MM-3205: Service Marketing

Topic: Measurement & Quality of Service Quality

Submitted to:
Dr. H. Ramananda Singh

Submitted by:
Arpita Deb
Sem: 4th Roll no: 23
Every manufactured goods has service elements such as storage, marketing, distribution,
insurance, customer support, and advertising. Every service has manufactured tangible elements:
banks provide statements; airlines provide tickets; restaurants serve foods. There is no clear
distinction, but there is a tangibility spectrum.
Services usually have more intangible elements than manufactured goods. Other important
defining characteristics of services are as follows:
• Inseparability. Production and consumption usually take place at the same time – a haircut
cannot be stored for future use.
• Variability. A restaurant can spoil us with a superb meal one day and disappoint us with
mediocre fare a week later.
• Heterogeneity. Services range from simple to complex, from high-contact to low-contact, from
fully customized to fully standardized, from personal to business services & so on.
Due to the intangible nature of services & the variation of services offered to different customers,
defining quality becomes even more complicated.

What is Quality?
According to the definition given by the American Society for Quality Control, quality is “The
totality of features & characteristics of a product or service that bears on its ability to satisfy
stated or implied needs.”
This definition is ideal from the point of view of marketers. The ability to satisfy stated or
implied need is key criterion to differentiate good quality from poor quality. Another important
characteristic noted in the definition is the totality of features & characteristics. Thus, every area
of the product or service is considered crucial.
For example; a high quality hospital service comprises not only the diagnostic, treatment &
surgery but also the nursing, the hospital environment including hygienic ward maintenance, the
quality of food supplied to the patients & accompanying relatives & the uniforms & dresses.

Moments of Truth:
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From the customer’s point of view, the most vivid impression of service occurs in the service
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encounter or “moment of truth,” when the customer interacts with the service provider. For
example, among the service encounters a hotel customer experiences are checking into the hotel,
being taken to a room by a bell person, eating a restaurant meal, requesting a wake-up call &
checking out. It is in these encounters that customers receive a snapshot of the organization’s
service quality & each encounter contributes to the customer’s overall satisfaction & willingness
to do business with the organization again. From the organization’s point of view, each
encounter thus presents an opportunity to prove its potential as a quality service provider & to
increase customer loyalty.
 The Five Determinants of Service Quality:

Reliability: The ability to perform the promised service both dependably & accurately. Reliable
service performance is a customer expectation & means that the service is accomplished on time,
in the same manner & without error every time.
For example, receiving mail same time each day.

Responsiveness: The willingness to help customers & to provide prompt service. Keeping
customers waiting, particularly for no apparent reason, creates unnecessary negative perception
of quality. If a service failure occurs, the ability to recover quickly & with professionalism can
create very positive perception of quality.
For example, serve complementary drinks on a delayed flight.

Assurance: The knowledge & courtesy of employees as well as their ability to convey trust &
confidence.
For example, being polite and showing respect for customer.

Empathy: The provision of caring & individualized attention to customers.

For example, being approachable, good listener etc.

Tangibility: The appearance of physical facilities, equipment, personnel & the communication
materials.
For example, cleanliness.

Perceived service Quality

Word of Personal Past

mouth needs experience
Service Quality Service Quality Assessment
Dimensions Expected 1. Expectations exceeded
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ES<PS (Quality surprise)

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Reliability service
Responsiveness 2. Expectations met
Perceived
Assurance ES~PS (Satisfactory quality)
service
Empathy 3. Expectations not met
Tangibles ES>PS (Unacceptable quality)
Figure 1
Service Quality Gap Model:

Figure 2

The gaps model of service quality brings customer focus & service excellence together in a
structured, practical way. The model focuses on strategies & processes that firms can employ to
drive service excellence while maintaining a focus on customers.
The central focus this model is the customer gap, the difference between customer
expectations & perceptions. To close this all important customer gap, the model suggests that
four other gaps - the provider gaps - need to be closed.
The provider gaps are the underlying causes behind the customer gap:
Gap 1 – Not knowing what customers expect.
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Gap 2 – Not selecting the right service designs & standards.

Gap 3 – Not delivering to service standards.
Gap 4 – Not matching performance to promise.

What is the measurement of service quality?

• The gap between the customer’s level of expectation and how well they rated the
service(s).

Why measure Service Quality?

• To identify where services need improving in view of the customers.
 • To provide services those are more closely aligned with expectation of the users.

How to measure Service Quality?

Generally organisations use a mixture of qualitative and quantitative methods:
 Qualitative Methods: interviews focus groups, observation (including mystery
shopping!).
 Quantitative Methods: surveys (questionnaires, customer comments cards), statistics
(routine data collection).

Service attributes can also be analyzed using either rating scales or penalty/reward analysis.

Focus Groups:
A focus group is a form of qualitative research in which a group of people are asked about their
perceptions, opinions, beliefs and attitudes towards a product, service, concept, advertisement,
idea, or packaging. Questions are asked in an interactive group setting where participants are free
to talk with other group members.

Mystery shopping
A qualitative tool of observation, mystery shopping has been growing increasingly popular in the
service setting. The basic idea of this method is to look at the process (es) under scrutiny from
the outside and measure their efficiency from a number of viewpoints:
• The checker. A specially trained employee of the company has the advantage of being familiar
with the company’s service standards. Airlines often use this type of analysis. The disadvantage
of the use of checkers as mystery shoppers is the fact that they might be recognized as such, for
they unconsciously act differently from average customers and may provoke the observer effect
(When observed personnel deviate from their usual behavior and present themselves at their
best). An additional danger is company blindness. This occurs if checkers are only able to
account for the company’s internal evaluation criteria, while they are either completely ignoring,
or ignorant of, both standards of competition and customer expectations.
• The expert. Specially trained outsiders can often be found carrying out mystery shopping in the
field of gastronomy. Their tests are very highly regarded by the general public, for experts are (or
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should be) familiar with standards of the competition as well as general industry standards. The
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main impediment to expert tests is the fact that experts do not necessarily belong to the customer
segment the company focuses on, and may have different expectations than the average
customer.
• The customer. Evaluators selected to play the role of customers normally fit the socio-
demographic or psychographic group profile for the customer segment(s) on which the company
focuses. Banks and insurance companies as well as food and clothes retailers often use this type
of mystery shopping. The main disadvantage of this approach is customers’ lack of expertise. To
offset it, companies usually organize preparatory training sessions.
All three approaches to mystery shopping are widely used in the airline sector for internal and
external benchmarking. All of them are highly subjective. However, the level of subjectivity can
be reduced to a certain extent by using as many evaluators as possible. Domino’s Pizza, a US-
based pizza company, used 800 customer-inspectors for each of their outlets over a period of 2
months, and then compared the results of their observations. In this way, individual outliers
leveled out and a more balanced picture emerged.

Use of rating scales in analysis of attributes: SERVQUAL

The most widely used and most carefully scrutinised rating scale is SERVQUAL (the name
stands for SERVice QUALity). The model defines quality as the difference between customer
perceptions and expectations with regard to quality of delivered service.
Respondents are asked to answer two sets of questions dealing with the same
subject, one set at a general level (such as quality of service in financial institutions), and one for
a company of interest (such as quality of service in bank XYZ). The first (general) set of
questions are quality expectations (Ei ) and the second (specific) set are quality perceptions (Pi ).
Respondents choose from a modified Likert scale which measures intensity of
agreement or disagreement with any given statement. Response options range from strongly
agree and lesser levels of agreement to neutral (neither agree nor disagree) and lesser levels of
disagreement to strongly disagree.

For each of the 22 items (service attributes), a quality judgment can then be
computed according to the following formula:
Perception(Pi) − Expectation(Ei) = Quality(Qi)

From the formula, the following can be implied:

• If expectations exceed perceptions, quality is poor.
• If perceptions exceed expectations, quality is excellent.
• If customers have low expectations which are met, quality exists.

From the formula, the following can be implied:

• If expectations exceed perceptions, quality is poor.
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• If perceptions exceed expectations, quality is excellent.

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• If customers have low expectations which are met, quality exists.

The SERVQUAL score (perceived service quality) is obtained by the following equation:
Penalty/Reward Method:

Penalty/reward analysis, developed by Brandt (1987, 1988), is used for identification of service
attributes whose (lack of) presence can either diminish or increase service value in the eyes of
potential customers. Desirable attributes which are not part of a service cause customer
dissatisfaction.

The same can be stated for undesirable attributes which are part of a service. These are therefore
labeled penalty factors. Reward factors, on the other hand, are those attributes which allow a
provider to exceed customer expectations. Sometimes referred to as delighters, they account for
higher perceived quality, and consequently also higher customer satisfaction.
To identify service attributes as either penalty or reward
factors, penalty/reward contrast (PRC) analysis is applied. PRC analysis is nothing more than a
multiple regression analysis based on the use of dummy variables. For each attribute, perceived
quality is compared to quality expectations, and the net result of the comparison statistically
linked to total customer satisfaction. In other words, should expectations exceed perceptions, the
attribute under scrutiny causes an average decrease in total customer satisfaction, and vice versa.
It is therefore possible to compensate the negative effects of penalty factors with positive effects
of reward factors.
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