viewership* between stations within a given market, given time
period, given daypart, given TG
o A trend analysis across time can help know performance of one station vs. others
o Audience share can be with respect to all channels or to all channels within a given genre
o For example: Share of Star Movies in Movie Channel
20. SIZING THE SALES FORCE
Four-Step Market-Based Process for sizing the sales force:
1. Customer Understanding: a) Identification b) Needs c) Buying processes
2. Customer Segmentation.
3. Segment Coverage& Assessment of segment value for the firm.
4. Sales Force Sizing.
Approaches to Sales Force Sizing:
1. Financial approaches: (frequently used)
a. Percentage of sales
b. Affordability
2. Workload buildup approaches:
a. Coverage Strategy Definition: Develop the most appropriate workload for each market segment; and
b. Sales Force Sizing: Add up the effort required to cover each of the market segments
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3. Sales response approach:
How to measure response functions:
Use market data (empirical): Obtained from syndicated sources or collected in-house
Use survey data (experimental): Like a conjoint survey
Use discussions (judgments):
o example: use a structured discussion to elicit or collect managements intuitions
quantitatively
o reiterate to obtain consensus estimate
Adbudg method of judgement
Used to measure market response to advertising& sales force Uses judgments-structured survey among managers to harvest the collective wisdom about market
responsiveness
Uses soft data to quantify market responses i.e puts equation to intuition
Upside
very useful in scenarios with no data quickbuilds consensusencourages systematic thinking;
Implementation:
What do you expect the sales level (relative to current levels) to be in response to
no sales force
50% of current sales force
100% of current sales force
150% of current sales force
saturation level sales force
Answering these questions is usually done by forcing a consensus estimate from a team of managers al
members of the team first answer the questions privately results are revealed & discussed adjustments are
made & discussed until a single set of answers to the 5 questions remains.
After the calculations are made, Sales Response is calculated as:
Sales response = min + (max min) SFc/ (d + SF
C); d = Competition Parameter, c = shape parameter.
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Remember, sales force is only one way of reaching consumers:
21. RESOURCE ALLOCATION
Resources among different brands in a category, different categories, and different products need to be
allocated.
Allocating Resources across marketing inputs
Share of Mind Product and Price Conjoint analysis->Total worth=sum of part worths -> Logit Mode
to find preferences among products->Mind Share Calculation
Share of Voice Promotion
Share of Distribution Place
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21.1 MARKET SHARE IDENTITY MODEL FOR ALLOCATING RESOURCES:
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From Elasticity to Allocation:
Like US/(US+THEM)
Allocating resources across multiple products within an SBU
Without interdependent demand:
With interdependent demand :
Examples:
o Gillette Sensor and Gillette Sensor Prestige
o Detergents (Tide and Cheers) by P&G
o American Express Green, Gold and Platinum cards
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Empirical Generalizations on Elasticities
Allocating Resources across Segments
BCG Matrix Approach:
Classify Product/Business Groups on two dimensions:
market/industry attractiveness [how good is the market]
company/business strength [how strong am I]
Business strength is measured as Relative Market Share The larger I am, the greater is the likelihood that I can generate cash
Industry Attractiveness is measured as % age growth rate of the market
Growing industries are more attractive
Growing industries require cash
Healthy Portfolio:
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Sick Portfolio:
Strengths
easy to use
diverse applications
o Resource allocation
o Effect of mergers on strategy
Weaknesses Questions about share profitability link
Assumptions about finite cash flow
Subject to Moral Hazard
Often misapplied as they appear to be easy to use
Assumes independence across SBUs.
22. CUSTOMER LIFETIME VALUE
Creation and sustenance of long-term relationships with the customers has become focus of companies. In such
an environment, marketing serves the purpose of maximizing customer lifetime value (CLV) and custome
equity, which is the sum of the lifetime values of the companys customers.
Why CLV?
1. Traditional marketing metrics such as brand awareness, attitudes, or even sales and share are not
enough to show a return on marketing investment. In fact, marketing actions that improve sales or
share may actually harm the long-run profitability of a brand.
2. Financial metric such as stock price and aggregate profit do not solve problem wither. Although these
measures are useful, they have limited diagnostic capability. Recent studies have shown that not all
customers are profitable. Therefore, we need to target-in and target-out (fire) customers based on CLV
calculations.
CLV for a customer can be measured using following:
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23. FORECASTING PRODUCT CATEGORY DEMAND (BASS MODEL)
Introduction:
The Bass model as it has come to be known is undoubtedly one of the most widely used, frequently
referenced and thoroughly researched marketing models in the world. First published in 1969, the model has
withstood the test of time and technicians who have added numerous bells and whistles designed to extend it,
expand it, add more variables and more complexity. Yet the basic three parameter model continues to deliveaccurate useful forecasts and insights for executive decision about innovations that are opening new and
emerging markets.
What is so unique about the model? It is amazingly versatile. It can represent distinctly different patterns of
adoption from slow growth sleepers to instant hits blockbuster for distinctly different products from state of
the art consumer electronics to such common tools as the toaster and the hair dryer. And, distinctly different
fields from medical breakthroughs like artificial insemination and rural innovations as bale hay.
It is a predictive model that allows us to forecast future adoptions, even when no data exists for our innovation.
We can use the parameters from the data base of products that had similar characteristics when they were
adopted.
The Model:
The model is built on two basic assumptions, that potential adopters of an innovation are influenced by two
types of communication channels. Broadcast media and interpersonal channels. Individuals adopting a new
product because of what they see or hear from mass media advertising messages occur continually, but peak
early in the product life cycle. And individual adopting based on what they see or hear from prior adopters.
If M is the upper bound on sales, the Demand from Innovators in time period t is:
(2.1)
Where, p is the coeff of innovation and At is the number of adopters by time t
The Demand from Adopters is:
(2.2)
Thus the total demand is,
St = D1 + D2 (2.3) Where, At = St-1 + St-2 (2.4)
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24. ESTIMATING MAXIMUM WILLINGNESS TO PAY
Steps:
1. Calculate the Exchange Rate
2. Using the Regression Data, find the Sum of all Utility From Non-Price Attributes
3. Multiply the Exchange Rate with the sum calculated in step 2 to obtain the Maximum WTP.
Example:
4. Sum of Non Price Attributes can be calculated as below:
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5. We get the Maximum WTP by multiplying Exchange Rate in Column 1 with the sum in Column 8.
25. PERCEIVED SERVICE QUALITY
Gap between expected and perceived service
GAPS Model
Service Quality GAPS Model
GAP 1
GAP 4
GAP 3
GAP 2
CUSTOMER
Personal Needs Past Experience
Expected Service
Perceived Service
GAP 5
External
Communications
to Customers
Service Delivery
(incl. pre-& post-contacts)
Translation of Perceptions
into Service Quality
Specifications
Management Perceptions
of Customer Expectations
MARKETER
Word of Mouth
Communications