Unit III

Service Quality

o Impact of Service Quality

o Approaches to Service Quality
o Ten Original Dimensions of Service Quality
o How to improve service Quality
o Service Quality Information Systems
o Benchmarking and Certification

Books to be referred:

Services Marketing & Management

B. Balaji
S Chand & CO. Ltd.

Services Marketing
Helen Woodruffe
Macmillan

Service Marketing – Concepts, Applications & Cases

By M.K. Rampal & S. L. Gupta
Galgotia Publishing Company

Services Marketing – Concepts, Planning & Implementation Cases

By C Bhattacharjee
Excel Books

Service Quality

Introduction
There are certain service firms who offers identical services under competing with each
other in a smaller area like fast food restaurants, banks etc. here the quality of service can
be used to differentiate from each other. Service quality is crucial to the customer as well
as the service firm or service providers. Organizations are becoming increasingly aware
of the importance of quality in maintaining competitive advantage. Thus the service firm
can be use the service quality in maintaining competitive advantage and the customer can
use the service quality for quality differentiation.

Total Quality Management has been a buzzword for business during the last decade and
the whole issue of quality has been received attention in business and academic circles.
Consumers have grown aware of quality and consumer ‘watchdog’ associations have
emerged to monitor service quality in many areas.
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

Measuring quality in services is not a simple task since they are in tangible and cannot be
stored. We can define service quality in terms of satisfaction that the customers derives
by comparing perception of the service received with the expectation of service desired.

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’ of a product
or service delivered.

Christian Gronroos distinguishes between “technical∼ quality” and “functional

quality”.
Technical Quality is concerned with the∼ outcome of the delivered product or service.

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.

More definitions
⇒"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

⇒ “Quality is consistent conformance to customer’s⇒ expectations.”

–Stack et al

⇒ “Quality is a predictable degree of⇒ uniformity at a low cost with a quality suited to
the market.”
-Deming
⇒ “Higher quality has a beneficial effect on both revenues⇒ and cost.”
-Gummesson

Thus, there are many definitions of quality, and in many senses quality is subjective.
To many people, quality implies luxury or excellence; a Rolls Royce rather than a Ford;
cordon bleu instead of fast food. However, quality can also be measured in terms of
fitness for purpose, and a Ford Escort is re4garded by many owners as a quality family
car, while McDonalds provide a quality fast food service.

The evolution of quality concepts and movement had been the subject of operational
managers in the manufacturing industry. Recently, quality has gained significant
relevance in context of service industry with reference to customer needs and
expectations.

Different definitions have been categorized into five approaches to quality by David
Garvin.

• Transcendent Approach
• Product based approach
• Manufacturing based approach
• Value based approach
• User based approach

Transcendent Approach
Transcend view of Quality is synonymous with innate excellence, a mark of
uncompromising standards and high achievements
Example Rolls Royce car, Rolex watches

Product based approach

The product based approach views quality as a precise and measurable variable
Quality reflects the quantity of ingredient (or features) or attributes a product or service
contains
A watch designed to run without the need for servicing for lifetime will be expensive

Manufacturing based approach

In this the focus is on the supply side and is concerned primarily with engineering and
manufacturing practices
The product may not be the best in the world but it is regarded as good quality if it is
manufactured or delivered precisely to its design specifications

Value based approach

It defines in terms of costs and prices.
Value is the quality one gets for the price one pays.
A consumer may buy a product with lower specifications if the price is low

User based approach

It starts with point that quality lies in the eyes of the beholder According to this approach
the goods that best satisfy the customer preferences are believed to be high quality.

Why Quality Matters?

In this increasingly competitive world, customers are in a position to demand forever

increasing levels of service and quality. Rather than simply react to their demands,
successful companies are proactive in the way they manage quality and continuously seek
to improve levels of customer satisfaction.

 The global market is becoming more competitive everyday.

 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.
 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.
 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.

 
Process of Service Quality Management

1) Setting The Right Standard:

It is necessary to have the right standard for service quality or else the quality
assurance process will deliver in appropriate levels of service. Standard quality is not
just related to manufacturing, it covers all other functions.

2) Implementing Quality Service:

The implementation process involves total commitment from all the levels of
organization. Team efforts play an important role. Effective implementation of
service quality is possible trough excellent internal marketing program one of the
approaches is total quality management (TQM).

3) Monitoring Service Quality:

 In order to monitor service quality various tools and techniques are used, they are:
1. Statistical Tool,
2. Quality Function Deployment,
3. Internal Performance Analysis,
4. Customer Satisfaction Analysis.

Ten Original Dimensions of Service Quality - Perceived service quality

as a customer-based performance measure:

An empirical examination of organizational barriers using an extended service quality

model was done by A. Parasuraman, Leonard L. Berry, Valarie A. Zeithaml.

Perceived service quality as customer-based performances measure is also known as

SERVQUAL Model. This study empirically examines organizational barriers to
delivering high-quality service performance as measured by customer perceptions and
expectations.

Using the extended service-quality model developed by Zeithaml, Berry, and

Parasuraman (Journal of Marketing, 52, 35-48) as a conceptual framework, five specific
propositions implied by the model and by earlier studies contributing to its development
were tested. Such testing required a complex research design involving five service
companies as well as samples of customers, contact employees, and managers from each
company. The results have practical implications and suggest an agenda for future
organizational research.

SERVQUAL was originally measured on 10 aspects of service quality: reliability,

responsiveness, competence, access, courtesy, communication, credibility, security,
understanding or knowing the customer and tangibles. It measures the gap between
customer expectations and experience.

By the early nineties the authors had refined the model to the useful acronym RATER:
1. Reliability
2. Assurance
3. Tangibles
4. Empathy
5. Responsiveness

Five Dimensions (later model)

Reliability - the ability to deliver promised services in a dependable, accurate manner.

Assurance - the ability to inspire trust and confidence.
Tangibles - physical elements of the service such as facilities and equipment and
communication materials
Empathy - the degree to which customers are treated as individuals or caring and
 individualised attention the firm provides its customers.
Responsiveness - the willingness to help customers and provide prompt service.

SERVQUAL has its detractors and is considered overly complex, subjective and
statistically unreliable. The simplified RATER model however is a simple and useful
model for qualitatively exploring and assessing customers' service experiences and has
been used widely by service delivery organizations. It is an efficient model in helping an
organization shape up its efforts in bridging the gap between perceived and expected
service.

Nyeck, Morales, Ladhari, and Pons (2002) stated the SERVQUAL measuring tool
“remains the most complete attempt to conceptualize and measure service quality” (p.
101). The main benefit to the SERVQUAL measuring tool is the ability of researchers to
examine numerous service industries such as healthcare, banking, financial services, and
education (Nyeck, Morales, Ladhari, & Pons, 2002). The fact that SERVQUAL has
critics does not render the measuring tool moot. Rather, the criticism received concerning
SERVQUAL measuring tool may have more to do with how researchers use the tool.
Nyeck, Morales, Ladhari, and Pons (2002) reviewed 40 articles that made use of the
SERVQUAL measuring tool and discovered “that few researchers concern themselves
with the validation of the measuring tool”.

In servics, it is the consumer who defines quality. Therefore human side of services is
key to deliver quality, no doubt many of the determinants for quality of products can be
applied to the service’ but the human side of service’ is missing to a considerable extent
in case of services.

Parasuram A, Zelthaml V.A and Berry LL, a group of researchers in Marketing proposed
quality dimensions of their own.

Originally their study consisted of ten dimensions which are given below in following:

Relaiability: It refers to consistency of performance and dependability, getting it right

first time, keeping promisews
Responsiveness: It means willingness and readiness of employees to provide service and
timeliness of service. For example, opening the store at accurate time, airlines ensuring
that the baggage arrives on same flight as passenger at same destination or waiters
bringing the ordered dishes to the right table.

Competence: It refers to existence of required skills and knowledge especially in contact

personnel. For example, tourist information staff knowing exactly where places are
locaed and best to arrive there.

Access: It means ease of contact or short waiting times. For example, Hotel groups
answering the telephone within 3 or 4 rings.
Courtesy: It is respect and consideration and friendliness. For examplevisitor attraction
staff helping families to enjoy their day withpout being over familiar.

Communication: It means informing customers in language they can understand and

explanation of service offered

Credibility: It refers to trustworthiness, believability and honesty

Security: It refers to freedom from danger, risk or doubt. For example, a hotel providing
safes for expensive items.

Understanding the Customer: It menas making the effort to understand customers’

needs.

Tangibles: It refers to physical evidence, ie., facilities and appeareance. For example,
entrance to a country park being designed to encourage exploration on foot rather than by
car.

Guidelines for Monitoring and Improving Service Quality

Measurement of customers’ service expectations and their perceptions

First and foremost, accurate assessment of service quality requires the measurement of
customers’ service expectations in addition to their perceptions. Measuring customers’
perceptions alone is not sufficient. Yet most firms that conduct service quality research
simply ask customers to rate the firms’ performance on a series of attributes, without
asking them to indicate how that performance compares with their expectations. The
problem with this approach is that performance ratings, by themselves, do not provide
maximum diagnostic value and may sometimes even be misleading.

Improving service quality as an ongoing process

Secondly, companies must view improving service quality as an ongoing process, rather
than as an occasional project—i.e., they should have systems in place for continuously
monitoring customer service and taking appropriate corrective actions.

Multiple approaches for gathering information

Thirdly, as part of the ongoing process recommended above, companies must use
multiple approaches for gathering information pertaining to service quality
improvement. Service quality research need not – and should not – be limited to
structured surveys such as one that uses the SERVQUAL approach. Using a portfolio of
approaches will enable compensating for the limitations of some approaches with the
strengths of other methods

Periodic employee research

Fourthly, service quality improvement cannot occur effectively without the benefit of
insights from periodic employee research. Employees are “internal customers” and, as
such, firms need to understand the expectations and perceptions of those customers as
well. The quality of service that employees receive from a firm will have a strong
impact on the employees’ own ability and willingness to deliver superior service to the
firms’ external customers. Because most services are produced and consumed
simultaneously, employees in effect become a part of a service firm’s “product” and of
the customers’ total experience. Therefore, dissatisfied or unhappy employees are not
likely to perform at their peak and deliver what customers would consider to be superior
service.

Delivering service reliably

Fifthly, firms must implement processes for striving to deliver their service reliably (i.e.,
“doing it right the first time”) and for effectively resolving any service problems that
occur (i.e., “doing it very right the second time”).

Technology’s Role in Serving Customers

The global marketplace is becoming increasingly challenging for companies because of

more intense competition and more demanding customers. The competitive pressure that
already exists due to the proliferation of look-alike, similarly priced brands is being
intensified by the exponential growth in the use of the Internet by companies and
customers. Companies – both old and new – are setting up cyber shops and markets as
supplements to traditional channels of customer-company exchanges, thereby multiplying
the number of competitors. Customers – both in business-to-business and end-consumer
markets – are using the Internet to ferret out all available alternatives from around the
world, thereby arming themselves with an unprecedented amount of market knowledge.
The best – and perhaps only – effective weapon for gaining a distinct and enduring
competitive advantage in today’s markets is superior customer service. In fact, achieving
and sustaining marketing excellence may be impossible without delivering superior
customer service.

Technology-based customer-company interfaces

Delivering superior customer service is especially critical in instances wherein customers
have to serve themselves through technology-based systems. With the advent and rapid
market penetration of technology-based customer-company interfaces such as online
banking and e-commerce, employee-delivered service is being replaced by self-service,
reducing the need for face-to-face encounters between customers and company
personnel.

Growth of self-service technologies

The fundamental shift does not mean that companies can afford to ignore customer
service. On the contrary, the growth of self-service technologies calls for a heightened
emphasis on customer service. Such an emphasis is necessary for proactively ensuring
that the customer-technology interface is user-friendly and, more importantly, for putting
in place an excellent customer-service infrastructure (including properly trained and
motivated employees) to assist customers experiencing problems or difficulties with the
self-service technologies.

Two additional forms of marketing: internal and interactive

The traditional marketing of goods occurs primarily in the form of external marketing –
activities pertaining to the traditional “4 Ps” [representing product, price, promotion and
place (i.e., channels of distribution)] – the effective marketing of services and provision
of customer service require extra emphasis on two additional forms of marketing:
internal and interactive.

Internal marketing deals with treating employees as internal customers and providing
them with appropriate training, support, motivation and rewards to serve external
customers well. Interactive marketing deals with making a good impression on
customers during their encounters with employees.

Managing these technology-based links

With the rapid infusion of technology into the process through which products and
services are purchased and consumed, merely augmenting external marketing with
internal and interactive marketing is no longer sufficient.

Technology is a new dimension that needs to be managed well to maximize marketing

effectiveness: the company-technology, technology-employee and technology-customer
linkages. Successfully managing these technology-based links requires a through
understanding of how customers and employees react to, cope with, and evaluate various
technology-based systems.

Listening to the Customer -The Concept of a Service-Quality Information System

Feedback from customers is vital to companies in their efforts to improve service. But
companies must ensure that they have multiple perspectives from different customer
groups. Many corporate officials advocate a listening system that uses many research
approaches in combination to capture, organize, and disseminate information.

Four in particular are essential:

o Transactional surveys;
o Customer complaint, comment, and inquiry capture;
o Total market surveys; and
o Employee surveys.

The five elements of the service-quality information system are:

1. Measure service expectations

Companies frequently measure only customers' service perceptions, when they should be
including their expectations about level of service, both what they desire and what they
deem adequate. Expectations provide a frame of reference when considering customers'
perception ratings.

2. Emphasize information quality

In evaluating information, companies should ask if it is relevant, precise, and useful, in
context, credible, understandable, and timely.

3. Capture customers' words

The system should include both quantitative and qualitative databases. Quantified data
are more meaningful when combined with customers' verbatim comments and
videotapes.

4. Link service performance to business results

What impact does service performance have on business results? Companies need to
calculate lost revenue due to dissatisfied customers, measure customers' repurchases, and
gauge the relationship between customer loyalty and propensity to switch.

5. Reach every employee

Companies should disseminate customer feedback to all employees. They are decision
makers who affect the quality of service at all levels.

Benchmarking and Certification

Benchmarking is part of the process of continuous improvement. It is defined as

measuring that of the strongest competition in order to establish ‘best practice’.
Benchmarking can be applied at three levels.

Internal benchmarking can be carried out in the larger organization by way of

comparisons between operations units. Thus the supermarket chain might benchmark
operations across stores, a financial institution across branches, different hospitals under
the same health authority, and different colleges under the same education authority.
Clearly of paramount importance is how performance is measured, and this has a clear
link to the strategy of the organization.

At a second level, competitive benchmarking can be used. This is probably the most
frequently quoted use where comparisons are made with directly competitive
organizations. This can be achieved relatively easily in some service environments
because of the necessity for the customer to participate in the process. As a hotel owner,
it is possible to ‘sample’ the service of a competitor simply by ‘posing’ as a guest. Often,
however, this is done in an informal manner. A comparative impression is gained of the
service without examining the different facets in a structured way and attempting to
measure them.

The third approach is functional or genetic benchmarking, which compares specific

functions, such as distribution and after-sale services. The advantage here is that the
information is sometimes easier to obtain than when comparisons are being made with
competitors.

Care has to be taken in selecting the dimensions and scales to be used for performance
measurement, and in ensuring that due account is taken of all relevant factors. This
process is shown in the diagram below

The Benchmarking Process

Determine Parameters to measure

Identify best competition

Determine data collection method

Compare competitor’s performance with organization’s performance

Identify factors which contribute to the performance gap

Establish action plans to close gaps

Set targets to measure progress

Implement action plans

Monitor Performance against targets

Repeat
Some of the benefits realized through benchmarking include:
1. The best practices from any industry may be creatively incorporated into a
company’s operations. Thus, benchmarking should not be aimed solely at direct
competitors and in fact it would be a mistake to do so.
2. Benchmarking is motivating. It provides targets that have been achieved by
others.
3. Resistance to change may be lessened if ideas for improvement come from other
industries. Determine data collection method
4. Technical breakthroughs from other industries that may be useful can be
identified early.
5. Benchmarking broadens people’s experience base and increases knowledge.

Compare competitor’s performance

with organization’s performance

Identify factors which contribute to

the performance gap

Determine Parameters to measure