Part 4

ALIGNING SERVICE DESIGN AND STANDARDS

Provider Gap 2

Key Factors Leading to Provider Gap 2

Chapter

Service Innovation and Design

Challenges of Service Innovation and Design New Service Development Processes Types of Service Innovations Stages in Service Innovation and Development Service Blueprinting High-Performance Service Innovations

Objectives for Chapter 9: Service Innovation and Design

Describe the challenges inherent in service innovation and design.

Present the stages and unique elements of the service innovation and development process.
Demonstrate the value of service blueprinting and how to develop and read service blueprints. Present lessons learned in choosing and implementing high-performance service innovations.

Risks of Relying on Words Alone to Describe Services Oversimplification

Portfolio Management

Incompleteness People tend to omit details or elements of the

service with which they are not familiar.

Subjectivity Any one person describing a service in words

will be biased by personal experiences and degree of exposure.

Biased Interpretation No two people will define responsive, quick

or flexible,.

Describing the Complexity of a Service Offering:

Types of Service Innovations

major or radical innovations start-up businesses new services for the currently served market service line extensions

service improvements style changes

New Service Development Process

New Service Strategy Matrix for Identifying Growth Opportunities

 Share building: (Current Customers Existing services)

Market penetration caf coffee day is to expand its reach and number of outlets across India during fiscal 2009-10, its PAN India retail presence to 882 outlets, a growth of nearly 16% over the previous year.

Market Development (New Customers, Existing Services)

Caf coffee day can be found in airports, universities, super departmental stores, multiplexes, railway stations, petrol pumps etc.)

Service Development( Current Customers, New Services)

New offerings The Layers range of Winter beverages

Diversification(New Customers, New Services)

Amalgamated Bean coffee Trading, hospitality sector with the Serai Luxury Resort and spa.Cafe Coffee Day resorts plans to set up resorts in Sakleshpur on the BengaluruHassan Highway, Mangalore and Mysore.

Service Blueprinting
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customers point of view.

Service Blueprint Components

Customer Actions line of interaction

Visible Contact Employee Actions line of visibility Invisible Contact Employee Actions
line of internal interaction Support Processes

Service Blueprint Components

Blueprint for Express Mail Delivery Service

Blueprint for Overnight Hotel Stay Service

Building a Service Blueprint

Application of Service Blueprints

New Service Development
concept development market testing

Supporting a Zero Defects Culture

managing reliability identifying empowerment issues

Service Recovery Strategies

identifying service problems conducting root cause analysis modifying processes

Blueprints Can Be Used By:

Service Marketers
creating realistic customer expectations:
service system design promotion

Human Resources Management

empowering the human element:
job descriptions selection criteria appraisal systems

Operations Management
rendering the service as promised:
managing fail points training systems quality control

System Technology
providing necessary tools:
system specifications personal preference databases

Benefits of Service Blueprinting

Provides a platform for innovation. Recognizes roles and interdependencies among functions, people, and organizations. Facilitates both strategic and tactical innovations. Transfers and stores innovation and service knowledge. Designs moments of truth from the customers point of view. Suggests critical points for measurement and feedback in the service process. Clarifies competitive positioning. Provides understanding of the ideal customer experience.

Common Issues in Blueprinting

Clearly defining the process to be blueprinted Clearly defining the customer or customer segment that is the focus of the blueprint Who should draw the blueprint? Should the actual or desired service process be blueprinted? Should exceptions/recovery processes be incorporated? What is the appropriate level of detail? Symbology Whether to include time on the blueprint

Parking Exterior Building Waiting Area Outdoor Seating

Interior Design Hostess Stand Appearance of Staff

Drink Station Appearance of Bar and Bartenders

Cleanliness of Table Silverware Napkins Sauces Centerpiece

Menu

Plates Glasses Presentation Food Drinks

PHYSICAL EVIDENCE

Menu

CUSTOMER

Arrive at Restaurant

Approach Hostess Stand

Wait/Order Drinks at Bar

Consume Drinks

Be Seated at Table

Order Drinks/ Appetizers

Specify Spiciness of Sauce

Receive Drinks/ Appetizers

Order Entree

Next Slide

CONTACT PERSON

(Visible)

Greet and Give Buzzer

Greet and Take Drink Order

Deliver Drinks

Escort to Table

Take Drink/ Appetizer Order

Prepare Sauce at Table

Deliver Drinks/ Appetizers

Prepare Drinks

SUPPORT PROCESS

(Invisible)

Process Seating Requests

Buzz Customer

Input Order at Bar/ Kitchen

Check Accuracy of Order

Computerized Seating System

Receive Order

Prepare Drinks/ Appetizers

Menu

Plates Food Presentation

Doggie Bags

Menu

New Silverware Plates Food Presentation

Portfolio with Check Enclosed Fortune Cookies

CUSTOMER

PHYSICAL EVIDENCE

Order Entree

Receive Entree

Eat Food

Consume Refills, Extra Sauce

Finish Meal

Ask for Doggie Bag

Order Dessert

Eat Dessert

Ask for Bill

Pay Bill

CONTACT PERSON

(Visible)

Take Entree Order

Deliver Order

Offer Refills, Extra Sauce

Deliver Drinks, Extra Sauce

Pick-up Empty Plates/ Clean off Table

Bring Boxes to Customer

Show Dessert Menu

Deliver Dessert

Deliver Bill and Fortune Cookies

Pack up Food

Take Order

(Invisible)

Enter Order into Computer

Refill Drinks, Extra Sauce

Take Plates to Kitchen

Enter Dessert Order Into Computer

Total Bill at Computer

SUPPORT PROCESS

Receive Food Order

Prepare Food

Wash Dishes

Receive Order/ Prepare Dessert

Print Bill

Tangible Cues or Indicators of Quality

Exterior and Interior Design Presentation of Food/Drinks Appearance of Staff Cleanliness of Tables, Utensils Cleanliness of Restrooms Location of Restaurant Appearance of Surrounding Customers

Possibility of Standardization

Hostess Greeting Pre-Prepared Sauces (Mild, Medium and Hot) Time Standards Food and Drink Quality Standards Bill Standards

Potential Fail Points and Fixability

Bar
train to make drinks; create ample seating space for wait area overflow

Food
revise food presentation; create quality control checks to ensure order is correct before delivering to customer

Staff
training; set number of times to check-in on customers; behavioral and attitude guidelines; dress code

Billing
standards for when to bring bill, how to deliver, when to pick-up, how quickly to process transaction; ensure one fortune cookie per customer

Cleanliness
standards for amount of time it takes to clear and clean tables; regular restroom checks

PROF. (DR.) ANUPAM NARULA

B.Sc. (Math's), M.A (Eco.), PGDBM (MKTG), Ph.D. (Eco.) FACULTY IN MARKETING, FORE SCHOOL OF MANAGEMENT, NEW DELHI

27

Suggested readings:
1. Services Marketing by Valarie A. Zeithaml & Mary Jo Bitner, Gremler, and Ajay Pandit ,Tata McGraw Hill New Delhi 2. Marketing of services by Christopher H. Love lock, PHI & Englewood cliffs. 3. Services marketing: The Indian experience by Ravi Shankar, Excel Books. 4. Marketing for Non- profit Organizations by Philip Kotler, PHI New Delhi.
28

TEST OF CRITERIA
Intangibility

SERVICES
Fully intangible

PRODUCT
Fully tangible

Inseparability of buyer & provider

Difficulty in measuring and controlling quality

Both must be present

Measure and control people& processes.

Remote transactions easy

Product quality.

High degree of risk. Cost of failure very high.

Product can be replaced.

Consumption of the Customization offering likely to enhance perception Personalization of buyer relationship
Sensitivity to time

Customization increases cost. Product is focus.

Can usually wait .
29

Relationship important
Needed on demand

 According to Philip Kotler: Service as an act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

Zeithmal defines services as deeds, processes and performance. Deeds are the actions of the service provider. Processes are the steps in the provision of service. And performance is the customers understanding of how the service has been delivered.
30

Service Continuum

Source: G. Lynn Shostack.

31

 Robert Judd in 1964 categorized services in three broad areas: -Rented goods services (Right to own and use a good for a defined time period), -Owned goods service (Custom creation, repair or improvement of goods owned by the customer) -Non-Goods services (personal, experience or experiential possession). Early 1977 Ms G Lynn Shostack, the Vice32

 Theodore Levitt Proposed the other approach of distinction i.e goods can be put into two categories: Search goods and Experienced goods. Search Goods- Packed goods. Experienced Goods- Holidays, Travel etc. Philip Kotler in 1980 has expanded the point of view and Suggested Four categories; Pure tangibles, Major tangibles with minor intangibles, Minor tangibles with Major intangibles, Pure services. Lovelock in 1980 categorized as : - People based Vs. Equipment based. - Extent to which Clients presence necessary. - Meets personal needs Vs. Business needs. - Public Vs. Private, For Profit Vs. Non- Profit. - Basic Demand characteristics. - Service content and benefits. - Service delivery procedures- Multi site Vs. single site, first come, first served.

33

CHRISTOPHER LOVELOCK & JOCHEN WIRTZ

Services are economic activities offered by one party to another. Often time- based, performances bring about desired results to recipients, objects, or other assets for which purchasers have responsibility.

In exchange for money, time and effort, service customers expect value from access to goods, labor, professional skills facilities, networks and systems; but they do not
34

Expanding the marketing mix for services:

PEOPLE: Friendliness, Knowledgeability, helpfulness, frontdesk staff, Housekeeping staff, Restaurant wait staff, To woo/ win the hearts & minds of service people. PHYSICAL EVIDENCE: Servicescape i.e Ambience, the background music, the comfort of the seating, Physical layout of a Service facility, the appearance of staff & promotional materials. PROCESS: The pace & sensitivity of the approval process of the loan and the skill

35

Salient features of services:

INTANGIBILITY INSEPARABILITY VARIABILITY PERISHABILITY OWNERSHIP SERVICE IS A PERFORMANCE SIMULTANEITY QUALITY MEASUREMENT NATURE OF DEMAND CUSTOMER, A PART OF THE PRODUCTION PROCESS.

36

WHY MARKETING OF SERVICES

1. Upward trend in the disposable income. (DINKS) 2. Increasing specialization. 3. Growing fashion. 4. Professionalism in education. 5. Information explosion. 6. Sophistication in market. 7. Increasing Governmental activities.
37

Factors affecting development of service marketing

1. 2. 3. 4. 5. 6. 7. Organization size and structure. Regulatory bodies. Growth in Service industries. Characteristics of Services. Customer/Employee interaction. Service Quality. Specific service sectors.
38

Significance of service marketing:

1. Creation and expansion of job opportunities. 2. An optimal utilization of resources. 3. Paving avenues for the formation of capital. 4. Increasing the standard of living. 5. Environment-friendly Technology.
39

Myths about service industries:

1. Service Economy produces services at the expense of other sectors: 2. Services are Labor intensive. 3. People satisfy their product needs before the need for services. 4. Service businesses are cottage industries and service jobs are low paying. 5. Services are only offered by the government sector.
40

Classification of services Based on degree of involvement of the customer:

People
People processing (Services directed at
peoples bodies)

INPUTS Possessions

Possession processing
(Services directed at physical possessions)

Tangible Intangible ACTION REQUIRED

A. Restaurant/

Health Care/Dance centre

B. Transportation/
Laundry and Dry Cleaning/ Repair and Maintenance.

Mental stimulus (Services directed at

peoples mind) C.Education/Consultancy/ Entertainment/ Psychotherapy

Information Processing (Services directed at

intangible assets) D. Legal services/ Banking/ Insurance/ Accounting/ medical Diagnosis.

41

People processing
People must enter the service factory, a physical location where people or machines create or deliver service benefits to customers. Sometimes service providers are willing to come to customers, bringing the necessary tools of their trade. Eye examination , manicure sittings. The amount of time required of customers in people- processing services varies widely. (minutes to months)
42

Possession-Processing
Customers ask service organizations to provide tangible treatment for some physical possession-house invaded by insects, an overgrown hedge, a malfunctioning elevator, dirty clothes etc. Many such activities are quasi- manufacturing operations and do not involve simultaneous production and consumption. Examples include cleaning, storing, repairing physical objects etc. Customers are less physically involved with this type of service than with people-processing.
The customer involvement is limited to dropping off the item that needs treatment, requesting the service, explaining the problem and later to pick up the item and pay the bill.

43

Mental Stimulus Processing

Services directed at peoples mind news, education advertising, Psychotherapy. Obtaining the full benefit of such services requires an investment of time and a degree of mental effort on the customers part. However the recipients dont necessarily have to be physically present in a service factory, just mentally in communication with the information presented. Education and entertainment are created in

44

Information Processing

Revolutionize by information technology, but not all information is processed by machines. Professionals in a wide variety of fields also use their brains to perform information processing. Information is the most intangible form of service output but can be transformed into tangible forms as letters, reports, plans CD-ROMs or DVDs. Financial services, professional services like

45

Classification of services Based on the service Tangibility:

1. Highly tangible: Cell phone on rent, After contract period is over, the cell is returned. 2. Service linked to tangible goods: Buying of Photocopying machine with which free service is given for few years. 3. Tangible goods linked to services: Airline services offer food & magazines to passengers. 4. Highly intangible: Massage parlor, customer does not get any tangible product.
46

Classification of services Based on the Business Orientation of service provider:

1. Not- for-profit Organization: serve society, Government schools & Hospitals.

2. Commercial Organizations: Airlines, Insurance, & Restaurants.

47

Classification of services Based on the Type of End- User:

1. Consumer Services: Beauty care, Physiotherapy, & Hair cutting. 2. Business to Business (B2B): purchased by Organizations, Market research, Consultancy, Advertising. 3. Industrial services: Machine Installation & Plant Maintenance.
48

To what extent service provider Needed to customize service:

High customization services Lawyer needs to change the way to win the case. Beautician will adjust the hair style and make up as per individual customer requirement. Little customization services Movie is screened in a theater. Technician sent by company to Install machine.

49

EXCELLENT SERVICE IS NOT ABOUT BEING 1000 PERCENT BETTER AT ONE THING BUT ONE PERCENT BETTER AT A THOUSAND THINGS.
JAN CARLZON

50

TODAY, SALES PEOPLE ARE STILL SELLING PRODUCTS WHILE CUSTOMERS WANT TO BUY RELATIONSHIPS.
LARRY WILSON.

51

PROF. (DR.) ANUPAM NARULA B.Sc. (Math's), M.A (Eco.), PGDBM (MKTG), Ph.D. (Eco.)

FACULTY IN MARKETING, FORE SCHOOL OF MANAGEMENT, NEW DELHI

52

GAPS MODEL OF SERVICE QUALITY

Expected service Customer Gap

Perceived service Service Delivery GAP 4 External communications to Customers

Company GAP 1

GAP 3
Customer Driven service Design and Standards GAP2 Company Perceptions of Consumer Expectations

53

CUSTOMER GAP

54

Key Factors Leading to the Customer Gap:

Provider GAPS:
GAP 1- The Listening Gap.
Not knowing what customers expect.

GAP 2- The Service Design and Standards Gap.

Not having the right service designs and standards.

GAP-3- The Service Performance Gap.

Not delivering to service standards.

GAP 4- The communication Gap.

Not matching performance to promises.

55

GAP-1: NOT KNOWING WHAT CUSTOMERS EXPECT:

What causes this gap: 1. No direct interaction with customers. 2. Unwillingness to ask customers about expectations. 3. Unpreparedness to address the expectations. 4. Lack of market segmentation to understand the needs of each segment.
56

Key Factors Leading to Provider Gap 1

GAP-2: NOT SELECTING THE RIGHT SERVICE DESIGN & STANDARD:

1. Absence of customer- Driven standards of service quality. 2. Absence of formal Quality- Control goals. 3. Vague or undefined service Design.

58

Key Factors Leading to Provider Gap 2

GAP-3: NOT DELIVERING TO SERVICE STANDARDS:

1. Lack of right type of employees or their training in services delivery. 2. Lack of empowerment of the employees. 3. Lack of training to the franchisees staff. 4. Failure to Predict/match supply and demand fluctuations. 5. Insufficient customer education.

60

Key Factors Leading to Provider Gap 3

GAP-4: MISMATCH BETWEEN PROMISES AND PERFORMANCE:

1. Unrealistic communication to customers. 2. Over promising through advertisement or personal selling. 3. Lack of internal communication.
PUT IT ALL TOGETHER TO CLOSE THE GAPS.
62

Key Factors Leading to Provider Gap 4

Ways to Use Gap Analysis:

Overall Strategic Assessment:

How are we doing overall in meeting or exceeding customer expectations? How are we doing overall in closing the four company gaps? Which gaps represent our strengths and where are our weaknesses?

Ways to Use Gap Analysis Specific Service Implementation

Who is the customer? What is the service?
Are we consistently meeting/exceeding customer expectations with this service? If not, where are the gaps and what changes are needed? (Examine gaps 1-4 for this particular service)

DIMENSIONS OF QUALITY:

1. 2. 3. 4. 5. 6. 7. 8.

PERFORMANCE FEATURES RELIABILITY CONFORMANCE DURABILITY SERVICEABILITY AESTHETICS PERCEIVED

66

DERMINANTS OF QUALITY OF SERVICES GIVEN BY BERRY & PARASURAMAN

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

CREDIBILITY SECURITY ACCESS COMMUNICATION UNDERSTANDING THE CUSTOMER TANGIBLES RELIABILITY RESPONSIVENESS COMPETENCE EMPATHY
67

MEASUREMENT OF SERVICE QUALITY:

1. 2. 3. 4. 5.

Customer- Defined Standards Benchmarking Complaint Solicitation and Analysis Lost customer Analysis Critical Incident study
Recovery Reconciliation with the customers

68

CHAPTER-5

CUSTOMER PERCEPTIONS OF SERVICE

Customer Perceptions of Service

Customer Perceptions Customer Satisfaction Service Quality

Service Encounters: The Building Blocks for Customer Perceptions

Objectives for Chapter 5: Consumer Perceptions of Service

Provide a solid basis for understanding what influences customer perceptions of service and the relationships among customer satisfaction, service quality, and individual service encounters. Demonstrate the importance of customer satisfactionwhat it is, the factors that influence it, and the significant outcomes resulting from it. Develop critical knowledge of service quality and its five key dimensions: reliability, responsiveness, empathy, assurance, and tangibles.

Show that service encounters or the moments of truth are the essential building blocks from which customers form their perceptions.

The customer is . . .
Anyone who receives the companys services, including:
external customers (outside the organization, business customers, suppliers, partners, end consumers) internal customers (inside the organization, e.g., other departments, fellow employees)

Customer Perceptions of Quality and Customer Satisfaction

Factors Influencing Customer Satisfaction

Product quality Service quality Price Specific product or service features Consumer emotions Attributions for service success or failure Perceptions of equity or fairness Other consumers, family members, and coworkers Personal factors Situational factors

ACSI and Market Value Added

ASCI and Annual Percentage Growth in S&P 500 Earnings

Source: C. Fornell Customer Satisfaction and Corporate Earnings, commentary appearing on ACSI website, May 1, 2006, http://www.bus.umich.edu/research/nqre/Q1-01c.html.

Relationship between Customer Satisfaction and Loyalty in Competitive Industries

Top Box Scores A Higher Standard

Overall Satisfaction with XYZ (% of customers) Definitely Will Repurchase from XYZ Definitely Would Recommend XYZ

TOP BOX
Very Satisfied

(64%)

= 96%
44-point drop

= 91%
55-point drop

All Customers

SECOND BOX
Somewhat Satisfied

= 52%

= 36%

(29%)

BOTTOM 3 BOXES
Neutral to Very Dissatisfied

(7%)

=7%

=4%

Source: Technical Assistance Research Bureau (TARP), Customer Service Survey company 2007.

FedEx Focus on Reliability

FedEx Message Absolutely, positively has to get there

Geek Squads Focus on Responsiveness

FedEx Focus on Assurance & Trust

FedEx Uses tag line Relax, its FedEx

Jiffy Lube Focus on Responsiveness & Tangibles

Offers Auto maintenance, from car oil changes to preventive maintenance, and much more based in Houston, Texas. Providing fast, efficient service and a comfortable, clean waiting room.

How Customers Judge the Five Dimensions of Service Quality

Outcomes of Customer Satisfaction

Increased customer retention Positive word-of-mouth communications Increased revenues

What is Service Quality? The Customer Gap

Customer Gap

Service quality is the customers judgment of overall excellence of the service provided in relation to the quality that was expected.

Service Quality
The customers judgment of overall excellence of the service provided in relation to the quality that was expected. Service quality assessments are formed on judgments of:
outcome quality interaction quality physical environment quality

The Five Dimensions of Service Quality

Reliability

Ability to perform the promised service dependably and accurately.

Assurance

Knowledge and courtesy of employees and their ability to inspire trust and confidence.
Physical facilities, equipment, and appearance of personnel.

Tangibles

Empathy

Caring, individualized attention the firm provides its customers.

Responsiveness

Willingness to help customers and provide prompt service.

Exercise to Identify Service Attributes

In groups of five, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customers point of view.

Reliability:
Assurance: Tangibles: Empathy: Responsiveness:

SERVQUAL Attributes
RELIABILITY

EMPATHY

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

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

RESPONSIVENESS

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

TANGIBLES

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

The Service Encounter

is the moment of truth occurs any time the customer interacts with the firm can potentially be critical in determining customer satisfaction and loyalty types of encounters:
remote encounters, phone encounters, face-to-face encounters

is an opportunity to:
build trust reinforce quality build brand identity increase loyalty

A Service Encounter Cascade for a Hotel Visit

A Service Encounter Cascade for an Industrial Purchase

Sales Call Delivery and Installation Servicing

Ordering Supplies
Billing

Service Encounters: An Opportunity to Build Satisfaction and Quality

Common Themes in Critical Service Encounters Research

Recovery:

Adaptability:

employee response to service delivery system failure

Coping:

employee response to customer needs and requests

Spontaneity:

employee response to problem customers

unprompted and unsolicited employee actions and attitudes

Recovery

Adaptability

Spontaneity

Coping

Evidence of Service from the Customers Point of View

PROF. (DR.) ANUPAM NARULA

B.Sc. (Math's), M.A (Eco.), PGDBM (MKTG), Ph.D. (Eco.)

FACULTY IN MARKETING, FORE SCHOOL OF MANAGEMENT, NEW DELHI

100

Customer expectations of service:

Customer expectations: Pre -trial beliefs that a consumer has about the performance of a service that are used as the standards against which service performance is judged. Knowing customer expectations- the most critical step in delivering quality service.

101

Possible Levels of Customer Expectations

102

Levels of customer service: Ideal Service Level: wished for level of service. Desired Service Level: Customer hopes to receive. Adequate Service Level: Minimum level of service that the consumer will accept. Predicted Service Level: Service level between desired and adequate service level of a customer and lies in the Zone of tolerance. Zone of Tolerance: A Gap/Area between adequate and Desired level of service. It varies for each customer and for the same customer in different situations.
103

The Zone of Tolerance

Service Level Expectations
Desired Service

Delights

Zone of Tolerance

Desirables

Adequate Service

Musts

104

Zones of Tolerance
The range of expectations between desired and adequate
can be wide or narrow can change over time
can vary among individuals

may vary with the type of product/service

105

Zones of Tolerance VARY for Different Service Dimensions

Desired Service

Level of Expectation

Zone of Tolerance
Adequate Service

Desired Desired Service Service

Zone of Tolerance Adequate Adequate Service Service

Most Important Factors

Least Important Factors

106

Source: Berry, Parasuraman, and Zeithaml (1993)

Factors that Influence Desired Service:

Enduring Service Intensifiers

1. Derived expectations
2. Customer Plilosophy

Desired Service Personal Needs

Zone of Tolerance Adequate Service

107

Enduring service intensifiers are individual, stable factors that lead to heightened sensitivity to service. It is Further Divided into:

1. Derived Service Expectations (Customer expectations are driven by another person or group of
people Ex- parent choosing a vacation for the family).

2. Customer Service Philosophies.

(Customer underlying generic attitude about the meaning of service and the proper conduct of service providers Ex: customers who are themselves in service business have strong service philosophies).

Personal needs include psychological categories.

physical,

social,

108

Factors that Influence Adequate service:

Transitory Service Intensifiers

Perceived Service Alternatives

Desired Service
Zone of Tolerance

Self-Perceived Service Role

Adequate Service

Situational Factors
109

 Transitory service intensifiers temporary individual factors a computer breakdown will be less tolerated at financial year-ends Perceived service alternatives: Customer in a big city who needs a loan to buy a house knows that he can get a loan from many sources hence he will have high adequate service expectations than a customer in rural town. Perceived service role of customer: Ayoung girl who has Knowledge in designing bridal dresses will actively participate in designing her own bridal dress and her adequate service expectations are high. Situational factors: Service performance conditions beyond the control of service provider For Example: Power failure due to which cable service provider is not able to beam his programme. Zone of tolerance increases and expectations of adequate service reduce .
110

Factors that Influence Both Desired and Predicted Service:

Explicit Service Promises

Implicit Service Promises

Desired Service Zone of Tolerance

Word-of-Mouth

Past Experience

Adequate Service

Predicted Service
111

 Explicit Service promises: Through ADS, Personal selling, Brochures and soon heighten the desired and predicted service expectation of customers. Example: Institute promising a job in U.S, candidates doing the course begin to believe that service provider will help them in getting a job in the U.S. Implicit service promises: Tangible clues that give a customer an idea of how the service will be. Ex: Price set by Taj Holiday Package serves as an Implicit service promise by the hotel group.

112

 Word- of-Mouth Publicity: Positive or negative opinion given by friends or relations. Past Experience: Customer who has visited Mc Donalds outlet in New York, USA will desire and predict to receive service of the same standard at a Mc- Donalds outlet in Mumbai, India.

113

ANTECEDANTS OF CUSTOMER EXPECTATIONS

Internal factors External factors Situation factors

Individual needs Competitive options Reason of purchase

Level of involvement
Past experience Service philosophy

Social context Consumer mood Word of mouth Time constraint communication emergency

Firm produced Price Promotion Distribution Firm image Pre service waiting Service personnel
114

Frequently Asked Questions About Customer Expectations

What does a service marketer do if customer expectations are unrealistic?

Should a company try to delight the customer? How does a expectations? company exceed customer service

Do customer service expectations continually escalate? How does a service company stay ahead of competition in meeting customer expectations?
115

Criteria to evaluate a service based on Customers Expectations.

Speed: travel agency delivers the tickets in a couple of hours. Certainty: Courier package delivery in 24 hours. Ease: theater that provides for online or telephonic ticket booking as it saves time and effort. Personal recognition: Sugar free tea during first stay in the hotel.
116

Aravind Eye Hospital

Based at Madurai, single largest cataract surgery provider in the world in 2003. Cataract surgery in U.S hospitals costed at US$ 1650 while Aravind provided at US$ 10. Aurolab was one of the leading manufacturers of intraocular lenses (IOLs) in the world. In 2003 held 10% share of global market in IOLs. American Ophthalmic Labs sold these lens at US$ 100-150 a piece, Aurolab sold at US$ 4-6 per lens. Founder of Aravind Eye hospitals, Dr Govindappa Venkataswamy (Dr V) said Give people a new experience, one that deeply changes their lives, make it affordable and eventually you change the whole world. And your customers become your marketers in service industry over period of time.

117

How does a company Exceed Customer Service expectations

Pebble Beach Resort, located along the pacific coast of northern California. It prints the phrase on the back side of employee business cards: Exceed the expectations of every guest, by providing a once in a lifetime experience, every time. This philosophy raises a question, Should a service provider try simply to meet customer expectations or to exceed them? 1. Exceeding customer expectations of basics is impossible. 2. Customer relationships with personalization of service & Knowledge of customers. For Example: Ritz- Carlton Hotels, two time recipient of the Malcolm Baldrige Quality Award.

118

 Adequate service expectations rise as quickly as service delivery or promises rise. Companies need to monitor adequate service expectations continually- the more turbulent the industry, the more frequent the monitoring needed.

TCS Experience Certainty: TCS promises what they can deliver and they deliver what they promise. Thats Certainty!. These promises are realistic and pragmatic approaches to the delivery of services. PROMISE WHAT WE DELIVER, DELIVER WHAT WE PROMISE. THATS CERTAINTY Tata consultancy services Experience Certainty
119

PROF. (DR.) ANUPAM NARULA

B.Sc. (Math's), M.A (Eco.), PGDBM (MKTG), Ph.D. (Eco.)

FACULTY IN MARKETING, FORE SCHOOL OF MANAGEMENT, NEW DELHI

120

 The study of consumer behavior requires inputs from various disciplines such as sociology, psychology and Economies.
Consumer behavior deals with the study of the factors that influence a customer in purchasing a product/service, and the process that he/she goes through, to evaluate the product/ service prior to and even after its purchase and use.
121

Dimensions of SEC Qualities:

Search Qualities Tangibility Credibility

Experience Qualities Access Courtesy Reliability Responsiveness Understanding the customer Communication

Credence Qualities Competence Security

122

 Search Qualities: is a characteristic that can be estimated before the purchase or consumption of a product. Goods have a higher magnitude of search qualities when compared to services. Experience Qualities: include those attributes of a good or a service, which can be assessed by a customer only after its purchase and utilization. Services have higher experience characteristics than goods. Credence Qualities: The qualities of a product or a service that are difficult to assess even after its purchase and consumption/ utilization.

123

Continuum of Evaluation for different types of products:

124

Consumer Decision Making Process:

125

1.Need Perception : Difference between the

actual state and desired state. The best example is the Maruti AD which says that the Monthly EMI on a car loan from the company is only Rs 2599 which gives the customer a feeling that it is quite affordable. 2. Search for information: Personal sources: Friends, Family, Neighbors. Etc. Commercial sources: Dealers, sales people, POP/POS Displays, Retailers, Advertising Etc.

126

Perceived Risk: Services makes the customers perception of risk higher in the case of services, than for goods. There are six types of perceived risks, namely: (a) Financial Risk: Decision to buy a second- hand car (cheaper but possibly over-used). (b) Functional Risk: Bike may not give that mileage that manufacturer promises. (c) Physical Risk: Pressure cooker, if not ISI, may result in an Accident. (d) Psychological Risk: harm to ones self image, Hiring the services of a Babysitter for their baby involves psychological risk, well being of their child.
127

(e) Social Risk: Dress that does not suit her personality involves a social risk, visiting a psychiatrist for treatment. (f) Time risk: Time spent to search & locate a product/ service prior to its purchase. 3. Evaluation of Alternatives: The evoked set of alternatives is smaller in services as compared to products. For example: Interior designing of a house is done according to the customers taste & differs from customer to customer.
128

 Evaluation of services is a well defined set of attributes. Moods, Emotions & Attitude. How customers integrate available information to make a purchase decision. 4. Purchase Decision: Trial purchases: Free Holiday packages,. Repeat Purchases: Brand Loyalty. Long-Term Commitment: 10-15 yrs membership with the club, Lifestyle clubs. 5. Post Purchase Evaluation: Comparing its performance with its Expectations, Cognitive Dissonance
129

Self-Service Technologies: How much do customers like providing their own services?

130