Service Marketing Chapter Eleven

11.1. Concept of service quality

Quality is a concept related to the attitude of the customers and their comprehensive evaluation
of the service. It is built upon a series of evaluative experiences of the services delivered by the
organization to the customers. The service quality can only be accessed after the service is
consumed. The assessment of service quality is made during delivery of service when customer
encounters the service personnel. Customer satisfaction with service quality is defined by
comparing perceptions of service received with the perception of expected service of the
consumers. When the expectations exceed, service is perceived to be of exceptional quality and
gives a pleasant surprise to the customer. Dimensions of service quality refer to the elements
which customer’s judge as relevant in developing a good quality service.

There are four key factors that can influence a customer’s expectations, which may help
customers in shaping their expectations of a service:
_ Word of Mouth Communication: This is the communication that flows from one person to
another in a social loop and helps in formulating service quality perceptions.
_ Personal Needs and Preferences: The relative importance that the person gives to the service
as an essential part of the offer.
_ Past Experience: The customer expectations also depend upon past experiences of the
customer with the service provider.
_ External Communications: External communications like advertising, public relations and
other publicity tools also influence the quality of service perception.
11.2. Measuring& improving service quality
How consumers assess service quality
Although it may be difficult, service organizations need to take steps to monitor and improve the
quality of the service that they provide. According to Lewis and Booms, service quality is ‘a
measure of how well the service
level delivered matches customer expectations. Delivering quality service means conforming to
customers’ expectations on a consistent basis.’ Using this definition of service quality, one of the
first steps before implementing a quality improvement programmes involves establishing
precisely which components of the service influence the consumer’s perception of quality.
Service quality from the consumer’s perspective is examined with reference to the pioneering
work carried out by Parasuraman, Zeithaml and Berry. Their research initially identified a set of
determinants used by consumers to judge the quality of the service they receive. Using this, and
subsequent research, they produced a conceptual framework (a Gaps model) and a measurement
instrument SERVQUAL that has been widely used by companies to assess service quality.

Determinants of service quality

The first five relate to the quality of the final outcome, while the remainder refers mainly to the
quality of the process of service delivery.
1. Reliability: This relates to the ability of the service provider to perform the promised service
dependably and accurately. The sort of question that a client might ask of the accountant to
assess dependability, for

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Example, might relate to whether all the information deadlines specified by the Inland Revenue
and the relevant legislation have been met.
2. Access: Is the service accessible and delivered with little waiting. For example, do the
hairdresser’s clients have to wait months before getting an appointment to have their hair cut?
3. Security: Is the service free from danger, risk or doubt? For example, how safe does the
customer feel using the bank’s automatic teller machine?
4. Credibility: How trustworthy and honest does the service provider appear to be? If the double-
glazing company tells the customer that they will deliver within the week, how likely is that to
happen?
5. Understanding the customer: How much effort does the organization make to get to know its
customers and understand their needs? A colour consultant, for example, would score highly
here, giving individual consultations to clients which involve questioning them on aspects of
their lifestyle.
6. Responsiveness: How willing are service employees to help customers, and to deal with their
specific problems? Is the accountant available to talk over a specific problem whenever the client
rings up?
7. Competence: To what extent do employees possess the required skills and knowledge to
perform the service? Often here, when using a service provider for the first time the customer
uses the existence of
Professional qualifications or membership of certain trade associations to assess this.
Accountants, for example, must be members of the Institute of Chartered Accountants in
England and Wales to prepare
Limited company accounts.
8. Courtesy: Are staff polite and considerate to consumers? Are the Waymark holiday telephone
operators polite and helpful to each customer who makes an inquiry about a booking? (Case
Study 5).
9. Tangibles: What assessments can be made of the appearance of the physical facilities,
equipment, personnel and communication materials? Do all the waiters in the restaurant wear
clean uniforms and appear to be concerned about their personal hygiene as well as the
cleanliness of the food that they are presenting?
10. Communication: How good is the organization at communicating effectively what is
provided in the service and what role customers are expected to play? Specifically, perhaps, are
customers kept informed about reasons for possible breakdowns in the delivery system?

Dimensions of service quality

After further research into the measurement of service quality, PZB advocated that the ten
determinants could be collapsed into five dimensions of quality. They are:
1. Tangibles: including the physical components of the service, e.g. seating, lighting, and so on;
2. Reliability: dependability of service provider and accuracy of performance;
3. Responsiveness: promptness and helpfulness;
4. Assurance: knowledge and courtesy of employees and their ability to inspire trust and
confidence;
5. Empathy: caring, individualized attention the firm gives its customers.

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11.4. Defining and measuring productivity

Productivity is a measure of relationships between an input and an output namely:

It is a standard measure that has been used by manufacturing industries for a very long time,
where, for example:

The real difficulty lies in aggregating a range of partial measures into a composite measure for
the whole organization. In other words, how the organization’s total output and the value added
are explained by the mix and deployment of resources. As total productivity, therefore, can be
difficult to determine and fail to detect specific explanations for poor performance, a number of
disaggregate measures are used:

Output is, of course, influenced by a host of factors such as the level of automation, the quality
of raw materials, scheduling of labor, layout of operations and customer behavior. The danger of
using only one partial measure of productivity in the form of labor input is that poor performance
may wrongly be attributed to unproductive workers. The explanation may quite easily be found
in poor materials and equipment, poor layout and awkward customers.

Nowadays the term performance indicator is often used to describe productivity measures. Given
the distinctive characteristics of services, the pursuit of productivity measurement is a
challenging one. It is a topic that generates a great deal of attention. Exhortations are often made
about the need to increase efficiency (as distinct from effectiveness) and invariably this is
supposed to be achieved by getting more output from the same input or getting the same output
from less input. Inevitably, calls are made for more output from less input! Labor is a major
input in any organization (particularly a service) and the focus for this call for increased
productivity has been, and still is, ‘blue-collar’ workers. Their counterparts, white-collar
workers, have escaped being subjected to product- ivity measurement. Increasingly, however, the
picture is changing. The perform- acne of white-collar workers is being measured, although the
term ‘performance indicator’ seems to take precedence over productivity. It is generally agreed
that it is much easier to measure productivity on an assembly line than in a service business
where the ‘product’ is often the customer’s intangible experience. Services, themselves, will of
course vary in terms of how susceptible they are to measurement and the form that measurement
will take.

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11.4.1. The productivity framework

To develop our understanding of productivity we need to add to the ideas of input and Output.
There are two words featured that are frequently mentioned in everyday discussion but often
without clear understanding of their meaning. They are used loosely and often interchangeably.
The words are, of course, efficiency and effectiveness. The meanings will become clearer as we
look at some examples. However, in general they can be defined as follows:
● Efficiency: the rate at which inputs are converted into outputs, e.g. calls per sales
representative; customers served per catering assistant. The emphasis is often on quantitative
measurement and the objective is one of securing the maximum out- put from the minimum
input.
● Effectiveness: the extent to which purposes/goals are achieved, e.g. the number of productive
and profitable calls per sales representative and the nature of customer relationships established
and fostered; the number of satisfied customers served per catering assistant. The emphasis is on
qualitative measurement and the objective one of meeting customer needs and delivering service
quality.

The distinction between efficiency and effectiveness has been defined as ‘doing things right’
(efficiency) and ‘doing right things’ (effectiveness).3 What this amounts to is that efficiency is
‘the rate at which inputs are converted into outputs’ and effectiveness is ‘the extent to which
purposes are being achieved’.
The above Figure offers a guide to developing an understanding of the various elements and their
relationships:

● Economy: the cost of selecting and hiring people, materials and equipment and conversion
through training and installation into resource inputs capable of providing service. It is not a
measure of performance, but can have an impact on the level of performance.
● Efficiency 1: the ratio of inputs to intermediate outputs, e.g. the cost per unit of capacity (cost
per place in a private nursing home) or cost per anticipated level of demand (cost per meal
prepared in a hotel).
● Production function: all the resources (staff, buildings, equipment, and consumables) are
combined to produce intermediate outputs, i.e. the capacity to produce the rele- vant service
(school places, hospital beds, train seats, restaurant seats).

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● Efficiency 2: the ratio of inputs to outputs, e.g. the cost per college graduate or cost per
number of meals sold in a hotel.
● Capacity utilization: the ratio of intermediate output to final output, i.e. how good is
management at converting the intermediate output into customer take- up. For example, what
percentage of seats will be taken up by customers in a restaurant or what percentage of places
will be taken up in a residential home? For services in general, and in particular where advance
preparation is involved (meals in a restaurant), accurate demand forecasting will become part of
effective marketing management.
● Effectiveness 1 and 2: there is no overall agreement as to how effectiveness should be
defined. Is it to be in terms of ‘output’ or ‘outcome’? Output means the service actually delivered
to customers. Outcome, on the other hand, is the impact which the service may have on the
recipients. It is the quality of the service delivered and its effectiveness in meeting users’ needs
or achieving its underlying purpose (Audit Commission). For example, a college educates
students (output) but has a certain responsibility for graduate employability and destination
(outcome). A management consultancy produces a report and advises a client (out- put) but has a
certain responsibility for the impact of the report on the performance of the client company
(outcome). In both cases, however, the outcome measure is not completely under the control of
the service provider.

For many services, output is defined in a straightforward manner, as in:

● Number of commuters transported
● Number of home help clients assisted
● Number of restaurant meals served
● Number of admissions to a leisure center.

What is missing is any reference to the quality of service delivered. Some services simply have
no output or outcome that can practically be measured in quantitative terms; for example, a
counseling service. If the output of a process appears to defy identification with precision, a
surrogate measure of output may be used. For example, the true output of the police service
could be its contribution to the maintenance of a peaceful, crime free, ordered society, or a public
library’s true output might be the contribution it makes to expanding the knowledge base of, and
to entertaining, the constituent community. As both of these outputs are likely to prove difficult
to quantify, proxy measures in the form of ‘percentage of reported crime solved’ and ‘ratio of
loans to book stock’ are used.
The difficulties surrounding the measurement of output and outcome have led to the
development of a different approach which is known as process productivity. It has been argued
as being a more realistic and expedient measure. How well the service is delivered is, arguably, a
better way for a service like health, where it is difficult to measure changes in health status and
where factors other than medical care affect health outcome.

11.4.2. Measuring Service Productivity

The intangible nature of service performances often makes it difficult to measure the
productivity of service industries. The measurement task is perhaps the most straightforward in
possession-processing services because many are quasi-manufacturing organizations, performing
routine tasks with easily measurable inputs and outputs that often include physical elements.
Examples include quick-service garages, which change a car's oil and rotate its tires, or fast-food

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restaurants, which offer limited and simple menus. But the task is more complicated when the
customer's vehicle has an engine problem, or when the restaurant in question is famous for its
varied and exotic cuisine. In a people-processing service like a hospital, we can look at the
number of patients treated in the course of a year and at the hospital's census, or average bed
occupancy. But how do we account for the different types of procedures performed—removal of
cancerous tumors, treatment of diabetes, or setting of broken bones—and the almost inevitable
variability between one patient and another? And how do we evaluate the difference in service
outcomes? Some patients get better, some develop complications, and some never recover. There
are relatively few standardized procedures in medicine that offer highly predictable outcomes.
Information-based services also pose measurement issues. How should we define the output of a
bank or a consulting firm? And how does an architect's output compare to a lawyer's? Some
lawyers like to boast about their billable hours. But what were they actually doing during those
hours, and how do we measure their output as opposed to their fees? It's alleged that some
lawyers strive to bill for more than 24 hours of work per day, but is that really an accurate
indication of productivity? Finally, measuring productivity is a challenge for mental stimulus
services like education.
Many universities are under pressure to document outputs, and they have been struggling with
how to measure the hours professors spend preparing for class, interacting with students,
providing service to the university and the community, and contributing to their professional
fields. And how do colleges (or their graduates) quantify the value of a college degree? Or the
value of a good professor versus a mediocre one? Variability is a major problem in measuring
service productivity. Unfortunately, traditional measures of service output tend to ignore
variations in the quality of service delivered and its perceived value to customers.

11.5. Improving service productivity

Given the standard ratio there are, in theory, five ways to increase productivity:
1. Output increases faster than input
2. Output remains unchanged with fewer inputs
3. Output increases from the same inputs
4 .Input decreases more than output
5 .Maximum increase in the ratio through an ideal combination of outputs and inputs.

Whatever method is selected, the true test will be the effect on the quality of service delivered.
Improved productivity must, therefore, take into account effectiveness as well as efficiency. A
number of practical steps can be taken to improve productivity in terms of efficiency and
effectiveness:
1. Careful cost control, driven by a management desire to become ‘leaner and fitter’
2 .Job designs – management and employees in pursuit of productivity improvements must
attempt to answer questions such as:

 What work do we do?

 How do we do it?
 Why do we do it this way?
 How can we do it better?
3 .Replace human labor with automation
4. Improve employee motivation:

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 How do employees perceive the organizational culture?

 Do they feel part of the organization?
 Are rewards commensurate with the tasks done?
5 .Select people more predisposed for productivity, for example the predisposition of an air
traffic controller is more important than that of a security guard in a low- crime area
6. Isolate, and even extend, the back office so that the benefits of manufacturing technology can
be achieved
7. Schedule resource deployment to match fluctuations in the level of customer demand
8. Involve customers more in the production and delivery of service
9. Make sure that highly skilled employees are not doing jobs that could be under- taken by less
fully trained staff.
There is often a tension between the drive for efficiency and the achievement of effectiveness. A
service can be efficient but ineffective; alternatively it can be effective but inefficient. This can
be illustrated by a hypothetical emergency ambulance service:
One can envisage an ambulance with a highly trained crew that is very efficient and dashes about
from accident to accident promptly, treating injured persons with expert skill, placing them in the
ambulance and rapidly driving them to the nearest hospital, then racing off to service yet another
emergency. The unit would be extraordinarily efficient if it handled two such emergencies in an
hour or about sixteen in an eight hour shift. However, it would be utterly ineffective if the actual
number of emergencies in the area averaged twenty per shift. This would be an example of a
highly efficient service that is utterly ineffective; more ambulances are needed. Alternatively,
one can conceive of a very effective ambulance service where no one has to wait more than five
minutes to receive expert medical attention, ambulances are promptly dispatched, and many lives
are saved. The contrast between efficiency and effectiveness

In trying to turn the service consumer into a valued participant in the service delivery process,
the service provider must recognize the following factors and how they could be managed:
● Consumer predisposition, e.g. personality, attitudes, values – may be difficult to change
● Consumer potential commitment/willingness to become involved – low to high
● Consumer knowledge and skills – how easily can they be developed if need be?

In addition to the degree of consumer involvement, the service provider must consider the nature
of consumer involvement, i.e. when, where and how in the service delivery process will
customer involvement occur? From self-service at a restaurant or petrol station through to
interactions with a doctor, teacher or accountant, the potential for exploiting improvements in
productivity can be substantial. Whatever changes in service delivery are proposed, the consumer
must be the major Beneficiary.

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Customer-Driven Approaches to Improving Productivity

In situations where customers are deeply involved in the service production process (most typical
in people-processing services), operations managers should examine how customers' inputs can
be made more productive. Marketing managers should be thinking about what marketing
strategies can be employed to influence customers to behave in more productive ways. Two
strategies, in particular, may be helpful: changing the timing of customer demand and involving
customers more actively in the production process.
Changing the Timing of Customer Demand Managing demand in capacity constrained service
businesses is a recurring theme in this book. Customers often complain about crowding and
congestion, reflecting time-of-day, seasonal, or other cyclical peaks in demand. During the off-
peak periods in those same cycles, managers often worry that there are too few customers and
that their facilities and staff are not fully productive.
Involving Customers More in Production Customers who assume a more active role in service
production and delivery can take over some labor tasks from the service organization. Benefits
for both parties may result when customers perform self-service. Some technological innovations
are designed to enable customers to perform tasks previously undertaken by service employees.
Quality and productivity improvements often depend on customers' willingness to learn new
procedures, follow instructions, and interact cooperatively with employees and other people.
Customers who arrive at the service encounter with a set of preexisting norms, values, and role
definitions may resist change. In fact, research results suggest that some customers may be more
willing than others to serve themselves.

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