The importance of quality can be assessed by going though the following points:
Lower Costs: Higher quality of services imply fewer mistakes for any repeat tasks, service recovery exercises or refunds to disgruntled customers. Preventive and corrective measures through quality control processes lower costs and increases productivity.
Immune or Less Vulnerable to Price War: Service firms known for their high quality services have an additional differentiating attribute and can avoid the service commodity trap. They can afford to have a higher price as they offer more benefits than the competition.
Higher Customer Loyalty: As mentioned in the previous unit and section, service quality ensures customer satisfaction that drives customer loyalty and enhanced profits.
Higher Market Share: Loyal customers contribute to positive word-of-mouth publicity (the ‘buzz effect’), which broadens customer base with minimal costs.
Loyal Internal Customers: The previous unit has explored the linear relationship between happy employees and customer loyalty, and a firm’s profitability. Employees become proud of the firm for which they are working; having a sense of belonging is known for inspiring and delivering high quality services. Lower attrition level lowers manpower and training costs and the service firm can leverage on the knowledge and skill of its employees.
Higher RoI: The service-profit chain had established in the previous unit that high quality services contribute to higher profitability.
Self Assessment
State whether the following statements are true or false:
13. A service firm that provides high quality services can afford to have a higher price as they
offer more benefits than the competition.
14. Loyal customers contribute to positive word-of-mouth publicity.
15. Higher the quality of services provided by the provider, higher will be the attrition rate
with the provider.
6.4 Summary
In manufacturing, quality is defined by the degree of compliance between stated goals and achieved targets. It is therefore rather easy to measure and conform to a standard.
In service it becomes difficult to comprehend the concept of quality and measure it. This is
due to the mother of all characteristics for services – the intangibility factor – and it makes measurement and assessment of service quality extremely challenging.
Quality in service has two-window viewpoints: internal and external to the service firm. Internal quality is all about the entire service delivery processófrom concept to encounter/ experience/transaction/consumption and external refers to the customer expectations.
The Gap model can help a firm desirous of improving service quality to focus better on its
strategies and service processes. This model can not only be used to find and identify areas in service delivery and designs but also measure and monitor quality in service. It consists of two types of gaps- consumer gaps and provider gaps.
Customer Gap is the gap between customer expectations and customer perceptions. This,
in other words, is the service quality shortfall as seen by the customers. Customers develop expectations from receipt of external stimuli from many sources - ranging from those that are company-controlled to social influences.
There are four provider gaps and these in sum total are the cause of the Customer Gap.
They are the shortfalls within the service firm.
Gap 1 is the customer expectation and management perception gap, Gap 2 is the management
perception and service quality expectation gap, Gap 3 Service quality specifications and service delivery gap and Gap 4 is the service delivery and external communications gap.
The Industrial Management Model is an approach to organizing a firm that focuses on
revenues and operating costs and ignores the role personnel play in generating customer satisfaction and sustainable profits.
The Market-focused Management Model focuses on the components of the firm that
facilitate the firmís service delivery system. It proposes that the firm should be supportive of those personnel who serve the customers and interact with them.
SERVQUAL method says that customer expectations can be judged based on following
factor: responsiveness, assurance, tangibility, empathy and reliability.
The importance of quality in services finds its base in lowered costs, higher customer loyalty, higher market share, loyal internal customers and higher ROI.
Notes
6.5 Keywords
Customer Gap: gap between customer expectations and customer perceptions External Marketing: communication between company and customers Interactive Marketing: communication between providers and customers Internal Marketing: communication between company and providers Moments of Truth: interaction between the provider and customer Provider Gap: gap form providerís side, cause of customer gap
Quality: totality of features of service that bears on its ability to satisfy given needs SERVQUAL: gives factors that affect customer expectations
Transcendental Quality: it can only be experienced not described User based Quality: defined form customerís perspective Value based Quality: equates quality with value
Notes
6.6 Review Questions
1. Explain how intangibility poses problems in measurement of service quality. Give
examples.
2. ‚Marketing myopia might creep in and make management blind‛. How does it relate to
service quality?
3. In services, perceptions are everything. Do you agree? Support your answer with valid
proofs.
4. Suppose you are the marketing manager of an airline company. How will you differentiate
between the factors that provide satisfaction and those that imply quality? Is there any distinction at all?
5. Take example of any two services and explain the customer gap.
6. Critically assess the usefulness of the Gap model for measuring quality in the hospitality
industry.
7. Discuss the loopholes in the industrial management model. Does the marketing model
help overcome those loopholes?
8. ‚It is very important to communicate firm’s strategies to both, internal and external
customers‛. Explain with examples.
9. Discuss the service encounters in airline industry. What can be the possible problems with
each encounter and how can they correct it?
10. ‚Services marketing is a game of ‘promises’ played amongst three entities‛. Comment
11. How can you link service quality with internal and external customer loyalty? Explain
with examples.
12. Suppose you are the marketing manager of a counselling services firm. How can you use
the gap model for service quality? Suggest ways to close each gap.
13. Suppose you are the marketing manager of a social club like Country Club. What factors
will you keep in mind to meet customer expectations? ( Use SERVQUAL method)
Answers: Self Assessment
1. b 2. d
3. a 4. c
5. 1 6. 4
7. External 8. Customer
9. Internal 10. Market management
11. Moment of truth 12. Reliability
13. True 14. True
6.7 Further Readings
Books C Bhattacharjee, Services Marketing, Excel Books, New Delhi
Christopher H Lovelock, Services Marketing, third edition, Prentice Hall, US Valarie A Zeithmal and Mary JO Bitner, Services Marketing: Integrating Customer
Focus across the Firm, Tata McGraw Hill, New Delhi
Online links www.cost280.rl.ac.uk/documents/.../documents www.qualitydigest.com/html/qualitydef.htm
www.sunway.edu.my/others/vol4/service_quality.pdf www.comsoc.org/~cqr/FAE_Docs/A1.../sv1quality www.degromoboy.com/cs/gap
Notes
Unit 7: Service Segmentation and Targeting
Objectives
After studying this unit, you will be able to:
Describe the concept of market segmentation
Identify the basis used for segmentation
Contrast differentiated and undifferentiated marketing
Realise the concept of target marketing
CONTENTS Objectives Introduction
7.1 Market Segmentation
7.1.1 The Diaspora Effect 7.1.2 Effective Segmentation
7.2 Bases for Segmenting the Service Consumer
7.2.1 Demographic Segmentation 7.2.2 Geographic Segmentation 7.2.3 Psychographic Segmentation 7.2.4 Behaviouristic Segmentation
7.3 Steps in Market Segmentation
7.3.1 Identifying Customer Segments 7.3.2 Develop Measures for Attractiveness 7.3.3 Selecting Customer Segments
7.4 Undifferentiated Marketing vs. Differentiated Marketing
7.4.1 Undifferentiated Marketing 7.4.2 Differentiated Marketing 7.4.3 Niche Marketing 7.5 Market Targeting 7.6 Summary 7.7 Keywords 7.8 Review Questions 7.9 Further Readings
Introduction
One cannot be everything to everyone; But one can be everything to a select few.
óMichael Porter
Notes
After analyzing the consumer and his buying behaviour, the service marketer usually comes to the conclusion that it is not possible or desirable to address the whole market with his offers. The decision for the service firm is to choose its markets, and target them with its service offers. The process of identifying market segments, selecting one or more of them and developing a marketing mix to meet their needs is known as target marketing.
Apart from targeting, assigning a draft of the service delivery to the target audience is also necessary. In this unit you will learn how service marketers segment the market and choose their target audience.