Service Marketing

1. Chapter- 1.4
Perception of Services

2. Customer Perceptions of Service
 Customer Perceptions
 Customer Satisfaction
 Service Quality
 Service Encounters: The
Building Blocks for Customer
Perceptions

3. Objectives for Chapter 5:
Consumer Perceptions of Service
 Provide a solid basis for understanding what influences customer perceptions of service
and the relationships among customer satisfaction, service quality, and individual service
encounters.
 Demonstrate the importance of customer satisfaction—what it is, the factors that
influence it, and the significant outcomes resulting from it.
 Develop critical knowledge of service quality and its five key dimensions: reliability,
responsiveness, empathy, assurance, and tangibles.
 Show that service encounters or the “moments of truth” are the essential building
blocks from which customers form their perceptions.

4. The customer is . . .
Anyone who receives the company’s
services, including:
 External customers (outside the
organization, business customers, suppliers,
partners, end consumers)
 Internal customers (inside the organization,
e.g., other departments, fellow employees)

5. Customer Perceptions of Service Quality and
Customer Satisfaction
Service
Quality
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Product
Quality
Price
Personal
Factors
Customer
Satisfaction
Situational
Factors
Customer
Loyalty

6. Factors Influencing Customer
Satisfaction
 Product quality
 Service quality
 Price
 Specific product or service features
 Consumer emotions
 Attributions for service success or failure
 Perceptions of equity or fairness
 Other consumers, family members, and coworkers
 Personal factors
 Situational factors

7. What Determines Customer Satisfaction? (i)
Product and Service Features - For a service such as a resort hotel, important features
might include the pool area, access to golf facilities, restaurants, room comfort and
privacy, helpfulness and courtesy of staff, room price, and so on.
Consumer Emotions - Think of times when you are at a very happy stage in your life
(such as when you are on holiday), and your good, happy mood and positive frame of
mind have influenced how you feel about the services you experience. Alternatively,
when you are in a bad mood, your negative feelings may carry over into how you
respond to services.
Attributions for Service Success or Failure - if a customer of a weight-loss organisation
fails to lose weight as hoped for, he or she will likely search for the causes – was it
something he or she did, was the diet plan ineffective or did circumstances simply not
allow him or her to follow the diet regime – before determining his or her level of
satisfaction or dissatisfaction with the weight-loss company.

8. Perceptions of Equity or Fairness - Customers ask themselves: have I been
treated fairly com- pared with other customers? Did other customers get
better treatment, better prices, or better quality service? Did I pay a fair
price for the service? Was I treated well in exchange for what I paid and the
effort I expended?
Other Consumers, Family Members and Co-workers - consumer
satisfaction is often influenced by other For example, satisfaction with a
family holiday is a dynamic phenomenon, influenced by the reactions and
expressions of individual family members over the duration of the holiday.
What Determines Customer Satisfaction? (ii)

9. Outcomes of Customer Satisfaction
 Increased customer retention
 Positive word-of-mouth communications
 Increased revenues

10. Relationship between Customer Satisfaction
and Loyalty in Competitive Industries
0%
20%
40%
60%
80%
100%
Very
dissatisfied
Dissatisfied Neither
satisfied nor
dissatisfied
Satisfied Very
satisfied
Satisfaction measure
Loyalty
(retention)
Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

11. Customer Gap
What is Service Quality?
The Customer Gap
 Service quality is the customer’s judgment of overall excellence of the service provided in
relation to the quality that was expected.

12. Service Quality
 The customer’s judgment of overall excellence of the
service provided in relation to the quality that was
expected.
 Service quality assessments are formed on judgments of:
 Outcome quality
 Interaction quality
 Physical environment quality

13. The Five Dimensions of Service Quality
Ability to perform the promised service dependably and
accurately.
Knowledge and courtesy of employees and their ability
to inspire trust and confidence.
Physical facilities, equipment, and appearance of
personnel.
Caring, individualized attention the firm provides its
customers.
Willingness to help customers and provide prompt
service.
Tangibles
Reliability
Responsiveness
Assurance
Empathy

14. SERVQUAL Attributes (i)
 Providing service as promised
 Dependability in handling customers’ service
problems
 Performing services right the first time
 Providing services at the promised time
 Maintaining error-free records
 Keeping customers informed as to when services will be performed
 Prompt service to customers
 Willingness to help customers
 Readiness to respond to customers’ requests
RELIABILITY
RESPONSIVENESS

15.  Employees who instill confidence in customers
 Making customers feel safe in their transactions
 Employees who are consistently courteous
 Employees who have the knowledge to answer
customer questions
ASSURANCE
 Giving customers individual attention
 Employees who deal with customers in a caring
fashion
 Having the customer’s best interest at heart
 Employees who understand the needs of their
customers
 Convenient business hours
EMPATHY
 Modern equipment
 Visually appealing facilities
 Employees who have a neat, professional
appearance
 Visually appealing materials associated with
the service
TANGIBLES
SERVQUAL Attributes (ii)

16. How Customers Judge the Five Dimensions of
Service Quality (i)
Responsiveness
Accessible; No waiting;
respond to requests
Assurance
Knowledgeable
machines
Tangibles
Repair facility; waiting
area; uniforms;
equipment
Empathy
Acknowledges customer
by name; remembers
previous problems and
preferences
Car repair
(Consumer)
Reliability
Problem fixed the first
time and ready when
promised

17. How Customers Judge the Five Dimensions of
Service Quality (ii)
Reliability
Flights to promised
destination depart and
arrive on schedule
Responsiveness
Prompt and speedy
system for ticketing, in-
flight baggage handling
Empathy
Understands special
individual needs;
anticipates customer
needs
Tangibles
Aircraft; ticketing
counters; baggage area;
uniforms
Assurance
Trusted name; good
safety record,
competent employees
Airline
(Consumer)

18. How Customers Judge the Five Dimensions of
Service Quality (iii)
Responsiveness
Accessible; no waiting;
willingness to listen
Empathy
Acknowledges patients
as a person; remembers
previous problems; listen
well; has patience
Tangibles
Waiting room; exam
room; equipment;
written materials,
Assurance
Knowledge; skills;
credentials; reputation
Medical care
(Consumer)
Reliability
Appointments are kept
on schedule; diagnoses
prove accurate

19. The Service Encounter
 is the “moment of truth” Each customer contact is called a moment of truth
 This occurs any time the customer interacts with the firm
 That has the ability to either satisfy or dissatisfy consumers when contact
 A service recovery is satisfying a previously dissatisfied customer and making them a loyal
customer
 can potentially be critical in determining customer satisfaction and loyalty
is an opportunity to:
 build trust
 reinforce quality
 build brand identity
 increase loyalty
Moments of Truth

20. Cycle of Service
Begin Service Encounter
End Service Encounter
= MOT

21. Check-In
Request Wake-Up Call
Checkout
Bellboy Takes to Room
Restaurant Meal
A Service Encounter
Cascade for a Hotel Visit

22. Sales Call
Ordering Supplies
Billing
Delivery and Installation
Servicing
A Service Encounter Cascade for an Industrial
Purchase

23. • The encounters that occur without any direct human contact.
• Remote encounters also occur when the firm sends its billing statements or
communicates other types of information to customers by mail. Although
there is no direct human contact in these remote encounters, each
represents an opportunity for the firm to reinforce or establish quality
perceptions in the customer.
• In remote encounters the tangible evidence of the service and the quality of
the technical processes and systems become the primary bases for judging
quality. More and more services are being delivered through technology,
particularly with the advent of Internet applications.
Retail purchases, airline ticketing, repair and maintenance
troubleshooting, and package and shipment tracking.
Types of Encounters (i)
Remote encounters (i)-

24. Such as
 When a customer interacts with a bank through the ATM system,
 With a car park management company through an automated ticketing
machine,
 With a retailer through its Internet website or with a mail-order service through
automated touch-tone telephone ordering.
Remote encounters (ii)-
Types of Encounters (ii)

25. Phone encounters
In many organizations (such as insurance companies, utilities and telecommunications), the
most frequent type of encounter between an end customer and the firm occurs over the
telephone (telephone encounters).
Almost all firms (whether goods manufacturers or service businesses) rely on telephone
encounters to some extent for customer service, general inquiry or order-taking functions.
The judgment of quality in telephone encounters is different from remote encounters,
because there is greater potential variability in the interaction. Tone of voice, employee
knowledge and effectiveness/efficiency in handling customer issues become important
criteria for judging quality in these encounters.
Types of Encounters (iii)

26. Face-to-face encounters-
A third type of encounter is the one that occurs between an employee and a customer in
direct contact (face-to-face encounters). Both verbal and non-verbal behaviors are important
determinants of quality, as are tangible cues such as employee dress and other symbols of
service (equipment, informational brochures, physical setting). In face-to-face encounters
the customer also plays a role in creating quality service for himself or herself through his or
her own behavior during the interaction.
Determining and understanding service quality issues in face- to-face contexts is the most
complex of all.
At Disney theme parks, face-to-face encounters occur between customers and ticket-takers,
maintenance personnel, actors in Disney character costumes, ride personnel, food and beverage
servers, and others.
For a company such as Ericsson, in a business-to-business setting direct encounters occur
between the business customer and salespeople, delivery personnel, maintenance
representatives and professional consultants.
Types of Encounters (iv)

27. Satisfaction Mirror
Higher Customer
Satisfaction
More Familiarity with
Customer Needs and
Ways of Meeting Them
Greater Opportunity for
Recovery
from Errors
Higher Employee
Satisfaction
Higher Productivity
Improved Quality
of Service
More
Repeat
Purchases
Stronger Tendency to
Complain about
Service Errors
Lower Costs
Better Results

28. Internal
Service
Quality
Employee
Satisfaction
Employee
Retention
Employee
Productivity
External
Service
Value
Customer
Satisfaction
Customer
Loyalty
Revenue
Growth
Profitability
• workplace design
• job design
• employee selection
and development
• employee rewards
and recognition
• tools for serving
customers
•Service concept:
results for customers
•service designed
and delivered to
meet targeted
customers' needs
•retention
•repeat business
•referral
Operating Strategy and
Service Delivery System
The Links in the Service-Profit Chain

29. Service Encounters: An Opportunity to Build
Satisfaction and Quality

30. Common Themes in Critical
Service Encounters Research
Recovery: Adaptability:
Spontaneity:
Coping:
employee response
to service delivery
system failure
employee response
to customer needs
and requests
employee response
to problem customers
unprompted and
unsolicited employee
actions and attitudes

31. Service encounter themes (i)

32. Service encounter themes (ii)

33. Service encounter themes (iii)

34. Service encounter themes (iv)

35. Recovery
 Acknowledge problem
 Explain causes
 Apologize
 Compensate/upgrade
 Lay out options
 Take responsibility
 Ignore customer
 Blame customer
 Leave customer to fend for
him/herself
 Downgrade
 Act as if nothing is wrong
DO DON’T

36. Adaptability
 Recognize the seriousness
of the need
 Acknowledge
 Anticipate
 Attempt to accommodate
 Explain rules/policies
 Take responsibility
 Exert effort to
accommodate
 Promise, then fail to follow
through
 Ignore
 Show unwillingness to try
 Embarrass the customer
 Laugh at the customer
 Avoid responsibility
DO DON’T

37. Spontaneity
 Take time
 Be attentive
 Anticipate needs
 Listen
 Provide information (even
if not asked)
 Treat customers fairly
 Show empathy
 Acknowledge by name
 Exhibit impatience
 Ignore
 Yell/laugh/swear
 Steal from or cheat a
customer
 Discriminate
 Treat impersonally
DO DON’T

38. Coping
 Listen
 Try to accommodate
 Explain
 Let go of the customer
 Take customer’s
dissatisfaction personally
 Let customer’s
dissatisfaction affect
others
DO DON’T

39. Because services are intangible, customers are searching for evidence of service in every
interaction they have with an organisation.
There are three major categories of evidence as experienced by the customer: people,
process and physical evidence. These categories together represent the service and
provide the evidence that makes the offering tangible.
The new mix elements essentially are the evidence of service in each moment of truth. All
these evidence elements, or a subset of them, are present in every service encounter a
customer has with a service firm and are critically important in managing service encounter
quality and creating customer satisfaction.
For example, when a dental patient has an
appointment with a local dentist, the first
encounter of the visit is frequently with a
receptionist in a dental waiting area.

40. Evidence of Service from the
Customer’s Point of View
People
Process
Physical
Evidence
 Contact employees
 Customer him/herself
 Other customers
 Operational flow of activities
 Steps in process
 Flexibility vs. standard
 Technology vs. human
 Tangible communication
 Services- cape
 Guarantees
 Technology