group 2 alpha

7/28/2019 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.

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