Module -IV

Servicescape
• is the physical surrounding or the facility
where the service is produced ,delivered and
consumed .
• Physical facility ---(interior & exterior)
• Ambient conditions ---(temp. colors, noises,
smells)
• Other tangibles
Elements of Physical Evidence
Servicescape Other tangibles

Facility exterior Business cards

Exterior design Stationery
Signage Billing statements
Parking Reports
Landscape Employee dress
Surrounding environment Uniforms
Brochures
Facility interior Internet/Web pages
Interior design
Equipment
Signage
Layout
Air quality/temperature
Impact of Service Environment
• Purchase decision
• Expectations
• Service quality evaluations
• Satisfaction
Examples of Physical Evidence from the Customer’s Point o
View
Service Physical evidence
Servicescape Other tangibles
Insurance Not applicable Policy itself
Billing statements
Periodic updates
Company brochure
Letters/cards
Hospital Building exterior Uniforms
Parking Reports/stationery
Signs Billing statements
Waiting areas
Admissions office
Patient care room
Medical equipment
Recovery room
Airline Airline gate area Tickets
Airplane exterior Food
Airplane interior (décor, seats, air Uniforms
quality)
Express mail Not applicable Packaging
Trucks
Uniforms
Computers
Sporting Parking, Seating, Restrooms Signs
event Stadium exterior Tickets
Ticketing area, Concession Areas Program
Entrance, Playiing Field Uniforms
 Relationship Marketing

• Relationship marketing is an integrated and

coordinated effort to identify, maintain, and
build up a network with individual consumers
and employees, and continuously strengthen
the network for the mutual benefits of both
sides, through interactive, individualized and
value added contacts continuously and over a
long period of time.
 Benefits of Relationship Marketing
• Benefits for the firm
If a firm maintains a good relations with its customers,
the customers will continue to avail of its services
without being detracted by competitors.
Organization can also cut down costs involved in
attracting new customers. To attract new customers,
they have to spend heavily on advertisements,
promotional campaigns, and discount offers.
But they can derive more benefits merely by maintaining
a good relationship with existing customers. Existing
customers will become repeat customers and even
provide free word of mouth publicity, which will bring
in more customers and additional revenues.
 Benefits to customers
By maintaining a consistent relationship with a
service organization and opting for its service
repeatedly, the customer can save on time as well
as the effort required to choose a new service
provider and then test its service capabilities.
Customer can make better and more effective use of
the time involved in this process. Also, because the
service provider already knows the customer
requirements, the latter enjoys highly personalized
services and sometimes even special services.
 Strategy in Relationship Marketing

Service organisations that believe in the concept of

relationship marketing formulate their strategies
in a different way when compared to traditional
organisations that believe in transaction
marketing.
The formers strategies are centered around
building and developing long-term relations with
customers while the latter’s strategies focus on
attracting customers for immediate business
gains. The sequence in which these organisations
formulate strategies are
1. Mission and Vision
• The first step in strategy formulation is
determining the mission of the organisation.
The mission of an organisation provides the
direction for its progress and guides its future
plans and strategies.
• The mission statement should clearly state the
reason for existence of the firm, its values and
its long-term goals.
2.SWOT Analysis
In this step, organisations examine their internal
environment to analyze their own strengths and
weakness and the external environment to identify the
opportunities for and threats to the business. The
management can evaluate organisational strengths by
analyzing its financial and other resources, its
competitive advantage over competitors and reputation
among customers and shareholders.
If the management observes weakness like poor cash
flows, thin margins, complaints on service quality or
decline in repeat customers, it needs to take immediate
step to improve the performance of the organisation.
3. Strategy Formulation
The management should formulate strategies to
match the results of its SWOT analysis. It
should formulate strategies to minimize the
impact of weakness on the performance of
the organisation and eliminate the effect of
external threats.
.
 Quality and Relationship Marketing
Quality needs to be given the topmost priority by service
providers because any deterioration in the quality standards
can reduce their credibility and affect the customers
perception of the firm. For ex. When the UTI failed in 1998 to
meet customer expectations on dividend payments of its
mutual fund, it lost their trust and confidence. It struggled
desperately in the subsequent years to rebuild its image.
 RETENTION STRATEGIES
A service organization attempts to retain customers by
providing quality service consistently, thereby winning over
the customer. Another important aspect of service marketing
is providing personalized attention and customized service to
the customer. Some of the strategies adopted by service
organizations are
Financial Bonds
Organisations employ various measures to attract and retain
customers. Some organisations attempt to retain customers
by offering them financial incentives. Customers attracted by
these tend to continue the relationship with the organisation.
Airlines for example, offer frequent flier programs for regular
customers like free travel, hotel stay, gift vouchers etc.
• Customer Retention Strategies
•Integrating systems with
•Discount coupons customers
•Gifts •Making joint investment
•Membership Structural on technology
benefits •Sharing process or
Bonds equipment

Financial Bonds
Continuous
quality service
to customers customization
Bonds
•Special attention Social Bonds
•Informing customers •Personalizing services
about new services •Offering a combination
•Wishing customers of services that suit
on their anniversaries customers specific needs
Social bonds
• Social bonds can play a very important role in
retaining customers when there is no other
factor that encourages or prevents them from
switching to competitors. For example, some
exclusive apparel stores like Levi’s and Louis
Philippe, record customer comments.
 Customization Bonds
• Some organisations attempt to develop a
special relationship with customers by
customizing their services to suit the specific
needs and preferences of each customer.
HDFC for example offers personalized services
to its customers. The customer can choose the
loan amount and the repayment period,
depending on the EMI amount.
 Structural Bonds
Structural bonds are formed with customers when
organizations offer value added services which are
not offered by competitors to them and the
customers themselves cannot acquire the
infrastructure needed to avail of such services.
These services do not depend on the service
personnel but on technology.
This indicates that customers become dependent on
the organizations structure rather than on the
employees. The name structural bonds is derived
from this nature of relationship.
Recovery of customers
Sometimes, despite having the best infrastructure, the most
advanced technology and thoroughly professional
employees, organisations may fail to provide quality service
to customers. In some cases, dissatisfied customers simply
switch to competitors without any complaint. Some of
them, however, voice their complaints to the company.
There are some dissatisfied customers who might or might
not voice their complaints, but share their bad experience
with the organization with their friends, colleagues and
relatives and create a bad image of the organization among
prospective customers. This will have a negative impact on
the business of the organisation and hinder its efforts to
attract new customers.
 What is service Recovery
Service recovery is a process that identifies service
failures, effectively resolves customer problems,
classifies their root causes, and yields data that can be
integrated with other measures of performance to
assess and improve the service system.
By adopting a service recovery system, service
organisations get a second chance to rectify any
mistake that occurred during the delivery of service in
the first instance.
The following guidelines should be followed by the
management while developing a service recovery
system.
1.Track and Anticipate Recovery Opportunities
• Organizations' should attempt to know if any
customer of theirs is dissatisfied with their
service or any other aspect of the company.
Periodic customer surveys and regular
customer interaction can help the organization
identify any failures on their part.
 Solve Problems Quickly
One of the main reasons for customers shying away from
conveying their problems to the company is that they feel that
it will be of no use. They might have formed this opinion
based on past experience or on hearing it from friends.
Some customers, however, communicate their grievances to the
company, expecting a prompt corrective action. When the
company fails to meet the customers expectations and fails to
sort out the issue, he loses confidence in the company and its
objectives.
The management should recognize that the customers who
complain have given a second opportunity to the organization
to rectify its mistake. If it fails to deliver even after being given
a second chance, the customer will, perhaps, be lost for ever.
Train and Empower Front Line Employees
• Organizations should educate employees
about the need to serve customers to their
satisfaction. They should be trained
adequately to offer error-free services
consistently. And they should also be trained
to deal with those precarious situations when
their efforts to offer quality services to
customers fail. Ford, for example, gives
extensive training to employees in service
recovery skills.
 Service Quality and its Significance
According to Parasuraman and Berry, “ Quality is exceeding what customers expect from
the service”.
According to Garvin, quality can be defined from different perspectives- user-based,
product-based, manufacturing- based, value based and transcendent view.
User-based Approach
This approach suggests that quality should be defined from the customers perspective. A
service offering that meets the customers needs and wants to his complete satisfaction
is quality service..
 Product-based approach
• This approach suggests that the service offered
by an organization falls short of the quality
standards only when a certain attribute or
aspect of service is left out or distorted.
• For ex. If a customer comments that the quality
of service offered by a hotel is poor, the
approach assumes that either the food was not
tasty, the service personnel were not customer-
oriented or that the ambience was not good.
 Operations- based approach
• This approach suggests that the quality of a
service depends on the efficiency of the
operations involved in service design and
delivery. It emphasizes cost effectiveness and
productivity rather than customer needs and
preferences.
 Value – based approach
• This approach seeks to define quality as the
value offered in return for the price paid by
the customer. In other words, it suggests that
the higher the price charged from the
customer, the more should be the benefits
offered by the service provider.
 Transcendent view of quality

This approach suggests that a person can assess

the quality of a service accurately only when
he is exposed to it repeatedly.
 Reasons for why quality is significant for the
success of a service organisation
• To win credibility and obtain repeat customers
If an organization offers quality service
consistently, it enjoys repeat business, that is,
customers visit it repeatedly. Because customers
obtain the desired service and are happy with it,
the chances of their moving to a different
organization are minimized.
To charge premium price

• When an organization offers superior quality

service compared to its competitors customers,
who value quality will always prefer this
organization to other players in the market.
• Therefore the organisation will be in a position to
charge a premium price from customers.
However, organisations competing on the
quality aspect need to continuously improve and
offer better services so that they always set
themselves above the competitors and win the
loyalty of customers.
 Measuring service quality
The intangible and perishable nature of services makes it
difficult for organizations to measure the quality, identify
the loopholes and take necessary steps to improve the
quality. Service organizations therefore evaluate certain
components of a service to determine its quality.
According to Gronroos, any service has two important
components- functional and technical.
Functional – This component involves interaction between
the customer and the service personnel. For ex, when a
customer visits a hotel, the warmth at the reception, the
promptness in check-in and the responsiveness of room
service, all comprise the functional component of service.
Technical
This component refers to the output of the service
operation. For ex. If a flight reaches its destination
exactly on time, the airlines is said to have delivered
quality service with respect to the technical
component. The technical component of a service is
easier to evaluate than the functional component.
Service quality is determined by customers using various
criteria like (Five Dimensions)
 Tangibles
 Reliability
 Responsiveness
 Assurance
 Empathy (covered this topic earlier, refer it)
 Dimensions of Service Quality
• Reliability: Perform promised service dependably and
accurately Example: receive mail at same time each day.
• Responsiveness: Willingness to help customers
promptly Example: avoid keeping customers waiting for
no apparent reason
• Assurance: Ability to convey trust and confidence
Example: being polite and showing respect for
customer
• Empathy: Ability to be approachable Example: being a
good listener
• Tangibles: Physical facilities and facilitating goods
Example: cleanliness
 Service quality Gap Model
• The gap between what the customer expects and what
the organisation offers them. This is called customer
gap. There can be different reasons for this gap and
these are called the provider gaps by Zeithaml,
Parasuraman and Berry. Some of the reasons for this
gap can be
• failure to understand customer expectations
• Failure to design the right service
• Not setting and communicating the right service
standards to employees and intermediaries
• Failure to deliver the service standards to customers
• Failure to take customer feedback and review the
service continuously.
• Failure to understand customer expectations
The quality of decisions made by the management
in service organisations often depends on the
quantity and quality of information they have
about the customers. Any decisions that are taken
without the needs and preferences of customers
being understood prove to be ineffective.
The management may fail to prioritize its projects,
fail to provide supplementary services valued by
customers and offer services that are not required
by them. This would simply add to the costs of the
organisation without awarding any benefits.
 Failure to design the right service
• Organisations which do not have service designs
that meet customer expectations, are bound to
lose out to competitors. The service design of an
organisation should take into account not only
the current requirements of customers,but also
their changing buying patterns.
• When companies fail to foresee customer needs
and their changing preferences, they fail to
design services that suit their needs. As a result,
they fail to satisfy the customer and so lose the
market to proactive competitors.
Not setting and communicating the right service
standards to employees and intermediaries

• If an organisation does not have any set service

standards, employees do not know whether they are
doing their job right while serving the customer.
Without any standardized procedure or goals, they will
do whatever they think is right in delivering the
service. Sometimes, even if an organisation has
established standards, it fails to satisfy the customers.
• When the standards are not communicated properly to
the service personnel or the intermediaries, they fall
short of customers expectations, leading to their
dissatisfaction.
• It has therefore, become imperative for
service organisations to establish standards
that actually meet the expectations of
customers. In addition, the standards should
be communicated to intermediaries and
employees at all levels and they should be
encouraged to maintain them.
Failure in delivering the service standards to
customers
• Sometimes, in spite of designing a good service
and setting service standards, a service provider
might fail to deliver the promised quality service to
customers. The reasons for such a failure can be
many. One reason could be operational problems
like technological or logistics problems.
• Sometimes lack of communication between
various departments also leads to poor quality
service.. Proper communication and co-ordination
between the various departments will help the
organization deliver better service.
Failure to take customer feedback and review
the service continuously
• A service company which enjoys a large dedicated
customer base today, may lose out to competitors if it fails
to continually upgrade itself. The marketer should keep
track of the changes in the market environment, the
customer buying patterns and his changing needs to
redesign his service from time to time.
• When a marketer relaxes, the competitors soon make new
offerings and attract the customers. Therefore, it becomes
imperative for a marketer to keep track of customers
changing needs and requirements and modify his service
offering accordingly.
 SERVQUAL - Introduction
SERVQUAL is a service quality framework, developed in the
eighties by Zeithaml, Parasuraman & Berry, aiming at
measuring the scale of Quality in the service sectors.
SERVQUAL was originally measured on 10 aspects of service
quality: reliability, responsiveness, competence, access,
courtesy, communication, credibility, security,
understanding the customer, and tangibles, to measure
the gap between customer expectations and experience.
If expectations are greater than performance, then
perceived quality is less than satisfactory and hence
customer dissatisfaction occurs (Parasuraman, 1985;
Lewis and Mitchell, 1990)
 BASIS OF THE SERVQUAL MODEL
The SERVQUAL model is dependent on three major bases
1) The 5 Gaps: There are 5 Gaps that create a void between
the customer’s expectations and the service delivered by
the service provider. Organizations should measure,
manage and minimise these 5 Gaps for successfully
marketing their service.
2) Causes & Solutions to Gaps: Identifying the causes and
appropriate solutions are very crucial to minimize that
void.
3) The Key Service Dimensions: The aspects that should be
stressed upon so as to allow the service to be adopted by
targeted segments
 THE SERVQUAL GAPS- Gap 1

• Commonly known as the management perception gap

• Gap 1 results from a difference between what customers
expect and what management perceives these
expectations to be.
• It indicates a problem with the understanding of the
market. This can occur, as a result of insufficient research
or communication failures. E.g. : Management of ABC
Dry cleaning Ltd perceives that a particular segment
simply expects low prices on its service, when in fact, the
expectation is a value-for-money service.
 THE SERVQUAL GAPS Gap 2

• Commonly known as quality specification gap.

• Gap 2 results from a difference between management
perceptions of what customers expect and the
specifications that management draws up when detailing
the service quality delivery actions that are required.
• Service design and performance standards are pre-
requisites for bridging this gap.
• E.g. : Most hotels do not do housekeeping in a room on
the day the customer is checking out. But has
management realised that the customer who is doing a
late checking out wants a clean room during that day.
 THE SERVQUAL GAPS Gap 3

• Commonly known as the Service delivery gap. Specifications

• Gap 3 results from a mismatch between the service delivery
specifications required by management and the actual service
that is delivered by front line staff.
• It is the difference between customer-driven service design &
standards, and the service delivery of the provider.
• Managers need to audit the customer experience that their
organization currently delivers in order to make sure it lives up to
the expected level.
• E.g. : Usually, all restaurants need to attend to every request and
orders of the customers. But very often when customers place
orders, they either do not receive the orders at all or the waiter
has confused it with that of another customer.
 THE SERVQUAL GAPS Gap 4

• Commonly known as market communication gap.

• This is the gap between the delivery of the customer
experience and what is communicated to customers, i.e.
the discrepancy between actual service and the promised
one.
• All too often organizations exaggerate what will be
provided to customers, or discuss the best case rather
than the likely case, raising customer expectations and
harming customer perceptions.
• E.g. A company commercialising slimming products boasts
that customers may lose up to 4-5 kgs/week. But they do
not specify that a strict diet and regular exercise must
accompany the treatment for it to have the desired effect
 THE SERVQUAL GAPS 5

• Commonly known as the perceived service quality

gap.
• Gap 5 may be identified as the overall difference
between the expected service and the perceived
service experienced. Gap 5 results from the
combination of Gaps 1 to 4 Customers expectations
have been shaped by word of mouth, their personal
needs and their own past service experiences.
• Unless Gap 5 is kept under check, it may result in
lost customers, bad reputation, negative corporate
image.
 THE SERVQUAL GAPS 2 ADDITIONAL GAPS

• Gap 6: The discrepancy between customer

expectations and employees’ perceptions: as a
result of the differences in the understanding
of customer expectations by front-line service
providers.
• Gap 7: The discrepancy between employee’s
perceptions and man discrepancy agreement
perceptions: as a result of the differences in
the understanding of customer expectations
between managers and service providers.
 CAUSES FOR THE GAPS
• Not knowing what customers expect
• Causes:
• Lack of a marketing orientation to quality Poorly
interpreted information about customer’s
expectations .

• Research not focused on demand quality

• Too many layers between the front line personnel

& top level management .
• GAP 2 - The wrong service quality standards
• Causes: inadequate commitment to service
quality
• lack of perception of feasibility
• Insufficient planning of procedures
• GAP 3 - The service performance gap
• E.g. : XYZ Events Ltd had promised the most exquisite catering and
wedding cake, but the food was not appreciable and the bride didn’t
like the cake at all.
• Causes:
• Poor employee or technology fit - the wrong person or wrong
system for the job
• Deficiencies in human resource policies such as ineffective
recruitment, role ambiguity, role conflict  Failure to match demand
and supply
• Too much or too little control 14
• Lack of teamwork within the organisation.
• GAP 4 - When promises do not match actual
delivery
• Causes:
• inadequate horizontal communication
• Over-promising in external communication
campaign
• Failure to manage customer expectations Failure
to perform according to specifications given to
customers
• CAUSES FOR THE GAPS
• GAP 5 - The difference between customer perception of
service and the expectation they had. Usually the cause is
the occurrence of the 4 other Gaps, which results in a
difference between customer perception and the
expectation they had. Ultimately the groom’s experience
was way too far from what he had expected, and thus
results in dissatisfaction. Other causes can be: cultural
background, family lifestyle, personality, demographics,
advertising, experience with similar service , information
available online. Customer perception is totally subjective
and is based on the customer’s interaction with the service.
 Uses of SERVQUAL
• To assess a company's service quality along each
of the 5 SERVQAL dimensions.
• To track customer's expectations and perceptions
over time.
• To compare a company's SERVQUAL scores
against competitors.
• To identify and examine customer segments that
differ significantly in their assessment of a
company's service performance.
• To assess internal service quality
(interdepartmental comparison)
• The five SERVQUAL dimensions are: R-A-T-E-R:
• 1) RESPONSIVENESS - Willingness to help customers and
provide prompt service
• 2) ASSURANCE - Knowledge and courtesy of employees and
their ability to convey trust and confidence
• 3) TANGIBLES - Appearance of physical facilities, equipment,
personnel, and communication materials
• 4) EMPATHY - Caring, individualized attention the firm
provides its customers
• 5) RELIABILITY - Ability to perform the promised service
dependably and accurately
 RESPONSIVENESS

• Responsiveness means to respond quickly, promptly, rapidly,

immediately, or instantly.
• Even if customers are chronically slow in getting back to providers,
responsiveness is very crucial in their service quality assessment.
• Whether its 30 minutes, 4 hours, or 24 hours, its important that
customers feel providers are promptly responsive to their requests at
anytime. Not only for emergencies, but even for everyday responses
as well.
• E.g. : A member of the public calls at Chantefrais to complain that a
particular Chantefrais outlet is not respecting its opening hours. The
quality officer, to whom all complaints are addressed, has to make
immediate inquiries & revert back to the plaintiff to reassure him that
necessary actions have been taken.
 ASSURANCE

• Assurance is a combination of the following: Competence -

having the requisite skills and knowledge .
• Courtesy - politeness, respect, consideration and friendliness of
contact staff
• Credibility - trustworthiness, believability and honesty of staff
Security - freedom from danger, risk or doubt, to feel in good
hands
• E.g. : Management of Chantefrais ensures that all staff is
empowered enough to address complaints and requests.
Following to some rumours sometime back, customers began
asking whether there will be an increase in price of products.
Any staff were competent enough to handle this question and
was ready to give explanations and details if asked.
 TANGIBLES

• Tangibles deals with all that is physically visible and touchable.

• Even though this is the least important dimension, appearance
matters. Service providers will still want to make certain their
employees appearance, uniforms, equipment, and work areas
on-site (closets, service offices, etc.) look good.
• The danger is for providers who can make everything look
sharp, and then fall short on RELIABILITY or RESPONSIVENESS.
• E.g. : Chantefrais, stresses on ethics about dress code. Uniforms
are provided and no eccentricities are allowed such as flashy
colours, or outrageously sexy dresses for the ladies.
 EMPATHY

• Empathy is the capacity to recognize feelings that are being

experienced by another person. Someone may need to have
a certain amount of empathy before they are able to feel
compassion.
• Empathy is a combination of the following: Communication
- keeping customers informed in a language they
understand and really listening to them.
• Understanding the customer - making the effort to get to
know customers and their specific needs while trying to
“wear their shoes” E.g. : The way of living, the background,
& the level of education, have to be taken into consideration
while dealing with Chantefrais’s customers
 RELIABILITY

“Do what you say youre going to do when you

said you were going to do it.” because
Customers want to count on their providers. It
is three times more important to be reliable
than have shiny new equipment or flashy
uniforms.
 Strategies for improving service quality
It is not too difficult for companies to improve service
quality. What is required is the right strategy to do it
and the commitment by all members of the
organisation. The following are some of the strategies
that should be followed by service organisations to
enhance the quality of service offered to customers.
 A service provider should aim at achieving zero-defects
or error-free service. This can be achieved by a
management that believes in 100% perfection,
providing the necessary infrastructure, that facilitates
error-free service, and by testing and retesting service
processes at various stages to eliminate any loopholes.
 Internal communication promotes better
understanding among employees of each
others tasks and responsibilities, and the
difficulties involved, and enhances co-
operation and coordination which eventually
results in better service to customers. Also
organisations should be equipped with
modern training equipment and techniques
to stimulate work real work environment and
train employees to deliver quality service.
 Service providers should always test a service prior to
launching it in the market place. If possible, a new service
should be introduced in a few select places for test-
marketing. This will allow some time for the management
to obtain customer feedback. In case customers report
problems, the management can take corrective action.
 Sometimes, service providers fail to deliver the service
despite all the precautions they take to prevent a failure.
At such times, customers perception of service quality
depends on the service providers ability to resolve the
problem immediately. To enable effective service recovery
and regain customers confidence, service providers should
train employees in recovery techniques and empower
them to resolve the problem immediately.
 The management should extend support to
employees by setting up the necessary
information system and other infrastructure
that enables employees to identify and rectify
errors with ease..
 Trained employees will be prepared to face
problems and therefore, can resolve them as
soon as they occur and sometimes even
before the customer can perceive the error.
 Monitoring service quality
Apart from using quality management techniques and
adopting service quality improvement strategies,
organizations should continually monitor their service
quality. The management can use the following methods to
monitor the service quality.
 Conduct customer surveys
Service organizations should regularly conduct customer
surveys to know whether the customers have any issues
with the service offered or with the service personnel.
Questionnaires should be given to customers to elicit their
opinions and rate the quality of service offered by the
organisation. Also, efforts should be made to explore the
factors leading to any dissatisfaction.
 Monitor customer feedback
Managers should give special attention to the
feedback given by customers in the form of
complaints or suggestions or even compliments.
The management should try to find out the root
causes of problems in case of complaints, and
prevent them from recurring. If the customer
makes some suggestions, the management
should consider them, discuss them with
employees for their feasibility and applicability
and implement the ones that are valuable and
practicable.
Review Service Blueprints, Problem-Tracking
System
• The management should constantly review the service
blueprints and identify any problems that exist. If
necessary, the management should change the
monitoring procedures and problem tracking procedures.
Service blueprinting is the process of representing the
entire service process in the form of a picture/diagram so
as to ensure that all the steps in a service process are
covered.
• As the service blueprint provides information on each
single event and activity involved in the service, a service
manager can test its effectiveness on paper.