overview of complete sm
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8/8/2019 Overview of Complete SM
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The Integrated Gaps
Model of Service Quality
• Closing the Customer Gap
• Provider Gap 1: Not Knowing What Customers Expect• Provider Gap 2: Not Having the Right Service Quality
Designs and Standards• Provider Gap 3: Not Delivering to Service Standards
• Provider Gap 4: When Promises Do Not MatchPerformance
• Putting It All Together: Closing the Gaps
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The Integrated Gaps Model ofService Quality
• To overview the framework of thegaps model of service quality
• To identify the factors responsiblefor each of the gaps.
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Perceived
Service
Expected
ServiceCUSTOMER
COMPANY
Customer
Gap
GAP 1
GAP 2
GAP 3
ExternalCommunications
to CustomersGAP 4Service
Delivery
Customer-DrivenService Designs and
Standards
Company Perceptionsof Consumer
Expectations
Gaps Model of ServiceQuality
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Pro Pro
Customer Expectations
Customer Perceptions
Key Factors Leading to theCustomer Gap
Customer
GAP
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Customer
Expectations
Company Perceptions of Customer Expectations
Inadeq Insuff
Rese
Key Factors Leading toProvider Gap 1
GAP
1
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Customer-Driven Service
Designs and Standards
Management Perceptions of
Customer Expectations
Poor Se Unsyst
Va ue
Key Factors Leading toProvider Gap 2
GAP
2
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Closing Gap 2• Service Development and Design
• Customer-defined service standards
• Physical Evidence and Servicescape
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Physical evidence• Communicating service quality
attributes
• Setting customer expectations• Creating service experience
Organization’s physical facility – SERVICESCAPE
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Coffee shop
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Music store
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Elements of Physical EvidenceServicescape Other tangibles
Facility exterior Exterior designSignageParkingLandscapeSurrounding environment
Facility interior
Interior designEquipmentSignageLayoutAir quality/temperature
Business cardsStationeryBilling statementsReportsEmp loyee dressUniformsBrochuresWeb pages
Virtual servicescape
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Types of Sericescapes• Servicescape use
• Complexity of servicescape
• Typology implications
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Typology of Service OrganizationsBased on Variations in Form and
Use of the ServicescapeComplexity of the servicescape evidenceServicescapeusage
Elaborate Lean
Self-service
(customer only)Golf LandSurf 'n' Splash
ATMTicketron
Post office kioskInternet servicesExpress mail drop-off
Interpersonalservices
(both customer andemployeee)
HotelRestaurantsHealth clinicHospitalBank
AirlineSchool
Dry cleaner Hot dog standHair salon
Remote service
(employee only)Telephone companyInsurance companyUtilityMany professional services
Telephone mail-order deskAutomated voice-messaging-based services
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Roles of the servicescape• Package
• Facilitator
• Socializer• Differentiator
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A Framework for Understanding Environment-User Relationshipsin Service Organizations
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Approaches for understanding
servicescape effects• Environment surveys
• Direct observation
• Experiments
• Photographic blueprints
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Guidelines for physical
evidence strategy• Recognize the strategic impact of PE
• Map the PE of service
• Clarify roles of the servicescape• Assess and identify PE opportunities
• Be prepared to update and modernize the
evidence• Work cross-functionally
K F L d
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Service Delivery
Customer-Driven Service
Designs and Standards
DeficienIneffectiRole am
Key Factors Leading toProvider GAP 3
GAP
3
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Closure of Gap 3• Understanding Employees roles inService Delivery
• Understanding Customers roles inService Delivery
• Intermediaries roles
• Managing demand & Capacity
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Employees’ Roles
in Service Delivery• The Critical Importance of ServiceEmployees
• Boundary Spanning Roles• Strategies for Closing Gap 3
• Service Culture
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Service Employees• They are the service.
• They are the organization in the customer’s eyes.
• They are the brand.
• They are marketers.
• Their importance is evident in:
– The Services Marketing Mix (People)
– The Service-Profit Chain
– The Services Triangle
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The Services Marketing
Triangle
InternalMarketing
Interactive Marketing
ExternalMarketing
Company(Management)
CustomersEmployees
enabling promises
keeping promises
setting promises
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
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The Service Profit Chain
Source: An exhibit from J. L. Heskett, T. O. Jones, W. E. Sasser, Jr., and L. A.Schlesinger, “Putting the Service-Profit Chain to Work,” Harvard Business Review ,March-April 1994, p. 166.
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The Service Profit Chain• Helps in understanding the linkbetween employee satisfaction,customer satisfaction and profits.
• Climate for good service and climatefor employee well-being are highlycorrelated.
• Service quality dimensions are drivenby employee behaviors
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Service Employees
• Who are they?– “boundary spanners”
• Organisation members who interface with
customers• Boundary – zone where customer meets internaloperations
• Two main roles performed:
– Information processing– External representation
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Boundary spanners• What are these jobs like?
– emotional labor
–many sources of potential conflict• person/role
• organization/client
• Interclient
• Quality/productivity
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The effect of role stress
on job performance
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Customer-
Oriented
Service
Delivery
Hire the
Right People
ProvideNeeded Support
Systems
Retain the
Best
People
Develop
People to
Deliver
Service
Quality
C o m p e
t e f o
r
t h e B
e s t
P e o p l e
Hire for
Service
Competenciesand Service
Inclination
Provide
Supportive
Technology
and
Equipment
Treat
Employees
as
Customers
Empower
Employees
B e t h e
P r e f e r r e d
E m p l o y e r T
r a i n f o
r
T e c h n i c a l a
n d
I n t e r a c t i v
e
S k i l l s
P r o m
o t e
T e a m w
o r k
M e a s u
r e
I n t e r n
a l
S e r v i
c e
Q u a l i t
y
D e v e l o p S e r v i c e -
o r i e n t e d I n t e r n a l
P r o c e s s e s
M e a s u
r e a n d
R e w
a r d
S t r o n
g
S e r v i c e
P e
r f o r m e r s
I n c
l u d e
E m p
l o y e e s i n
t h e
C o m p
a n y
’ s
V i s i o n
Human Resource Strategies for Closing GAP 3
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Empowerment
• Benefits:– quicker responses
– employees feel moreresponsible
– employees tend to interact
with warmth/enthusiasm– empowered employees are a
great source of ideas
– positive word-of-mouthfrom customers
• Drawbacks:– greater investments inselection and training
– higher labor costs
– slower and/or inconsistent
delivery– may violate customer
perceptions of fair play
– “giving away the store”(making bad decisions)
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Importance of customers
in Service delivery• Customers are a part of the productionprocess.
• A service experience heavily depends onthe audience’s (customer’s) input levelsalso.
• Level of customer participation in
service varies across services.• Role of other customers
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How Customers Widen
Gap 3• Lack of understanding of their roles
• Not being willing or able to perform
their roles• No rewards for “good performance”
• Interfering with other customers
• Incompatible market segments
Leve s o customer
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Leve s o customerparticipation across
different services• Low - consumer presence requiredduring service delivery –
– Products are standardized– Service is provided regardless of any
individual purchase
– Payment may be the only required
customer input• Ex. Airline travel, Hotel stay, fast food restaurant.
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Contd…• Moderate - consumer inputs required for service
creation –
– Client inputs customize a standard service
– Provision of service requires customer purchase
– Customer inputs are necessary for an adequateoutcome, but the service firm provides the service
• Ex. Restaurant, Haircuts, annual physical exam etc.,
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Contd..• High - customer cocreates the service product
– Active client participation guides the customizedservice
– Services cannot be created apart from the
customer’s purchase and active participation– Customer inputs are mandatory and cocreate the
outcome• Ex. Marriage counseling, major illness or surgery, lawyer consultation
etc.,
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Importance of Other
Customers in Service Delivery• Other customers can detract from
satisfaction:– Disruptive behaviors
– Excessive crowding
– Incompatible needs
• Other customers can enhance satisfaction:– Mere presence
– Socialization/friendships
– Roles: assistants, teachers, supporters
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Customer Roles in
Service DeliveryProductive Resources
Contributors to
Quality and
Satisfaction
Competitors
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Customers as Productive
Resources• “Partial employees”
– Contributing effort, time, or other resourcesto the production process
• Customer inputs can affect organization’sproductivity
• Key issue:
– Should customers’ roles be expanded?reduced?
Customers as Contributors
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Customers as Contributorsto Service Quality and
Satisfaction• Customers can contribute to
– Their own satisfaction with the service
• By performing their role effectively
• By working with the service provider
– The quality of the service they receive
• By asking questions
• By taking responsibility for their own satisfaction
• By complaining when there is a service failure
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Customers as
Competitors• Customers may “compete” with the service provider
• “internal exchange” vs. “external exchange”
• Internal/external decision often based on:
– Expertise capacity– Resource capacity
– Time capacity
– Economic rewards
– Psychic rewards
– Trust
– Control
Self Service Technologies
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Self-Service Technologies—The Ultimate in Customer
Participation• Produced directly by customers without
any direct involvement or interactionwith the firm’s employees.
• Advances in technology, have allowedthe introduction of wide range of self-service technologies.
• Ex: ATM’s, Airline check-in, internet banking, onlineauctions, etc.,
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Customer Usage of SST’s• Benefits > costs
• Customer readiness results from a
combination of – personal motivation,ability and role clarity .
• Benefits to companies – cost savings
and revenue growth.
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Success with SST’s• Clear strategy
• Benefits to customer
• Motivating customers to try
• Making customers tech-ready
• Involving customers in the design of theservice technology system and processes
• Educating customer for encouraging adoption.
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Strategies for Enhancing
Customer ParticipationEffective
Customer
Participation
Recruit, Educate,
and RewardCustomers
Define Customer
Jobs
Manage the
Customer
Mix
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Strategies for Enhancing
Customer Participation• Define customers’ jobs– Helping himself
– Helping others– Promoting the company
– Individual differences• Not everyone wants to participate
Strategies for Recruiting
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Strategies for Recruiting,Educating, and Rewarding
Customers1. Recruit the right customers
2. Educate and train customers to performeffectively
3. Reward customers for their contribution
4. Avoid negative outcomes of inappropriatecustomer participation
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Manage the customer
mix• Attracting maximally homogeneousgroups of customers
• Compatibility of customer segments
Key Factors Leading to
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Service Delivery
Lack of I Tende
indeExternal Communications to
Customers
Key Factors Leading toProvider GAP 4
GAP
4
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Marketing Communication
mix• Advertising
• Sales promotion
• Public relations• Direct marketing
• Personal selling
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Communications and theServices Marketing Triangle
Internal Marketing Vertical Communications
Horizontal Communications
Interactive Marketing Personal Selling
Customer Service Center Service Encounters
Servicescapes
External Marketing Communication
Advertising
Sales PromotionPublic RelationsDirect Marketing
Company
CustomersEmployees
Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
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Key reasons for service
communication problems• Inadequate management of servicepromises
• Inadequate management of customerexpectations
• Inadequate customer education
• Inadequate internal communications
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Approaches for Integrating ServicesMarketing Communication
Goal:Delivery
greater thanor equal topromises
ImproveCustomer Education
ManageService
Promises
ManageCustomer
Expectations
ManageInternal
MarketingCommunication
Matching service promises
with delivery
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Goal:Delivery
greater thanor equal topromises
Offer Service
Guarantees
CreateEffectiveServices
Communications
MANAGING SERVICE PROMISES
MakeRealisticPromises
CoordinateExternal
Communication
Managing Service
Promises
Services Advertising
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Services AdvertisingStrategies Matched with
Properties of Intangibility• Incorporeal existence
• Abstractness
• Generality Vs. specificity• Nonsearchability
• Mental impalpability
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Guidelines for service
advertising effectiveness• Use narratives to demonstrate the serviceexperience
• Present vivid information
• Use interactive imagery• Focus on the tangibles
• Feature employees in communication
• Promise what is possible• Encourage W-O-M communication
Approaches for
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Communicate Criteria for Service Effectiveness
Create Tiered-ValueOfferings
NegotiateUnrealistic
Expectations
Goal:Delivery
greater thanor equal topromises
Offer Choices
Approaches forManaging Customer Expectations
Approac es or
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Goal:Delivery
greater thanor equal topromises
PrepareCustomers
for theServiceProcess
ClarifyExpectationsafter the Sale
Teach
Customersto Avoid
PeakDemandPeriods
andSeek Slow
Periods
ConfirmPerformanceto Standards
Approac es orImproving Customer
Education
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Goal:Delivery
greater thanor equal topromises
Create EffectiveVerticalCommunications
Align BackOffice Personnel
w/ External Customers
Create EffectiveHorizontal
Communications
CreateCross-Functional
Teams
Approaches for ManagingInternal Marketing Communications
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Pricing of Services• Three Key Ways Service Prices areDifferent for Consumers
• Approaches to Pricing Services• Pricing Strategies That Link to the
Four Value Definitions
Three Key Ways Service
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Three Key Ways ServicePrices are Different for
Consumers• Customer knowledge of services– Service heterogeneity limits knowledge– Providers are unwilling to estimate price– Individual customer needs vary– Price information is overwhelming in services– Prices are not visible
• The role of nonmonetary costs– Time costs, search costs, convenience costs and
psychological costs• Price as an indicator of service quality
Three Basic Price Structures and
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Three Basic Price Structures andDifficulties Associated with Usage
for Services
D e m a n d -
B a s e d
C o s t - B
a s e d
C o m p
e t i t i
o n -
B a s e d 1. Cost-plus pricing
2. Fee for service
1. Price signaling
2. Going-rate pricing
Three Basic Price Structures and
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Three Basic Price Structures andDifficulties Associated with Usage
for Services
D e m a n d -
B a s e d
C o s t - B
a s e d
C o m p
e t i t i
o n -
B a s e d
PROBLEMS:1. Costs difficult to trace
2. Labor more difficult to
price than materials
3. Costs may not equal valu
PROBLEMS:1. Small firms may charge too
little to be viable
2. Heterogeneity of services
limits comparability
3. Prices may not
reflect customer
value
PROBLEMS:1. Monetary price must be adjusted to reflect
the value of non-monetary costs
2. Information on service costs less available to
customers, hence price may not be a central factor
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Value is low price.Value is everything
I want in a service.
Value is thequality I get for
the price I pay.
Value is all that I get for all
that I give.
Four Customer Definitions
of Value (perceived value)
Pricing Strategies When the
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Value is low price.
• Discounting• Odd pricing• Synchro-pricing• Penetration Pricing
Pr c ng Strateg es When theCustomer Defines Value as Low
Price
Synchro-Pricing: Place differentials, Time differentials,Quantity differentials and Differentials as incentives
Pricing Strategies When the
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Value is everything
I want in a service.
• Prestige pricing• Skimming pricing
Pr c ng Strateg es When theCustomer Defines Value as
Everything Wanted in a Service
Pricing Strategies When the
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Value is the quality I
get for the price I pay.
• Value pricing
• Market segmentationpricing
r c ng Strat g s Wh n thCustomer Defines Value as
Quality for the Price Paid
Pricing Strategies When the Customer
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Value is all that I get for all that I give.
• Price framing• Price bundling• Complementary pricing• Results-based pricing
g gDefines Value as All That Is Received for
All That Is Given
Complementary Pricing: Captive pricing,
two-part pricing and Loss leadership
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Value is low price. Value is everything
I want in a service.
Value is the quality
I get for the price I pay .
Value is all that I get
for all that I give.
• Discounting• Odd pricing• Synchro-pricing
• Penetration Pricing
• Prestige pricing• Skimming pricing
• Value pricing• Market segmentation
pricing
• Price framing• Price bundling• Complementary pricing• Results-based pricing
Summary of Service Pricing Strategiesfor Four Customer Definitions of Value
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