Chapter 7: Delivering & performing the service Flashcards
Discuss the framework of the service profit chain and its integrating elements ? What is the main philosophy underlying this framework ?
This framework shows the importance of internal service quality (=satisfied employees) in order to get satisfied customers. If a company works on its internal service quality (ex. better work environment), employee satisfaction will go up as well. If employees are more satisfied, they will be more productive, but also much more likely to stay at the company.
This is the best way to provide high external service quality (i.e. service quality for customers), which on its turn will lead to high customer satisfaction and eventually loyalty. As we know, loyal customers mean higher profibitability (because they repeatidly buy your product or service for example).
Discuss the overall strategies service firms can adopt to align capacity and demand!
- Shift demand
- Demand too high = communicate busy days to customers, modify timing and location of service ddelivery, offer incentives for non-peak usage, charge higher prices in peak moments
- Demand too low = Stimulate business, advertise peak usage times and benefits of non-peak usage, vary how the facility is used, differentiate on price - Shift capacity
- Demand too high = stretch time, labour, facilities and equipment temporarily, use part-time employees, cross-train employees, subcontract/outsource, request overtime, …
- Demand too low = schedule downtime in low demand periods, schedule vacations, schedule employee training, lay off employees, …
In general we use marketing mix elements to achieve these strategies.
Elaborate on the role of service employees! What are the major challenges?
Service employees are an important part of the service delivery process: they are the service, they are the organization in the customers eyes, they are the brand, and they are the marketers!
–> They are one of the most tangible aspect of the service delivery process
They are boundary spanners = They cross the boundaries in term of responsibility of communication. They have frequent contact with customers and thus know what their need and expectations are.
Major challenges:
- Emotional labor = they have to deal with emotional responses from customers
- Potential conflict = there is a lot of potential for conflict
o Person – role conflict = sometimes an employee is limited by the role it has been given by the organization and can’t do more than he/she is doing
o Organization – client conflict = The company cannot infinitely help their customers, there is a boundary to it.
o Interclient conflict
- Quality/productivity tradeoffs = employees are not able to provide a certain service quality level due to the fact that they have to achieve certain prescribed productivity levels.
Explain the concept of revenue management. Under what circumstances is it appropriate to implement revenue management? Provide an example!
= price the service based on expected demand in order to optimize capacity usage while also maximizing revenue
Revenue management practices require the following characteristics to be applied effectively, which are all inherently present in the hotel industry.
- Fixed capacity (a hotel has only a limited number of rooms available)
- A perishable product, meaning the same room can only be sold on the same day (i.e. tomorrow is a different day, making the product essentially “expired”)
- High fixed costs and low variable costs
- The Product can be priced differently
- Demand evolves (seasons, day to day, weekends vs weekdays etc.)
- The product can be sold in advance
- The market can be segmented (e.g. groups and promotions)
In what way can a company like Thomas Cook apply capacity planning ? Provide examples and explain !
Capacity planning = the process of determining the production capacity needed by an organization to meet changing demands for its products.
Generally there are 2 ways of planning capacity:
- Influence demand
- Influence capacity
For a company like Thomas Cook it is easier to influence demand on the short term (by adding or removing certain flights, changing the price of a ticket, …). While it is easier to influence capacity on the long run (buying new airplanes, buying extra terminal space in the airport, …).
In what way can service customers increase the “service performance gap” ?
- Lack of understanding their roles = customers expect a different kind of service than is provided (ex. Ikea full service furniture store)
- Not being willing or able to perform their roles = it might be difficult for customers to fulfill their roles and thus they won’t get the desired result (ex. Gym subscription alone won’t get you a summer body).
- No rewards for “good performance” = you won’t get applauded for assembling your IKEA chair.
- Interfering with other customers = the presence of other customers might interfere with the service delivery of another customer. (ex. During a busy hour, you didn’t get helped which widened your third gap)
- Incompatible market segments = if a restaurant is aiming at rich old people and young students, both will have a bad experience because of the other.
On what way could an airline company manage capacity ? Give an example and explain!
Capacity planning = the process of determining the production capacity needed by an organization to meet changing demands for its products.
Generally there are 2 ways of planning capacity:
- Influence demand
- Influence capacity
For a company like Thomas Cook it is easier to influence demand on the short term (by adding or removing certain flights, changing the price of a ticket, …). While it is easier to influence capacity on the long run (buying new airplanes, buying extra terminal space in the airport, …).
What are the different role services employees can perform ? Where are the major challenges ?
Service employees are an important part of the service delivery process: they are the service, they are the organization in the customers eyes, they are the brand, and they are the marketers!
–> They are one of the most tangible aspect of the service delivery process
They are boundary spanners = They cross the boundaries in term of responsibility of communication. They have frequent contact with customers and thus know what their need and expectations are.
Major challenges:
- Emotional labor = they have to deal with emotional responses from customers
- Potential conflict = there is a lot of potential for conflict
o Person – role conflict = sometimes an employee is limited by the role it has been given by the organization and can’t do more than he/she is doing
o Organization – client conflict = The company cannot infinitely help their customers, there is a boundary to it.
o Interclient conflict
- Quality/productivity tradeoffs = employees are not able to provide a certain service quality level due to the fact that they have to achieve certain prescribed productivity levels.
What different roles can service customers performs during service delivery ! Explain !
Co-creation = customer has to participate in the service delivery process (these levels differ from service to service however: low/moderate/high).
In general, we differentiate 3 roles a customer can take:
- Productive resource = partial employee = contributing effort, time, or other resources to the production process
- Contribute to quality satisfaction = customers can contribute to their own satisfaction with the service by performing their role effectively and by working with the service provider. They can also contribute to the quality of the service they receive by asking questions, taking responsibility for their own part, and by complaining in case of service failure.
- Competitors = customers can compete with the service providers by providing the service themselves (ex. By cooking at home a customer competes with a restaurant).
What types of customer involvement exist within a services context ? Discuss the different roles customers can perform !
Co-creation = customer has to participate in the service delivery process (these levels differ from service to service however: low/moderate/high).
In general, we differentiate 3 roles a customer can take:
- Productive resource = partial employee = contributing effort, time, or other resources to the production process
- Contribute to quality satisfaction = customers can contribute to their own satisfaction with the service by performing their role effectively and by working with the service provider. They can also contribute to the quality of the service they receive by asking questions, taking responsibility for their own part, and by complaining in case of service failure.
- Competitors = customers can compete with the service providers by providing the service themselves (ex. By cooking at home a customer competes with a restaurant).
How can customers influence the satisfaction of others?
They can detract from satisfaction: - Disruptive behavior (ex. Being drunk) - Overly demanding behaviors - Excessive crowding - Incompatible needs They can enhance satisfaction - Mere presence (ex. Crowd at a sporting event) - Socialization/friendships - Roles: assistants, teacher, supporters, mentors
How could a company deliver service quality through human resource strategies?
In order to provide service quality through employees, a firm must:
- Hire the right people = compete for the best, hire for competences, be the preferred employer
- Develop people to deliver quality services = train skill, empower people, promote teamwork
- Provide needed support systems = measure internal service quality, provide the right equipment, develop service-oriented internal processes.
- Retain the best people = measure and reward strong performers, treat employees as customers, include employees in the company’s vision.
What are some strategies to enhance customer participation?
- Define customers’ roles
- Recruit, educate and reward customers
- Manage customer mix
