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Services Management: Strategic Service Vision

The document discusses strategic service vision and management. It provides information on segmenting the market, defining the service concept, developing an operating strategy, and designing the service delivery system. It also discusses models for understanding service quality, including the gaps model which identifies four gaps within an organization that can lead to unmet customer expectations. Key factors are outlined that can contribute to each of the four gaps. Additional topics covered include evaluating services, levels of customer expectations, and factors that influence expectations.

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Rimsee Chhajer
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Download as PDF, TXT or read online on Scribd
84 views

Services Management: Strategic Service Vision

The document discusses strategic service vision and management. It provides information on segmenting the market, defining the service concept, developing an operating strategy, and designing the service delivery system. It also discusses models for understanding service quality, including the gaps model which identifies four gaps within an organization that can lead to unmet customer expectations. Key factors are outlined that can contribute to each of the four gaps. Additional topics covered include evaluating services, levels of customer expectations, and factors that influence expectations.

Uploaded by

Rimsee Chhajer
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PDF, TXT or read online on Scribd
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Services Management

7 September 2006 FALL 2006

Strategic Service Vision


Target Market Segments
What are common characteristics of important market segments? What dimensions can be used to segment the market, demographic, psychographic? How important are various segments? What needs does each have? How well are these needs being served, in what manner, by whom?

Strategic Service Vision


Service Concept
What are important elements of the service to be provided, stated in terms of results produced for customers? How are these elements supposed to be perceived by the target market segment, by the market in general, by employees, by others? How do customers perceive the service concept? What efforts does this suggest in terms of the manner in which the service is designed, delivered, marketed?

Strategic Service Vision


Operating Strategy
What are important elements of the strategy: operations, financing, marketing, organization, human resources, control? On which will the most effort be concentrated? Where will investments be made? How will quality and cost be controlled: measures, incentives, rewards? What results will be expected versus competition in terms of, quality of service, cost profile, productivity, morale/loyalty of servers?

Strategic Service Vision


Service Delivery System
What are important features of the service delivery system including: role of people, technology, equipment, layout, procedures? What capacity does it provide, normally, at peak levels? To what extent does it, help insure quality standards, differentiate the service from competition, provide barriers to entry by competitors?

Service Purchase Decision


Service Qualifier: To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline. Service Winner: The competitive dimension used to make the final choice among competitors. Example is price.

Service Purchase Decision (cont.)


Service Loser: Failure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization) or late delivery of package (speed).

The Gaps Model of Service Quality


The gaps model is a useful framework for understanding service quality in an organization. The most critical service quality gap to close is the customer gap, the difference between customer expectations and perceptions. Four provider gaps occur and are responsible for the customer gap. Various factors responsible for each of the four provider gaps.

The Gaps Model of Service Quality


The Customer Gap The Provider Gaps:
Gap 1 not knowing what customers expect Gap 2 not having the right service designs and standards Gap 3 not delivering to service standards Gap 4 not matching performance to promises

Putting It All Together: Closing the Gaps

Gaps Model of Service Quality


CUSTOMER
Customer Gap

Expected Service

Perceived Service
Service Delivery External Communications Gap 4 to Customers

COMPANY
Gap 3 Gap 1 Gap 2

Customer-Driven Service Designs and Standards Company Perceptions of Consumer Expectations

Gaps Model of Service Quality


Customer Gap: difference between customer expectations and perceptions Provider Gap 1 (The Knowledge Gap): not knowing what customers expect Provider Gap 2 (The Service Design & Standards Gap): not having the right service designs and standards Provider Gap 3 (The Service Performance Gap): not delivering to service standards Provider Gap 4 (The Communication Gap): not matching performance to promises

The Customer Gap


Expected service
Customer Gap

Perceived service

Key Factors Leading to Provider Gap 1


Customer Expectations

Gap 1

! Inadequate marketing research orientation


Insufficient marketing research Research not focused on service quality Inadequate use of market research

! Lack of upward communication


Lack of interaction between management and customers Insufficient communication between contact employees and managers Too many layers between contact personnel and top management

! Insufficient relationship focus


Lack of market segmentation Focus on transactions rather than relationships Focus on new customers rather than relationshi p customers

! Inadequate service recovery


Lack of encouragement to listen to customer complaints Failure to make amends when things go wrong No appropriate recovery mechanisms in place for service failures

Company Perceptions of Customer Expectations

Key Factors Leading to Provider Gap 2


Customer-Driven Service Designs and Standards

Gap 2

!Poor service design Unsystematic new service development process Vague, undefined service designs Failure to connect service design to service positioning !Absence of customer -driven standards Lack of customer -driven service standards Absence of process management to focus on customer requirements Absence of formal process for setting service quality goals !Inappropriate physical evidence and servicescape Failure to develop tangibles in line with customer expectations Servicescape design that does not mee t customer and employee needs Inadequate maintenance and updating of the servicescape

Management Perceptions of Customer Expectations

Key Factors Leading to Provider Gap 3


Customer-Driven Service Designs and Standards

Gap 3

! Deficiencies in human resource policies


Ineffective recruitment Role ambiguity and role conflict Poor employee -technology job fit Inappropriate evaluation and compensation systems Lack of empowerment, perceived control, and teamwork

! Customers who do not f ulfill roles


Customers who lack knowledge of their roles and responsibilities Customers who negatively impact each other

! Problems with service intermediaries


Channel conflict over objectives and performance Difficulty controlling quality and consistency Tension between empowerment and control

! Failure to match supply and demand


Failure to smooth peaks and valleys of demand Inappropriate customer mix Overreliance on price to smooth demand

Service Delivery

Key Factors Leading to Provider Gap 4


Service Delivery

Gap 4

! Lack of integrated services marketing communications Tendency to view each external communication as independent Not including interactive marketing in communications plan Absence of strong internal marketing program ! Ineffective management of cust omer expectations Absence of customer ex pectation management through all forms of communication Lack of adequate educati on for customers ! Overpromising Overpromising in advertising Overpromising in personal selling Overpromising through physical evidence cues ! Inadequate horizontal communications Insufficient communication between sales and operations Insufficient communication between advertising and operations Differences in policies and procedures across branches or units

External Communications to Customers

Customer Evaluation Processes for Services


Search Qualities
attributes a customer can determine prior to purchase of a product

Experience Qualities
attributes a customer can determine after purchase (or during consumption) of a product

Credence Qualities
characteristics that may be impossible to evaluate even after purchase and consumption

Continuum of Evaluation for Different Types of Products


Most Goods
Easy to evaluate

Most Services
Difficult to evaluate

Clothing

Jewelry

Furniture

Houses

Restaurant meals

Automobiles

Vacations

Haircuts

Television repair

Child care

Legal services

Root canals

High in search High in experience High in credence qualities qualities qualities

Medical diagnosis

Auto repair

Dual Customer Expectation Levels


Desired Service

Adequate Service

Possible Levels of Customer Expectations

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The Zone of Tolerance


Desired Service

Zone of Tolerance

Adequate Service

Zones of Tolerance for Different Service Dimensions


Desired Service

Level of Expectation

Zone of Tolerance
Adequate Service

Desired Service Zone of Tolerance Adequate Service

Reliability

Tangibles

Source: L. L. Berry, A. Parasuraman, and V. A. Zeithaml, Ten Lessons for Improving Service Quality, Marketing Science Institute, Report No. 93-104 (May 1993).

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Factors That Influence Desired Service


Lasting Service Intensifiers

Desired Service
Personal Needs

Zone of Tolerance Adequate Service

Factors That Influence Adequate Service


Temporary Service Intensifiers

Desired Service
Perceived Service Alternatives

Zone of Tolerance Adequate Service


Predicted Service

Self-Perceived Service Role

Situational Factors

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Factors That Influence Desired and Predicted Service


Explicit Service Promises Implicit Service Promises

Desired Service Zone of Tolerance Adequate Service

Word-of-Mouth

Past Experience

Predicted Service

Frequently Asked Questions About Customer Expectations


What does a service marketer do if customer expectations are unrealistic? Should a company try to delight the customer? How does a company exceed customer service expectations? Do customer service expectations continually escalate? How does a service company stay ahead of competition in meeting customer expectations?

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