1. Today’s Agenda
Service Audit
Customer Expectation
Customer Perception

2. Five Questions to Think Over for Next Class Discussion
Is Nepal already in the service economy? Yes or No Justify your answer with data.
Do proper research to answer these questions, substantiate with data and examples. Don’t give random answers.

3. Five Questions to Think Over for Next Class Discussion
Do you normally consider the service of private institutions in Nepal good or bad? What is the reason behind it?
Do proper research to answer these questions, substantiate with data and examples. Don’t give random answers.

4. Five Questions to Think Over for Next Class Discussion
What is your service experience with the public institution of Nepal? Why things are happening that way?
Do proper research to answer these questions, substantiate with data and examples. Don’t give random answers.

5. Five Questions to Think Over for Next Class Discussion
What to you think about Nepali service culture? Can service culture be taught, if yes how? Think from organizational perspective and our general life perspective.
Do proper research to answer these questions, substantiate with data and examples. Don’t give random answers.

6. Five Questions to Think Over for Next Class Discussion
Can service be the differentiating factor in an organization? What is its contribution in brand building?
Do proper research to answer these questions, substantiate with data and examples. Don’t give random answers.

7. Service is Everybody’s business

8. Examples of Service Industries
In these examples, value is co-created.
Hospitality
restaurant, firm/motel, bed & breakfast
ski resort, rafting
Health Care
hospital, medical practice, dentistry, eye care
Professional Services
accounting, legal, architectural
Financial Services
banking, investment advising, insurance
Travel
airline, travel agency, theme park
Others
hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design
What do customers value more the good or the service?

9. Services defined
Customers purchase SERVICES that they cannot touch or taste.
Services are PERFORMANCES, employees as actors.
Services are DEEDS, legal right to stay in a firm, to use a car, to have a seat on a specific flight.
Services ENHANCE peoples’ lives, but they are not essential to human life.

10. Service Challenges
Without touch, taste, smell, a consumer’s ability to JUDGE the quality of services is limited.
Every service has RISK, which consumers want to minimize before purchase.
Customers look for clues/evidence to judge the quality of a service.
A firm needs to provide evidence (information) so that customers can judge the quality of a service.

11. Tangibility Spectrum Clues of quality—
How would you signal quality to customers?
Services
Goods

12. Search, Experience, and Credence Qualities
1-12

13. Why are services so important?

14. Relevance of Service Marketing in today’s world…
Nepal
GDP - composition by sector
agriculture: 38.1%
industry: 15.3%
services: 46.6% (2012 est.) US
GDP - composition by sector
agriculture: 1.2%
industry: 19.1%
services: 79.7% (2012 est.)

15. Why Services Matter Services dominate U.S. and worldwide economies
Services are growing dramatically
Service leads to customer retention and loyalty
Service leads to profits
Services help manufacturing companies differentiate themselves

16. Contributions of Service Industries to U.S. Gross Domestic Product

17. Changing Structure of Employment as Economic Development Evolves
Share of
Employment
Agriculture
Services
Industry
Time, per Capita Income
Source: IMF, 1997

18. Why do firms focus on Services?
Services can provide higher profit margins and growth potential than products
Customer satisfaction and loyalty are driven by service excellence—not simply selling goods
Services can be used as a differentiation strategy in competitive markets
Jerome
The are 3 main reasons why our program is focusing on services.
It provides a higher profit margin than tangible products,
Increases satisfaction and retention,
Provides a competitive advantage over others.
I am going to use two examples to illustrate these points.
The automotive industry has typically been perceived as a manufacturing industry. However,
after-sale services and parts account for nearly 80% of all revenue opportunities, and more than 50% of the average automobile dealer’s profits
It is by far the largest creator of shareholder value on a percentage basis. A GM study revealed that $9 billion in after sale revenue produced $2 billion in profits (22% margin). Profits from $150 billion car sales were much lower.
JD Power and Associates published a report showing a strong correlation between customer satisfaction with after-sale services and customer intent to repurchase the same brand (Lexus and Saturn cars)
Hyundai’s success is due largely to its differentiation strategy of offering 10 year - 100,000 mile guarantee. The service offering is changing customer’s perception of the brand
The same can be said about the personal computer industry.
With the advancement of technology, personal computers are now becoming more and more of a commodity. While 25% of revenue opportunities are in the initial sale, most revenue opportunities are from after-sale.
Company responsiveness to customer calls is the biggest driver customer satisfaction with its product.
Dell revolutionized the industry by being the first to offer mass customization of personal computers.
Across manufacturing companies, after-sale services and parts contributes about 25% of total revenue, and 40%-50% of all profits
Services related revenue exceeds first-time product sales by 500% %
Retail industry derive largest margins from sale of extended warranties
It is a program that is designed in response to a business environment that is increasingly moving away from a product orientation to a service-focus
GE, IBM other good examples.

19. How Services differ from goods & challenges

20. Intangibility Heterogeneity Simultaneous Production and Consumption
Characteristics of Services Compared to Goods WAI WAI Vs. Yeti Airlines’ Service
Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability

21. Implications of Intangibility
Services cannot be inventoried
cannot be easily patented
cannot be readily displayed or communicated.
Mass production of services is difficult
Pricing is difficult
You have to make the intangible-tangible

22. Implications of Heterogeneity
Service delivery and customer satisfaction depend on employee and customer actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted—especially at the front-line!
Customers want homogeneous services-you have to standardize services

23. Implications of Simultaneous Production and Consumption
Customers participate in and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
You have to try to keep the right customer mix in your firm!

24. Implications of Perishability
It is difficult to synchronize supply and demand with services
Crowding is a negative
Crowding is a positive
Services cannot be returned or resold
Guarantees are difficult, can services be guaranteed?

25. Comparing Goods and Services

26. Today’s Discussion Service Marketing Mix 4 Ps to 7Ps People Process
Physical Evidence

27. Any queries till now?

28. The Gaps Model of Service Quality – A little recap
Chapter 2
The Gaps Model of Service Quality – A little recap
The Customer Gap
The Provider Gaps:
Gap 1 – The Listening Gap
not knowing what customers expect
Gap 2 – The Design and Standards Gap
not having the right service designs and standards
Gap 3 – The Performance Gap
not delivering to service standards
Gap 4 – The Communication Gap
not matching performance to promises
Putting It All Together: Closing the Gaps

29. How to conduct service audit of your company?

30. Service Audit of Yeti Airlines

31. The Customer Gap

32. Key Factors Leading to the Customer Gap
Customer Expectations
Customer
Perceptions

33. Customer expectation of service

34. Factors that Influence Customer Expectations of Service
Service Expectations
Factors that Influence Customer Expectations of Service
Issues Involving Customers’ Service Expectations
3-34

35. Customer Expectations

36. What do your customers expect from you, the Service provider?

37. Customer Expecations When you’re a customer, what matters to you
At the hospital
In the examination room
In the waiting room
When calling your doctor
Leaving the doctor’s office

38. Customer expectations?
Technical Element
Human Element

39. Customer expectations?

40. Customer expectations
When a client visits your health center:
It’s primarily for you’re your technical quality
Clients may expect polite staff, attentive, pleasant
If expectations are not met, the client leaves dissatisfied

41. Possible Levels of Customer Expectations
3-41

42. Dual Customer Expectation Levels
3-42

43. The Zone of Tolerance
3-43

44. The Zone of Tolerance Desired Service Zone of Tolerance
Adequate Service
Desired Service
Zone of
Tolerance
← Delights
← Desirables
← Musts
3-44

45. Zones of Tolerance
The range of expectations between desired and adequate…
can be wide or narrow
can change over time
can vary among individuals
may vary with the type of product/service
3-45

46. Zones of Tolerance for Different Service Dimensions
3-46

47. Factors That Influence Desired Service
3-47

48. Factors That Influence Adequate Service
3-48

49. Factors That Influence Desired and Predicted Service
3-49

50. Exercise – Glacier Bear Lodge

51. Frequently Asked Questions About Customer Expectations
What does a service marketer do if customer expectations are “unrealistic”?
3-51

52. Frequently Asked Questions About Customer Expectations
What does a service marketer do if customer expectations are “unrealistic”?
Are you able to refute competitor’s promise?
Give reality check
3-52

53. Frequently Asked Questions About Customer Expectations
Should a company try to delight the customer?
3-53

54. Frequently Asked Questions About Customer Expectations
Should a company try to delight the customer?
One needs to weight in the benefits because delight involves effort and cost
Chose area of delight that are not copied by competitors
3-54

55. Frequently Asked Questions About Customer Expectations
How does a company exceed customers’ service expectations?
3-55

56. Frequently Asked Questions About Customer Expectations
How does a company exceed customers’ service expectations?
Under-promise and Over-deliver
Under-promise in sales reduce competitive appeal – honest portrayal of the the service both explicitly and implicitly
Position unusual service as unique rather than standard
3-56

57. Frequently Asked Questions About Customer Expectations
Do customers’ service expectations continually escalate?
3-57

58. Frequently Asked Questions About Customer Expectations
Do customers’ service expectations continually escalate?
Desired level of service are more stable
Adequate level service keeps on changing, monitor adequate service expectations continually
3-58

59. Frequently Asked Questions About Customer Expectations
How does a service company stay ahead of competition in meeting customer expectations?
3-59

60. Frequently Asked Questions About Customer Expectations
How does a service company stay ahead of competition in meeting customer expectations?
Adequate Service
Desired Service
Zone of
Tolerance
← Delights
← Desirables
← Musts
3-60

61. Managing customer expectations
At every stage in the client’s relationship with your organization, clients have a different set of expectations.
At the appointment: what would their expectations be?
At check-in: what would their expectations be?
In the examination room: what would their expectations be?

62. Managing customer expectations prior to visit
Learn what customers expect
Tell customers what to expect
Provide consistent quality
Communicate with customers during the service
If possible, modify the service to meet customer expectations, or explain why service cannot be changed
After the client is finished:
Communicate: were expectations met?
Follow-up with clients to get views
Develop a procedure for dealing with dissatisfied clients

63. When expectations change
Emergencies
When clients come in groups, expect more
When clients come with friends
Weather, traffic also influences expectations
When clients have expectations that are unrealistic, not in their best interest, cannot be provided
Influence clients’ expectations
Trust: earned and sustained via constant follow-up and care

64. Influence clients Explain why
Educate: the customer is not always right
Under promise & over deliver

65. Where do Client expectations come from?
Advertisement
Corporate website
Brand name
Building, employees,
clues
Friends, family
talk
Newspaper article
Past experience
WHICH OF THESE DO YOU CONTROL?

67. Customer perception

68. Customer Perceptions of Quality and Customer Satisfaction
Satisfaction Vs. Service Quality

69. Customer Satisfaction
Satisfaction is consumer’s fulfillment response, it is a judgment that the product or services features or the product or service itself provides pleasurable level of consumption related fulfillment.
What determines customer satisfaction
Product and Service Features
Consumer’s emotions
Attributions to service failures or success
Perception of Equity and fairness
Other consumers, family members and co-workers
National Customer Satisfaction Index – The American Customer Satisfaction Index

70. How Customers Judge the Five Dimensions of Service Quality

71. The Five Dimensions of Service Quality
Reliability
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.
Assurance
Tangibles
Empathy
Responsiveness

72. Exercise to Identify Service Attributes
For KUSOM spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customer’s point of view.
Service Quality Dimensions
Issue
Solution
Reliability:
Assurance:
Tangibles:
Empathy:
Responsiveness :

73. SERVQUAL Attributes RELIABILITY EMPATHY RESPONSIVENESS TANGIBLES
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
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
RESPONSIVENESS
TANGIBLES
Keeping customers informed as to when services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customers’ requests
Modern equipment
Visually appealing facilities
Employees who have a neat, professional appearance
Visually appealing materials associated with the service
ASSURANCE
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

74. The Service Encounter is the “moment of truth”
occurs any time the customer interacts with the firm
can potentially be critical in determining customer satisfaction and loyalty
types of encounters:
remote encounters, phone encounters, face-to-face encounters
is an opportunity to:
build trust
reinforce quality
build brand identity
increase loyalty

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

76. Recovery

77. Adaptability

78. Spontaneity

79. Coping

80. Each group with formulate a role play based on the four Critical Service Encounters
Debrief – Do’s and Don’ts

81. Evidence of Service from the Customer’s Point of View

82. Proposal

83. Some Research Areas stimulating service innovation,
facilitating servitization, service infusion, and solutions,
understanding organization and employee issues relevant to successful service,
developing service networks and systems,
leveraging service design,
using big data to advance service,
understanding value creation,
enhancing the service experience,
improving well-being through transformative service,
measuring and optimizing service performance and impact,
understanding service in a global context, and
leveraging technology to advance service.

84. Thank you