CH 9

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CH 9

• SERVICE QUALITY

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DEFINITION- SERVICE QUALITY
Fitness for use
Confirming to requirements and specifications

• Quality can only be defined by customers
• and occurs where an organization supplies goods
• or services to a specification that satisfies
  their needs.

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Defining service quality

• Conforming to requirements (Crosby,1984)
• But whose - external standards?
• Fitness for use (Juran, 1982)
• As defined by customers
• Customer perceived quality
• Quality is an attitude built up from a series of
  evaluated experiences (Bateson, 1999)

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Components of Quality Service-based

• Tangibles Appearance of physical elements

• Reliability Dependable and accurate performance

• Responsiveness Promptness helpfulness

• Assurance Competence, courtesy, credibility,
  security

• Empathy Easy access, good communication,
  understanding of customer

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DIMENSIONS OF SERVICE QUALITY
Instrumental Dimension
Expressive Dimension
Based on objective measure of quality
Based on subjective Measure of quality
Describes physical aspects of the service
Relates to the intangible Or psychological aspects
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Technical and functional quality (Gronroos, 1984)

• Technical quality
• essentially measurable objectively
• e.g. time or perceived time spent in a queue
• Functional quality
• how the technical quality is subjectively
  perceived
• e.g. perceived fairness in handling a queue, (was
  there an explanation?)

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TECHNICAL VS. FUNCTIONAL SERVICE QUALITY

• Technical quality refers to the relatively
  quantifiable aspects of a service that consumers
  receive in their interactions with a service firm
  .
• Because it can easily be measured by both
  customer and supplier , it forms an important
  basis for judging service quality.

• The functional quality cannot be measured as
  objectively as the elements of technical quality
  .

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Consumers perception of technical and functional
quality as applied to an opticians practice
SERVICE EXPECTATIONS Dependent on Advertising/
price/ Word of mouth etc.
PERCEIVED STANDARD OF DELIVERY
SERVICE QUALITY The difference between Service
expectations and Perceived standard of delivery
CORPORATE IMAGE Quality judgment also Influenced
by opticians image
TECHNICAL QUALITY Opticians knowledge Standard
of equipment Speed of service
FUNCTIONAL QUALITY Attitudes of staff Appearance
of staff Atmosphere of opticians practice
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QUALITY SATISFACTION

• The distinction between quality and satisfaction
  is important because service providers need to
  know whether their objective should be to have
  consumers who are satisfied with their
  performance or to deliver the maximum level of
  perceived service quality

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Is quality the same as satisfaction?

• Literature suggests they are separate constructs,
  but related.
• Satisfaction relates to the gap between
  expectations and perceived quality.( Anderson and
  Fornell, 1994)
• evaluated after each purchase
• Perceived quality may be longer term
  (Parasuraman, Zeithaml and Berry, 1988).
• Evaluated over several transactions

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THE SERVICE PROFIT CHAIN
Internal service quality ( the working
Environment workplace)
Employee satisfaction
Employee productivity
Employee retention
External service value
Customer satisfaction
Customer loyalty
Revenue growth
Improved profitability
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FRAMEWORKS FOR UNDERSTANDING AND MEASURING
SERVICE QUALITY

• Performance only measures
• Disconfirmation models
• Importance performance approaches

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PERFORMANCE ONLY MEASURES

• The simplest approach to measuring service
  quality is to ask customers to rate the
  performance of the service.
• Performance only measures avoid the need to
  measure customers expectations of a service.

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SERVPERF

• Measures perceived quality - the providers
  performance only
• It is an absolute measure of quality
• A simpler and less contentious approach
• This approach requires the customer to rate a
  providers performance extending from 1 (
  strongly disagree) to 5 ( strongly agree).
• SERVPERF explains more of the variance in an
  overall measure of service quality than measures
  that incorporate expectations.

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3 Levels of Expectations (Parasuraman, Zeithaml
and Berry, 1993)

• Three levels of expectations can be defined
  against which quality is assessed
• The desired level of service , reflecting what
  the customer wants
• The adequate service level , defined as the
  standard that customers are willing to accept
• The predicted service level that which they
  believe is most likely to actually occur

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Consumers zones of tolerance for service quality
High
Desired service level
Quality level
Zone of tolerence
Minimum acceptable Service level
Low
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DISCONFIRMATION APPROACHES

• By this approach , a service is deemed to be of
  high quality when consumers expectations are
  confirmed by subsequent service delivery.
• Because of the emphasis on differences between
  expectations and perceptions , this type of model
  is often referred to as disconfirmation model.

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DISCONFIRMATION APPROACHES

• Satisfaction Expectations - Perceived service
• Based upon
• the outcome (what was finally delivered)
• the process of delivery (the consumption
  experience)

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SERVQUAL methodology (Parasuraman, Zeithaml and
Berry, 1993)

• Service quality defined as the difference between
  
• the standard of service that customers
  expect,and
• what they actually perceive during consumption
• Service quality Expectations - Perceptions

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SERVQUAL measurement

• 22-item scales measuring to cover 5 broad
  dimensions of service quality based on
• Expectations
• Perceptions

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Measuring service quality SERVQUAL
Model(Parasuraman, Zeithaml Berry 1985, 1988)
Reliability
dependability, accurate performance
Service Quality
Responsiveness
promptness, helpfulness
Assurance
competence, credibility, courtesy, security
Empathy
customer understanding
Tangibles

• appearance of physical elements)

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ServQual dimensions

• Reliability
• dependability
• delivering on promises
• accuracy
• consistency
• Responsiveness
• promptness
• helpfulness

Get it right the first time!
and on time!
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ServQual dimensions

• Assurance
• competence
• courtesy
• credibility
• security
• Empathy
• easy access
• good communication
• customer understanding
• personalised attention
• Tangibles
• physical evidence

I feel safe
They listen to me
People look smart
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Service Quality (SERVQUAL) Questionnaire Items
RELIABILITY
EMPATHY

• Giving customers individual attention
• Employees who deal with customers in a caring
  fashion
• Having the customers best interest at heart
• Employees who understand the needs of their
  customers
• Convenient business hours

• 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

RESPONSIVENESS
TANGIBLES

• Keeping customers informed as to when services
  will be performed
• Prompt service to customers
• Willingness to help customers
• Readiness to respond to customers requests

• Modern equipment
• Visually appealing facilities
• Employees who have a neat, professional
  appearance
• Visually appealing materials associated with the
  service

ASSURANCE

• 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

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Diagnosing quality failuresGaps in service
delivery

• SERVQUAL identifies 5 gaps where service quality
  can fail
• Gap 1 Between customer expectations and
  management perceptions
• Gap 2 Between management perception and service
  quality specification
• Gap 3 Between service quality specifications and
  service delivery
• Gap 4 Between service delivery and external
  communications
• Gap 5 Between perceived service and expected
  service

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Reasons for provider gap I
Customers expectations

• Inadequate marketing research orientation
• Lack of upward communication
• Insufficient relationship focus
• Inadequate service recovery

Companys perceptions of customer expectations
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Translation of perceptions into service quality
specifications
Reasons for provider gap 2

• Poor service design
• Absence of customer-defined service standards
• Inappropriate physical evidence

Management perceptions of customer expectations
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Prescriptions for Closing theService Quality
Gaps

• Knowledge gap Learn what customers expect
• Understand customer expectations
• Improve communication between frontline staff and
  management
• Turn information and insights into action
• Standards gap Specify SQ standards that reflect
  expectations
• Set, communicate, and reinforce customer-oriented
  service standards for all work units
• Measure performance and provide regular feedback
• Reward managers and employees

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Customer-driven service designs and standards
Reasons for provider gap 3

• Poor human resource policies
• Failure to match supply and demand
• Problems with service intermediaries

Service delivery
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External communications to consumers
Reasons for provider gap 4

• Lack of integration of marketing communications
• Inadequate management of customer expectations
• Overpromising
• Inadequate horizontal communications

Service delivery
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Prescriptions for Closing the Service Quality
Gaps

• Perceptions gap Educate customers to see reality
  of service quality delivered
• Keep customers informed during service delivery
  and debrief after delivery
• Provide physical evidence
• Interpretation gap Pretest communications to
  make sure message is clear and unambiguous
• Present communication materials to a sample of
  customers in advance of publication
• Service gap Close gaps to meet customer
  expectations consistently

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Prescriptions for Closing theService Quality
Gaps

• Delivery gap Ensure service performance meets
  standards
• Clarify employee roles
• Train employees in priority setting and time
  management
• Eliminate role conflict among employees
• Develop good reward system
• Internal communications gap Ensure that
  communications promises are realistic
• Seek comments from frontline employees and
  operations personnel about proposed advertising
  campaigns
• Get sales staff to involve operations staff in
  meetings with customers
• Ensure that communications sets realistic
  customer expectations

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Customer expectations
Reasons for Customer Gap 5

• Not knowing what customers expect
• Not selecting the right service standards and
  designs
• Not delivering to service standards
• Not matching performance to promised

Customer perceptions
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Service Quality Gaps
CUSTOMER
Customer needs and expectations
1. Knowledge Gap
MANAGEMENT
Management definition of these needs
2. Standards Gap
Translation into design/delivery specs

4. Internal Communications Gap
3. Delivery Gap
Advertising and sales promises
Execution of design/delivery specs
4.
6. Interpretation Gap
5. Perceptions Gap
Customer perceptions of service execution
Customer interpretation of communications
7. Service Gap
Customer experience relative to expectations
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Criticisms of SERVQUAL

• Unrealistic to measure expectations
  retrospectively
• Paradox that low grade services may achieve a
  higher quality rating than high grade service
  because of lower expectations
• Expectations change with each encounter.

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IMPORTANCE PERFORMANCE ANALYSIS

• Importance Performance Analysis (IPA) is a
  simple and easy to use approach that compares the
  performance of elements of a service with the
  importance of each of these elements to the
  consumer.
• The elements that are used to define measurement
  scales can be derived through exploratory
  research.
• In practice , some researchers have used scale
  items that are very similar to those used in a
  typical SERVQUAL study.
• The difference is in the treatment of scores.
  Instead of calculating a Perceptions minus
  Expectations (P-E) score , IPA analysis
  calculates a Performance minus Importance (P-I)
  score.

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IMPORTANCE PERFORMANCE ANALYSIS
High
Concentrate quality Improvements here
Keep up the good work
0 1 2 3 4 5 6 7 8 9 10
Importance
Possible over delivery Of quality
Low priority
Low
0 1 2 3 4 5
6 7 8 9 10
High
Low
Performance
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COMPOSITE MODELS OF SATISFACTION
Attitude
Interaction quality
Behaviour
Expertise
Ambient Conditions
SERVICE QUALITY
Physical Environment quality
Design
Social factors
Waiting time
Outcome quality
Tangibles
Valence
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FROM SERVICE QUALITY TO EXPERIENCE

• Service experience typically comprises
• The physical environment
• Service delivery process
• Relationships between customers and the firms
  employees
• Brand associations

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Long Waiting Times May Indicate Need for Service
Process Redesign
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Customers emotional states
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SETTING QUALITY STANDARDS
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What level of service quality should an
organization provide for its customers?

Profitable level of quality
High level of Quality cannot Be sustained
by Customers willingness To pay
Cost/revenue per unit
Cost per customer
Quality improvement needed In order to gain
profitable Customer acceptance
Revenue per customer
0
88
50
100
Notional level of quality
Lowest
Highest
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BENCHMARKING STUDIES

• Benchmarking can be undertaken at a number of
  levels, based on what is compared and what the
  comparison is being made against
• Performance benchmarking- essentially based on
  outcome measures
• Process benchmarking- for example the efficiency
  and effectiveness of customer handling procedures
• Strategic benchmarking- for example comparing the
  integrity of a companys strategic plan with best
  practice in the industry
• Internal benchmarking- which involves comparing
  internal processes and structures
• Competitive benchmarking which may be with
  respect to market share , selling price etc.
• Functional benchmarking- sometimes the task will
  be to assess the performance of a companys
  functions( e.g. advertising or sales ) with best
  practice.

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BENCHMARKING STUDIES
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CREATING A SERVICE QUALITY CULTURE
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MANAGING THE EXTENDED MARKETING MIX FOR QUALITY
Customer expectations
Quality gap
Index of quality
Customer perceptions
Time