1. RECAP
• Provider Gap 2
• Factors leading to Provider gap 2
• Poor service design
• Absence of customer driven standards
• Inappropriate physical evidence and
servicescape
2. • Service design
– Challenges Of Service Innovation And Design
• Risks of Relying on Words Alone
– Important Considerations for Service Innovation
• The five principles of service design thinking
• User-centered
• Cocreative
• Sequencing
• Evidencing
• Holistic
– Types of Service Offering Innovations
• Major to simple changes
3. • Service Innovation and Development – Steps
– Front end planning
– Implementation
• Service Blueprinting
4. Service Blueprint Components
Customer Actions
line of interaction
Visible Contact Employee Actions
line of visibility
Invisible Contact Employee Actions
line of internal interaction
Support Processes
Physical Evidence
5. • Building a Service Blue Print
• Benefits of Service Blue Print
6. • Service Standards
• Standardization
• Customization
• Customer driven service standards
• Hard Standards and Soft standards
• Process for Setting Customer-Defined
Standards
7. • Physical evidence and servicescape
• Elements of Physical evidence
Servicescape Other tangibles
Facility exterior
Exterior design
Signage
Parking
Landscape
Surrounding environment
Facility interior
Interior design
Equipment
Signage
Layout
Air quality/temperature
Business cards
Stationery
Billing statements
Reports
Employee dress
Uniforms
Brochures
Web pages
Virtual servicescape
12. • Behavior of employees - heavily influenced by the
culture of that organization
Service Culture:
• a culture where an appreciation for good service
exists, and
• where giving good service to internal as well as
ultimate, external customers is considered a
natural way of life and
• one of the most important norms by everyone.
Employees’ Roles
in Service
13. The Services Marketing Triangle
Internal
Marketing
Interactive Marketing
External
Marketing
Company
(Management)
Customers
Employees
enabling
promises
keeping promises
setting
promises
The triangle shows the three interlinked groups that work
together to develop, promote, and deliver services
Anyone or
anything
that
communic
ates to the
customer
before
service
delivery
Here, the promises are kept or broken by the
firm’s employees, subcontractors, or agents
To help the
providers
deliver
on the service
promise
14. The Service Profit Chain
• The service profit chain suggests that there are critical linkages among
the following elements
• The model does not suggest causality
15. • The Effect of Employee Behaviors on Service
Quality Dimensions
– All five dimensions of service quality can be
influenced directly by service employees.
16. The critical role of Service Employees
• They are the service.
• They are the organization in the customer’s
eyes.
• They are the brand.
• They are marketers.
• Their importance is evident in:
– The Services Marketing Mix (People)
– The Service-Profit Chain
– The Services Triangle
17. • Frontline service employees are referred to as
boundary spanners because they operate at
the organization’s boundary.
• Boundary spanners provide a link between the
external customer and environment and the
internal operations of the organization.
18. Boundary Spanners Interact with Both
Internal and External Constituents
Internal Environment
External Environment
19. Service Employees
• Who are they?
– “boundary spanners”
• What are these jobs like?
– emotional labor
• the labor that goes beyond the physical or mental skills needed to
deliver quality service
– many sources of potential conflict
• conflict between role requirements and the self-image or self-
esteem of the employee.
• conflict between two bosses, the organization and the individual
customer
• conflict when incompatible expectations and requirements arise
from two or more customers
• conflict while delivering satisfying service to customers and at the
same time being cost-effective and productive
20. Sources of Conflict for
Boundary-Spanning Workers
• Person vs. Role
• Organization vs. Client
• Client vs. Client
• Quality vs. Productivity
21. Customer-
Oriented
Service
Delivery
Hire the
Right People
Provide
Needed Support
Systems
Retain the
Best
People
Develop
People to
Deliver
Service
Quality
Hire for
Service
Competencies
and Service
Inclination
Provide
Supportive
Technology
and
Equipment
Treat
Employees
as
Customers
Empower
Employees
Human Resource Strategies for Closing GAP 3
22. Customers’ Roles in Service Delivery
• Customer themselves
• Fellow customers
23. Customer Roles in Service Delivery
Productive Resources –
they are “partial employees”
Contributors to
Quality and
Satisfaction
Competitors
24. How Customers Widen Gap 3
• Lack of understanding of their roles
• Not being willing or able to perform their roles
• No rewards for “good performance”
• Interfering with other customers
• Incompatible market segments
25. Strategies for Enhancing Customer
Participation
Effective
Customer
Participation
Recruit, Educate,
and Reward
Customers
Define Customer
Jobs
Manage the
Customer
Mix
26. Delivering Service through
Intermediaries and Electronic Channels
Service Provider Participants
• Service principal (originator)
– creates the service concept
• (like a manufacturer)
• service deliverer (intermediary)
– entity that interacts with the customer in the
execution of the service
• (like a distributor/wholesaler)
27. Key Issues
Involving Intermediaries
• conflict over objectives and performance
• conflict over costs and rewards
• control of service quality
• empowerment versus control
• channel ambiguity
29. Franchisers of Service
• Leveraged business
format for greater
expansion and revenues
• Consistency in outlets
• Knowledge of local
markets
• An established business
format
• Difficulty in maintaining and
motivating franchisees
• Inconsistent quality
• Control of customer
relationship by intermediary
• Lack of perceived control
over operations
Benefits Challenges
30. Agents and Brokers
• Reduced selling and
distribution costs
• Intermediary’s
possession of special
skills and knowledge
• Wide representation
• Knowledge of local
markets
• Loss of control over
pricing and other
aspects of marketing
• Representation of
multiple service
principals
Benefits Challenges
31. Electronic Distribution of Services
• Low cost
• Customer convenience
• Wide distribution
• Customer choice and
ability to customize
• Quick customer feedback
• Customers are active, not passive
• Lack of control of electronic
environment
• Price competition
• Security concerns
Benefits Challenges
32. Managing Demand and Capacity
• Overuse or underuse of a service can directly
contribute to gap 3: failure to deliver what
was designed and specified.
• Fundamental issue underlying supply and
demand management in services - lack of
inventory capability
33. • This lack of inventory capability is due to the
perishability of services and their
simultaneous production and consumption
– An airline seat not sold on a given flight cannot be
left in inventory and resold the following day
35. Capacity Constraints
• Time
– For some service businesses, the primary constraint on service
production is time. E.g - a lawyer, a consultant
• Labor
– For a firm that employs a large number of service providers. E.g -
University
• Equipment
– E.g – Air Freight Services
• Facilities
– Limited facilities
– Eg – Hotels have only a certain number of rooms to sell
36. • Optimal versus Maximum Use of Capacity
• Using capacity at an optimal level
– means that resources are fully employed but not
overused and
– customers are receiving quality service in a timely
manner.
• Maximum capacity, on the other hand,
represents the absolute limit of service
availability.
37. • In a sporting event, the entertainment value of
the game is enhanced for customers when
every seat is filled
• optimal and maximum capacity may be the same.
• In some cases, maximum use of capacity may
result in excessive waiting by customers, as in a
popular restaurant.
38. Demand patterns
• It is necessary to have a clear understanding
of demand patterns
– why they vary, and
– the market segments that constitute demand at
different points in time
39. • The Charting of Demand Patterns
• To begin to understand demand patterns, the
organization needs to chart the level of
demand over relevant time periods
– In some services, such as restaurants or health
care, hourly fluctuations within a day may also be
relevant.
40. • Predictable Cycles
• As service providers consider customer
demand levels, predictable cycles may be
detected
– including daily (variations occur by hour)
– weekly (variations occur by day)
– monthly (variations occur by day or week), and/or
– yearly (variations occur according to months or
seasons)
41. • In some cases, predictable patterns occur at
all periods
– The demand for a bank’s services can vary by hour
(with lunch time and end of the day with the most
demand),
– by day of the week (with the last day of the week
and the first day of the week being the most
popular) etc
42. • Random Demand Fluctuations
• Sometimes the patterns of demand appear to
be random—there is no apparent predictable
cycle.
• Yet even in this case, causes can often be
identified.
• For example, day-to-day changes in the weather
may affect the use of recreational, shopping, or
entertainment facilities.
43. • Demand Patterns by Market Segment
• An organization that has detailed records on
customer transactions may be able to
disaggregate demand by market segment,
revealing patterns within patterns
• E.g: OP Patients mostly on Mondays in some
health clinics
44. Understanding Capacity Constraints
and Demand Patterns
• Time, labor, equipment,
and facilities
• Optimal versus maximal
use of capacity
• Charting demand patterns
• Predictable cycles
• Random demand
fluctuations
• Demand patterns by
market segment
Capacity Constraints Demand Patterns
45. Strategies for Shifting Demand
to Match Capacity
(Reduce Demand during Peak Times)
• Communicate busy days and times
to customers.
• Modify timing and location of
service delivery.
• Offer incentives for nonpeak
usage.
• Set priorities by talking care of
loyal or high-need customers first.
• Charge full price for the service—
no discounts
(Increase Demand to Match
Capacity)
• Educate customers about peak
times and benefits of nonpeak
use.
• Vary how the facility is used.
• Vary the service offering.
• Differentiate on price.
Demand Too High Demand Too Low
Shift Demand
46. Strategies for Flexing Capacity
to Match Demand
• Stretch time, labor, facilities and equipment.
• Cross-train employees.
• Hire part-time employees.
• Request overtime work from employees.
• Rent or share facilities.
• Rent or share equipment.
• Subcontract or outsource activities.
• Outsource.
• Perform maintenance,
renovations.
• Schedule vacations.
• Schedule employee training.
• Lay off employees.
Demand Too High Demand Too Low
Flex Capacity
47. Waiting Issues
• unoccupied time feels longer
• preprocess waits feel longer
• anxiety makes waits seem longer
• uncertain waits seem longer than finite waits
• unexplained waits seem longer
• unfair waits feel longer
• longer waits are more acceptable for
“valuable” services
• solo waits feel longer
48. Waiting Strategies
• Employ operational logic to reduce wait
• Establish a reservation process
• Differentiate waiting customers
• Make waiting fun, or at least tolerable
