Module 4 Managing Service Quality

Generic dimensions used by customers to evaluate service quality Tangibles: Appearance of physical elements. Reliability: Ability to perform the promised service. Responsiveness: Willingness to help customers & provide prompt service. Competence: Possession of the skills & knowledge required to perform the service. Courtesy: Politeness, respect, friendliness of contact personnel. To measure customer satisfaction with different aspects of service quality, the researchers developed a survey research instrument called serqual. Serqual is an instrument based on the assumption that customers can evaluate a firms service quality by comparing, perceptions of its service with their own expectations. The serqual scale includes 5 dimensions 1) Tangibles 2) Reliability 3) Responsiveness 4) Assurance 5) Empathy Any gap that exists between customers expectations & perceptions is an indication of quality problem and a conceptual tool is needed to correct service quality problem. This conceptual tool is called Gap Model. Generic Dimension Used by Customers To evaluate Service Quality Dimension Definition Trustworthiness, believability, honesty of the service provider Examples of question that customers might raise Does the hospital have good reputation?Does my stockbroker refrain from pressuring me to buy? Does the repair firm guarantee his work? Is it safe for me to se the ban's atm at night? Is my credit card protected against unauthorised use?Can I be sure that my insurance policy provides complete coverage?

Credibility

Security

Freedom from danger, risk or doubt

Access

Approachability and ase of contact

how easy is it for me to talk to a superior when I have a problem? Does the Airline have a 24-hour toll- free phone number?Is the htel conveiently located?When I have a complaint, is the manager willing to isten to me?Does my doctor avoid using technical jargon?Does the electrician call when unable to keep a scheduled appointment? Does someone in a hotel recognise m as a regular customer?Does my stockbroker try to determine my specific financial objectives?Is the moving company willing to accommodate my schedule?

Communicati on

Listening to customers ad keeping them informed in language they can understand

Understandi ng the Customer

Tangibles

Making the effort to know customers and their need Appearance of physical facilities,equipment,perso nnel,and communication materials

Are the hotel's facilities attractive?Is my accountant dressed appropriately?Is my bank statement easy to understand?

Reliability

Ability to perform the promised service dependably and accurately

When a lawyer says he will call me in 15 minutes, does she do so?Is my telephone bill free from errors?Is my telephone repaired right the first time? When there is a problem,does the firm resolve it quickly?Is my stockbroker willing to answer my questions?Is the cable TV company willing to give me a specific time when the installer will show up? Can the bank teller process my transaction with fumbling around?When I call my travel agent, is she able to obtain the information I need?Does the dentist appear to know what he is doing? Does the flight attendant have a pleasant Demeanour? Are the telephone operators consistently polite when answering my calls? Does the plumber take off his muddy shoes before stepping on my carpet?

Responsiven ess

Willingness to help customers and provide prompt service

Competence

Possession of the skills and knowledge required to perform the service

Courtesy GAP MODEL:

Politeness, respect, consideration, and friendliness of contact personnel

This model identifies a total of seven types of gaps that can occur at various pointsduring the design & delivery of a source performance. i) Knowledge Gap: It is the difference between what service providers believe customers expect and customer actual needs & expectations. ii) Standard Gap: It is the difference between managements acception of customers expectations & quality standard established for service delivery. iii) Delivery Gap: It is the difference between specified delivery standards & the service providers actual performance on these standards. iv) Internal Communication Gap: It is the gap between what the companys advertising & sales personnel think are the products features performance & service quality level and what the company is actually able to deliver. v) Perception Gap: It is the difference between what is infact delivered & what customers perceive they have received. vi) Interpretation Gap: Difference between what a service providers communication effort promise &what customer thinks was promised by these communications. vii) Service Gaps: It is the difference between what customers expect to receive and their perceptions of the service delivered.

MANAGING DEMAND AND SUPPLY IN SERVICES* OPTION 1 Strategies for making capacity to match demand Customer Involvement Self Service Buffets and Salad bars at restaurants Fast food joints Cross training employees To perform tasks in several operations creates flexible capacity to meet localized peaks in demand. Using part time employees A ready part time labour pool is available from college at Coffee Day, Pizza Hut stretch existing capacity o Stretch time Banks started working on Sundays o Stretch labour Overtime work from employees o Stretch fascilities Additional tables & chairs at restaurants o Stretch equipments Computers, phone lines Developing complementary services Eg: Restaurants have complimentary services by adding a bar. Diverting waiting customers into the lounge during busy waiting periods can be profitable to the restaurants. Promoting off peak demand Eg: Telephone companys offer lower rates to encourage long distance dialing at night. Pricing Incentives Eg: Movies (INOX) Mon to Thurs Morning show 79/Fri, Sat, Sun Night show 250/ Communicate to Customers Eg: Signs in banks and post offices that let customers know their busiest hours and days of the week, can serve as warnings. Modify Timing Eg: Empire chain of Hotels open till midnight. Modify Location Eg: Mobile libraries, Mobile Dialysis in ambulance Sharing Capacity Eg: Parking facilities hired from neighbouring institutions on peak hours. Move facilities and Equipment Eg: Hotels Two rooms with a locked door inbetween can be rented to two different parties in high demand times. Schedule [dcor] time during periods of low demand Eg: Paintings / Repair & Maintenance work done at college during holiday times. OPTION 2 Strategies for managing demand to match capacity Partitioning demand Eg: Patients flow in higher on week days. Therefore, why not make appointments in the latter part of the week to level demand.

 Vary the service offering Eg: Accounting firms focus on tax preparations late in the year. During other times of the year, they can focus on Audits and general consulting activities Advertising & Sales promotion: Can also be used to remind customers about peak demand times & promotional offers during off season are common. OPTION 3 Strategies when demand and capacity cannot be matched. Reservations There are reservations for services particularly when supply is likely to be constrained. Eg: Railway booking tickets, 1 Re flight charges, MTR [lunch] Waiting lines o Once a customer arrives, he or she may be willing to wait for service to begin. o Many queues operate on first come, first serve basis. o Certain services on the basis of critical needs / urgency rather than order of arrival Queuing situations o Arrival patterns of customers o Service times o Number of servers o Queue disciplines Triage / Sorting

Parameters in Queuing situations

Eg: To handle first class & Business class travelers more expeditiously than tourist class travelers who have paid considerably lower fares. Can serve segment demands of different kinds and route them to different service process Delaying Service Delivery Eg: Its worth waiting one hour (or for a little while) to experience the service which is worth it. (Like waiting for MTR lunch, waiting for the best doctor.) YIELD MANAGEMENT The process of allocating right type of capacity to the right type of customers at the right price so as to maintain revenue or yield Eg: Because of the perishable nature of airline seats, offering a discount on fares to fill the aircraft became attractive. Airlines were the first to develop yield management. Inventory Demand through Waiting Lines and Reservations One of the challenges of services is that, being performances, they cannot normally be stored for later use. In an ideal world, nobody would ever have to wait to conduct a service transaction. But firms cannot afford to provide extensive extra capacity that would go unused most of the time. In businesses whose demand regularly exceeds supply, managers can often take steps to inventory demand. This task can be achieved in one of two ways: (1) by asking customers to wait in line (queuing), usually on a first come first served basis, or (2) by offering them the opportunity of reserving, or booking space in advance. Waiting: A Universal Phenomenon Nobody likes to be kept waiting. Its boring, time wasting, and sometimes physically uncomfortable, especially if there is nowhere to sit or you are outdoors. Almost every organization faces the problem of waiting lines somewhere in its operation.

Why Waiting Lines Occur Queues are a symptom of resolved capacity management problems. Analysis and modeling of queues is a wellestablished branch of operations management. Tailoring Queuing Systems to Market Segments Allocation to separate queuing areas may be based on: 1 Urgency of the job- At many hospital emergency units, a triage nurse is assigned to greet incoming patients and decide which ones require priority medical treatment and which can safely be asked to register and then sit down while they wait their turn. 2 Duration of service transaction- Banks, supermarkets, and other retail services often institute express lanes for shorter, less complicated tasks. 3 Payment of a premium price- Airlines usually offer separate check-in lines for first-class line, resulting in reduced waits for those who have paid more for their tickets. 4 Importance of the customer- A special area may be reserved for members of frequent user clubs. Airlines often provide lounges, offering newspapers and free refreshments, where frequent flyers can wait for their flights in greater comfort. Ten propositions on the Psychology of Waiting Lines Unoccupied time feels longer than occupied time Pre and postprocess waits feel longer than in process waits Anxiety makes waits seem longer Uncertain waits are longer than known, finite waits Unexplained waits are longer than explained waits Unfair waits are longer than equitable waits The more valuable the service, the longer people will wait Solo waits feel longer than group waits Physically uncomfortable waits feel longer than comfortable waits Unfamiliar waits seem longer than familiar ones

Giving Customers Information on Waits Does it help to tell people how long they are likely to have to wait for service? Common sense would suggest that this is useful information for customers, as it allows them to make decisions about whether they can afford to take the time to wait now or should come back later. It also enables them to plan the use of their time while waiting.

TYPES OF MARKETING IN SERVICE FIRMS

According to Philip Kotler, service marketing not only requires traditional external marketing but also internal and interactive marketing. The three types of marketing in service industries is depicted in the following figure.

SERVICE FIRM

Internal Marketing enabling the promise

External Marketing settling the promise

EMPLOYEES
Interactive Marketing delivering the promise EXTERNAL MARKETING

CUSTOMERS

It is mainly directed towards those individuals and groups who buy goods and services from the organization. The external marketing efforts are traditional function of marketing of the customers and make promises to the customer regarding what is to be delivered. Anything that is conveyed to the customer in any form before the service delivery can be viewed as part of external marketing function. External marketing builds customer expectations and beliefs about service delivery. So, the first step towards external marketing is to make the firm understand what makes the customers want a certain want a certain type of service, and what are their expectations of a particular service. The external marketing then gives promises that correspond with the personal needs and aspirations of the target group. It becomes imperative for the service provider to understand the needs of the customer. This leads to segmentation of the market on a suitable basis demographic, psychographic and usage pattern. Once the service firm has decided its market segment, its next task is to find ways to compete in that segment, this can be achieved by using the right marketing mix after considering the external factors. The service offering planning, pricing, promotion and delivery of the service tend to differ in respect of a customer group. The augmented level of the service offering which is strategically used for positioning the service, price and location which convey quality and the advertising campaign which communicates quality, all form part of external marketing. The promises (which the service provider makes) should highlight the reason why the customer must choose this service from several service providers. This promise should also match the customers expectation of the service. The methods by which the promises are conveyed by the firm are through promotion campaign, corporate image, and word of mouth communication and also through the past experience, which the customer has had with the firm. External marketing is the responsibility of the marketing department of the organization as well as the advertising and market research firms who have been assigned the work of communicating with the customers. According to Zeithaml and Bitner, the customers expectation of the service can be derived from the following sources: Explicit Service Promise these are personal and non-personal statements about the service made to the customer by the service firms through advertisements, contracts, personal selling and other methods of communication. Implicit Service Promise are service related cues other than explicit promise that lead to inference about what the service should and will be like. These quality cues are dominated by price and the tangibles associated with the service.

Word of Mouth Communication this source is more vital because it is perceived and unbiased. Moreover, service qualities are difficult for customers to evaluate prior to purchasing and directly experiencing them. Word of mouth communication can be sourced from friends, family and also from consumer reports. Past Experience the previous of the customer with the service firm creates a desire and level of expectation in the future interaction. Corporate Image the corporate and local image of the service firm will also influence the expectations of the customers. The promise setting in the external marketing function is very critical since a very high expectation may lead to a highly dissatisfied customer. Care shall be taken to maintain credibility while setting the promise. INTERNAL MARKETING The employees of the service firm who interact with the customers must meet the expectations of the customers that are created by the external marketing efforts. At the same time if the service systems as well as the service staff do not support the frontline employees, they will not be able to meet the promises made by the organization. Thus, internal customers of the organization are its employees, who, in their job, depend on others in the organsation, for providing those goods (equipment) and services (information) to serve the external customers. So, directly or indirectly every employee in the organization is serving the external customer. As Jan Carlzon says, if you dont serve customers you better serve else in the organization