Title: Recap
1Recap Week 2
2Classifying services
- The degree of tangibility/intangibility - Are
there some tangible aspects of the service? To
what extent? - Who or what is the direct recipient of service
processes- Are the services directed to the
customers themselves or to objects belonging to
them? - The place of service delivery- Do the customers
go to the service or the service to the customer?
3Classifying services
- Customisation versus standardisation -Should all
customers receive the same service or should it
be more flexible? - Relationship with customers Is the relationship
formal or informal? - Discrete versus continuous services Does the
relationship occur on a single occasion or
continuous over a period of time? - High contact versus low contact- How much of the
service is tangible or intangible?
4Service encounters
- Three levels of customer contact
- High contact
- Medium contact
- Low contact
5Consumer behaviour and services
6Sources of key difference
- Intangibility
- Heterogeneity
- Simultaneous production and consumption
- Search properties
- Search qualities
- Experience qualities
- Credence qualities
7Key differences
- Information search
- Greater use of personal services
- Perceived risk
- Financial risk
- Performance risk
- Physical risk
- Social risk
- Psychological risk
- Time risk
- Evaluation of service alternatives
- Smaller evoked set
- Substitutability by self
8Key differences in consumer behaviour
- Purchase
- Simultaneous purchase and consumption, or
services may be purchased ahead of delivery - Risk and risk reducing strategies
- Consumer experience
- Dominates the evaluation process
- Post purchase evaluation
- Word of mouth communication
- Attribution of satisfaction
- Brand loyalty
- Cultural differences
9Service Quality
10(No Transcript)
11Learning objectives
- After this week you should be able to
- define service quality
- distinguish between service quality and
satisfaction - understand the importance of service quality to
the management of services - describe various models of service quality
- be aware of current issues regarding service
quality.
12Service quality
- Elusive
- An abstract concept, similar in nature to an
attitude, as it represents a general, overall
appraisal of a product or service - Service quality can be defined as a consumers
judgement or perception of an entitys overall
excellence or superiority, often as a result of
comparing expectations with perceived performance
13Intangibility and quality
- Quality of physical goods can be assessed before
purchase - Services cant be sampled before purchase
increasing risk - Marketers must develop strategiesaimed at
tangibilising the intangible, standardising
production and consumption (as much as
possible),and reducing the perceived risk and
cognitive dissonance often associated with the
purchase of services.
14Inseparability and quality
- Quality depends on the interaction between
service provider and consumer - Consumers often rely on this interpersonal
process to assess service quality
15Variability and quality
- Customers, service personnel and environmental
influences may result in variability - Variability makes it difficult to apply quality
standards
16Service quality
- Insulating customers
- Creating competitive advantage
- Encouraging repeat purchase
- Promoting loyalty
- Enhancing positive word of mouth
- Lowering the marketing costs due to higher
loyalty - Facilitating a positive service outcome
17The evolution ofservice quality
- Disconfirmation of expectations
- The Nordic model
- The SERVQUAL/Gaps model
- The three component model
- Integrating perspectives
18Disconfirmation of expectations (Oliver 1980)
19The Nordic model (Gronroos 1990)
- Represents the service experience on the basis of
functional and technical elements - Technical quality refers to what the customer
receives from the service - Functional quality refers to service delivery
- Model emphasises companies must be careful what
they promise
20The Gaps model (Zeithaml, Parasuraman Berry
1990)
21The Gaps
22The Gaps (cont.)
23The Gaps (cont.)
24The Gaps (cont.)
25The SERVQUAL dimensions Perceived Service
Quality
- Reliability (dependability, accurate performance)
- Assurance (competence, courtesy, credibility
security) - Tangibles (appearance of physical elements)
- Empathy (easy access, good communications
customer understanding) - Responsiveness (promptness helpfulness)
- (Parasuraman, Zeithaml Berry 1988)
26SERVQUAL
27SERVQUAL (cont.)
28The three-component model Rust Oliver (1994)
Source Rust Oliver, 1994. p. 11
29Hierarchical model
30Current issues in service quality
- Causality
- Does satisfaction lead to quality or does quality
lead to satisfaction - What is the relationship between service quality,
customer satisfaction behavioural intent?
31Current issues (cont.)
- Should researchers use performance only measures
or expectation perception when assessing
service quality?
32Model Advantages Disadvantages
Disconfirmation of expectations Takes into consideration expectations as well as actual perceptions The use of expectations in measuring service quality has currently come under a lot of criticism in the literature
Nordic model (Gronroos) Focuses on the service outcome and process, that is, what the customer receives from the service and how the service is delivered Does not explicitly consider the impact of the physical environment of the service setting on service quality perceptions. Uses the disconfirmation of expectations model as a basis
Servqual/Gaps Identifies a number of areas important to service quality assessment. Has been widely used in the literature and in practice Uses gap scores as derived from the disconfirmation of expectations model. Does not have an outcome orientation does not measure service outcome perceptions
Three-component model Extends Gronroos model to include the physical environment. Has received increasing support in the literature Some three-component models are still based on disconfirmation. Not well tested in the literature.
Integrated model Looks at service quality in a new light. Provides a more sensitive analysis by looking at the different tiers of service quality dimensions Has not been well tested in the literature as it is a new model. Needs more research to test its usefulness
33Satisfaction
34Learning objectives
- After this week you should be able to
- explain what customer satisfaction/dissatisfactio
n (CSD) is and what factors lead to CSD - understand delight
- measure customer CSD
35Satisfaction
- The customers fulfilment response
- A judgement that a service or service provider
provided a level of fulfilment including under
or over fulfilment - Involves both cognitive (thinking) and affect
(emotion and feeling) elements
36Satisfaction service quality (Oliver 1993)
- Satisfaction is experience dependent
- Quality evaluations are largely cognitive
evaluations of satisfaction are cognitive
emotive - Satisfaction has a shorter term temporal focus
37Satisfaction formation
- Satisfaction is related to the variation between
a customers pre-purchase expectations and
perceptions of service performance (D of E
paradigm)
38Other influences
- Attitudes towards the brand
- Attributions
- Causal attribution (who is to blame?)
- Control attribution (could the firm control the
event?) - Stability attribution (is it a one-off event?)
- Equity theory (perceived fairness)
- Perceived value (quality/price trade-off)
39Disconfirmation of expectations (Oliver 1980)
40Satisfaction consequences McColl-Kennedy (2003)
41Satisfaction consequences (cont.) McColl-Kennedy
(2003)
42Satisfaction in services
- Satisfaction is based on expectations
- Dissatisfied customer will change suppliers
- Merely satisfied customers may also change
suppliers - A challenge is to delight customers
43Link between satisfaction loyalty
profitability
- Satisfaction is linked to loyalty and influences
retention of customers - Satisfied customers increase purchasing where
purchasing is discretionary - Satisfied customers are more likely to note
company communications - Satisfied customers also tolerate lower price
elasticity
44ASCI and Annual Percentage Growthin SP 500
Earnings
Source C. Fornell Customer Satisfaction and
Corporate Earnings, commentary appearing on ACSI
website, May 1, 2001, http//www.bus.umich.edu/res
earch/nqre/Q1-01c.html.
45Relationship between Customer Satisfaction and
Loyalty in Competitive Industries
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.
46Customer delight
- Expectations exceeded to a surprising degree
- Can make it more difficult to please the customer
in the future - Creates dissatisfaction in competing firms
47Does delight pay?
- Delight is useful if
- Satisfaction influences behaviour
- Future profits receive significant weight
- The firm is able to capitalise on competitors
dissatisfied customers (e.g. Bendigo Bank) - Best results if it is not easily imitated
48Measuring satisfaction
- Expectations play a key role in CSD
- Expectations offer standards against which
experiences are evaluated - Ideal to measure pre- and post- consumption
49Measurement process
- initial work to determine consumers service
expectations (eg focus groups/interviews) - measurement of expectations pre-consumption (eg.
questionnaire) - subsequent post-consumption measurement of
performance - disconfirmation and satisfaction perceptions.
50Summary
- Companies want satisfied customers
- Customer satisfaction involves both cognitive and
affective elements and represents a judgement
that a service provider provided a level of
fulfilment - There are a range of drivers of satisfaction
51Summary (cont.)
- Satisfaction is based on expectations
- Customer delight creates dissatisfaction among
the customers of competitor firms - Delight strategies should be difficult to imitate
- Satisfaction can should be measured