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Chapter-8Service Quality Management
• What are services?The word service originally associated with the work performed by servants for their masters.
“ the action of serving, helping or benefiting; conduct tending to the welfare or advantage of another”
Services are acts, deeds, performance or efforts.The aim of service is to provide solution to the customers problem.
SRM/M1/SS
Services is an activity or series of activities take place by interaction between customer and service employees
It’s an economic activity which is consumed at a time it is produced and provide added value in forms of Convenience, amusement, timeliness , comfort or health
SRM/M1/SS
Services Defined…
“Activities, Benefits or Satisfactions which are offered for sale
or provided in connection with the sale of goods”
American Marketing Association
SRM/M1/SS
Services Defined…
“Separately identifiable, intangible activities which provide want satisfaction
when marketed to consumers and/or industrial users and which are not necessarily tied to the sale of a
product or another service”
William J. Stanton
SRM/M1/SS
Services Defined…
“Any activity or benefit that one party can offer to another that is essentially intangible and does not
result in the ownership of anything.Its production may or may not be tied to a physical
product”
Philip Kotler and Bloom
SRM/M1/SS
Goods Vs. Services• Goods are tangible
• Goods are homogeneous
• Goods are produced in the factory
• Production, distribution and consumption are separate and independent functions in goods
• Services are intangible
• Services are heterogeneous
• Services are produced in buyer-seller interactions
• Production, distribution and consumption take place simultaneously in the case of services
Why Services Marketing ???
SRM/M1/SS
Goods Vs. Services
• Consumers do not generally participate in the production of goods
• Goods can be stored
• In sale of goods, transfer of ownership takes place
• Consumers are co-producers in services
• Services can not be stored
• In the sale of services, transfer of ownership will not take place
SRM/M1/SS
Characteristics of Services…
• Intangibility• Inseparability• Variability• Perishability• Customer participation• No ownership
SRM/M1/SS
Perishability…
• Challenges :- Storage of service is not
possible- Sales volume
continuously in relation to the capacity
- Time pressure in sales
• Strategic Options :- Demand management- Capacity management- Tactical approaches- Continuous study on
demand patterns and competitive parameters
SRM/M1/SS
Customer Participation…
• Challenges :- Customers are not
controllable- Production quality also
depends upon customer’s knowledge and ability to participate
- Customers are evaluating at every stage of service production
• Strategic Options:- Effective external marketing- Customer education and
training- Effective interactive
marketing- Management of
movements of truth- Effective internal marketing
SRM/M1/SS
No ownership…
• Challenges:- Nothing remains after
consumption- Very less time to the
consumer to evaluate the product
- High consumer dissonance
• Strategic Options:- Making communication
tangible- Customer relationship
marketing- Managing high level of
company image
SRM/M1/SS
Classifications of Services in Economy
Value Added ServicesFinancing, Leasing, Insurance
Infrastructure serviceCommunications, Transportation, Utilities, BankingManufacturing Services inside companyFinance, Accounting, Legal , R&D and design
Distribution serviceWholesaling, Retailing, Repairing
SRM/M1/SS
Cont…..
Personal ServiceHealth care, Restaurants, Hotels
Business Service supporting Manufacturing Consulting, Auditing, Advertising, Waste Disposal
Governments ServiceMilitary, Education, Judicial, Police and fire protection
SRM/M1/SS
Service Classification :Service process Matrix
SRM/M1/SS
LOW High
LOW
High Mass services•Retailing•Wholesaling•School•Retail aspect of commercial Banking
Service factory•Airlines•Trucking•Hotels•Resorts & Recreation
Service Shop•Hospitals•Auto Repair•Other repair services
Professional Services•Physicians•Lawyers•Accountants•Architects
De
gre
e o
f L
ab
or
inte
nsi
ty
Degree of Interaction and Customization
Dimensions of Service Quality
The Gaps Model
Six Service Quality Gaps
Gap 1: The Knowledge Gap Gap 2: The Policy Gap Gap 3: The Delivery Gap Gap 4: The Communications Gap Gap 5: The Perceptions Gap Gap 6: The Service Quality Gap
SRM/M1/SS
Suggestions for Closing the Six Service Quality Gaps
Suggestions for Closing the Six Service Quality Gaps
Suggestions for Closing the Six Service Quality Gaps
Suggestions for Closing the Six Service Quality Gaps
Measuring and Improving Service Quality
Measures of Service Quality
Soft Measures Not easily observed, must be
collected by talking to customers, employees or others
Provide direction, guidance and feedback to employees on ways to achieve customer satisfaction
Can be quantified by measuring customer perceptions and beliefs
e.g., SERVQUAL, surveys, and customer advisory panel
Hard Measures
Can be counted, timed, or measured through audits
Typically operational processes or outcomes
Standards often set with reference to percentage of occasions on which a particular measure is achieved
Customer Feedback Collection Tools
Hard Measures of Service Quality
Hard Measures of Service Quality
• Service quality indexes– Embrace key activities that have an impact on customers
• Control charts to monitor a single variable– Offer a simple method of displaying performance over time against
specific quality standards – Enable easy identification of trends – Are only good if data on which they are based are accurate
• FedEx: One of the first service companies to understand the need for an index of service quality that embraced all the key activities that affect customers
Control Chart for Departure Delays
Tools to Analyze and Address Service Quality
Problems
Tools to Analyze and Address Service Quality Problems
• Fishbone diagram– Cause-and-effect diagram to identify potential causes of
problems
• Pareto Chart– Separating the trivial from the important. Often, a majority of
problems are caused by a minority of causes (i.e., the 80/20 rule)
• Blueprinting– Visualization of service delivery, identifying points where
failures are most likely to occur
Cause-and-Effect Chart for Flight Departure Delays
Analysis of Causes of Flight Departure Delays
Blueprinting
• Depicts sequence of front-stage interactions experienced by customers plus supporting backstage activities
• Used to identify potential fail points
– where failures are most likely to appear
• Shows how failures at one point can have a ripple effect
• Managers can identify points which need urgent attention
– Important first step in preventing service quality problems
© Oxford University Press 2008. All rights reserved.
35
Service Blueprinting
Return On Quality (ROQ)
• Assess costs and benefits of quality initiatives – ROQ approach is based on four assumptions:
• - quality is an investment• - quality efforts must be financially accountable• - it’s possible to spend too much on quality • - not all quality expenditures are equally valid
– Implication: Quality improvement efforts may benefit from being related to productivity improvement programs
– To determine feasibility of new quality improvement efforts, determine costs and then relate to anticipated customer response
• Determine optimal level of reliability – Diminishing returns set in as improvements require higher investments – Know when improving service reliability becomes uneconomical
Ser
vice
Rel
iabi
lity
100%
A B
Investment
Small Cost,Large Improvement
Large Cost,Small Improvement
C D
Satisfy Target Customers Through Service Delivery as
Planned
Satisfy Target Customers Through Service Delivery as
Planned
Satisfy Target Customers Through Service Recovery
Satisfy Target Customers Through Service Recovery
Optimal Point of Reliability: Cost of Failure = Service
Recovery
Optimal Point of Reliability: Cost of Failure = Service
Recovery
Assumption: Customers are equally (or even more) satisfied with the service recovery than with a service that is delivered
as planned.
When Does Improving Service Reliability Become Uneconomical?
Productivity in a Service Context
• Productivity: amount of output produced relative to amount of inputs– Improvement in productivity means an improvement in the ratio of outputs to
inputs.
• Intangible nature of service makes it hard to measure productivity of service firms, especially for information-based services– Both input and output are hard to define – Relatively simpler in possession-processing services, as compared to information-
and people-processing services
Service Efficiency, Productivity, and Effectiveness
• Efficiency: involves comparison to a standard, usually time-based (e.g., how long employee takes to perform specific task)– Focus on inputs rather than outcomes and may ignore variations in service
quality/value
• Productivity: involves financial valuation of outputs to inputs– Consistent delivery of outcomes desired by customers should command higher
prices
• Effectiveness: degree to which firm meets goals– Cannot divorce productivity from quality and customer satisfaction
40
Stopwatch Time Study
• Standard time duration means the time taken by an average worker to perform a task at a sustainable rate under the given facility arrangements.
• A performance rating (P) is multiplied with the observed time of the job to arrive at the normal time (N) of the job.
• Standard time (S) is normal time plus allowances. Allowances have to be made for time consumed in adjusting or repairing the machines, workers drinking water, or taking rest breaks.