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SMSMPart 1
FOCUS ON THE CUSTOMER
2
SM
Perceived
Service
Expected
ServiceCUSTOMER
COMPANY
Customer
Gap
GAP 1
GAP 2
Gaps Model of Service Quality
GAP 3
External Communications
to CustomersGAP 4Service Delivery
Customer-Driven Service Designs and Standards
Company Perceptions of Consumer Expectations
Part 1 Opener
3
SMGaps Model of Service
Quality
• Customer Gap:
• difference between expectations and perceptions
• Provider Gap 1:
• not knowing what customers expect
• Provider Gap 2:
• not having the right service designs and standards
• Provider Gap 3:
• not delivering to service standards
• Provider Gap 4:
• not matching performance to promisesPart 1 Opener
4
SM The Customer Gap
ExpectedService
PerceivedService
GAP
Part 1 Opener
5
SMSMChapter 2
CONSUMER BEHAVIOR
IN SERVICES
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SMObjectives for Chapter 2:
Consumer Behavior in Services
• Overview the generic differences in consumer behavior
between services and goods
• Introduce the aspects of consumer behavior that a
marketer must understand in five categories of consumer
behavior:
• Information search
• Evaluation of service alternatives
• Service purchase and consumption
• Postpurchase evaluation
• Role of culture
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SM Consumer Evaluation
Processes for Services
• Search Qualities
– attributes a consumer can determine prior to
purchase of a product
• Experience Qualities
– attributes a consumer can determine after
purchase (or during consumption) of a product
• Credence Qualities
– characteristics that may be impossible to evaluate
even after purchase and consumption
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SMFigure 2-1
Continuum of Evaluation for Different Types of Products
Difficult to evaluateEasy to evaluate
High in search
qualities
High in experience
qualities
High in credence
qualities
Most
Goods
Most
Services
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SM
Figure 2-2
Categories in Consumer Decision-Making and Evaluation of
Services
Information
SearchEvaluation of
Alternatives
Purchase and Consumption
Post-Purchase Evaluation
Use of personal sources
Perceived risk Evoked set
Emotion and mood
Service provision as drama
Service roles and scripts
Compatibility of customers
Attribution of dissatisfaction
Innovation diffusion
Brand loyalty
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SM
Figure 2-3
Categories in Consumer Decision-
Making and Evaluation of Services
Information
SearchEvaluation of
Alternatives
Purchase and Consumption
Post-Purchase Evaluation
Use of personal sources
Perceived risk
Evoked set
Emotion and mood
Service provision as drama
Service roles and scripts
Compatibility of customers
Attribution of dissatisfaction
Innovation diffusion
Brand loyalty
Culture Values and attitudes
Manners and customs
Material culture Aesthetics
Educational and social institutions
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SM Information search
• In buying services consumers rely more on personal sources. WHY? Refer p32
• Personal influence becomes pivotal as product complexity increases
• Word of mouth important in delivery of services
• With service most evaluation follows purchase
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SM Perceived Risk
• More risk would appear to be involved with purchase of services (no guarantees)
• Many services so specialised and difficult to evaluate (How do you know whether the plumber has done a good job?)
• Therefore a firm needs to develop strategies to reduce this risk, e.g, training of employees, standardisation of offerings
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SM Evoked Set
• The evoked set of alternatives likely to be smaller with services than goods
• If you would go to a shopping centre you may only find one dry cleaner or “single brand”
• It is also difficult to obtain adequate prepurchase information about service
• The Internet may widen this potential
• Consumer may choose to do it themselves, e.g. garden services
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SM Emotion and Mood
• Emotion and mood are feeling states that
influence people’s perception and
evaluation of their experiences
• Moods are transient
• Emotions more intense, stable and
pervasive
• May have a negative or positive influence
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SMService Provision as
Drama
• Need to maintain a desirable impression
• Service “actors” need to perform certain
routines
• Physical setting important, smell, music,
use of space, temperature, cleanliness, etc.
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SMGlobal Feature:
Differences in the Service
Experience in the U.S. and Japan
Authenticity
Caring
Control Courtesy
Formality
Friendliness
Personalization
Promptness
Contact: +923006641921 Usman Waheed
17
SMSMChapter 3
CUSTOMER
EXPECTATIONS OF
SERVICES
Contact: +923006641921 Usman Waheed
18
SMObjectives for Chapter 3:Customer Expectations of
Service
• Recognize that customers hold different types of expectations for service performance
• Discuss controllable and uncontrollable sources of customer expectations
• Distinguish between customers’ global expectations of their relationships and their expectations of the service encounter
• Acknowledge that expectations are similar for many different types of customers
• Delineate the most important current issues surrounding customer expectations
Contact: +923006641921 Usman Waheed
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SM DEFINITIONS
• Customers have different expectations re services – or expected service
• Desired service – customer hopes to receive
• Adequate service – the level of service the customer may accept
• DO YOUR EXPECTATIONS DIFFER RE SPUR and CAPTAIN DOREGO?
Contact: +923006641921 Usman Waheed
20
SMFigure 3-1
Dual Customer Expectation Levels
(Two levels of expectations)
Adequate Service
Desired Service
Zone ofTolerance
Contact: +923006641921 Usman Waheed
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SMFigure 3-2
The Zone of Tolerance
Adequate Service
Desired Service
Zone ofTolerance
Contact: +923006641921 Usman Waheed
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SM
Figure 3-3
Zones of Tolerance VARY for
Different Service Dimensions
Most Important Factors Least Important Factors
Level of
Expectation
Source: Berry, Parasuraman, and Zeithaml (1993)
Adequate Service
Desired Service
Zone ofTolerance
DesiredService
AdequateService
Zone
of
Tolerance
Desired Service
Adequate Service
Contact: +923006641921 Usman Waheed
23
SM
Figure 3-4
Zones of Tolerance VARY for
First-Time and Recovery Service
First-Time Service
Outcome
Process
Outcome
Process
Recovery Service
ExpectationsLOW HIGH
Source: Parasuraman, Berry and Zeithaml (1991)
Contact: +923006641921 Usman Waheed
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SM
Figure 3-5
Factors that Influence
Desired Service
DesiredService
AdequateService
Zone
of
Tolerance
Enduring Service
Intensifiers
Personal Needs
Contact: +923006641921 Usman Waheed
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SM
• Personal needs include physical, social,
psychological categories
• Enduring service intensifiers are individual, stable
factors that lead to heightened sensitivity to
service
This can further divided into Derived Service
Expectations and Personal service Philosophies
Contact: +923006641921 Usman Waheed
26
SM
Figure 3-6
Factors that Influence
Adequate Service
DesiredService
AdequateService
Zone
of
ToleranceSelf-Perceived
Service Role
Situational
Factors
Perceived Service
Alternatives
Transitory Service
Intensifiers
Contact: +923006641921 Usman Waheed
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SM
• Transitory service intensifiers – temporary –
a computer breakdown will be less tolerated
at financial year-ends
• Perceived service alternatives
• Perceived service role of customer
• Situational factors
Contact: +923006641921 Usman Waheed
28
SM
Figure 3-7
Factors that Influence
Desired and Predicted Service
DesiredService
AdequateService
Zone
of
Tolerance
Predicted
Service
Explicit Service
Promises
Implicit Service
Promises
Word-of-Mouth
Past Experience
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SMSMChapter 4
CUSTOMER
PERCEPTIONS OF
SERVICE
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SM
Objectives for Chapter 4:
Customer Perceptions of
Service
• Provide you with definitions and
understanding of customer satisfaction and
service quality
• Show that service encounters or the
“moments of truth” are the building blocks of
customer perceptions
• Highlight strategies for managing customer
perceptions of service
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SM
Figure 4-1
Customer Perceptions of
Service Quality and
Customer Satisfaction
Service
Quality
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Product
Quality
PricePersonal
Factors
Customer
Satisfaction
Situational
Factors
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SMFactors Influencing
Customer Satisfaction
• Product/service quality
• Product/service attributes or features
• Consumer Emotions
• Attributions for product/service success or
failure
• Equity or fairness evaluations
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SMOutcomes of
Customer Satisfaction
• Increased customer retention
• Positive word-of-mouth communications
• Increased revenues
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SM
Figure 4-3
Relationship between Customer
Satisfaction and Loyalty in
Competitive Industries
0%
20%
40%
60%
80%
100%
Very
dissatisfied
Dissatisfied Neither
satisfied nor
dissatisfied
Satisfied Very
satisfied
Satisfaction measure
Lo
yalt
y (
rete
nti
on
)
Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.
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SM Service Quality
• The customer’s judgment of overall
excellence of the service provided in
relation to the quality that was expected.
• Process and outcome quality are both
important.
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SM The Five Dimensions of
Service Quality
Ability to perform the promised service dependably and accurately.
Knowledge and courtesy of employees and their ability to convey trust and confidence.
Physical facilities, equipment, and appearance of personnel.
Caring, individualized attention the firm provides its customers.
Willingness to help customers and provide prompt service.
Tangibles
Reliability
Responsiveness
Assurance
Empathy
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SM Exercise to
Identify Service Attributes
In groups of five, choose a services industry and spend 10 minutes
brainstorming specific requirements of customers in each of the five
service quality dimensions. Be certain the requirements reflect the
customer’s point of view.
Reliability:
Assurance:
Tangibles:
Empathy:
Responsiveness:
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SMSERVQUAL Attributes
Providing service as promised
Dependability in handling customers’ service problems
Performing services right the first time
Providing services at the promised time
Maintaining error-free records
Keeping customers informed as to when services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customers’ requests
RELIABILITY
RESPONSIVENESS
Employees who instill confidence in customers
Making customers feel safe in their transactions
Employees who are consistently courteous
Employees who have the knowledge to answer customer questions
ASSURANCE
Giving customers individual attention
Employees who deal with customers in a caring fashion
Having the customer’s best interest at heart
Employees who understand the needs of their customers
Convenient business hours
EMPATHY
Modern equipment
Visually appealing facilities
Employees who have a neat, professional appearance
Visually appealing materials associated with the service
TANGIBLES
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SM The Service Encounter
• is the “moment of truth”
• occurs any time the customer interacts with the firm
• can potentially be critical in determining customer satisfaction 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
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SM
Check-In
Request Wake-Up Call
Checkout
Bellboy Takes to Room
Restaurant Meal
Figure 4-4
A Service Encounter
Cascade for a Hotel Visit
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SM
Sales Call
Ordering Supplies
Billing
Delivery and Installation
Servicing
Figure 4-5
A Service Encounter Cascade for an Industrial
Purchase
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SMCritical 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
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SMSample Questions for Critical
Incidents Technique Study
• Think of a time when, as a customer, you had a
particularly satisfying (dissatisfying) interaction
with an employee 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
was satisfying (dissatisfying)?
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SM 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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SM Recovery
• Acknowledge
problem
• Explain causes
• Apologize
• Compensate/upgrade
• Lay out options
• Take responsibility
• Ignore customer
• Blame customer
• Leave customer to
fend for him/herself
• Downgrade
• Act as if nothing is
wrong
DO DON’T
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SM Adaptability
• Recognize the
seriousness of the need
• Acknowledge
• Anticipate
• Attempt to
accommodate
• Explain rules/policies
• Take responsibility
• Exert effort to
accommodate
• Promise, then fail to
follow through
• Ignore
• Show unwillingness to
try
• Embarrass the customer
• Laugh at the customer
• Avoid responsibility
DO DON’T
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SM Spontaneity
• Take time
• Be attentive
• Anticipate needs
• Listen
• Provide information
(even if not asked)
• Treat customers fairly
• Show empathy
• Acknowledge by name
• Exhibit impatience
• Ignore
• Yell/laugh/swear
• Steal from or cheat a
customer
• Discriminate
• Treat impersonally
DO DON’T
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SM Coping
• Listen
• Try to accommodate
• Explain
• Let go of the
customer
• Take customer’s
dissatisfaction
personally
• Let customer’s
dissatisfaction affect
others
DO DON’T
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SMFigure 4-6
Evidence of Service from the
Customer’s Point of View
People
ProcessPhysical
Evidence
Contact employees
Customer him/herself
Other customers Operational flow of
activities
Steps in process
Flexibility vs.
standard
Technology vs.
human Tangible
communication
Servicescape
Guarantees
Technology
Contact: +923006641921 Usman Waheed
50
SM
Figure 17-9
Sample Measurements for the
Balanced Scorecard
Adapted from Kaplan and Norton
Innovation andLearning Perspective
CustomerPerspective
Service Perceptions
Service Expectations
Perceived Value
Behavioral Intentions:
OperationalPerspective:
Right first time (% hits)
Right on time (% hits)
Responsiveness (% on
time)
Transaction time (hours,
days)
Throughput time
Reduction in waste
Process quality
Financial Measures
Price Premium
Volume Increases
Value of Customer
Referrals
Value of Cross Sales
Long-term Value of
Customer
% Loyalty% Intent to Switch# Customer
Referrals# Cross Sales# of Defections
Number of new products
Return on innovation
Employee skills
Time to market
Time spent talking to
customers
Contact: +923006641921 Usman Waheed
51
SM
Figure 17-10
Service Quality Spells Profits
ServiceQuality
CustomerRetention
Costs
PricePremium
Word ofMouth
Margins
Profits
Defensive Marketing
Volume ofPurchases
MarketShare
Reputation
Sales
PricePremium
Offensive Marketing
Contact: +923006641921 Usman Waheed
52
SM