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



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.



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



Pro Pro

Customer Expectations

Customer Perceptions

Key Factors Leading to theCustomer Gap

Customer

GAP



Customer

Expectations

Company Perceptions of Customer Expectations

Inadeq Insuff

Rese

Key Factors Leading toProvider Gap 1

GAP

1



Customer-Driven Service

Designs and Standards

Management Perceptions of

Customer Expectations

Poor Se Unsyst

Va ue

Key Factors Leading toProvider Gap 2

GAP

2



Closing Gap 2• Service Development and Design

• Customer-defined service standards

• Physical Evidence and Servicescape



Physical evidence• Communicating service quality

attributes

• Setting customer expectations• Creating service experience

Organization’s physical facility – SERVICESCAPE



Coffee shop



Music store



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



Types of Sericescapes• Servicescape use

• Complexity of servicescape

• Typology implications



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



Roles of the servicescape• Package

• Facilitator

• Socializer• Differentiator



A Framework for Understanding Environment-User Relationshipsin Service Organizations



Approaches for understanding

servicescape effects• Environment surveys

• Direct observation

• Experiments

• Photographic blueprints



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



Service Delivery

Customer-Driven Service

Designs and Standards

DeficienIneffectiRole am

Key Factors Leading toProvider GAP 3

GAP

3



Closure of Gap 3• Understanding Employees roles inService Delivery

• Understanding Customers roles inService Delivery

• Intermediaries roles

• Managing demand & Capacity



Employees’ Roles

in Service Delivery• The Critical Importance of ServiceEmployees

• Boundary Spanning Roles• Strategies for Closing Gap 3

• Service Culture



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



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



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.



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



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



Boundary spanners• What are these jobs like?

– emotional labor

–many sources of potential conflict• person/role

• organization/client

• Interclient

• Quality/productivity



The effect of role stress

on job performance



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



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)



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



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



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.



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.,



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.,



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



Customer Roles in

Service DeliveryProductive Resources

Contributors to

Quality and

Satisfaction

Competitors



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



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



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



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.,



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.



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.



Strategies for Enhancing

Customer ParticipationEffective

Customer

Participation

Recruit, Educate,

and RewardCustomers

Define Customer

Jobs

Manage the

Customer

Mix



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



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



Manage the customer

mix• Attracting maximally homogeneousgroups of customers

• Compatibility of customer segments

Key Factors Leading to



Service Delivery

Lack of I Tende

indeExternal Communications to

Customers

Key Factors Leading toProvider GAP 4

GAP

4



Marketing Communication

mix• Advertising

• Sales promotion

• Public relations• Direct marketing

• Personal selling



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



Key reasons for service

communication problems• Inadequate management of servicepromises

• Inadequate management of customerexpectations

• Inadequate customer education

• Inadequate internal communications



Approaches for Integrating ServicesMarketing Communication

Goal:Delivery

greater thanor equal topromises

ImproveCustomer Education

ManageService

Promises

ManageCustomer

Expectations

ManageInternal

MarketingCommunication

Matching service promises

with delivery



Goal:Delivery


Offer Service

Guarantees

CreateEffectiveServices

Communications

MANAGING SERVICE PROMISES

MakeRealisticPromises

CoordinateExternal

Communication

Managing Service

Promises

Services Advertising



Services AdvertisingStrategies Matched with

Properties of Intangibility• Incorporeal existence

• Abstractness

• Generality Vs. specificity• Nonsearchability

• Mental impalpability



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



Communicate Criteria for Service Effectiveness

Create Tiered-ValueOfferings

NegotiateUnrealistic

Expectations

Goal:Delivery


Offer Choices

Approaches forManaging Customer Expectations

Approac es or



Goal:Delivery


PrepareCustomers

for theServiceProcess

ClarifyExpectationsafter the Sale

Teach

Customersto Avoid

PeakDemandPeriods

andSeek Slow

Periods

ConfirmPerformanceto Standards

Approac es orImproving Customer

Education



Goal:Delivery


Create EffectiveVerticalCommunications

Align BackOffice Personnel

w/ External Customers

Create EffectiveHorizontal

Communications

CreateCross-Functional

Teams

Approaches for ManagingInternal Marketing Communications



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



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



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



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



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



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




Value is everything


• Prestige pricing• Skimming pricing

Pr c ng Strateg es When theCustomer Defines Value as

Everything Wanted in a Service




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



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



Value is low price. Value is everything


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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