Chapter 5

Defining and Managing

Service Quality
What is Quality (Q)? Essentials of Service Quality (SQ) How to Improve SQ

Why Quality Matters



The global market is becoming more competitive every day 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

Why Quality Matters cont.

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

Relationship between

Quality, Market Share, and ROI



Higher quality yields a higher return-onreturn-oninvestment (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

: Foundation Principles


Quality is one of the core components of value in the S-Q-I-P model SWhile price and image are communicators, product and service quality define the offering in the value proposition Quality is still a powerful competitive force facing companies

Key Forces Influencing Quality in the Future

 

 

Quality must deliver bottom-line results bottomManagement systems will increasingly absorb the quality function Quality will be everyones job The economic case for a broader application of quality will need to be proved Global demand for products and services will create a global work force Trust and confidence in business leaders and organizations will decline
Source: Source: Kenneth Case, President of the American Society for Quality (ASQ) (2002) Coming Soon: The Future, Quality Progress, Vol. 35 (11), p. 27. Progress,

Factors Influencing Change in Quality Perceptions

Modern communications permit and in some cases encourage customers to shift their patronage from one producer to another  Global competition has resulted in increased choice and has raised customer expectations of what constitutes acceptable quality  Technology - marketing is a contest for consumers attention and the Internet is now competing for that attention as the number of Internet users worldwide continues to rise

What is Quality?
"The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs." (Kotler) (Kotler) Quality must provide goods and services that completely satisfy the needs of both internal and external customers. Quality serves as the customers. "bridge" between the producer of goods or services and its customer. (Johnson & Weinstein)

Demings 14-Point Philosophy on Quality 14Constancy of Purpose Adopt the New Philosophy Cease Dependence on Mass Inspection End the Practice of Awarding Business on the Basis of Price Alone Improve Constantly and Forever the System of Production and Service Institute Training Institute Leadership
Cont.

Demings 14-Point Philosophy on Quality - cont. 14-

Drive Out Fear Break Down Barriers Among Staff Eliminate Slogans, Exhortations and Targets Eliminate Work Quotas Remove Barriers to Pride of Workmanship Institute a Vigorous Program of Education and SelfSelf-Improvement Put Everyone to Work on the Transformation

The 6 Sigma Approach to Quality

Define the process Measure it to obtain a performance baseline IMPROVE the process

Analyze the data to determine where errors are occurring

Control it to ensure the errors do not recur

The Juran Philosophy of Quality

Juran, defined quality as "fitness for use" where products " possess customer-desired product features and are free from customerdeficiencies The Juran philosophy of quality centered around three basic quality processes: planning, improvement, and control Juran believed that there must be a continual striving toward quality, consisting of a number of steps from research, development, design, specification, planning, process control, etc. and then back to research again

Crosbys Philosophy of Quality



Crosby defines quality as "conformance to requirements, not as goodness" Crosby believes that quality is created by a system of prevention, not appraisal (doing it right the fist time or DIRFT), where the performance standard is "zero defects -meeting specifications 100% of the time. Crosby also believes it is necessary to build a qualityquality-driven corporate culture

Garvins 8 Quality Dimensions



Product performance  Features  Reliability  Conformity  Durability  Serviceability  Aesthetics  Perceived quality

Quality Function Deployment (QFD) QFD)



Integrating the voice of the customer ensures a practice known as quality function deployment (QFD) The GOAL OF QFD is to determine not only what customers want, but which product or service attributes are most important to them This process needs to precede new product or service introductions in order to ensure design quality QFD enables companies to identify and prioritize customer needs and respond to them effectively

Customer Driven Engineering House of Quality

Engineering attributes (EAs) (e.g., weight on front wheels, tire characteristics, etc.) Customers attributes (CAs) (e.g., traction in dry conditions)
Importance of each CA

.05 .01
...

Relationships between EAs and CAs

Engineers measures of each product on each EA

Measures of customers perceptions of each product on each CA

Service Quality


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 Finally, customers evaluate support activities that occur after the transaction, that is post-sale postservices

Definitions of Service Quality

Service quality can also be defined according to both the what and how a product or service is delivered. Gronroos distinguishes between technical quality and functional quality. quality. Technical Quality is concerned with the outcome of the delivered product or service.
cont..

Definitions of Service Quality cont.

Customers use service quality attributes such as reliability, competence, performance, durability, 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.

Cardinal Principles of Service Quality

Listening precedes action  Reliability is key  Flawless execution of the basics  Pay attention to service design  Perform service recovery well  Surprise customers  Practice fair play  Promote teamwork Internal service begets external service


Adapted from Zemke, Ron (2002)

The

Service Offering

Service quality can also be judged by considering the various spheres or thresholds of the service offering as presented in Figure 3 Service Levels. The core benefit is the most fundamental level for which the service offering stands for, that is, what the consumer is actually seeking. cont.

The

Service Offering cont.

The core benefit represents basic reasons why people buy, such as hunger, safety, convenience, confidence, status, selfselfesteem, and so on. Gonroos uses the term service concept to indicate the core of a service offering, such as offering a car rental as a solution to a shortshort-term transportation need.

The 3 Service Levels

SATISFIERS HYGIENE FACTORS

CORE BENEFIT

Service Quality Challenges Defining quality for services is more difficult than for products because of the intangible, variable nature of service characteristics Unlike product quality, consumers frequently lack the necessary information to evaluate service quality cont.

Service Quality Challenges cont.

Quality Perceptions

Search quality and experience quality are more applicable to determining product quality With services, however, consumers are usually limited to using credence quality to evaluate the experience, relying solely on the overall credibility of the service provider Service Continuum Another challenge presented in assessing service quality arises when viewing services along a continuum ranging from pre-sale to post-sale activities prepost-

Continuum of Services

Pre-sale Services

Transaction Services

Post-sale Services

Broad Dimensions of Service Quality



Reliability perform promised service dependably and accurately Responsiveness - willingness/readiness to provide prompt service Competence - possess knowledge and skill to perform the service Access - approachability and ease of contact of service personnel Courtesy - politeness, consideration, and friendliness of service personnel cont

Broad Dimensions of Service Quality cont.



Communication - keeping customers informed; listening to customers Credibility - trustworthy, believable, honest Security - freedom from danger, risk, or doubt Understanding/knowing customer - knowing customers needs Tangibles - physical evidence of service

  

Parasuraman, A. Zeithaml, V., and Berry, L. (1985).

Mapping Service Quality



Parasuraman and his colleagues found that service quality is a measure between service perceptions as well as expectations Service quality stems from a comparison of what a consumer feels a service firm should offer (desires or wants) versus their perception of what the service firm actually does offer  Ensuring good service quality involves meeting or exceeding consumers expectations

SERVQUAL Model: Gap Analysis

1. Research gap customer expectations<->mgt. perceptions 2. Planning & design gap mgt. perceptions<->service specifications 3. Implementation gap service specifications<->service delivery 4. Communication gap service delivery<->external communication 5. Reality gap customer expectations<->the experience

GAP 3 Service Performance Gap

Team Work Employee Job Fit Technology Job Fit Perceived Control Supervisory Control Systems Role Conflict Role Ambiguity Service Performance Gap

SERVQUAL


Used to operationalize the gaps influencing customer perceptions SERVQUAL is a 21-item instrument that measures 21both expectations and customer perceptions of the service encounter Scale reflects the respondents zone of tolerance or the range of the companys performance between acceptable and desired service levels

Benefits of SERVQUAL
Can serve as an effective diagnostic tool for uncovering broad areas of a companys service quality shortfalls and strengths The SERVQUAL scale is offers the potential to determine the relative importance of the 5 major service quality dimensions-- Reliability, dimensions-Responsiveness, Assurance, Tangibles, and Empathy Tangibles, -- and to track service quality performance over time The scale serves as a suitable generic measure of service quality, transcending specific functions, companies, and industries

Service Profit Chain



Researchers have proposed a link between employee satisfaction, customer satisfaction and firm profitprofitability, known as the service profit chain (SPC) (SPC) The SPC represents an integrative framework for understanding how operational investments into service quality are related to customer satisfaction perceptions and how these translate into profits Improving quality also leads to other desirable outcomes, such as customer satisfaction

The Service Profit Chain

Internal Service Delivery -Employees Service Concept

External --Customers
Service Value Outcomes
C/S, Loyalty

Employee Value

Service Value

Profits

-- Workplace design -- Process Tools -- Rewards/Recognition

-- Higher reliability -- Lower costs

--- Lifetime Value --- Retention --- Referrals

Growth

Adapted from Heskett, Sasser, and Schlesinger (1997).

How to Improve Quality



Design services in cooperation with customers Focus your improvement programs outward, on market "break"breakpoints" Create a tangible representation of service quality Use teamwork to promote service excellence Create a service-bias based on these service quality servicedeterminants: professionalism, attitudes/behaviors, accessibility/flexibility, reliability/trustworthiness, service recovery, and reputation/credibility cont

How to Improve Quality cont..

Develop proper measurements Employee selection, job design and training are crucial to building customer satisfaction and SQ
  

 

Reward total quality efforts in marketing View service as a process, not a series of functions Integrate customer information across sales channels

Service Quality Exercise

Choose one of these SQ situations:

      

Answer these questions:

 

Auto repair Hospital visit Theme park Hair cut Supermarket Fast food restaurant Air travel

How unique/standardized is product and/or service? Type of service search, experience, or credence.? Pure service or productproductservice blend? What factor most affects service quality? After service is delivered, is corrective action possible?