MBA Sales and Marketing Assignment

SEM - IV
Course Name: Service Marketing
Module III: The Service Quality

Q1. Take example of any two services and explain the customer gap?

Answer: Customer Gap is the gap between customer expectations and customer perceptions.
This, in other words, is the service quality shortfall as seen by the customers. Customers develop
expectations from receipt of external stimuli from many sources - ranging from those that are Notes
company-controlled to social influences. These form the bases of his reference-to-come for the
service experience. The customer’s perceptions indicate the service as actually received, for all
practical purposes, since what we perceive is what is real to us. Perceptions are everything.
 Company-controlled external stimuli are: service product/offer, price, advertising, promotions,
displays, outlets etc.
 Social influences as external stimuli are: word of mouth communications and reference groups.
 Other influencers of expectations are: personal needs and past experience of the customer. The
customer gap indicates the difference between actual performance and the customer’s perception
of the service. There are a lot of subjective judgments made by customers. Last experiences may
prejudice them and change their estimation of quality. Example: A customer is satisfied with a
certain restaurant; but his last experience there (it could be because of a new waiter) could leave
him embittered, washing away years of happy experiences at one go. The quality of a service has
two components:
 Technical Quality: This is the end result of the service operations process.
 Functional Quality: This is about the process, especially concerning the interaction between the
customer and service provider. These two factors inject a heavy dose of subjectivity into the service
process. Any service organisation would be desirous of closing the gap between what is expected
and what the customer has received. To them, this would be absolutely necessary to build a long
term relationship with the customer, to retain him. But in order to close the Customer Gap, another
type of gap has to be closed: the Provider
Gap.

The Customer Gap: And finally, the

customer gap refers to the difference
between customer expectations and
customer perceptions. This may arise
when the customer sees a characteristic of
service quality as something undesirable.
This gap is also now used to identify
overall customer dissatisfaction, which
appears as the result of the sum of the
other gaps.

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Example of Any Two Services

Power BI
With Microsoft’s Power BI, you’re able to easily collect any relevant business intelligence about
your customers within the cloud, while also protecting your organizational data. Power BI helps you
with the process of running a gap
analysis for customer service by
providing accurate insights, data, and
analytics.

Features:
 Data visualization
 Built-in AI capabilities
 Tight Excel integration
 Prebuilt & custom data connectors
 Oversight of sensitive data
 Open connectivity framework
Pricing: You can start your Power BI
Pro subscription for $9.99 user/month

Hubspot
Hubspot is a Jack of all trades type of SaaS automation tool because it helps automate marketing,
sales, support, and more. The platform has all the components you need to run successful surveys
and inbound marketing campaigns to stay top-of-mind for your leads and keep your customers
happy, thus helping you run your gap analysis smoothly, without seeming pushy with your
customer studies.

Features
 Advanced CRM capabilities
 Knowledge base
 Customer feedback
 Data quality automation
 Analytics
Pricing starts from $740/month

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Q2. “It is very important to communicate firm’s strategies to both, internal and external
customers”. Explain with examples.

Answer: Example of Internal and External Customer

Example #1: Romesh Bhandari wants a loan to purchase a car. He gets a loan from ICICI Bank at
a certain rate of interest. The Sharma family is bored and therefore goes to Essel World on a public
holiday. They have a grand time. The Provider They are the internal customers of an organisation
who invariably complete the service transaction on behalf of the company. They are mostly
employees, but also include franchisees, channel partners, distributors, wholesalers, retailers, etc.
Example: Andromeda is the largest Direct Sales Agent (DSA) for Citibank and successfully sells its
multiband cards successfully. Karvy Consultants and LIC, Reliance, etc. are other examples for
this. Three different types of marketing take place during the service transaction amongst the three
entities:

A External Marketing: The company does external marketing on the customer. It promises
benefits, explains features and assures satisfaction by way of advertising, public 9 relations
exercises and other forms of corporate communication. It uses mass-media to convey its promises.
It makes promises to the customers.

B Internal Marketing: The Company does internal marketing to its providers. The company has to
provide working space like offices, and equipment’s, like computers, and telephones to its provider.
It also has to recruit, select and trained appropriate employees, channel partners, and franchisees.
It enables the providers to complete the service transaction. The company enables its promises
Today, many businesses turn to see their employees as “internal customers”. It’s said that
“Employees are the brand ambassadors of the company. The staff is the factor that makes the
difference and brings the competitive strength to the business”.
Apple’s story is typical. Apple is a great example of success when it comes to delivering good
internal and external customer experiences. The corporate culture they put out is innovation,
originality, and expertise. To promote this culture, even the initial selection of candidates and initial
training is made very carefully by Apple to ensure that every employee - especially those who work
directly with customers - expresses itself, verify the business image. Every customer who comes to
the Apple Store knows that their salespeople are experts in their products and give good feedback
to the company.

Example # 02 Apple's customer

The reason businesses need to learn from Apple experiences because we can see that the number
of customers using products from the company is very large. In addition to that, the strategies in
business characterize. Apple does not have any other mix that has helped them have a strong
foothold in the market today. And more than anyone, Apple understands how vital both internal and
external customers are to a business.
Apple does not appreciate the value of advertising
through Google or Facebook because they think this
is a very easy channel to create a feeling of boredom
for customers. And in fact, the company mainly
operates on two strategies: distributing products
through exclusive brand ambassadors and positive
reviews on the mass media.
Businesses should not ignore customers’ emotions,
and Apple is completely focused on the emotions of
the users, including the employees in the company.
Because they understand emotion easily manipulates other actions, creating a customer feeling
comfortable, happy, and satisfied will certainly not leave you.
Apple has been a testament to customer-based success over the years. So, businesses should try

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to apply some of the most suitable measures to create a difference for the company’s customers
and efficiency.
Internal vs. External Customer: Who’s Come First?
Tom Peters, who is considered as the Red Bull of management thinkers, said: “Paradoxically, to
achieve emotionally connecting customer experience, employees come first, ahead of the
customer.”
Here, I agree with this point of view. This is not to say that internal customers are more important
than external ones. Both groups of customers are extremely important to the business. However,
internal customers will be the group that should be given priority first because the quality of their
experience will affect the quality of the external customers’ experience.
Internal vs External Customer: Who’s Come First?
If your office staff seldom deal with outsiders and are not interested in the lives of outside clients,
you can immediately feel that every activity in the company does not seem to have any impact on
outside customers. But if you look at the broader picture, you will see that every employee plays a
crucial role in satisfying customer needs. Every communication with internal customers is an
important link in a chain of different events that end at the same point: satisfying external
customers.
About two years ago, the Wall Street Journal published an article under the headline “Poorly
treated employees will treat customers the same way”. Many managers do not realize that their
employees are internal customers, and the quality of service the company provides to customers is
a direct reflection of how managers behave. Hence, you need to treat your staff as one of your
most important customers. Thanks to that, you focus not only on what your employees can do to
make your business move forward but also on what you can do to make their job easier.
Somewhere in the business, there is a close relationship between employee emotions and
customer feedback. Customers feel happy only when employees in the business have similar
feelings and vice versa. So what is the secret to tightening this link?

An External Customer
An external customer is the end user, attempting to gain goods and services from your
organisation.
If this isn’t enough of a dividing line between the internal and external customer, think of it like this:
the external customers are your main source of revenue. They are who, all in all, your internal
customers are attempting to do effective business with. Keeping external customers happy, holding
on to them and pulling in more just like them is the way you build your business.
Between the internal and external customer, the external comes first. But without ensuring your
internal customers have access to the resources they need, then you’re essentially hampering your
own business’ productivity.

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External customers can be the following:
Customer Type Characteristics Examples
B2C (Business to Purchases are for Individuals buying groceries, clothing,
Consumer) personal use electronics, entertainment services
B2B (Business to Purchases are for Companies buying software, raw materials,
Business) business operations office supplies, marketing services,
logistics providers
Resellers/ Purchases are for Wholesalers buying in bulk from
Distributors resale manufacturers, retailers purchasing
products for their stores
Government Agencies Purchases adhere to National or local governments buying
specific regulations equipment, vehicles, construction services,
consulting
Non-profit May prioritise social Charities, educational institutions,
Organisations impact alongside cost foundations, NGOs purchasing goods or
services related to their mission
An internal customer
Internal customers are individuals, or departments,
within an organisation that rely on the company’s
products or services themselves, but not in the
same way external customers do. Internal
customers are using these goods/services to
enhance their services – for the business. The main
point of this is to cut the costs of using other
organisations’ goods/services by doing it
themselves, with cooperation from other
departments.
Someone who works in marketing, for example, may need the support of a designer to achieve
their ends. This marketing person would, then, be an internal customer. Understanding this and
establishing effective communication across your organisation will speed up productivity and
increase quality.
Whilst employees are your main internal customers, there are other examples:
Internal Customer Roles Typical Needs
Type
Employees Sales reps, developers, Reliable technology, clear policies and
customer service expectations, training, access to
agents, HR staff, information, timely support from other
managers departments, recognition of their value
Departments Marketing, IT, Product Clear goals and budgets, adequate
Development, Finance, resources (staffing, tools), collaboration
Operations across teams, communication, respect, and
processes to support efficient work
Suppliers (within the Procurement teams, Timely payment, clear ordering procedures,
organisation) facilities, cleaning team, defined processes, communication, fair
vendors providing treatment as a valued partner
internal services
Shareholders/ Owners, board Transparency about performance and
Stakeholders members, investors strategy, financial accountability, return on
investment, communication of major
decisions, alignment with their goals

All of the above rely on your organisation’s services and goods to achieve ends.

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Q3. In services, perceptions are everything. Do you agree?

Answer: The Provider Gap There are four provider gaps and these in sum total are the cause of
the Customer Gap. They are the shortfalls within the service firm. To close the customer gap, the
provider gap (or, as also known, Company Gap) has to be bridged. The four provider gaps are:

Gap 1: Customer Expectation-Management Perception Gap It is the inability of top

management to perceive what the customer wants, and is the main reason why a firm cannot meet
a customer’s expectations. The company is blinded by a perceptual veil of ignorance, arrogance or
criminal neglect. Some of the reasons why Gap-1 can occur are: Inadequate marketing research;
Lack of upward communication in the organisation; Insufficient focus on relationship building (don’t
care attitude) etc.

Gap 2: Management Perception- Service Quality Expectation Gap This gap is created in the
design process of the service product and lying down of specifications for service quality during
service transactions. In the design process, this gap arises during the translation of management’s
perception of customer expectation into design specifications. Managers would set specifications
for service quality on the basis of what they believe the customer requires- a very dangerous
presumption. The implications of this gap are that even if the firm has crystal-clear knowledge and
understanding of the customer’s expectations, there would be scope for misunderstanding this,
leading to setting the wrong specifications, service designs and standards. Example: A bank would
believe that customer friendly interaction is what the customers prefer but the standard would be
set on computerisation - which is impersonal and neutral. There is no human contact to support the
concept of “friendliness”.

Gap 3: Service Quality Specifications - Service Delivery Gap This occurs at the service
provider level when there is deviation from service standards specified and actually delivered to the
customers. This probably is the bane of all public sector institutions, be they banks, insurance
companies, hotels, travel agencies, hospitals or any such. The management’s perception and
service design standards might be accurate and perfect. But if the interacting service provider
during service delivery falls short of the standards specified, the customer will get an impression of
a poorly performing firm. This becomes especially important for that firm that is heavily dependent
on people in performing the last transaction. Example: Public sector banks might have the best of
design specifications set by Reserve Bank of India; yet late-coming staff, corrupt employees (the
Harshad Mehta scam of misuse of Portfolio Management Funds and the internal document mess-
up in State Bank of India) would bring large gaps in quality to put it mildly.

Gap 4: Service Delivery - External Communications to Customer This is essentially a

communication gap. The gap is the difference between service delivery intention and capability and
what is being communicated to the customers. An over-hyped communication raises the
expectations of the customer - and his benchmark of service quality and his expectations from the
service delivery sky-rocket. It will be difficult then for the firm to meet the expectation and there
would inevitably be a shortfall. 6 The tragedy is the customers would have been satisfied without
the hype. But now they go back with memories of disappointment and are actually dissatisfied. This
results from inadequate communication from the firm.

Example: Doordarshan, the much-maligned state TV broadcaster, would announce a certain

programme, say an interview with Mr. Amitabh Bachchan, to be broadcast at 7 p.m. and they would
fail to do so at that hour - creating huge disappointment. The viewers would curse and would not
forgive DD despite an apology - even if one were forthcoming.
For the past few months, I have dedicated 80% of my effort to altering my customers' perception.
Despite achieving a favorable outcome, it required significant exertion to shift their mindset.

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Looking at it from a short-term perspective, failure to modify their perception would have resulted in
termination of our contract. However, from a long-term standpoint, we risked losing a valuable
relationship and potential repeat business. In addition, our brand image would have been
significantly impacted.
After dedicating two months to this arduous task, I began contemplating the significance of
customer perception and its effects on both the brand and the business relationship. This
experience highlighted the importance of investing in the relationship rather than focusing solely on
revenue and cost.
Upon signing the contract, we agreed to deliver a set number of deliverables within a specific
timeframe and at a fixed cost. This was a new venture for us, and the competition had already
established themselves for over five years. We aimed to demonstrate our competence and prove
our ability to provide value to our customer. Our team successfully onboarded and learned the new
processes, and we understood the requirements well. However, when it was time to deliver, we
faltered. Unfortunately, this incident set the tone for a negative perception that gradually developed
within the customer's organization. This perception affected the team morale and overall business
relationship.
The significance of managing customer perception cannot be overstated as it can determine the
fate of a business. Customers develop their perceptions of a business based on their experiences
and the results they receive. When a customer perceives a business in a negative light, they are
unlikely to engage with it, which can result in a decline in revenue and a tarnished reputation.
My realization about the severity of managing customer perception came about when the customer
placed a stop payment on our milestone and refused to provide additional requirements as per the
contract. Upon conversing with them, it was revealed that the quality of work delivered was the
issue. However, after communicating with our team, I learned that initial problems were rectified
and additional processes were delivered with minimal issues. Despite this, the customer was
reluctant to share any more processes with us. Upon investigating, it was discovered that they had
lost faith in our abilities and removed a critical process from our pipeline. Their request was for us
to replace the current team with more experienced personnel and improve the quality of work.
As the situation had come to a halt, I realized the importance of comprehending the customer's
needs and expectations and swiftly addressing their concerns. However, I wanted to convey to
them that their perception, although valid, could only be altered if they provided us with an
opportunity to work on additional processes. Both parties could only determine their future
association by fulfilling the terms of the contract. I also highlighted that the issue was not solely
one-sided, and that both parties needed to collaborate to achieve a positive outcome. This
approach convinced the customer to share additional processes with us.
In response to the situation, we took prompt action and made a few modifications which instilled
confidence in the customer's mind.
As I write this article, we have successfully secured additional business and are currently in
negotiations to expand our services in other areas within the same line of business.

These are the lessons we learned from this experience:

 It's important to understand the customer's needs and expectations.

 Address their concerns quickly.
 Any new engagement will have their problems which will need to be addressed.
 Invest the effort to identify the real problem and make necessary process changes to meet
engagement objectives.
 Show the customer the true picture, which can sometimes be lost.
 Ensure governance reports contain relevant information.
 Consider whether changes to governance structure or personnel are necessary.
 Deliver a consistently positive customer experience and demonstrate value.
 Show the customer that we're committed to a long-term relationship, not just a short-term
one.

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  Allocate resources towards long-term gains to demonstrate commitment.

To conclude, managing customer perception is not just a nice-to-have but a necessity for any
business that wants to succeed in today's marketplace. By prioritizing customer satisfaction and
taking steps to manage customer perception, businesses can create a positive reputation, attract
and retain customers, and ultimately, achieve long-term success.
If a customer perceives a business positively, they are more likely to engage with it and become
loyal customers. A positive perception can also lead to positive word-of-mouth recommendations
and increased customer retention.

“perception is reality,” and it usually means whatever someone sees or feels to be valid —
regardless of whether it is or not — is their truth.
In the digital space, the truth of the matter is no brand owns its perception 100 percent; ownership
falls into the hands of the consumer. And to take that truth just one step further, the perception of a
brand lives and dies in the mind of the consumer. That’s a pretty powerful position.
That means having crystal-clear awareness of how your brand is perceived is key, and doing
everything you can to move the needle of perception as close to your digital branding reality is
crucial.

How do you do that? First, it takes getting real. We need to be honest here. Many organizations
think their brand and brand strategy is the equivalent of a Bugatti La Voiture Noire, and what they
are really rolling with is the equivalent of a beat-up Ford Pinto. To remedy this, it takes
understanding the difference between digital branding reality and digital branding perception, and
closing the gap between the two.
Digital branding reality is the core identity of your brand. This reality usually involves a brand
message, mission and brand-positioning statement.
Digital branding perception is what the audience knows (or believes it knows) about your brand and
the emotions emitted when thinking about your brand logo, colors and messaging.
Does this even matter for security dealers, integrators and manufacturers? Absolutely, and far
more than most organizations realize. This is because branding is not just about evoking a positive
image. In fact, it is far more complex than that. It is about encompassing who you are, what you do
and your capabilities into the entirety of your strategy, which reinforces your position in the
customer’s mind.

We commonly see this played out where security organizations report not gaining interest in certain
areas or regarding particular services simply because the potential customer does not perceive
they have the capacity to fulfill their needs. That means missed opportunities and lost revenue.
So, what are some practical ways to close the gap between brand perception and reality? To start
bridging the gap it’s important to define your identity, listen to industry and consumer trends, align
offerings to meet consumer needs, set expectations and finally, fulfill and exceed the expectations.
We know that is easier said than done, but there are tools to help.
The best place to start is by looking at website metrics by social listening. Having your ear to the
ground provides a phenomenal amount of insight into how customers perceive your brand. Once
you gain the knowledge, it is possible to make course corrections in branding.
Here are some great free tools to help you in your efforts.

Website analytics tools:

 Smartlook is a popular tool that includes session recordings, events, funnels and heat maps
that allow you to track quantitative and qualitative analytics.
 Google Analytics is the most well-known and popular free web analytics tool out there. It’s a
traditional analytics solution, meaning it provides real-time data about your site’s traffic, like
page views, sessions, time on page, bounce rates and other stats and metrics.
 Clicky is a privacy-friendly tool that provides real-time analytics.

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 Hotjar is best known for its session recordings and heat map tools, but it also has user
feedback widgets as well as survey features.
 Woopra is a quantitative analytics tool for tracking customer journeys end-to-end. It’s more
versatile than traditional analytics tools as it comes with features for product, marketing, sales
and customer support teams.

Social listening tools:

 Answer the Public is one of the most popular free social listening tools today. It allows teams to
listen to autocomplete data so that you can discover useful phrases and questions people are
asking around your keyword.
 Hootsuite helps brands manage their social media marketing efforts in one place.
 Social Mention aggregates user-generated content into a single stream of information. It allows
you to track and measure what people are saying about you, your company, a new product or
any topic in real time.
 BuzzSumo is a great social listening tool for identifying the content that performs best. It’s
extremely useful for marketers looking to generate new ideas, create high-performing content
and engage with influencers on social media.

Bottom line? While having distance between your digital branding reality and perception is normal,
it should be every brand’s goal to work toward closing that gap. It is an ongoing process
perception is important because it impacts a business’s bottom line. Say a customer becomes so
frustrated with your brand that they decide to end their subscription with your business. You might
think it’s a small loss—just a single subscription—but that churn represents much more value.
Once you realize how much impact a single customer can have on your bottom line, their
perception of your company will seem like anything but a small matter.
 Customer perceptions affect your brand image
Many consumers love to share their positive experiences with people in their network. For example,
they might tell their family about a restaurant that serves delicious pizza. Or, they’ll encourage their
coworkers to use a productivity app that slashed their work time in half.
But customers don’t always say good things. Their word-of-mouth depends on their perception of
your brand. “We all know that consumers are more likely to share poor experiences than good ones
(and with triple the number of people!),” says Chandler. “It’s also important to remember that once
people get an idea in their heads, it’s hard to change their minds. In fact, we’re hardwired to find
info that supports our preconceived notions—it’s called confirmation bias.”Enough negative word-
of-mouth marketing over time will solidify a bad brand reputation, and that’s no small matter.
 Customer perceptions influence purchasing decisions
You might think if you offer a superior product or an unbeatable price, customers will naturally flock
to your brand. That might be the case, but these factors don’t guarantee that outcome. Other
important factors may impact their perception of your brand and their decision to make a purchase.

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Q4. Explain how intangibility poses problems in measurement of service quality. Give examples.

Answer:
Service Quality Issues Defining quality in service: In manufacturing, quality is defined by the
degree of compliance between stated goals and achieved targets. It is therefore rather easy to
measure and conform to a standard. In service it becomes difficult to comprehend the concept of
quality and measure it. This is due to the mother of all characteristics for services ñ the
intangibility factor ñ and it makes measurement and assessment of service quality extremely
challenging. Perception of service quality is, additionally, felt by all parties involved in a service
delivery process: service providers, customers and suppliers. They should therefore understand
each other’s definitions of service quality. Quality can be viewed from multiple perspectives:

A) Product- Based The definition is based on measurable parameters. It is suitable for goods, but
becomes a challenge in services. The number of times a telephone ring before the receiver is
picked up by a service provider can be a basis of measuring responsiveness.
Example: Domino’s Pizza has successfully positioned itself as a firm, which promises to deliver its
fare in half an hour - in other words, giving measurable parameters for quality.

B) User- based This definition is from the customer’s perspective, reinforcing the notion that quality
is in the eyes of the beholder. Example: An extremely well-read professor following all the
guidelines of teaching can be condemned with “poor” rating if the students are not able to
comprehend the accent, or if the delivery is uninteresting.

C) Manufacturing-based This is conformance based and quality is perceived as an outcome of

production processes. Output is considered to be of high quality if it conforms to design
specifications. This factor is controllable by the service firm but does not take into consideration
customer satisfaction.

D) Value-based This definition equates quality with value. The service provider will have to strike a
balance between conformance and performance, evaluating benefits and price to customer
satisfaction.

E) Transcendental Quality can only be experienced but can neither be described nor documented
rendering it impractical for quality managers. Tourism is one such area where quality can, to some
extent, be only experienced directly.
 Quality in service has two-window viewpoints: internal and external to the service firm.
 Internal quality is all about the entire service delivery process from concept to
encounter/experience/ transaction/consumption. While internal quality is all about conformance and
compliance to design standards.
 External quality is about the customer’s perception. While the former can be controlled by the
service firm, service quality is as perceived by the customers - and should be measured from that
perspective.
 Quality is the totality of features and characteristics of a product or service that bears on its ability
to satisfy given needs

Intangibility is used in marketing to describe the inability to assess the value gained from engaging
in an activity using any tangible evidence. It is often used to describe services where there isn't a
tangible product that the customer can purchase, that can be seen, tasted, or touched. This is the
most defining characteristic of a service that differentiates it from a product.

When a customer is buying a service, he perceives a risk related to the purchase. It is difficult for a
customer to know in advance what they will be getting. To reassure the buyer and build his

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confidence, marketing strategists need to give tangible proof for the quality of service. Service
providers can inspire confidence in the service by having a clean facility that customers can see, an
easy-to-navigate website that shows service offerings, and a reliable and courteous staff to help
customers. Because of service intangibility, consumers are less likely to switch brands or try new
ones.
Given the intangibility of services, marketing them becomes a particularly challenging and yet
extremely important task. Due to the increasing homogeneity in product offerings, the attendant
services provided are emerging as a key differentiator in the mind of the consumers. For example,
in the case of two fast food chains serving a similar product (Pizza Hut and Domino's), it is the
service quality, not the actual product, that distinguishes the two brands from each other. Hence,
marketers can leverage the service offering to differentiate themselves from the competition and
attract consumers. These services, such as having a polite and friendly staff, can really distinguish
one fast food place from another, both of which offer the same kind of food.

Marketing a service poses new challenges to the marketer. In this assignment, pick one of the
following services: A doctor’s office, an airline, an employment agency, or a bank. Outline the
target market for the organization you selected, based on applicab le segmentation
characteristics. Justify why you picked these criteria to identify your target market. Then
discuss the service’s special nature and how you would apply the four service characteristics,
outlined in Figure 7.3, to the organization you selected.

Service intangibility means that the delivered services are non-physical. Therefore, the level of
appreciation of its value, attributes, and outcomes are significantly low since they can only be
experienced when they are bought. The nature of human beings is such that they are quick to
incorporate things they can see and feel into their lives with ease. For example, when a person
sees a building, they can quickly notice its value and buy it, which may not be the case for an
online coach or a surgeon because people cannot see the intangible outcome.

Service Quality
The service literature has demonstrated that customers are becoming increasingly sensitive to
service elements and the overall quality of service offered by an organization ( Parasuraman,
Zeithaml &Berry, 1988). Various researchers have developed alternative concepts for service
quality, like the Nordics (Grönroos, 1984, 1988; Lehtinen & Lehtinen, 1991) and the American
schools of thought (Parasuraman et al., 1988). The work of Parasuraman et al. (1988) has led to
the identification of a service quality measurement tool, SERVQUAL. It is one of the most widely
used instruments as it aims to help service managers diagnose and improve the quality of services
under their control. The model on which SERVQUAL is based proposes that customers evaluate
the quality of a service across five distinct dimensions as follows:
Reliability

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– ability to perform the promised service dependably and accurately;
Responsiveness
– willingness to help customers and provide prompt service;
Assurance
– knowledge and courtesy of employees and their ability to inspire trust and confidence; Empathy
– caring, individualized attention the firm provides to its customers;
Tangibles
– appearance of physical facilities, equipment, appearance of personnel, and communication
materials.
The SERVQUAL scales comprises of 22 questions measuring expectations and 22 questions
measuring perceptions. Customers evaluate the quality of services provided by organizations
based on the discrepancy among expectations and perceptions (Grönroos, 1984; Parasuraman et
al., 1988). Although the SERVQUAL instrument has been widely used in various settings (Fick &
Ritchie, 1991; Saleh & Ryan, 1992; Jabnoun & Al-Tamimi, 2003; Tan & Kek, 2004; Arasli et al.,
2008), it has been subjected to a number of criticisms regarding its operationalization of
expectations, the reliability and validity of the gap score formulation and the difficulty in replicating
its dimensions (Carman, 1990; Cronin & Taylor, 1992; Teas, 1993; Baker & Crompton, 2000;
Sureshchandar, Rajendran & Kamalanabhan, 2001). Babakus & Boller (1992) suggest that the
dimensionality of service quality may vary depending on the type of service sector under
investigation.
Performance –only measure (SERVPERF) explains more of the variance in an overall measure of
service quality than the SERVQUAL instrument (Bolton & Drew, 1991; Cronin & Taylor, 1994;
Yüksel & Rimmington, 1998). SERVPERF maintains the original 22 items of SERVQUAL but
measures perceptions of performance only instead of measuring both expectations and
performance and has been empirically validated in banking, pest control, dry cleaning, fast food,
advertising and dental service (Cronin & Taylor, 1992, 1994; Quester & Romaniuk, 1997)

Example: Pizza hut

Pizza Hut is one of the flagship brands of Yum! Brands, Inc., which also has KFC, Taco Bell, A&W
and Long John Silver's under its umbrella. Pizza Hut is the world's largest pizza chain with over
12,500 restaurants across 91 countries.
In India, Pizza Hut has 137 restaurants across 36 cities, including Delhi, Mumbai, Bangalore,
Chennai, Kolkata, Hyderabad, Pune, and Chandigarh amongst others. Yum! is in the process of
opening Pizza Hut restaurants at many more locations to service a larger customer base across the
country.
Pizza Hut entered India in 1996, and opened its first restaurant in Bangalore. Since then it has
captured a dominant and significant share of the pizza market and has maintained an impressive
growth rate of over 40 per cent per annum. Pizza Hut now has 95 outlets across 24 cities in India;
and employed nearly 4,000 people by end of 2004. Yum! has invested about US$ 25 million in
India so far; this is over and above investments made by franchisees.
Pizza Hut is believed to have close to 50 per cent market share of the organized pizza-retailing
segment in India. According to an article in Financial Express, the market size of the pizza segment
is around US$ 87 million and currently growing at the rate of 15 per cent to 17 per cent per annum.
According to Pizza Hut sources, most of their outlets are financially successful, encouraging further
expansion. In India, the average investment for each outlet is US$ 275,000-335,000 and is borne
by the franchisee.
Following are the factors of success for Pizza-Hut over the years:
Offering value food
Employing economies of scale, Pizza Hut has made its offerings more affordable. Its delivery offer
of US$ 4.4 for four personal pan pizzas has been very successful; helping it grows the business by
25 per cent. They have recently introduced a range of vegetarian personal pan pizzas for US$ 1.1.
Most Pizza Hut restaurants are located in the metros and smaller metros. In taking long strides
across the country, Pizza Hut is consolidating its position by opening more restaurants in the

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metros where it already has a presence as well as opening outlets in new markets.
Moving beyond metros
According to company sources, Pizza Hut is moving beyond the metros and foraying into 12 to 13
new markets including Trichy, Nagpur, Bhubhaneswar, Thiruvananthapuram and Pondicherry to
increase penetration.
Aggressive marketing and tie-ups with local and popular brands
Pizza Hut has increased its visibility by launching a well-received TV campaign aimed at the young
crowd. It has formed partnerships with recognized brands such as Nestle and Pepsi. It also holds
regular promotional campaigns targeted at children and uses these alliances to offer packages
during these campaigns.
Developing the local supply chain
The local supply chain for Pizza Hut was developed by Yum! and currently 95 per cent of the
ingredients they use are locally produced. They now import very few specialty items like pepperoni.
Leveraging the India advantage: International brand with an Indian heart
Pizza Hut is one of the first international pizza chains with purely vegetarian dine-ins at Chowpatty
(Mumbai), Ahmedabad and Surat, which also serve Jain menus. Pizza Hut has even opened two
all-vegetarian restaurants in the western state of Gujarat to cater to the Jain religious community,
whose members prefer not to eat at places where meat is served.
Offering more than the international menu
International food chains typically offer only a few localised products in other parts of the world.
However, Pizza Hut's local menu is as large as the international one. According to Pizza Hut, the
Indian food heritage is very rich, and hence Indians like local flavours. The Tandoori range of
pizzas, which was developed locally, has a menu mix of over 20 per cent.
Indigenous sourcing of raw materials
Pizza Hut has reduced costs through indigenous sourcing of raw material. It has tied up with a local
company Dynamix Dairy Industries Ltd (DDIL) for sourcing mozzarella cheese. The landed cost of
imported mozzarella comes to US$ 3.3 - 3.5 per kilogram. The domestic price, however, works out
to US$ 2.99 - 3.1 per kilogram. Pizza Hut is adding to the bottom line by localising equipment as
well as by paying attention to inventory replenishment, which has been reduced from 60 to 30 days.

Dominos
Domino's vision is focused on "Exceptional people on a mission to be the best pizza delivery
company in the world! ". Domino's is committed to bringing fun and excitement to the lives of our
customers by delivering delicious pizzas to their doorstep in 30 minutes or less, and all its
strategies are aimed at fulfilling this commitment towards its large and ever-growing customer
base.
Domino's constantly strives to develop products that suit the tastes of its customers, thereby
bringing out the Wow effect (the feel good factor). Domino's believes strongly in the strategy of
'Think local and act regional'. Thus, time and again Domino's has been innovating toppings suitable
to the taste buds of the local populace and the Indian market has very well accepted these.
Domino's Pizza India Limited (DPIL) is the master franchisee for India, Srilanka, Bangladesh and
Nepal from Domino's Pizza International Inc., USA. The company had been promoted by Mr.
Shyam S. Bhartia and Mr. Hari S.Bhartia of the Jubilant Organosys Group (Formally Vam Organic
Group).
The Company was incorporated in March 1995. The First Domino's Pizza store in India was
opened in January 1996, at New Delhi and today after nine years Domino's Pizza India has grown
into a countrywide network of over 100 outlets in 27 cities, which includes:-
North - Delhi, Gurgaon, Chandigarh, Ludhiana, Amritsar, Jallandhar, Dehradun, Shimla, Agra,
Kanpur, Lucknow, Noida, Faridabad, Mussoorie
South - Chennai, Bangalore, Hyderabad, Coimbotore, Mangalore, Cochin, Secundrabad, Manipal
East – Kolkatta, West - Mumbai, Pune, Ahmedabad, Goa
Domino's intends to penetrate completely within these markets by opening up 20-25 outlets per
year in these cities. Domino's has a young and enthusiastic team of over 2,100 employees. Today,

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Domino's has emerged as the leader in the fast food segment with about 65% of market share of
pizza delivery in India and have outlets more than any other corporation in the business of food, not
just the pizza business. All the Company outlets are corporate outlets invested by the company and
also managed by the company.
Over a period since 1996, Domino's Pizza India has established a reputation for being a home
delivery specialist capable of delivering its pizzas within 30 minutes to its community of loyal
customers from its entire stores around the country. Customers can order their pizzas by calling the
single countrywide "Hunger Helpline" - 1600-111-123 and Domino's was the first one to start this
facility for its customers.
Domino's vision is "Exceptional people on a mission, to be the best pizza delivery company in the
world!". Domino's is committed to bringing fun and excitement to the lives of our customers by
delivering delicious pizzas to their doorstep in 30 minutes or less, and all our strategies work for
fulfilling this commitment towards our large and ever-growing customer base.
Domino's constantly strives to develop the product that suits the taste of its customers to bring out
the 'WOW' effect (i.e. the feel good factor). Domino's believes in the strategy of "Think local and act
regional" that is blended with a playful image personified by our "Hungry Kya?" positioning. Thus,
time and again Domino's has been innovating toppings, suitable to the taste buds of the locals and
these have been very well accepted by the Indian market, are doing extensively well in the market.
We are constantly in the process of innovating further; we introduce new topping every 3 -4 months
Domino's understands customers demand and is constantly developing local flavors understanding
the local sentiments. Also, the ingredients, sauces etc. are made keeping in mind the taste buds of
Indian consumers while retaining the international flavor.
Domino's constantly strive to make the company an integral part of the lives of the target audiences
by getting involved with the clientele at the emotional level and building long-term relationship with
them. Thus, Domino's concentrate more on carrying out below-the-line activities in the area it
serves.
Domino's believe in bringing fun and excitement into the lives of our clientele. We take our delivery
proposition very seriously and our entire corporate ethic is based on it. Domino's is the recognized
world leader in Pizza delivery. But it isn't just about delivering; it's also about giving back to the
community. Domino's believes that an essential component of corporate responsibility is to provide
support to charitable organizations that benefit the communities where its employees and
customers work and live. Domino's worldwide is known for its commitment toward social causes
and believes in adding fun to the lives of our customers and communities it serves.
In India, Domino's has been associated with the NGO's devoted to the cause of underprivileged
Children's. Domino's conducts Store Educational Tour (SET) for the underprivileged children time-
to-time. Recently this was done in the one of the Domino's outlet in Delhi and Mumbai with the
underprivileged children from CRY (Child Relief and You) where Domino's took the pledge to
provide part-time employment to the eligible wards from CRY who are above 18 years, reiterating
its commitment towards social causes. Also, fifty- percent of that day's first 20 deliveries of the
store were given to CRY toward the cause of the underprivileged children. The children had a gala
time while they learned to make and bake pizzas at the store and finally tasted the sumptuous
offerings made by them during the Store Educational Tour.
Domino's Pizza India also boasts about its commitment to serve its customers on time by
implementing the "30 MINUTES OR FREE" service commitment, they have been able to achieve
this as a result of continuous efforts and dedication of the entire team in improving operating
efficiencies.
Domino's Pizza India has been consistently rated amongst the top 2 pizza chains worldwide in the
Domino's family by Domino's International, in terms of quality of operations. Our pizza delivery
times have also been judged as the best delivery times in the world across all Domino's.
Problem statement
Why do people prefer Pizza-Hut over Dominos pizza (In respect of service quality)?

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Q5. Suppose you are the marketing manager of a social club like Country Club. What factors will
you keep in mind to meet customer expectations? ( Use SERVQUAL method)

Answer: SERVQUAL Model This method says that customer service expectation can be
measured along a few factors. There are two versions of this method. Dimensions of Service
Quality We will discuss two works both of which will give the totality of dimensions to service
quality.
David A. Garvin: Eight dimensions of quality were identified by Garvin:
1. Performance: Every product is supposed to deliver benefits and the measure of its quality is
performance of the offer. A dish sourer, which can clean plates completely and quickly, would be a
performance measure.
2. Features: These are in addition to the core product, which does not come as standard features,
like add-ons.
3. Reliability: This is a measure of the degree of probability of the product delivering what had
been promised.
4. Conformance: Delivery quality meeting design standards.
5. Durability: This is a measure of the length of time that a product can deliver benefits, without
deterioration.
6. Serviceability: If the product can be repaired with ease and speed, then it is a measure of
quality. It could include the behavioural dimension of service personnel, like their politeness.
7. Aesthetics: This is a measure of the products looks, design, touch and feel.
8. Perceived quality: Consumers develop a perception due to company-controlled stimuli like
advertising, publicity and brand promotion, and social effects like word-of-mouth.
A Parasuraman et al: Parasuraman, Valerie Zeithaml and Leonard Berry identified five dimensions
with which consumers judge services.
1. Reliability: The service should be performed with dependability, and as per its promise.
2. Responsiveness: This concerns the attitude of the service provider to be willing to provide
service. It also includes their sensitivity as well as timeliness in responding to customer requests.
3. Assurance: This relates to the knowledge, skill and competence of the service providers. It also
indicates their ability to generate trust and faith, and also capability in service delivery with
politeness and consideration.
4. Empathy: This dimension relates to caring, feeling as well as the ability to give personalized
service.
5. Tangibles: This is a measure of the effectiveness of the physical evidence of the service
provider like design layout and facilities.

If you wish to build a loyal customer base, you must be willing to go the extra mile to meet
customer expectations every time you engage with a customer. That’s because customer loyalty is
a by-product of high customer satisfaction.
Many companies seem to think that their customer expectations will be met with whatever it is that
they offer, but that’s rarely ever the case. Instead, companies need to take the time to understand
what their customers want and adjust their offerings accordingly.

How to meet customer expectations

Here are the eight strategies to learn more about your customers’ expectations and close the gap
between their goals and your business needs.
1. Get to know your audience
The first step to meeting customer expectations is simply establishing a clear picture of who your
customers are. This requires you to go beyond basic demographic information like age, gender,
and location.
You need to understand your customers like you understand your product. Dig deeper to learn
about customer needs, interests, and factors influencing their buying decisions.
The best way to learn about your customers is to conduct market research. You may want to talk to

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 a group of loyal and new customers to seek information about how they found you, what problems
they are trying to solve, and why they chose your product/services over other competitors in the
market. Their answers can help you develop a stronger understanding of what your audience is
looking for when they research your company so you can ensure you’re providing precisely that.
2. Make sure you’re reaching the right buyers
Once you have done your market research, you are in a better position to understand who your
potential customer is, how you can reach them, what interests them, and the challenges they’re
trying to overcome.
You can expand your research by analyzing your existing customer base and finding answers to a
few questions like
 What encourages a customer to indulge in repeat purchases?
 Which customer segments tend to become long-term, loyal customers?
 How can you identify an unhappy customer at the earliest?
The answers to these questions will help you paint a more accurate picture of who you should be
focusing on with your marketing and customer retention efforts.
For example, let’s imagine you’re an accounting software company whose target audience is
business owners. After studying your customer base, you notice that customers who work at mid-
sized businesses are more likely to upgrade to your premium plan and to stay with your product
longer than their small business and enterprise-sized counterparts. They even prefer real-time
customer support and may churn if timely support is not provided. These signals help
you prioritize these high-value customers when making key business decisions.
Tip: Don’t forget to keep an eye out for social media mentions. Disgruntled customers tend to
share negative reviews on social media platforms.
3. Look for new ways to exceed customer expectations
Once you’ve identified who your most valuable customer segment is, you should focus on finding
new ways to meet their needs.
Sticking with the account software example, let’s say you’ve determined that your mid-size
business clients prioritize the need to improve process efficiency to save time. The next step is
to consider how to reflect this through your product- You may add new functionalities or change the
existing user interface. After making any changes, you can follow up with your customers to see if
the changes help make their work easier or meet their expectations. Customer interactions like
these will make them feel valued and will likely continue doing business with you.
Tip: When you focus on what your customers want, they will welcome your product improvements
instead of viewing them as unnecessary bells and whistles.
4. Set clear standards for your team members
As the team that interacts with your customers most often, your support team has a major impact
on whether or not your company meets customer expectations. Hiring and training an excellent
team of support agents is one of the most important investments you can make. And the best way
to ensure that your agents provide the level of service your customers deserve is by setting clear
standards.
First, you’ll want to set goals for key support metrics like first response time, average resolution
time, and first call resolution rate. These are the easiest metrics to monitor and measure, and they
can help you establish concrete benchmarks for your team.
Then, create guidelines for responding to specific queries. Write a list of the most common
questions and issues you hear from customers, and establish appropriate responses for each. This
way, you can provide a consistent customer service experience for each customer.
5. Be as transparent as possible
One of the most important factors in whether you’re able to meet customer expectations is whether
you take the time to set accurate expectations in the first place.
Some companies focus on generating sales at the beginning of every customer journey. But, it’s
not the best way to set your customers up for success. Instead, companies need to focus
on educating their potential customers on how they can benefit or derive value from the
product/services, what they can expect from your brand, and what policies they’ll be agreeing to if

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they become a customer. You should be transparent about your pricing information, return and
cancellation policies, and the level of support your customers can expect from your team when they
need assistance.
Sharing this information may not be as fun for your sales team as showing off new features and
impressive case studies, but taking the time to do so upfront prevents your customers from being
caught off guard by policies they don’t like.
Your customers also prefer self-service over waiting for their queries to be answered. Ensure you
have built a comprehensive knowledge base with all the resources and guides your customers may
need or enabled a chatbot that answers common queries or redirects customers to the right
resources. The presence of community forums will also help customers help each other with
unbiased feedback and reviews. This way, they will be able to make an informed decision about
making a purchase and have clear expectations from your brand before they spend a single cent.
6. Develop a customer-centric culture
Many companies put the responsibility of managing customer happiness solely on their support
teams, but this shouldn’t be the case. That’s because when it comes down to it, each employee’s
contributions impact your customers’ experience. The best way to ensure your customer service
experience is delivered at par with customer expectations is by developing a customer-centric
culture.
Encourage your employees to keep your customers at the center of each decision, whether they’re
a developer working on new features or a marketer coming up with new campaigns. This way,
everything your company does will be executed keeping the end user in mind and will more likely
meet and exceed their expectations.
7. Collect customer feedback regularly
As you work towards meeting customer expectations, the best way to gauge whether your efforts
are successful is to collect customer feedback regularly.
Send customer satisfaction surveys, and ask questions about the entire customer
experience. Are customers able to easily find the information they need to make decisions? Is the
buying process user-friendly? Does your product meet their expectations?
Asking the right questions will help you understand the level of experience your brand provides. It
can also help you learn which parts of the process you could be doing better. For example, when
you offer omnichannel customer service, you may want to deliver consistent customer service
experiences across every communication channel. Collecting customer feedback and keeping tabs
on key metrics like your NPS (net promoter score) can help ensure you act as per your customers’
expectations.
8. Evaluate your competitors
If a customer has worked with one of your competitors in the past, they are likely to compare the
two brands. Their expectations of your company will be largely based on their previous
experience with the competitor.
The only way to know whether you’re living up to those expectations is to spend some time learning
about your competitors. Evaluate these brands to learn what they are doing well. What do their
customers like about their brand? And what are they doing that you aren’t?
If there’s a particular part of the customer experience that a competitor is doing better than you, it’s
in your best interest to focus your efforts on improving that part of the experience with your brand.
Then, instead of worrying about living up to the expectations created by other companies, you can
focus on making the kind of improvements your competitors will struggle to keep up with.

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