Midterm #1 Flashcards
What does intangibility mean how does it link to services?
something that exists but cannot be touched, is difficult to describe, understand or measure; that does not exist as a physical thing but is still valuable to a company.
‣ Commonly linked to services, intangible goods are sold by a company that simultaneously provides service to the customer ex. A anti-virus software, theatre
What are the four unique elements of service?
‣ Intangibility - explains the lack of recognizable features that can help buyers justify why they buy the products they do. A service=a process of completion, can be difficult to assess for both buyers and marketers as it often creates uncertainty
‣ Inconsistently - services provided by humans (human error), same results won’t be replicated. Problem in assessing a purchase
‣ Inseparability - product cannot be separated from the service provider
‣ Inventory - inventory changes, it’s not about stocking the product to match the demand, it becomes about stocking the tools to be used in the process.
What is the Continuum of Evaluation for Different Types of Products?
‣ Demonstrates how products and services arranged according to their difficulty to evaluate.
• Left goods of high search qualities,
• middle are goods and services high in experience qualities
• right high in credence qualities (buyers normally find hard to evaluate
What are the three main problems related to intangibility?
‣ Lack of Evidence
• Tangible features tend to validate buying decisions (ex. Cell phone concerned about colour rather than network connectivity ). Tangible features are readily available and easy to critique. Lack of tangibility creates uncertainty and issues with branding
◦ Solution: create tangibility in the service (ex. Having nice seats on an airplane ), these things allow for +ve WOM=testimonials can work as verification to dilute uncertainty. For branding need to take advantage of tangible features to brand. Adds credibility.
‣ Increased Importance of Customer Perceptions • Perceptions carry a very heavy weight because of diminished quality of information about of perceived risk is expected to by higher. Each customer has different standard. ◦ Solution: Create an avenue for reviews (website, SMP), pull best reviews to create testimonials which create tangibility for their service. Can also calculate net promoter score to gauge customer loyalty. ‣ Price Strategies • How to price the service in a way that the value they providing is clearing communicated. Different methods of pricing - cost based pricing (based on fixed and variable costs), competition based pricing (according to competitors) and demand based pricing (accordance to perceived service value and willingness to pay). Intangibility often makes it hard to justify the costs. ◦ Solution: demand-based pricing is the most optimal pricing methods because it takes into account customers’ perceptions of value and willingness to pay. Customer -focused pricing, allows for higher profit margins. In order to do this must quantify or create tangibility from all aspects of the service offering. Customer should know what they are receiving so they can value it. Service providers should aim To quanity their service form beginning to end. Ex. Appointment booking to payment process.
What do customers evaluate service quality based on?
‣ Reliability = most important, means quality, accuracy, consistency, and dependability of the service
‣ Responsiveness = the timeliness of the service
‣ Assurance = trust employee builds with the customer
‣ Empathy = the care and attention the service provider takes to understand and accommodate the customers emotions
‣ Tangibility = important to include as services are intangible goods
What is the service gap model? What are the names of the five gaps?
◦ Service gap model - illustrates the different areas in the service delivery process in which gaps between the service producer and customer are related
The types of gaps are: Knowledge, Standards, Delivery, Communication, and Expectation Gaps
Explain the Knowledge Gap, give an example and strategies to close the gap.
‣ The difference between what customers expect and what the company thinks they expect. Arises from a disconnect in the companies understanding of what customers expect (depending on past experiences, personal wants and needs, WOM) and grows the more the service provider neglects the gap.
• Solution: market research, service provider must keep up to date with customer needs and wants. Conducting surveys - primary research or Secondary research about the industry.
• Example : hotel thinks guests wanted dinner menu changes, but they were actually upset about room internet speed and cleanses.
Explain the Standards Gap, give an example and strategies to close the gap.
‣ Management envisions doesn’t align with the instructions given to employees. Service delivery specifications should be provided. Arises when turning customer expectations into clear guidelines for employees becomes a challenge or managment hasn’t provided specific service desgin and standard.
• Solution - management must establish clear policies and procedures for service delivery. Measuring performance and employees training.
• Example: restaurants management wants top-notch customer service but hasn’t communicated clear protocols to staff
Explain the Delivery Gap, give an example and strategies to close the gap.
‣ Mismatch between agreed service standard and what the customer actually experiences. Even if the first two gaps are addressed, the delivery gap persists if employees face obstacles in delivery the service required. Could be due to lack of necessary tools or inadequate feedback.
• Solution: comprehensive approach involving employee training, providing the right tools and implementing a structured feedback system
• Example: online store promising quick delivery, but employees face logistical challenges or lack necessary resources, causing delays and dissatisfaction.
Explain the Communication Gap, give an example and strategies to close the gap.
‣ The way a service provider communicates their service quality and the quality of the actual service delivered. **most frustrating from a consumer’s point of view as it can only be closed from the provider’s end. It is when advertising or social media does not accurately communicate the actual service
• Solution: staying honest when communicating quality of service. Highlight attainable and realistic qualities.
• Example: Disney is known to communicate their theme parks as the happiest place on earth. So if you buy tickets and half the rides are closed and it’s dirty and bad environment you would be dissatisfied.
Explain the Expectation Gap, give an example and strategies to close the gap.
‣ Customers expectation going into the service and how they perceive the service after receiving it. **Most challenging gap for service providers to deal with because there is no way to regulate how a customer perceives something as positive or negative, will be different for everyone. Arises when customers come in with high expectations and then after receiving the service leave with either +ve or -ve perceptions and create an expectation gap.
• Solution - need to advertise level of service accurately and update market research to stay in the know about what their customers are looking for.
How can we measure service quality? Why do we measure it?
◦ Models such as SERVQUAL, SERVPERF and GAP model have emerged to guide business toward improved service quality.
◦ Measuring Service quality: SERVQUAL, SERVPERF, Grönroos Model and more. Help understand customer expectations, perception of service, and contribute greatly to the betterment of service quality.
What is the GAP model? Explain the five gaps.
◦ The GAP Model : tool that monitors service quality and satisfaction. Five gaps
‣ Knowledge Gap: issues regarding the customer expectations and management perception. Ex. Customers expect larger portions but managers set portions relatively small. Gap can be fixed with accurate communication between both parties.
‣ Standards Gap: (policy) gap addresses difference between service quality specification and management perception. Ex, manager tells receptionist to pick up the phone but did not communicate how many rings is acceptable.
‣ Delivery gap: difference between service quality and delivery. Standards set but lacking proper ressources or training to achieve them. Ex. Restaurant set time food should be cooked by but due to limited cooks it is not achievable
‣ Communication Gap: Difference between service quality and external communication. This gap occurs when conveying the quality service through advertisements and service in reality does not meet those standard.
‣ Perception Gap: gap between expected service and the experienced service. Ex. Patient at hospital expects a clean room but is not provided with one.
What is GAP model analysis?
assesses the current position of an organization and the desired positon. Allows for an organization to find the gap and take the steps to correct mistake and meet the goals
What is SERVQUAL?
◦ What is SERVQUAL: measurement tool that consists of 44 questions, 22 being related to perceived quality and 22 being related to expected quality. SERVQUAL allows for evaluation of gaps across five elements: tangibility, reliability, repsonsiveness, assurance, and empathy. It is a time consuming process so some customers are hesitant to complete. SERVQUAL is best paired with GAP model analysis as it provides a more holistic report on weakness related tos er ice delivery.
What is SERVPERF
◦ What is SERVPERF: stands for service performance and is a service quality measurement tool. It does not consider customer expectation, rather the company’s performance. It also measures the five dimensions of service quality, but only 22 items rather than 44. It allows for a simpler line of questioning and it is ideal for understanding overall customer satisfaction and company performance.
What is soft measurement of Service quality? How do you apply it?
◦ Soft Measurement of Service Quality: measures that are intangible or non-physical. Qualitative measures are “soft” and quantitative measure are “hard”. An example of a soft measurement would be how welcoming the host is when greeting restaurant goers. Hard measurements are objective and tangible, such as revenue growth.
◦ Applying the GAP model to Soft Measurement : “identify the gaps between customer expectation and customer perception, and then close the gap and improve overall customer satisfaction levels”. Objective is to address and close the gaps. The application of the GAP model is necessary when customer’s expected experience significantly deviates from perception of the service.
How do service providers close gaps? Do all service providers close gaps the same way?
◦ Closing the gaps: several ways service providers can close gaps regarding soft measure of service quality.
‣ Customer feedback to better understand needs and expectations, developing clear training and expectations of employees, and providing accurate information to avoid gaps in customer expectations.
• Problem areas and value of each gap depends on the industry and businesses. Process of closing gaps looks different.
Explain the four step process to closing the GAP model?
‣ Four step process to apply the GAP model
• 1. Define the service quality dimensions and criteria (based on existing models such as SERVQUAL and SERVPERF)
• 2. Collect and analyze the data on the service quality gaps (can be gathered from customer, employee, manager and competitor feedback can be qualitative or quantitative)
• 3. Create and implement the steps to close the gaps
• 4. Monitor results of the steps used to close the gaps and look for indicators of customer satisfaction, evaluate whether the problems have been corrected.
• What constitutes good service? (How can we become the absolute best service provider for the customer base?)
◦ We know we have had good service when we feel satisfied, if we are not satisfied then we walk away!
◦ What does “good” really mean? Good can be ambiguous (unclear or has multiple meanings)
◦ Primary answer: “The majority and hopefully 100% of our customers, within our chosen target market, should feel satisfied with our services” (a clearly defined target market is important here)
◦ Service can be equated with the word care!
◦ The three steps to quality service
‣ 1. Develop a model of service delivery (providing service to all of our customers equitably and fairly across the board)
‣ 2. Which of the five SERVQUAL dimensions is needed to deliver superior service: ASSURANCE (with good communication this cannot be provided)
‣ 3.
• Create an “Eager to Serve” attitude amongst your staff.
• Create customer care standards.
• Introduce a customer care model that is designed around world class customer care.
• Train your staff to deliver an “Exceptional” first impression.
What are the five SERVQUAL dimensions?
Tangibility, Empathy (cannot be taught, it’s innate), Responsiveness, Assurance, Reliability
What’s the 80/20 rule?
20% of your customers (the more loyal and involved ones) generate 80% of your companies revenue
