1

New service development using

gap-based quality function deployment

A mobile telecommunication case

Jing-hua Li

Zhejiang Gongshang UniversityP.R.China

02/06/2008

2

Research questions

• Why study new service development ?

• Why combine the Gaps and QFD ?

• Why employ mobile telecom case ?

3

Contents

• Combining two models ?

• New model

• Mobile phones in China

• What this means ?

4

Combining two models?

• House of quality

• Gap model

5

House of quality

customerneeds

engineeringmetrics

benchmarking

on needs

target and final specs

technicalcorrelations

relativeimportance

relationships between

customer needs and

engineering metrics

6Fitzsimmons, Fitzsimmons, 2001

1

1

1

1

1

Volvo Dealer

Village Volvo

Re

lativ

e

1 2 3 4 5 Customer Expectations

Reliability

Responsivene ss

Assurance

Empathy

Tangibles

Comparison with Volvo Dealer

Weighted score

Improvement difficulty rank

O O

O Weak

Medium

* Strong

9

9

9

Att

itu

de

Ca

pa

cit

y

Info

rma

tiio

n

Eq

uip

me

nt

8

7

7

6 6

5 5

5

5

4

4

3 3

3

3

2

2 2

2

+

_

+

Customer Perceptions

o

+

+

+

o

o

o

o

+

o o

o

o o

o Village Volvo

+ Volvo Dealer

Service Elements

Relationships

127 82 63 102 65

1

* *

7

Gap model

Customer Expectations Customer Demands

Service DeliveryManagement perceptions of customer expectations

Service Specifications

Communication

Service design

Customer / Marketing research

Service performance

Gap 5

Gap 1

Gap 3

Gap 4

Gap 2

Parasuraman, et al., 1985, 1988

Customer Satisfaction

8

Combining two models?

9

New Model

• Theoretical model

• Operational model

• Weights

10

C ustom erexpec ta tions

S ervice qua lity gap

Cus

tom

erpe

rcep

tions

R equirem ents o fservice qua lity

M arketing info rm ation gap

Cus

tom

er d

eman

ds

C ustom er perceptions

C om m unication gap

Ser

vice

del

iver

y

S ervicespec ifications

S tandards gap

Req

uire

men

ts o

fse

rvic

e qu

ality

S ervice de livery

S ervice perfo rm ance gap

Ser

vice

spec

ifica

tions

11

S ervice de livery

S ervice perfo rm ance gap

Ser

vice

spec

ifica

tions

C ustom er perceptions

C om m unication gap

Ser

vice

del

iver

yC ustom erexpec ta tions

S E R V Q U A L

S ervice qua lity gap

Cus

tom

erpe

rcep

tions

D es igning process

M arketing info rm ation gapand s tandards gap

Cus

tom

er d

eman

ds

12

D es igning process

R ela tion m atrix

Wei

ght

Cus

tom

er d

eman

ds

Questionnaire

InterviewInterviewLiterature

13

Weights of service quality• positive question

– Required elements can

be always found

• reverse question– Required elements can

NOT be always found

Kano, et al, 1984

Don’t fulfill expectations

Customer dissatisfaction

Attractive

Must-be

Performance

Positivequestions

Reverse questions

Happy Must-be Indifference Acceptable Unhappy

Happy Q A A A O

Must-be R I I I M

Indifference R I I I M

Acceptable R I I I M

Unhappy R R R R QMatzler, Hinterhuber, 1998

14

Mobile phones in China

• Background

• Model

• Questionnaire

• Interview

15

BackgroundSource: www.drcnet.com.cn

0

500

1000

1500

2000

2500

2001 2002 2003 2004 2005 2006 2007

mobile calling(billion mins)

message sending(billion items)

China mobile phones

0

100

200

300

400

500

600

1998 2001 2004 2007

Mobile subscribers (million)

16

0

20

40

60

80

100

120

Subscribers per 100 inhabitants, Winter 2007, China

Subscribers (million, April 2008)399. 5

12. 54 4. 31

China Mible (GSM)

China Unicom(GSM)

China Unicom(CDMA)

Source: www.drcnet.com.cn

Background

17

2001 2002 2003 2005 2008Beginning

Operators: China MobileObject: users of GoToneContent: local voice serviceCharacteristics: simple forms

“Price chaos”

Operators: China Mobile and China UnicomObject: overall expansionContent: local voice, toll voice, roaming serviceCharacteristics: various kinds of packages, update quickly, different means for sale

Development

Operators: China Mobile and China UnicomObject: an expansion of users interfaceContent: local voice, toll voice, roaming serviceCharacteristics: intensified competition, bundling sale

“Rational competition”

Operators: China Mobile and China UnicomObject: comprehensive usersContent: voice service. data service, choose availableCharacteristics: rational competition trend

18

Tariff brands in China Mobile

• GoTone businessman and other high earners

• M-zone students

• Easyown remaining sections of society

19

New tariff package development

Tracking

& assessment

users tracking

·the effective assessment

Feedback & adjustment

Market

forecasts

·find market opportunities ·consider the copy strategy

Definition

of

objectives

·make marketingObjectives

·focus on targetConsumers

·analyze consumptioncharacteristic

Design of tariff

package

·design product mix of tariff package ·decide tariff level in advance

Design of marketing

strategy

·select marketing channels and sale mode ·formulate the publicity strategy

Benefit

forecasts

·a pre-assessment on the package ·predict the profit and cost ·determine the tariff level

Audit

for

approval

·be presented to China Mobile (headquarter) to get a approval through auditing

Launch

·salesman training

·market sales

20

C ustom erexpec ta tions

S E R V Q U A L

S ervice qua lity gap

Cus

tom

erpe

rcep

tions

D es igning process

M arketing info rm ation gapand s tandards gap

Cus

tom

er d

eman

ds

S ervice produc t

C om m unication gap

Cus

tom

erpe

rcep

tions

21

Questionnaire• G1 Required elements can be always found• G2 The differentiation between elements is always significant• G3 The elements of package are full enough• G4 The package is simple enough

• G5 I can choose elements of package freely

• G6 The packages with same brand can be chosen together

• G7 The interval between new tariff packages is reasonable

• G8 The package is always improved with the changing of customer demands

• G9 The content of package is novel and personalized

• G10 The tariff package has image symbols

• G11 The package is always with a preferential price

• G12 The package is always with a clear billing

Elements of package

Range of free choice

Personalization of package

Price

22

Profile(125 subscribers, August 2007)

Index percent Index percent

Gender male 50.4

female 49.6

Age ≤ 20 1.6

20–25 47.2

26–30 31.2

31–45 17.6

≥ 46 2.4

Career staff 33.6

student 30.4

manager 15.2

teacher 8.8

other 12.0

Degree < B. A. 16.8

B. A. 47.2

≥ M. A 36.0

Income Monthly (RMB)

≤ 500 9.6

500-1000 24.0

1000-3000 36.0

3000-5000 23.2

≥ 5000 7.2

Package M-zone 55.2

GoTone 22.4

Easyown 22.4

23

Pearson correlations

24

Reliability and Validity customer demands

IDEFA Load

Factor 1 Factor 2 Factor 3 Factor 4

Alpha 0.822 0.848 0.807 0.837

G1 0.317 0.624 0.465 0.037

G2 0.313 0.797 0.272 0.052

G3 0.362 0.667 0.193 0.227

G4 0.035 0.688 0.042 0.603

G5 0.089 0.244 0.845 0.293

G6 0.162 0.271 0.725 0.357

G7 0.601 0.369 0.228 0.325

G8 0.619 0.259 0.350 0.206

G9 0.776 0.146 0.339 0.082

G10 0.838 0.181 0.185 0.075

G11 0.407 0.223 0.348 0.687

G12 0.150 0.077 0.317 0.857

25

The weights of service quality

26

Interview I • “left wall”-- customer demands elements of package;

range of free choice;

personalization of package;

price

•“ceiling” -- design process of tariff package market forecasts;

target orientation;

design tariff package;

planning marketing strategy;

revenue forecasts;

approval;

launching into market;

keeping track and evaluation;

improving according to the feedback

27

R eq u ired e lem en ts c an b e a lw ays fo u n d

T h e d iffe ren tia tio n b e tw een e lem en ts is a lw ayss ig n ific an t

1 8 .2 3 0

D es ig n in g p ro cess o f ta riff p ack ag e

C u s to m er d em an d s

W eig h t

◎

Fin

ding

mar

ket o

ppor

tuni

ties

by

mar

ket r

esea

rch

7 .4 2 0 △T h e e lem en ts o f p ack ag e a re fu ll en o u g h 1 8 .9 1 6 ◎

2 0 .3 5 6 ○T h e p ack ag e is s im p le en o u g h

I c an ch o o se e lem en ts o f p ack ag e free ly 2 8 .4 3 6 △3 8 .3 1 9 △T h e p ack ag es w ith sam e b ran d can b e ch o sen

to g e th e rT h e in te rv a l b e tw een n ew ta riff p ack ag es isrea so n ab le 2 7 .6 8 7 ◎

2 2 .3 2 6 ◎T h e p ack ag e is a lw ays im p ro v ed w ith th ech an g in g o f cu s to m er d em an d sT h e co n ten t o f p ack ag e is n o v e l an dp e rso n a liz ed 1 5 .9 1 8 ○

8 .3 2 2 △T h e ta riff p ack ag e h a s im ag e sym b o ls

T h e p ack ag e is a lw ays w ith a p re fe ren tia l p rice 1 4 .4 1 4 △1 3 .2 2 1 △T h e p ack ag e is a lw ays w ith a c le a r b illin g

◎

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W eig h ted sco re 4 4 4 4 9 8 4 2 5 4 2 5 3 1 5 2 2 5 2 5 9 4 3 2 1 2 9 9 2 5 6 4 4 3 4 4 3

◎ ◎ ◎ ◎◎◎◎

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Note : "◎ " m ean s s tro n g co rre la tio n (3 ); "○ " m ean s co rre la tio n (2 ); "△ " m ean s w eak co rre la tio n (1 ).

28

Interview II• “left wall” -- customer perception elements of package

range of free choice

personalization of tariff package

price

•“ceiling”-- tariff package product

price

place

promotion

29

△ ◎

R eq u ired e lem en ts can b e a lw ays fo u n d

T h e d iffe ren tia tio n b e tw een e lem en ts is a lw ayss ig n ifican t

D e liv e ry o f ta riff p ack ag e

C u sto m er d em an d s

W eig h t

Cle

ar m

arke

t ori

enta

tion

T h e e lem en ts o f p ack ag e a re fu ll en o u g h

T h e p ack ag e is s im p le en o u g h

I can ch o o se e lem en ts o f p ack ag e free ly

T h e p ack ag es w ith sam e b ran d can b e ch o sento g e th e rT h e in te rv a l b e tw een n ew ta riff p ack ag es isrea so n ab leT h e p ack ag e is a lw ays im p ro v ed w ith th ech an g in g o f cu s to m er d em an d sT h e co n ten t o f p ack ag e is n o v e l an dp e rso n a liz ed

T h e ta riff p ack ag e h as im ag e sym b o ls

T h e p ack ag e is a lw ays w ith a p re fe ren tia l p rice

T h e p ack ag e is a lw ays w ith a c lea r b illin g

Com

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pac

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spec

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△

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ount

of

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ion

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ffer

ent g

roup

s of

cus

tom

ers

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ce d

iffe

rent

ly in

dif

fere

nt s

tage

s of

life

cyc

le o

f ta

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pac

kage

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e di

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ate

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ing

reas

onab

le

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paga

ndiz

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w s

ervi

ce r

easo

nabl

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up

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rea

for

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erie

nce

of n

ew s

ervi

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in s

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ecia

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to s

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alco

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ervi

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lyse

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ff p

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egul

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ove

its

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les

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d pr

omot

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○◎

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Note : "◎ " m ean s s tro n g co rre la tio n (3 ); "○ " m ean s co rre la tio n (2 ); "△ " m ean s w eak co rre la tio n (1 ).

30

What this means ?

• New service development vs. service innovation

• Engineering vs. marketing

• Thought vs. methodology

• Theory vs. practice

Acknowledgements

Natural Science Fund of China (Grant No. 70402016)

Natural Science Fund of Zhejiang Province (Grant No. Y605404)

Two co-authors’ contribution: Ms. Lei Xu, Ms. Xiu-lan Wu

Two anonymous reviewers of International Journal of Services Tec

hnology and Management

Mr. Jonathan Alyen’s kindly help on presentation and slide design

32

References in slides• James A. Fitzsimmons, Mona J.Fitzsimmons, Service Management: Operation, Strategy, and

Information Technology, Third Edition, McGraw-Hill Companies, Inc. 2001, p58

• A. Parasuraman, L.L. Berry, V.A. Zeithaml, A conceptual model of service quality and its impli

cations for future research, Journal of Marketing, Vol. 49, pp.41–50, 1985.

• A. Parasuraman, L.L. Berry, V.A. Zeithaml, SERVQUAL: A multi-item scale for measuring con

sumer perceptions of service quality, Journal of Retailing, Vol. 64, No. 1, pp.12–40, 1988.

• N. Kano, et al. Attractive quality and must-be quality, Hinshitsu (Quality, the Journal of Japane

se Society for Quality Control), Vol. 14, pp.39–48, 1984.

• K. C. Tan, T. A. Pawitra, Integrating SERVQUAL and Kano's model into QFD for service excell

ence development, Managing Service Quality, vol. 11, no. 6, pp. 418-430, 2001.

• K. Matzler, H. H. Hinterhuber, How to make product development projects more successful by

integrating Kano’s model of customer satisfaction into quality function deployment?

Technovation, Vol. 18, No. 1, pp. 25-38, 1998.

33

Academic VisitorManchester Institute of Innovation Research Manchester Business SchoolThe University of Manchester

5.10 Harold Hankins BuildingTel: +44 161 275 0928(O) Mobile (UK): +44 779 982 1004Mobile (China): +86 139 581 600 47

Email: jinghua.li@mbs.ac.ukEmail: jhli@zju.edu.cn

Welcome comments and questions !