Service Marketing - an introduction

Table of contents

1. Introduction

2. Understanding customer expectations of service
2.1 Customer expectations
2.2 Implications for managers
2.3 Example Singapore Airlines

3. Service-quality specifications
3.1 Service design
3.2 Service standards
3.3 Physical evidence

4. Service delivery by employees
4.1 Key roles of employees
4.2 Human resource policies

5. Conclusion

Bibliography

1. Introduction

A service has been described as a deed, act or performance (Berry, cited in Lovelock, 1983). The literature suggests that differences between goods and services exist, resulting in four basic characteristics of services: intangibility, inseparability of production and consumption, heterogeneity, and perishability (Gronroos, 1988, Wilson/ Zeithaml/ Bitner/ Gremler, 2008). Zeithaml and Bitner claim that intangibility is the key determinant of whether an offering is a service or product (Bebko, 2000). These service characteristics have created problems and challenges for managers of services.

A recurring theme in service companies is the difficulty managers experience in translating their understanding of customers’ expectations into service that employees can understand and execute.

This proposition will be discussed in the following.

2. Understanding customer expectations of service

2.1 Customer expectations

Expectations have been defined “(…) as beliefs about service delivery that serve as standards or reference points against which performance is judged” (Wilson et al., 2008, pg. 55). Customers evaluate service quality by comparing their perceptions of service with their expectations. Service quality dimensions are those attributes of service about which customers may have expectations and which need to be delivered at some specified level (Johnston/ Clark, 2001). Service quality and customer service expectations respectively can be categorized into five overall dimensions: tangibles, reliability, responsiveness, assurance, and empathy (Parasuraman/ Berry/ Zeithaml, 1991a). Travellers for example might expect no-frills service for a short domestic flight but would be very dissatisfied wit the same level of service on a full-service airline flying from Glasgow to New York (Lovelock/ Wirtz, 2004). It is therefore the key challenge for service operation managers to understand customer expectations of their own firm’s service offering.

According to Parasuraman/ Berry/ Zeithaml (1991b) customers have different types of expectations about service, classified in two service levels: The desired service level is the service the customer hopes to receive (“can be” or “should be” expectations). The adequate service level is the service the customer finds acceptable (“will be” expectations) and reflects the minimum performance level expected by the customer without being dissatisfied. These two service level expectations are the upper and lower boundary of the zone of tolerance. A performance that falls below the adequate service level will cause dissatisfaction, whereas a performance level above the tolerance zone will pleasantly surprise customers (Lovelock/ Wirtz, 2004). Customers may accept variation within a range of performance and it will only have any real effect on perceived service quality when performance moves outside this range (Johnston, 1995). The tolerance zone differs across customers. Some customers have a narrow zone of tolerance whereas other customers have a wide one (Wilson et al., 2008).

Customer expectations are influenced by many factors such as personal needs, temporary service intensifiers, perceived service alternatives, word-of-mouth communication, explicit and implicit service promises, or previous experience (Wilson et al., 2008). Many forces that influence customer expectations are to some extent out of the control of the manager. Some customers therefore may have unrealistic expectations that can cause aggravation as a result (Johnston/ Clark, 2001). Customers’ expectations are thereby quite basic. They expect the service to be performed as promised. It is likely that companies meet customers’ expectations when their promises reflect the service actually delivered (Parasuraman et al., 1991b).

2.2 Implications for managers

Knowing what the customer expects is a prerequisite for delivering quality service (Parasuraman et al., 1991b). However, companies do not always have an accurate understanding of what customers’ expectations are due to a lack of marketing research orientation and an inadequate upward communication (Zeithaml/ Parasuraman/ Berry, 1990).

Problems may occur if managers do not put enough time and effort into getting feedback from customers about what they want.

Customers’ expectations are dynamic and will change over time. What an organisation may have defined as adequate last month may be inadequate this month (Johnston/ Clark, 2001). Consequently, research has to be conducted regularly to generate information about what customers want. Companies have to develop an effective services marketing research programme that includes multiple types of information source and research studies such as complaint solicitation and service quality (SERVQUAL) in order to identify common service failure and to monitor and track service performance (Wilson et. al., 2008). Moreover, it is essential that top managers use the research findings effectively to improve service quality.

Furthermore, managers have to interact directly with customers to meet their expectations (Zeithaml et al., 1990). For example, a Burger King executive manager spent five days on the line in a restaurant in Liverpool to gain first-hand knowledge about customers and employees (Video in class). In doing so, the manager could listen to the complaints of both customers and employees and thereby gain detailed information about the service. Upward communication is therefore an effective way to provide top managers with information to improve their understanding of customers’ expectations (Zeithaml et al., 1990).

Understanding customers’ expectations is challenging and might be difficult for managers, especially due to an inadequate research orientation and a lack of upward communication. Not knowing what the customer expects can result in a competitive disadvantage.

However, taking adequate measures enables managers to determine customers’ needs and wants and to identify sources of customer satisfaction and dissatisfaction, respectively. Hence, top managers will improve their understanding of customers’ expectations.

2.3 Example Singapore Airlines

Singapore Airlines (SIA) is one of the few companies in the world that overcomes the challenge and difficultly in understanding customers’ expectations by adequately employing marketing research and upward communication. The airline is consistently recognized as the world’s “best airline.” SIA clearly understands the high demands customers place on them, resulting in a need to constantly change and review everything the airline does. It excels in understanding customers’ expectations by aiming to create a “wow” effect and to regularly surprise customers. New ideas such as lighter and more nutritious food are generated by feedback from its staff, information about other airlines, analysis of customer complaints and compliments, and major traveller surveys. Senior managers are listening to customers and to their front-line staff. Information is collected, for example, by a random sample of passengers on about 10 per cent of SIA’s flights. In contrast to other airlines, SIA takes both complaints and compliments seriously. Each complaint is used as a learning lesson in order to ensure that mistakes will not be repeated (compare Wirtz/ Johnston, 2003).

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