Chapter 5

Defining and Managing

Service Quality

What is Quality (Q)?

Essentials of Service Quality (SQ)
How to Improve SQ
 Why Quality Matters !
 The global market is becoming more
competitive every day
 Companies continually search for new ways to
gain an edge over their competitors around the
globe
 Global competition and deregulation in a
number of industries is forcing companies to
turn to quality in order to survive
Why Quality Matters – cont. ?
Quality is our best assurance of customer
allegiance, our strongest defense against
foreign competition, and the only path to
sustained growth and earnings (Welch).

Perhaps the most important reason for

pursuing quality is that quality pays (Deming).

Research shows a relationship between quality,

market share, and return on investment
 Relationship between
Quality, Market Share, and ROI
 Higher quality yields a higher return-on-
investment (ROI) for any given market share
 Quality also pays in the form of customer
retention -- customer defections represent a
significant cost to companies
 Adopting quality principles strongly correlates
to corporate stock and earnings appreciation
 : Foundation Principles
 Quality is one of the core components of
value in the S-Q-I-P model

 While price and image are communicators,

product and service quality define the offering
in the value proposition
 Quality is still a powerful competitive force
facing companies
Key Forces Influencing Quality in the
Future
 Quality must deliver bottom-line results
 Management systems will increasingly absorb the
quality function
 Quality will be everyone’s job
 The economic case for a broader application of
quality will need to be proved
 Global demand for products and services will create
a global work force
 Trust and confidence in business leaders and
organizations will decline
Source: Kenneth Case, President of the American Society for Quality
(ASQ) (2002) “Coming Soon: The Future”, Quality Progress, Vol. 35 (11), p. 27.
 Factors Influencing Change in
Quality Perceptions
■ Modern communications permit and in
some cases encourage customers to shift
their patronage from one producer to
another
 Global competition has resulted in increased

choice and has raised customer expectations of

what constitutes acceptable quality
 Technology - marketing is a contest for

consumer’s attention and the Internet is now

competing for that attention as the number of
Internet users worldwide continues to rise
 What is Quality?
■ "The totality of features and characteristics of
a product or service that bear on its ability to
satisfy stated or implied needs." (Kotler)
■ Quality must provide goods and services that
completely satisfy the needs of both internal
and external customers. Quality serves as the
"bridge" between the producer of goods or
services and its customer. (Johnson &
Weinstein)
Deming’s 14-Point Philosophy on Quality
■ Constancy of Purpose
■ Adopt the New Philosophy
■ Cease Dependence on Mass Inspection
■ End the Practice of Awarding Business
on the Basis of Price Alone
■ Improve Constantly and Forever the System of
Production and Service
■ Institute Training
■ Institute Leadership
Cont….
Deming’s 14-Point Philosophy on Quality - cont.

■ Drive Out Fear

■ Break Down Barriers Among Staff
■Eliminate Slogans, Exhortations and Targets
■ Eliminate Work Quotas
■ Remove Barriers to Pride of Workmanship
■ Institute a Vigorous Program of Education and
Self-Improvement
■ Put Everyone to Work on the Transformation
The 6 Sigma Approach to Quality

Measure it to obtain a
Define the process performance baseline

Analyze the data to IMPROVE

determine where the process
errors are occurring

Control it to ensure the

errors do not recur
 The Juran Philosophy of Quality
 Juran, defined quality as "fitness for use" where products
possess customer-desired product features and are free from
deficiencies

 The Juran philosophy of quality centered around three basic

quality processes: planning, improvement, and control

 Juran believed that there must be a continual striving toward

quality, consisting of a number of steps from research,
development, design, specification, planning, process
control, etc. and then back to research again
 Crosby’s Philosophy of Quality
 Crosby defines quality as "conformance to
requirements, not as goodness"
 Crosby believes that quality is created by a
system of prevention, not appraisal (doing it
right the fist time or DIRFT), where the
performance standard is "zero defects --
meeting specifications 100% of the time”.
 Crosby also believes it is necessary to build a
quality-driven corporate culture
Garvin’s 8 Quality Dimensions
 Product performance
 Features

 Reliability

 Conformity

 Durability

 Serviceability

 Aesthetics

 Perceived quality
 Quality Function Deployment (QFD)
 Integrating the voice of the customer ensures a
practice known as quality function deployment (QFD)
 The GOAL OF QFD is to determine not only what
customers want, but which product or service
attributes are most important to them
 This process needs to precede new product or service
introductions in order to ensure design quality
 QFD enables companies to identify and prioritize
customer needs and respond to them effectively
 Customer Driven Engineering –
House of Quality
Engineering attributes (EAs)
(e.g., weight on front wheels, tire
characteristics, etc.)

Customers’
attributes .05 Relationships
(CAs) between EAs and
(e.g., .01
“traction in CAs Measures of
dry … customers’
conditions”) ... perceptions
of each
product on
Importance of Engineers’ measures of each each CA
each CA product on each EA
 Service Quality
 Customers also form perceptions of quality during
the service transaction - how effectively and
efficiently the service was delivered and the speed
and convenience of completing the transaction

 Finally, customers evaluate support activities that

occur after the transaction, that is post-sale
services
 Definitions of Service Quality
■ Service quality can also be defined according
to both the what and how a product or service
is delivered.
■ Gronroos distinguishes between “technical
quality” and “functional quality”.
■ Technical Quality is concerned with the
outcome of the delivered product or service.
cont..
Definitions of Service Quality – cont.

■ Customers use service quality attributes such

as reliability, competence, performance,
durability, etc. to evaluate technical quality.
■Functional Quality has more to do with how
the technical quality is transferred to the
consumer. Service quality attributes such as
responsiveness and access would be important
in helping the customer judge the functional
quality of the service encounter.
Cardinal Principles of Service Quality
 Listening precedes action
 Reliability is key
 Flawless execution of the “basics”
 Pay attention to service design
 Perform service recovery well
 Surprise customers
 Practice “fair play”
 Promote teamwork
 Internal service begets external service

Adapted from Zemke, Ron (2002)

 The Service Offering

 Service quality can also be judged by

considering the various “spheres” or thresholds
of the service offering as presented in Figure –
3 Service Levels.

 The core benefit is the most fundamental level

for which the service offering stands for, that is,
what the consumer is actually seeking.
cont.
The Service Offering – cont.
The core benefit represents basic reasons
why people buy, such as hunger, safety,
convenience, confidence, status, self-
esteem, and so on.
 Gonroos uses the term “service concept” to
indicate the core of a service offering, such
as offering a car rental as a solution to a
short-term transportation need.
The 3 Service Levels

SATISFIERS

HYGIENE
FACTORS

CORE
BENEFIT
 Service Quality Challenges

■ Defining quality for services is more

difficult than for products because of the
intangible, variable nature of service
characteristics

■ Unlike product quality, consumers

frequently lack the necessary information
to evaluate service quality cont.
Service Quality Challenges – cont.

Quality Perceptions
■ Search quality and experience quality are more
applicable to determining product quality
■ With services, however, consumers are usually limited
to using credence quality to evaluate the experience,
relying solely on the overall credibility of the service
provider

Service Continuum
☛Another challenge presented in assessing service
quality arises when viewing services along a
continuum ranging from pre-sale to post-sale activities
 Continuum of Services

Pre-sale Transaction Post-sale

Services Services Services
Broad Dimensions of Service Quality
 Reliability – perform promised service dependably
and accurately
 Responsiveness - willingness/readiness to provide
prompt service
 Competence - possess knowledge and skill to perform
the service
 Access - approachability and ease of contact of
service personnel
 Courtesy - politeness, consideration, and friendliness
of service personnel cont…
Broad Dimensions of Service Quality – cont.

 Communication - keeping customers informed; listening to

customers
 Credibility - trustworthy, believable, honest
 Security - freedom from danger, risk, or doubt
 Understanding/knowing customer - knowing customer’s
needs
 Tangibles - physical evidence of service

 Parasuraman, A. Zeithaml, V., and Berry, L. (1985).

 Mapping Service Quality
 Parasuraman and his colleagues found that service
quality is a measure between service perceptions as
well as expectations
 Service quality stems from a comparison of what a

consumer feels a service firm should offer (desires or

wants) versus their perception of what the service
firm actually does offer
 Ensuring good service quality involves meeting or

exceeding consumers’ expectations

SERVQUAL Model: Gap Analysis
1. Research gap
customer expectations<->mgt. perceptions
2. Planning & design gap
mgt. perceptions<->service specifications
3. Implementation gap
service specifications<->service delivery
4. Communication gap
service delivery<->external communication
5. Reality gap
customer expectations<->the experience
GAP 3 – Service Performance Gap

Team Work
Employee Job Fit
Technology Job Service
Performance
Fit
Gap
Perceived
Control
Supervisory
Control Systems
Role Conflict
Role Ambiguity
 SERVQUAL
 Used to operationalize the gaps influencing customer
perceptions

 SERVQUAL is a 21-item instrument that measures

both expectations and customer perceptions of the
service encounter

 Scale reflects the respondent’s “zone of tolerance” or

the range of the company’s performance between
“acceptable” and “desired” service levels
 Benefits of SERVQUAL
Can serve as an effective diagnostic tool for uncovering
broad areas of a company’s service quality shortfalls
and strengths

The SERVQUAL scale is offers the potential to

determine the relative importance of the 5 major
service quality dimensions-- Reliability,
Responsiveness, Assurance, Tangibles, and Empathy
-- and to track service quality performance over time

The scale serves as a suitable generic measure of service

quality, transcending specific functions, companies,
and industries
 Service Profit Chain

 Researchers have proposed a link between employee

satisfaction, customer satisfaction and firm profit-
ability, known as the service profit chain (SPC)

 The SPC represents an integrative framework for

understanding how operational investments into
service quality are related to customer satisfaction
perceptions and how these translate into profits

 Improving quality also leads to other desirable

outcomes, such as customer satisfaction
 The Service Profit Chain
Internal Service
Delivery --Employees Service
Concept
External --Customers

Employee Service Service Value

Value Value Outcomes –
C/S, Loyalty
Profits

Growth
-- Workplace design -- Higher --- Lifetime Value
-- Process Tools reliability --- Retention
-- Rewards/Recognition -- Lower costs --- Referrals

Adapted from Heskett, Sasser, and Schlesinger (1997).

 How to Improve Quality
 Design services in cooperation with customers

 Focus your improvement programs outward, on market "break-

points"

 Create a tangible representation of service quality

 Use teamwork to promote service excellence

 Create a “service-bias” based on these service quality

determinants: professionalism, attitudes/behaviors,
accessibility/flexibility, reliability/trustworthiness, service
recovery, and reputation/credibility cont…
 How to Improve Quality – cont..

 Develop proper measurements

 Employee selection, job design and training are
crucial to building customer satisfaction and SQ
 Reward total quality efforts in marketing
 View service as a process, not a series of functions
 Integrate customer information across sales channels
 Service Quality Exercise

Choose one of these Answer these questions:

 How unique/standardized is
SQ situations: product and/or service?
 Auto repair  Type of service – search,
 Hospital visit experience, or credence.?
 Pure service or product-
 Theme park service blend?
 Hair cut  What factor most affects
 Supermarket service quality?
 Fast food restaurant
 After service is delivered, is
corrective action possible?
 Air travel