Service Marketing

Service marketing is a form of marketing where businesses that provide

a service to their customers use to increase brand awareness & sales.
Service marketing is a specialized branch of marketing that focuses on
the unique characteristics of services and how to effectively market
them.
Characteristics of Service
Intangibility: Services cannot be touched, seen, or felt in the same way
that physical products can. For instance, consider healthcare services.
You can't physically touch or see the treatment a doctor provides until it's
delivered. Patients must rely on the reputation of the healthcare provider,
reviews, or recommendations to make a decision.
Inseparability: Services are often produced and consumed
simultaneously. This means that customers are typically present during
the service delivery process. A restaurant visit is a prime example. When
you dine in a restaurant, you are present during the service delivery
process. You interact with waitstaff, chefs, and other diners in real-time,
and the dining experience is created as you receive the service.
Variability: Services can vary from one interaction to another because
they are highly dependent on the skills, attitudes, and behaviors of the
service providers. Think about a hair salon. Even if you visit the same
salon regularly, the quality of your haircut can differ depending on the
stylist's expertise, mood, or even the tools they use. This variability is a
key challenge in service industries.
Perishability: Services are often perishable in the sense that they
cannot be stored or inventoried for future use. Empty seats on a plane or
unsold appointment slots cannot be recouped, so effective marketing is
crucial to maximize utilization.
Importance of Service Marketing
Service marketing holds significant importance in today's business
landscape for several reasons:
A Service-Based Company: Service marketing is crucial for service-
based companies as it helps convey intangible benefits to customers.
For example, a hotel can use service marketing to highlight its luxurious
amenities and exceptional customer service to attract guests.
Growth of Service Sector Employment: Effective service marketing
can lead to increased demand for services, thereby creating more job
opportunities. An example is the growth of ride-sharing platforms like
Uber, which expanded the service sector and created employment for
drivers.
E-Service: Service marketing in the digital realm is essential for online
businesses. For instance, an e-commerce platform like Amazon relies
on service marketing to build trust through efficient delivery, customer
reviews, and personalized recommendations.
Impact of Deregulation: In industries like telecommunications,
deregulation can lead to increased competition. Service marketing helps
companies differentiate themselves. For instance, after deregulation,
telecommunications companies like AT&T focused on marketing their
network reliability to stand out.
Developing Sustainable Service Marketing Practices: Sustainable
service marketing is vital for long-term success. An example is
Starbucks' commitment to ethically sourced coffee and eco-friendly
initiatives, which resonate with environmentally-conscious customers
and contribute to sustainable service marketing practices.
Service Marketing Mix (7Ps):
While traditional marketing has the 4Ps (Product, Price, Place,
Promotion), service marketing incorporates an extended marketing mix
with three additional Ps:
- People: Refers to the employees who deliver the service. Their skills,
attitude, and training are crucial in-service quality. For example, A high-
end restaurant emphasizes the importance of well-trained and courteous
waitstaff. They ensure that their servers have extensive knowledge of
the menu, maintain a friendly demeanour, and offer personalized
recommendations to enhance the dining experience. The quality of
service greatly depends on the skills and attitude of these employees.
- Process: The procedures, systems, and workflows used to deliver
the service. Streamlining processes can enhance efficiency and
customer satisfaction. For example, An online retail company has a
streamlined order fulfillment process. When a customer places an order,
they receive immediate order confirmation, regular status updates, and a
clear estimated delivery date. This efficient process enhances customer
satisfaction as it minimizes confusion and provides a smooth buying
experience.
- Physical Evidence: Tangible elements that support the service,
such as the service environment, brochures, uniforms, or equipment. For
example, A luxury spa invests in creating a serene and aesthetically
pleasing environment. They use soft lighting, soothing music, and
aromatic scents to create a relaxing atmosphere. Additionally, they
provide customers with plush robes, slippers, and high-quality towels.
These tangible elements, along with the spa's luxurious decor, contribute
to the overall perception of a premium spa experience.
Core Marketing Management Tasks
Managing Differentiation Against Competitors: This involves
developing and maintaining a unique selling proposition that sets your
products or services apart from competitors. For example, Apple
differentiates itself by emphasizing sleek design and user-friendly
interfaces, which distinguish its products from other smartphone
manufacturers.
Managing the Overall Brand Image: This task focuses on creating and
maintaining a consistent and positive perception of your brand in the
minds of consumers. For instance, Coca-Cola has consistently portrayed
itself as a fun and refreshing beverage through its marketing campaigns,
reinforcing this image with slogans like "Open Happiness."
Managing the Quality of Service Delivered to Customers and
Setting Their Expectations: Ensuring that your customers receive high-
quality service while aligning their expectations with your offerings is
crucial. For instance, luxury hotels like The Ritz-Carlton provide
exceptional service to guests and manage expectations through
personalized interactions and attention to detail in every aspect of their
stay.
Managing Communication: Effective communication involves
conveying your brand's message and value proposition clearly and
consistently across various channels. For example, Nike uses celebrity
endorsements, social media campaigns, and powerful slogans like "Just
Do It" to communicate its brand's identity as a motivator for athletic
excellence.
Scope or Field of Services
A. Profit Organizations:
Housing: Profit organizations in this sector may include real estate
companies, property management firms, and construction companies.
Recreation and Entertainment: This sector involves businesses related
to entertainment, such as movie theatres, amusement parks, sports and
leisure facilities, and event management companies.
Personal Care: This includes services like beauty salons, spas, fitness
centres, and wellness clinics.
Medical and Other Health Care: Profit organizations in healthcare can
encompass hospitals, clinics, pharmaceutical companies, medical
device manufacturers, and health insurance providers.
Private Education: This sector includes private schools, colleges, and
universities, as well as tutoring services.
Businesses and Other Professional Services: This is a broad
category covering various professional services such as legal firms,
consulting companies, advertising agencies, and IT companies.
Insurance and Other Financial Organizations: This includes
insurance companies, banks, investment firms, and financial advisory
services.
Transportation: This sector encompasses transportation companies
like airlines, railways, shipping companies, and logistics providers.
Communication: Profit organizations in this field include
telecommunications companies, internet service providers, and media
companies.
B. Non-profit Organizations:
Government Educational Institutions: Public schools, colleges, and
universities run by government entities fall under this category.
Cultural Organizations: These can include museums, art galleries,
cultural centers, and organizations focused on preserving and promoting
culture.
Religious Organizations: This category covers churches, mosques,
temples, and other religious institutions.
Charity: Charitable organizations work towards various social and
humanitarian causes, including poverty alleviation, disaster relief, and
healthcare.
Government Medical & Health Care: Public healthcare institutions and
government-run medical facilities fall under this category.
Political Organizations: Political parties, advocacy groups, and
organizations engaged in political activities and campaigns are included
here.
Marketing Challenges Created by Intangibility
Lack of Service Inventories:
Service businesses often struggle with the absence of tangible
products that can be stored or inventoried. For instance, a consulting
firm cannot stockpile hours of expert advice. This lack of inventory can
be challenging when trying to meet fluctuating demand or provide
immediate service, unlike a retail store with physical products readily
available for purchase.
Services Lack Patent Protection:
Unlike physical products, services typically cannot be patented or
protected through traditional intellectual property means. For instance, a
software company can patent its unique code, but a financial planning
service cannot patent its financial strategies. This lack of patent
protection makes it challenging for service providers to prevent
competitors from replicating their offerings.
Services Are Difficult to Display and/or Communicate:
Communicating the value and features of services is often more
complex than showcasing tangible products. For example, a restaurant
can display its food visually, but a counseling service must rely on
testimonials, descriptions, and perhaps a website to convey the benefits
of its services. This difficulty in visual presentation and communication
can make it harder for customers to understand and evaluate the
service.
Services Are Difficult to Price:
Determining the appropriate pricing strategy for services can be
challenging due to their intangible nature. For instance, a graphic design
agency may have difficulty setting a fixed price for a creative project
because the value is subjective and influenced by various factors like
client expectations and project complexity. This variability in pricing can
complicate the marketing and sales process for service providers.
Possible Solutions to Challenges Caused by Intangibility
Utilize Tangible Clues/Physical Evidence:
In situations where intangibility poses a challenge, organizations can
rely on tangible clues or physical evidence to provide customers with a
more concrete understanding of their offerings. For example, a luxury
hotel might send potential guests a physical brochure showcasing their
amenities, room layouts, and exquisite dining options, allowing
customers to tangibly assess the quality and comfort they can expect
during their stay. This physical collateral helps bridge the gap between
the intangible experience of a hotel stay and the customer's
expectations.
Utilize Personal Sources of Information:
Leveraging personal sources of information such as testimonials,
reviews, or endorsements can help mitigate the challenges associated
with intangibility. For instance, an online marketplace like Amazon allows
customers to read reviews from previous buyers, providing social proof
and personal experiences that help customers make more informed
decisions when purchasing intangible products like digital books or
software. These personal sources build trust and add a tangible layer of
credibility to intangible offerings.
Create a Strong Organizational Image:
To overcome intangibility challenges, organizations can focus on
building a strong and distinctive brand image. For example, Apple has
successfully cultivated a brand image associated with innovation,
design, and user-friendliness. This intangible brand image becomes a
tangible asset as customers associate Apple products with these
qualities, making them more inclined to purchase new Apple products
based on their perception of the company's overall reputation, even
before experiencing the actual product. Strong brand images provide a
tangible assurance of quality and consistency.
Utilize Activity-based Costing:
Activity-based costing (ABC) is a financial management technique that
assigns costs to specific activities, helping organizations gain a more
tangible understanding of their cost structures and profitability. For
instance, a software development company may use ABC to allocate
costs to various stages of software development, making it easier to
assess the profitability of different projects or products within their
intangible service portfolio. By analyzing tangible cost data,
organizations can make informed decisions to optimize their offerings
and pricing strategies in the face of intangibility challenges.

Marketing Challenges Created by Inseparability

The Service Provider Is Physically Connected to the Service:
Inseparability means that the service provider is an integral part of the
service delivery. This poses a challenge in marketing because the
customer's perception of the service is heavily influenced by the
interactions with the provider. For example, in a fine dining restaurant,
the quality of the food may be excellent, but if the waitstaff is unfriendly
or inattentive, it can negatively impact the overall customer experience
and affect repeat business.
Customers Are Involved in the Production Process:
When customers play an active role in the service delivery, it can be
challenging to maintain consistency and quality. For instance, in a self-
service gas station, customers pump their own gas, and the cleanliness
of the facility and the efficiency of the pumps can vary. Marketing needs
to address this variability and assure customers of a positive experience
despite their involvement in the process.
“Other Customers” Are Involved in the Production Process:
The presence and behavior of other customers can affect a customer's
perception of a service. In a crowded gym, for example, if fellow gym-
goers are noisy, inconsiderate, or use equipment improperly, it can lead
to a negative experience for others. Marketers need to manage and
communicate how they address such issues to maintain customer
satisfaction.
The Mass Production of Services Presents Special Challenges:
Mass-producing services can be challenging as customization is
limited, and maintaining consistency becomes crucial. For example, in a
fast-food chain, ensuring that each customer receives the same quality
and taste across various locations is a marketing challenge. Brands
must use standardized processes, training, and quality control measures
to address these challenges and meet customer expectations.

Possible Solutions to Challenges Caused by Inseparability

Strategic Selection and Training of Public Contact Personnel:
In order to address the challenges posed by inseparability, businesses
should carefully select and train their public contact personnel to ensure
they possess the right skills and attitudes. For instance, a luxury hotel
might hire front desk staff who are not only skilled in hospitality but also
trained in handling guest complaints with grace and professionalism.
This strategic approach ensures that even in service breakdown
situations, the personnel can manage customer expectations and
mitigate dissatisfaction.

Effectively Manage Consumers:

To cope with inseparability, companies must proactively manage
consumer expectations and experiences. For instance, a restaurant can
use reservation systems to stagger diners' arrival times during peak
hours, preventing overcrowding and long wait times, thus enhancing the
overall dining experience. By effectively managing consumers,
businesses can optimize service delivery and maintain a positive
customer perception even during busy periods.
Develop Multisite Locations:
Expanding to multiple locations can help alleviate inseparability
challenges. For example, a popular spa may open branches in different
parts of the city, allowing customers to access their services more
conveniently and reducing overcrowding at any single location. This
expansion strategy not only enhances accessibility but also spreads out
the demand, making it easier to deliver consistent and high-quality
services.
Marketing Challenges Created by Heterogeneity
Standardization of Processes:
 Standardizing service processes can help mitigate the impact of
heterogeneity. For example, fast-food chains like McDonald's have
successfully implemented standardized procedures for preparing and
serving food. Regardless of location or staff, customers expect a
consistent level of service and product quality, which reduces the
variability associated with heterogeneity.
Employee Training and Development:
Investing in comprehensive training and ongoing development for
service employees can enhance their skills and consistency. For
instance, luxury hotels like The Ritz-Carlton provide extensive training to
their staff in the art of hospitality. This ensures that guests receive a
consistent level of service excellence, regardless of which staff members
they interact with.
Technology Integration:
Leveraging technology can help streamline and standardize service
delivery. For instance, online customer service chatbots like those used
by Amazon provide consistent and immediate responses to customer
inquiries, reducing variability in customer support quality. Additionally,
ride-sharing platforms like Uber employ GPS tracking and rating systems
to ensure a consistent and reliable transportation experience for
passengers.
By implementing these solutions, service marketers can address the
challenges posed by heterogeneity and improve overall customer
satisfaction and loyalty.
Possible Solutions to Challenges Caused by Heterogeneity
Customization Strategy:
In order to address challenges caused by heterogeneity, organizations
can opt for a customization strategy, tailoring their products or services
to meet the unique needs of different customer segments. For instance,
a software company may offer a customizable interface that allows users
to personalize their workflow and user experience. This approach
acknowledges and embraces diversity among customers, providing
them with a sense of ownership and satisfaction.
Standardization Strategy:
 Alternatively, organizations can pursue a standardization strategy to
streamline operations and reduce complexity. For example, in the fast-
food industry, companies like McDonald's employ a standardized menu
and operational processes across their global locations. This
consistency ensures efficiency and uniform quality, mitigating challenges
posed by regional variations in taste and preferences, while also
simplifying training and supply chain management.
Marketing Challenges Created by Perishability
Demand Exceeds Supply of Service Available: This challenge occurs
when there is a surge in demand for a perishable service, but the
capacity to provide that service is limited. For example, a popular
restaurant may experience a sudden influx of customers during a holiday
weekend, resulting in long wait times and frustrated patrons due to
limited seating and kitchen capacity.
Demand Exceeds Optimal Supply of Service Available: In this
scenario, demand for the service is high but not at its peak capacity,
creating an imbalance. An example could be a movie theater that
experiences higher demand on weekends than on weekdays. The
theatre might struggle to meet the weekend demand comfortably while
operating underused during weekdays, which can impact profitability.
Supply Exceeds Demand for Optimal Service Available: Here, there
is an oversupply of the perishable service compared to the demand at its
optimal level. For instance, a ski resort may have ample skiing facilities
during the summer months when demand is low, leading to inefficiencies
and financial losses.
Demand and Supply at Optimal Levels: This is the ideal situation
where the demand for the perishable service matches the supply
perfectly. An example is a well-managed hotel that consistently books
rooms at its ideal occupancy rate, ensuring efficient utilization of
resources without overbooking or leaving rooms empty.
Possible Solutions to Challenges Caused by Perishability
Demand Strategy:
Utilizing Creative Pricing Strategies to Smooth Demand: Implement
dynamic pricing, where prices adjust based on demand. For example, a
movie theater might increase ticket prices during peak hours and offer
discounts during off-peak times, encouraging customers to choose less
crowded showings.
Implement a Reservation System: Restaurants can use reservation
systems to manage peak demand times. For instance, a popular
restaurant might allow customers to book tables in advance, ensuring a
steady flow of diners throughout the evening rather than a sudden rush.
Shift Demand to Complimentary Services: A ski resort could promote
summer activities like hiking or mountain biking to attract visitors during
the off-season. This diversification reduces reliance on perishable winter
sports demand and keeps the resort active year-round.
The Effective Use of Nonpeak Demand Periods: Airlines can
encourage travel during off-peak times by offering discounted fares or
special promotions for mid-week or non-holiday flights, thus spreading
demand evenly throughout the week.
Supply Strategy:
Utilize Part-Time Employees: Retail stores can hire seasonal or part-
time staff during peak holiday seasons, such as hiring extra cashiers
during the Christmas shopping rush, ensuring adequate staffing without
overburdening the budget year-round.
Capacity Sharing: Shared kitchen spaces are becoming popular for
small food businesses. They can rent kitchen facilities when they need
them, reducing the need for a full-time, perishable asset like a
commercial kitchen.
Prepare in Advance for Expansion: Manufacturers can invest in
flexible production lines that allow easy scaling up or down based on
demand. This enables them to quickly adapt to changing market
conditions without excessive idle capacity.
Utilization of Third Parties: E-commerce companies can partner with
third-party logistics providers to handle warehousing and shipping during
peak seasons, ensuring efficient order fulfillment without the need for
extensive in-house infrastructure.
Increase Customer Participation: Car rental companies can offer
customers the option to rent out their vehicles during periods of low
personal use through peer-to-peer sharing platforms, effectively utilizing
otherwise idle assets while expanding their fleet when needed.
These strategies illustrate how businesses can adapt to the challenges
of perishability by managing demand and optimizing their supply chain to
minimize waste and maximize efficiency.

The Consumer Decision Process in Service Marketing:

1. The Prepurchase Stage: The Stimulus
In this stage, consumers are exposed to various stimuli that trigger
their need for a particular service. These stimuli can be internal (such as
personal desires or needs) or external (such as advertising or
recommendations). For example, a person seeing a commercial for a
new spa might feel the need for relaxation and pampering, triggering the
decision-making process.
The Prepurchase Stage: Problem Awareness
After the stimulus, consumers become aware of a problem or a need
they want to address through a service. For instance, someone might
realize they have aching muscles and need a massage to alleviate the
discomfort. This problem awareness is crucial as it sets the stage for
further decision-making.
The Prepurchase Stage: Information Search
Once consumers are aware of their problem, they begin to seek
information about potential solutions. This can involve gathering
information through various sources, such as online research, asking
friends for recommendations, or reading reviews. For instance, someone
looking for a massage service might search online for local spas, read
reviews, and compare prices.
The Prepurchase Stage: Evaluation of Alternatives
During this stage, consumers assess the different service providers or
options available to solve their problem. They consider factors like
quality, price, location, and reputation. For example, someone evaluating
alternatives for a massage service might compare the reviews, pricing,
and proximity of several local spas before making a decision.
2. The Consumption Stage: Choice
After evaluating alternatives, consumers make a choice and select a
specific service provider or option to address their need or problem. For
instance, they might choose a particular spa to book a massage based
on their evaluation criteria.
3. The Post-purchase Stage: Post-purchase Evaluation
Following the consumption of the service, consumers engage in post-
purchase evaluation to assess their level of satisfaction. They reflect on
whether the chosen service met their expectations and if it provided
value for their money. For example, a customer who received a
massage may consider factors like the therapist's skills, the ambiance of
the spa, and their overall experience to determine if they are satisfied or
if they would recommend the service to others.

The Opportunity for Ethical Misconduct in Services Marketing

Opportunities for ethical misconduct within the service sector can be

attributed predominantly to the intangibility, heterogeneity, and
inseparability dimensions inherent in the provision of service. The
Opportunities for Ethical Misconduct in Services Marketing are given
below-

Services are characterized by few search attributes: Unlike tangible

products, services often lack easily observable physical characteristics
that customers can evaluate before purchase. For example, when
choosing a restaurant for a special occasion, customers cannot fully
assess the quality of the dining experience until they've already made a
reservation and arrived at the restaurant.
Services are often specialized and/or technical: Some services
require specialized knowledge or technical expertise, making it
challenging for customers to judge the provider's competence. An
example is hiring a financial advisor who claims to have expertise in
complex investment strategies. Customers may have difficulty assessing
the advisor's qualifications and rely on trust.
Some services have a significant time lapse between performance
and evaluation: In some service industries, such as healthcare, the
outcome or quality of service may not be apparent immediately. For
instance, a patient receiving surgery may only know the effectiveness of
the procedure weeks or even months after the operation, making it
challenging to attribute any issues to ethical misconduct during the
service.
Many services are sold without guarantees and warranties: Unlike
products that often come with warranties, services like consulting or
coaching may not offer tangible guarantees. For instance, a career
coach may promise to provide guidance, but there's no assurance of a
specific job outcome, leaving room for potential ethical concerns if the
promised results are not delivered.
Services are often provided by boundary-spanning personnel:
Service providers frequently interact directly with customers, making
their behavior and ethics critical to customer satisfaction. In the
hospitality industry, hotel employees like front desk staff and concierges
serve as boundary spanners, shaping guests' overall experience through
their actions and attitudes.
Variability in service performance is somewhat accepted:
Customers may acknowledge that there can be some variability in
service quality, but this acceptance can create an opportunity for
unethical providers to exploit this tolerance. For example, airline
passengers may understand that flight delays can happen occasionally,
but frequent and unjustified delays may signal unethical conduct by the
airline.
Reward systems are often outcome-based as opposed to behavior-
based: In many service organizations, employees are often rewarded
based on performance outcomes, such as sales targets or customer
satisfaction scores, rather than ethical behavior. This could incentivize
employees to engage in unethical conduct to achieve these outcomes,
such as pressuring customers into purchasing unnecessary services to
meet sales goals.
Customers are active participants in the production process: In
some services, customers actively participate in the service delivery
process, making it possible for them to contribute to or hinder the service
outcome. For instance, in a self-service car wash, customers are
responsible for washing their vehicles, and their actions can impact the
quality of the service and may lead to disputes if they misuse the
equipment or facilities, highlighting potential ethical dilemmas.
Issues That Create Ethical Conflict
Conflict of Interest: This ethical issue arises when an individual's
personal interests or financial gains clash with their professional
responsibilities. For example, if a procurement manager in a company
accepts gifts or favors from a supplier in exchange for awarding them a
contract, it creates a conflict of interest as their personal gain interferes
with their duty to make impartial decisions in the best interest of the
organization.
Organizational Relationships: Ethical conflicts can emerge in the
context of relationships within an organization, such as friendships,
romantic involvement, or nepotism. For instance, if a manager promotes
a close friend or family member without considering their qualifications
or performance, it can lead to perceptions of favoritism and undermine
fairness within the organization.
Honesty: Honesty is a fundamental ethical principle, and conflicts arise
when individuals are tempted to deceive or withhold information. For
example, an employee who falsifies their timesheet to claim more hours
than they actually worked is compromising honesty in the workplace,
which can erode trust and lead to ethical dilemmas for both the
employee and the organization.
Fairness: Fairness pertains to the equitable treatment of individuals,
and ethical conflicts arise when decisions or actions favor one group
over another without justification. An example could be a manager
consistently assigning the best projects to a certain team while
neglecting others, creating a perception of unfairness and potentially
demotivating the overlooked employees.
Communication: Ethical conflicts can stem from issues related to
transparency, truthfulness, and the appropriate sharing of information.
Suppose a company withholds critical safety information about its
products from the public or its employees, even when aware of potential
risks. In such a scenario, the lack of communication can lead to ethical
conflicts as it jeopardizes the safety and well-being of stakeholders who
rely on accurate information.
Controlling Ethical Decision Making
The adverse effects of unethical decision making may lead service firms
to try to control the ethical behavior of their employees in a number of
ways. Suggestions for controlling and managing ethical behavior
include:
Employee Socialization: Employee socialization refers to the process
of integrating new employees into an organization's culture and values.
For example, a tech company might introduce new hires to its
commitment to sustainability during orientation, encouraging them to
participate in green initiatives and fostering a sense of environmental
responsibility among employees.
Standards of Conduct: Standards of conduct are established
guidelines that outline expected behavior within an organization. In a
healthcare setting, adherence to patient privacy regulations (such as
HIPAA in the United States) is a standard of conduct, ensuring that
sensitive patient information remains confidential and is not mishandled
by employees.
Corrective Control: Corrective control involves addressing ethical
violations through disciplinary actions or corrective measures. For
instance, if an employee in a financial institution is found to have
engaged in fraudulent activities, the company may implement corrective
measures such as suspension, retraining, or even termination, to deter
unethical behavior and uphold the organization's integrity.
Leadership Training: Leadership training programs are designed to
equip managers and leaders with the skills and knowledge needed to
make ethical decisions and lead by example. For example, a
manufacturing company might provide leadership training to its plant
managers to help them navigate ethical dilemmas, such as ensuring
worker safety while maintaining production efficiency.
Service/Product Knowledge: Service/product knowledge ensures that
employees understand the features and benefits of their offerings. In the
retail industry, employees who possess extensive product knowledge
are better equipped to provide customers with accurate information,
enabling them to make informed choices and fostering trust in the brand.
Monitoring of Employee Performance: Monitoring employee
performance involves assessing adherence to ethical standards and
overall job performance. An example might be a call center using quality
assurance checks to review customer interactions, ensuring that
employees handle inquiries professionally and ethically, maintaining a
high level of customer satisfaction.
Building Long-term Customer Relationships: Building long-term
customer relationships focuses on maintaining trust and loyalty with
customers over time. In the hospitality sector, hotels may prioritize guest
satisfaction by addressing concerns promptly, offering personalized
services, and creating a positive experience to encourage repeat
business and referrals.
What Is Service Quality?
An attitude formed by a long-term, overall evaluation of a firm’s
performance.

Failure Gaps in Service Quality

Implementing and evaluating service quality is a difficult task. In the first

place, perceptions of quality tend to rely on a repeated comparison of
the customer’s expectation about a particular service. If a service, no
matter how good, fails repeatedly to meet a customer’s expectations, the
customer will perceive the service to be of poor quality. Second, unlike
goods marketing, where customers evaluate the finished product alone,
in services, the customer evaluates the process of the service as well as
its outcome. A customer visiting a physician, for example, will evaluate
service not only on the basis of whether he or she experienced a
positive outcome (e.g., feeling better), but also on whether the physician
was friendly, competent, and caring. In the hopes of better
understanding how a firm can improve its overall service quality, the
service quality process can be examined in terms of five gaps between
expectations and perceptions on the part of management, employees,
and customers.

The concept of service gaps in service quality is often discussed in the

context of the SERVQUAL model, which identifies five key gaps that can
lead to a disparity between customer expectations and perceptions of
service quality.

Service Gap: The distance between a customer’s expectation of a

service and perception of the service actually delivered. For instance, A
customer visits a restaurant and expects quick service based on the
restaurant's reputation for fast service. However, the staff is unaware of
this expectation and provides slow service due to understaffing. This gap
exists because the management did not accurately understand or
communicate the customer's expectation for quick service.
Knowledge Gap: The difference between what consumers expect of a
service and what management perceives the consumers to expect. For
instance, A retail store wants to improve its customer service, but the
management is not aware of the latest trends and customer preferences
in the fashion industry. As a result, they stock outdated clothing styles,
which do not meet customer expectations for trendy fashion. This gap is
a result of insufficient market research and knowledge about customer
preferences.
Standards Gap: The difference between what management perceives
consumers to expect and the quality specifications set for service
delivery. For instance, A hotel chain sets high standards for cleanliness
and room maintenance but fails to provide adequate training to its
housekeeping staff. As a result, some rooms are not cleaned properly,
leading to a gap between the desired service standards and the actual
service delivered.
Delivery Gap: The difference between the quality standards set for
service delivery and the actual quality of service delivery. For instance,
An e-commerce company promises next-day delivery for certain
products on its website. However, due to logistical issues, some
customers receive their orders several days late. This gap occurs when
the company fails to deliver the service as promised, resulting in a
discrepancy between customer expectations and actual service delivery.
Communications Gap: The difference between the actual quality of
service delivered and the quality of service described in the firm’s
external communications. For instance, A telecommunications company
advertises its internet service as "lightning-fast with no downtime."
However, in reality, customers experience frequent outages and slower-
than-advertised speeds. This gap arises from misleading advertising and
inaccurate communication of the service quality, leading to customer
dissatisfaction.

Measuring Service Quality: The SERVQUAL Measurement Scale

Tangibility Dimensions:
Tangibility refers to the physical aspects and tangible cues associated
with a service. This dimension assesses how tangible elements like
facilities, equipment, and appearance contribute to the perceived quality
of a service. For example, a luxury hotel may have opulent decor, well-
maintained facilities, and stylish uniforms for staff, enhancing the overall
perception of quality.

Reliability Dimensions:
Reliability is the consistency and dependability of a service in delivering
what it promises. This dimension focuses on the ability of a service
provider to consistently meet or exceed customer expectations. An
example would be a courier service that reliably delivers packages on
time, without errors or delays, thereby building trust with customers.

Responsiveness Dimensions:
Responsiveness measures how quickly and effectively a service
provider addresses customer needs and concerns. This dimension
emphasizes the importance of timely responses and solutions. For
instance, a customer support hotline that promptly answers calls and
resolves issues demonstrates high responsiveness and improves
customer satisfaction.

Assurance Dimensions:
Assurance relates to the competence, credibility, and courtesy of service
employees. It encompasses factors such as the knowledge and
professionalism of staff and their ability to instill confidence in customers.
An example is a financial advisor who possesses in-depth expertise,
communicates effectively, and inspires trust by offering sound financial
advice and guidance.

Empathy Dimensions:
Empathy focuses on the ability of service providers to understand and
empathize with the emotions and needs of customers. This dimension
considers the personalized and caring approach taken by service
personnel. For instance, a healthcare provider who not only treats a
patient's medical condition but also shows genuine concern for their
well-being and comfort demonstrates a high level of empathy, leading to
a more positive service experience.