PRODUCT AND CUSTOMER SERVICE STRATEGIES Spring, 1999

OUTLINE l Quality –Concepts –Customer Service –Service Quality –Time Based Service

What is the relationship between cost and quality??

QUALITY/COST RELATIONSHIP l An emphasis on quality reduces costs because it: –increases uniformity of products –reduces rework and mistakes –reduces waste of manpower, machine, and materials usage

QUALITY l In turn, these improvements lead to –productivity gains –better competitive position –job satisfaction

VALUE l What is value? l “A perception that a product meets customer needs at a fair price.” l It is the right combination of quality, service, delivery, and price.

QUALITY l Quality perspectives should be based on customer preferences, not internal evaluations

GENERIC APPROACHES TO QUALITY l “Catching up” l “Leapfrogging”

ELEMENTS OF QUALITY l PERFORMANCE: the primary, operating characteristics of a good –How well does the washing machine wash clothes? l FEATURES: the “bells and whistles” of the good; secondary characteristics –Does an airline offer a movie and dinner?

ELEMENTS OF QUALITY l RELIABILITY: the probability of failure within a specific time; consistency of performance –What percentage of time will the car start in winter? l CONFORMANCE: degree to which a product’s characteristics match preestablished standards –What is the incidence of service calls?

ELEMENTS OF QUALITY l DURABILITY: the measure of product life –How long will the lawn mower last? l SERVICEABILITY: the elapsed time before service is restored; the timeliness of service appointments –Is the product easy to service? –Can service be provided quickly?

ELEMENTS OF QUALITY l AESTHETICS: How the product looks, feels, sounds, tastes, smells –Does the furniture look and feel like “quality” furniture? l PERCEIVED QUALITY: Image, brand name, reputation –What is the reputation of the brand?

DIMENSIONS OF SERVICE QUALITY l Tangibles –Appearance of physical facilities, equipment and personnel l Responsiveness –Willingness to help customers and provide prompt service l Assurance –Knowledge and courtesy of staff; ability to convey trust and confidence

DIMENSIONS OF SERVICE QUALITY l Reliability –Ability to perform the promised service dependably and accurately l Empathy –Caring, individualized attention to the firm’s customers

IMPLICATIONS OF A SERVICE STRATEGY l The firm must strive to provide superior quality l The firm must set realistic expectations

TEN COMMANDMENTS OF SERVICE AND QUALITY l Thou shalt be remembered for your services. l Thou shalt not only be interested in the customer's money. l Thou shalt make service an action. l Thou shalt know that if thou forget about service, thou shalt be forgotten. l Thou shall not present false images. ("If you can't deliver, don't promise.") l 6.Thou shall not forget that buyers seek value. l 7.Thou shalt not forget that the buyer has the right to demand service. l 8.Thou shalt remember that a satisfied customer is the best business strategy of them all. l 9.Thou shalt not forget that success is never final. l 10.Thou shalt let people know they matter.

TEN COMMANDMENTS OF SERVICE AND QUALTY l Thou shall not forget that buyers seek value. l Thou shalt not forget that the buyer has the right to demand service. l Thou shalt remember that a satisfied customer is the best business strategy of them all. l Thou shalt not forget that success is never final. l Thou shalt let people know they matter.

THE “GAPS” MODEL l Three factors impact a customer’s expectations –word of mouth communications –personal needs –past experiences l Five “gaps” can lead to dissatisfaction with service delivery

THE GAPS MODEL l Customer’s Expectations / Marketer’s Expectations l Management Perceptions and Service Quality Specifications l Service Quality Specifications and Service Delivery l Service Delivery and External Communications l Perceived Service and Expected Service

TIME BASED STRATEGIES l A time based strategy attempts to beat the competition by providing a product to the customer as quickly as possible

TIME BASED STRATEGIES l Start from scratch l Wipe out approvals l Emphasize teamwork l Worship the schedule l Develop time effective distribution l Put speed in the culture

FROM THE TEXT... l Pages 378 to 386