Service Quality Gap and Strategies to Fill Up Service Quality Gap

Batch Alpha - Group 2

Jamnalal Bajaj Institute of Management Studies MMS 1 Ankit Kumar Harshavardhan Chavan Jyotirmoy Mukherjee Nikhil Kasat Sanket Madavi Umesh Mahajan

Service Quality Gap and Strategies to Fill Up Service Quality Gap

Service Quality Gap Service quality is a term which describes a comparison of expectations with performance. Service quality is a business administration term used to describe achievement in service. It reflects at each service encounter. Customers form service expectations from past experiences, word of mouth and advertisement. In general Customers compare perceived service with expected service in which if the former falls short of the latter the customers are disappointed. A customer's expectation of a particular service is determined by factors such as recommendations, personal needs and past experiences. The expected service and the perceived service sometimes may not be equal, thus leaving a gap. Customer perception of the firm and its offer are shaped by word of mouth publicity like recommendation of friend, relative, neighbour and peer at workplace, personal experience on the part of the customer, personal need of individual customers, external communication like the publicity of the firm in the media and its advertisements and other corporate communication. Study shows that customer assessed the service of firm on the following parameter.

Tangible or the appearance of physical facilities, equipment, personnel and communication material. Reliability or the ability to perform the desired service dependably and accurately Responsiveness or the willingness to help customers and prompt service Assurance as measured by the competence of the firm in delivering the promised service, courtesy extended to the customer, the firms creditability and the extent to which customer feels secure. Empathy or the caring, individualized attention that the firm provides to customer. Customer perceived reliability, assurance tangibility responsiveness and empathy in order to determine the service quality of the firm.
2

When positive perceptions are not confirmed by the actual performance of the firm, a gap occurs, and this has been called the Service Quality Gap

There are four major gaps in the service quality concept. Gap 1: Customers expectations versus management perceptions: as a result of the lack of a marketing research orientations inadequate upward communication and too many layers of management. Gap 2: Management perceptions versus service specification: as a result of inadequate commitment to service quality, a perception of unfeasibility inadequate task standardization and an absence of goal settings. Gap 3: Service specification versus service delivery: as a result of role ambiguity and conflict poor employee- job fit and poor technology job fit, inappropriate supervisory control systems lack of perceived control and lack of team work.

 Gap 4: Service delivery versus external communication: as a result of inadequate horizontal communication and propensity to over promise Gap 5 : Gap between a customer's perception of the experience and the customer's expectation of the service - Customers' expectations have been shaped by word of mouth, their personal needs and their own past experiences. Routine transactional surveys after delivering the customer

experience are important for an organization to measure customer perceptions of service.

Organizations take when service quality gaps are encountered Service quality is a deliberate strategic choice exercised by winner firms. When the firms encounter service quality gaps, has to focus on the following critical areas: Developing a shared service vision: The starting point is that of developing a shared service vision, a service concept, and operating strategy which communicated to everyone in the organization. Through open communication companies has continued to refine its service concept. By understanding what their target customer want and how they perceive firms competitors. The firm has achieved its goal through strategy and system integration, where in HRD, up gradation of technology, and service delivery points have played a pivotal role. Training and decentralization of decision making, and accessibility of top management contact personnel and a customer have helped firms to emerge a winner in the financial service industry. It is not only important to have service vision but it is equally critical to plan and implement a service quality strategy. Here the firm has to set before itself the goal of 100 per cent customer satisfaction. Though on the face of it, this looks impossible, in reality it has been found to be a motivating, challenging and even achievable goal. Dissatisfaction is as contagious as satisfaction and therefore the firm should work to achieve 100 per cent customer satisfaction. Locating service point near the customer: Taking service to the customer is one of the useful tools in improving in improving service quality. The option demands that instead of the customer having to seek out service outlets, the firms service centres should seek out the customer. Service which is done at hand, at the time customer wants it. Making delivery point user friendly:

It is important to have service point user friendly. Cleanliness, friendly environment and courteous people, warm hospitality shown in both verbally and non-verbally, and using technology can make service delivery point customer friendly. Reducing the time gap between services sought and delivered: A firm should work to reduce the time gap between the customer asking for service and being delivered. The firm should aim at providing any service to the customer in least possible time. Product design : The firm should also take a close look at its product design and examine how technology can help better serve customer. Technology today offers opportunities to the firm to provide a highly dependable, zero defect products. Unconditional guarantee: The firm must also plan to give unconditional guarantee to its customer. Especially when commitment to customer service is pledge by none else than the Chief Executive of the firm. Customer confidence in the firm and its product goes up. Role clarity and empowering people: Role clarity and inter-role linkage helps motivate service provider to deliver good quality service to the customer. Often when role of an individual employee is not clear defined and role overlapping are a common phenomenon in the organization, confusion occurs. Individual have to appreciate that without support from other individuals or department it is difficult to achieve 100 per cent customer satisfaction. Decentralization decision making, encouraging two ways communication, and letting the individual employee take calculated risk is important. Organization will need to be flat so as to enable them to respond faster to customer needs and problems. Performance measurement and reward systems: To create excellence in service quality it is necessary to reinforce the positive behaviour of service providers. Their performance should be assessed on the basis of their contribution in creating a satisfied customer. Corporate reward
6

system should encourage such employees and the firm should show case them so that others, too feel motivated to deliver quality service. Research and training of people: A firm needs to continuously monitor customer satisfaction and for this it needs to have a customer feedback and intelligence system in place. It should also occasionally conduct market research to understand people changing customer perception and expectations. Firm need to educate and train their employee in delivering quality service. They have to be sensitive to customer needs and expectations. Employees will also have to educated or trained in using state of art technology to service customers. Case Studies 1. GATI Ahead in Reach Among top five players in the country Best logistics company award Network reaches up to 580 districts out of 590 districts Also into international operations

Service Quality Gaps Knowledge Gap: Improper field level education Business intelligence not available for decision making at all levels Least attention paid to small customers Solutions: o Customers information is collected through feedback forms o Appointment of executives to cater all types of customers Standard Gap: No proper service design for customers Fluctuation in fuel prices No insurance for goods
7

 Improper allocation of funds Solutions: o Sharing the burden of increasing fuel prices o Insurance for goods Delivery Gap: Poor employee-technology job fit Delay in delivering the service Over pricing to match demand Solutions: o Employees are properly trained o Promptness in delivery Communication Gap: Improper horizontal communication Customer enquiry constraints Absence of strong internal marketing Lack of adequate education for customer Solutions: o Toll Free Number available to provide information to the customers o Online tracking system on Gati.net

Perception Gap: Indifferent attitude towards customers Improper design leading to negative perception Improper information transparency to their supply chain partners to maintain competitiveness Solutions: o Should have a positive attitude towards the customer o Proper market research to change design accordingly
8

Interpretation Gap: Overpromise, under delivery Main customers - Corporate customers. Hence interpretation of a local customer varies differently Solutions: o Should focus on B to C advertising apart from B to B advertising o Provide services as promised Service Gap: Value added services Ware housing facility Reverse logistics Solutions: o Started giving value added services in some areas 2. McDonalds A Story of Service Recovery Background Note: The McDonald brothers, Richard and Maurice opened a drive-in restaurant in San Bernardino, California, in 1937. By the late 1990s, after years of declining earnings and poor customer ratings, McDonalds Corp., the largest fast food chain in the world, seemed to have lost its claim to providing the Great American Meal. The company, which was once the favorite destination of fast food lovers around the world, had been receiving low ratings on quality and customer satisfaction since the early 1990s. However, under the leadership of Jim Cantalupo, who was made CEO in early 2003, and Charlie Bell, the President, McDonalds managed a relatively quick turnaround. Under the turnaround plan, McDonalds introduced substantial system wide changes that overhauled the companys products, operations and marketing. The new plan eliminated the negative elements in the system, while retaining and building on the positive aspects. No Longer the Great American Meal: Through the decades, McDonald had promoted itself as the provider of the Great American Meal. However, by the1990s, it was clear that the company has lost its claim to that title. Changing customer eating habits,
9

increased competition and complacence on the part of the company and its franchises, were the main reasons for the difficulties experienced by it. The 1990s saw an increasing interest in healthy living and physical fitness in the US. People realized that regular consumption of fast food could play havoc with their health by increasing their intake of Cholesterol and fat, and lead to a spate of problems related to obesity and heart disease. Instead of fast food, which comprised mainly of burgers, fries and soda, people switched to sandwiches and salads, which were perceived as healthier foods. Consequently, companys like Subway and Panera Bread, which offered sandwiches and salads in a casual dining atmosphere, began to take over the customer base of fast food chains like McDonalds. These restaurants created a new subcategory in the industry and were called fast casual outlets. In an attempt to recover their lost customers, McDonald Start including healthier items like salad and sand witches in their menu. For instance, McDonald introduced the McLean Deluxe Burger in the early 1990s a 91% fat free patty, as a substitute for the Big Mac. However, people hated its taste and McDonalds was forced to phase out the product a couple of years after it was launched. Mc Donald also attempted to shift to low fat frying oil in2002, but it was not able to give the trademark McDonalds taste, and customers rejected the change. Considering people's perception of fast food, it did not take long for the industry to become the target of lawsuits filed by people who blamed the fast food industry for their obesity. Activists published statistics showing that McDonalds food had a high proportion of unhealthy fats, and reports also made public the unhygienic careless way in which the food was being prepared. Although none of the lawsuits filed against the company were successful, analysts said that they generated a large amount of bad publicity. Despite the protests and the accusations against the industry, analysts noted that customer behavior in the fast food industry was paradoxical. People realized that junk food was unhealthy and criticized companies for serving it, but when healthier alternatives were made available, customers did not like them. Apart from increasing public aversion to fast food, increased competition also harmed McDonalds adversely. McDonalds had to face competit ion not only from fast food chains like Burger King, Wendys and Pizza Hut, but also from chains like Subway, Cosi and Panera Bread, which dealt in salads and sandwiches. McDonald focused on building more stores, consumers were demanding better food and more variety. Acc. To a survey conducted by
10

Business week, consumers who ate fast food at least once a month rated both Wendys and burger king better than McDonalds, as far as the quality of food was concerned. McDonalds continuous expansion and failing franchisee relations had an adverse effect on service and quality, which had been its USP for many years. In 1990s, McDonalds stopped grading its franchisees by mystery shoppers on parameters such as cleanliness, speed and service. In 1992 McDonalds introduced made for you kitchens to counter custom-made food systems at Wendys and Burger King, but it extended the time required to serve instead of speeding it up. Research also found that slow service and rude professional employees were major sources of customers complaints. Acc. to a survey, Wendys took 127 seconds to serve its customers while V took 163 seconds. Besides, McDonalds products had become stale and the company had failed to come out with successful product launches since the early 1980s. Although it attempted in the 1990s, to introduce 40 food items but most of them failed to appeal to customers. The Golden Arches Rise Again: After McDonalds announced its first quarterly loss in38 years in 2003, the board realized that big changes were required in the companys strategy and direction. The board ousted Greenberg and installed Cantalupo as the CEO. Soon after taking over, Cantalupo prepared the plan to win, which outlined McDonalds strategy for the next three years. The plan streamlined the companys operations and aimed to create a McDonalds that was more geared to the new conditions in the fast food industry. The cornerstone of the turnaround plan was the improvement of comparable sales, which could be increased by improving the quality of service and operations in existing restaurants, instead of funneling capital spending into new openings. Towards this end, the company made several improvements designed to help the restaurants function more efficiently. For instant, it reduced the number of shelf-keeping units by 84, which reduced inventory, and designed new menu boards that would include more pictures to make ordering easy. It also introduced new automated drink dispensers, French fry bins, and a hydraulic vegetable-oil-delivery system that would save time in the kitchen. The menu was simplified and included a greater number of healthy options, while doing away with slow moving products. For instance, instead of selling separately a Double Cheeseburger meal, a Quarter Pounder meals, and a Two-Cheeseburger meal, McDonalds planned to sell only the Quarter Pounder.
11

The number of items in a Value Meal was also pared down from 13 to 8. In a move to offer a healthier menu McDonalds Increased it's focused on salads and sandwiches. In 2003, it introduced entre-sized salads, along with items like McGriddles breakfast sandwiches, white-meat chicken nuggets and chicken nuggets and chicken strips, which were reasonably successful. It also began offering fruit with Happy meals. In early 2004, McDonalds began phasing out its super size portions of fries and soft drinks. It also launched the Adult Happy meal, which was a meal designed for grown-ups that included a salad, bottled water, a pedometer and a booklet of walking tips. Soon after introducing this concept, comparable store sales increased 10.5%. Some McDonalds outlets were also diversifying into coffee. Some Australian franchisees were testing a concept called McCafe in over 500 outlets in Australia. McDonalds was also on a drive to improve quality of service and maintenance standards in its restaurants. In 2003, Cantalupo reinstalled the grading system by mystery shoppers to identify, improve, or eliminate underperforming restaurants and to check whether the franchisees were maintaining the expected high standards of hygiene and cleanliness. Under the turnaround plan, the company decided that each restaurant would be visited by mystery shoppers- anonymous visitors paid to observe restaurants- at least 16 times a year. In 2004, the company introduced the travel path which required that a staff member, in a restaurant, had to walk around at regular intervals during the day to ensure that everything was in order. Surveys conducted by the company in the early 2000s revealed that Ronald McDonalds was one of the best recognized icons in the US, ranking just behind Santa Claus. McDonalds began to showing signs of turning around by early 2004. Number of satisfied customers increased by more than 2 million over 2003-2004.

12