No proctoring on exam - some time pressure (2hrs) - partly MC partly open - practical questions
- case questions
LECTURE 1 - SERVICE CONCEPTUALISATION (WZB1)
What to keep in mind?
I) What is the market I am operating in
II) Who is my customer (market segmentation), which part of the market am I trying to
reach?
GAP model
* main GAP used is GAP 5: states that there is a difference between expectations and
perceptions (customer gap)
→ expectations are usually higher dan perceptions, resulting in unhappy customers
* thinking about how to close the gap between expectations and perceptions
Key factors leading to GAP 5:
To close the customer gap (Gap 5), the gap model suggests that four other gaps also need to
be closed:
1. Provider Gap 1: Not knowing what customers expect
2. Provider Gap 2: Not selecting the right service designs and standards
3. Provider Gap 3: Not delivering to service standards
4. Provider Gap 4: Not matching performance to promises
→ The key to close the customer gap (Gap 5) is to close provider gaps 1 to 4 and keep
them closed
→ To the extent that one or more provider gaps exists, customers perceive service
,quality shortfalls
Key factors leading to GAP 1:
The difference between customer expectations of service and a company’s understanding of
those expectations.
→ Firm lacks understanding of what those expectations are
1. Inadequate marketing research orientation
- Insufficient marketing research
- Research not focused on service quality
- Inadequate use of marketing research
2. Lack of upward communication
- Lack of interaction between management and customers
- Insufficient communication between contact employees and managers
- Too many layers between contact personnel and top management
3. Insufficient relationship focus
- Lack of market segmentation
- Focus on transactions rather than relationships
- Focus on new customers rather than relationship with customers
4. Inadequate service recovery
- What companies do with customer complaints
Key factors leading to GAP 2: focused on process(-design)
Difference between company understanding of customer expectations and development of
customer-driven service designs and standards / Not selecting the right service quality designs
and standards
→ Avoid Gap 2: design services without oversimplification, incompleteness, subjectivity and
bias
1. Poor service design
- Unsystematic new service development process
- Vague, undefined service designs
- Failure to connect service design to service positioning
2. Absence of customer-driven standards
- Lack of customer-driven service standards
- Absence of process management to focus on customer requirements
- Absence of formal process for setting service quality goals
3. Inappropriate physical evidence and servicescape
- Failure to develop tangibles in line with customer expectations
- Servicescape design that does not meet customer and employee needs
- Inadequate maintenance and updating of the servicescape
Factors leading to GAP 3
The discrepancy between development of customer-driven service standards and actual service
performance by company employees / not delivering to service designs and standards
,→ Firm must have systems, processes, and people in place to ensure that service delivery
actually matches the design and standards
1. Deficiencies in human resource policies
- Ineffective recruitment
- Role ambiguity and role conflict
- Poor employee-technology job fit
- Inappropriate evaluation and compensation systems
- Lack of empowerment, perceived control, and teamwork
2. Failure to match supply and demand
- Failure to smooth peaks and valleys of demand
- Inappropriate customer mix
- Over-reliance on price to smooth demand
3. Customers not fulfilling roles
- Customers lack knowledge on their roles and responsibilities
- Customers negatively impact each other
4. Problems with service intermediaries
- Channel conflict over objectives and performance
- Channel conflict over costs and rewards
- Difficulty controlling quality and consistency
- Tension between empowerment and control
5. Inadequate service recovery
- Lack of encouragement to listen to customer complaints
- Failure to make amends when things go wrong
- No appropriate recovery mechanisms in place to service failures
Key factors leading to GAP 4 communication GAP
The difference between service delivery and the service provider’s external communications /
not matching performance to promises
1. Lack of integrated services marketing communications
- Tendency to view each external communication as independent
- Not including interactive marketing in communications plan
- Absence of strong internal marketing program
2. Ineffective management of customer expectations
- Not managing customer expectations through all forms of communication
- Not adequately education customers
3. Overpromising
- Overpromising in advertising, personal selling, and physical evidence cues
4. Inadequate horizontal communications
- Insufficient communication between sales and operations
- Insufficient communication between advertising and operations
- Differences in policies and procedures across branches or units
, * Services part is often the largest part of the companies income
→ 70% of jobs is in the services industry
* For services, expectations are not as clear as when buying a product. Therefore, the gap
between expectations and perceptions is often bigger.
Service
A change in the condition of a person or of a good belonging to some economic unit which is
brought about as a result of the activity of some other economic unit, with the prior agreement of
the former person or economic unit. (Hill,1977)
→ Deeds, processes and performances (intangible)
→ Provides added value (convenience, amusement, comfort, health)
* Vague grey area between a service and a good, often intertwined → tangibility spectrum
* Several matrices for services, but every matrix fits another situation best
Service Dominant Logic
Logic that the value derived from physical goods is really the service provided by the good.
→ Value is created when the customer integrates, applies and used the resources (value in
use)
→ A service involves interaction between a service provider and a customer
Services Process Matrix
Challenges for managers
- Low interaction/customization
Marketing, attention to physical surroundings, standardization of operations
- Low labor intensity (high cost of capital)
Capital decisions, technological advances, peaks in demands
- High labor intensity
Hiring, training, employee welfare
- High interaction/customization
Fighting costs, maintaining quality, reacting to customer intervention
- case questions
LECTURE 1 - SERVICE CONCEPTUALISATION (WZB1)
What to keep in mind?
I) What is the market I am operating in
II) Who is my customer (market segmentation), which part of the market am I trying to
reach?
GAP model
* main GAP used is GAP 5: states that there is a difference between expectations and
perceptions (customer gap)
→ expectations are usually higher dan perceptions, resulting in unhappy customers
* thinking about how to close the gap between expectations and perceptions
Key factors leading to GAP 5:
To close the customer gap (Gap 5), the gap model suggests that four other gaps also need to
be closed:
1. Provider Gap 1: Not knowing what customers expect
2. Provider Gap 2: Not selecting the right service designs and standards
3. Provider Gap 3: Not delivering to service standards
4. Provider Gap 4: Not matching performance to promises
→ The key to close the customer gap (Gap 5) is to close provider gaps 1 to 4 and keep
them closed
→ To the extent that one or more provider gaps exists, customers perceive service
,quality shortfalls
Key factors leading to GAP 1:
The difference between customer expectations of service and a company’s understanding of
those expectations.
→ Firm lacks understanding of what those expectations are
1. Inadequate marketing research orientation
- Insufficient marketing research
- Research not focused on service quality
- Inadequate use of marketing research
2. Lack of upward communication
- Lack of interaction between management and customers
- Insufficient communication between contact employees and managers
- Too many layers between contact personnel and top management
3. Insufficient relationship focus
- Lack of market segmentation
- Focus on transactions rather than relationships
- Focus on new customers rather than relationship with customers
4. Inadequate service recovery
- What companies do with customer complaints
Key factors leading to GAP 2: focused on process(-design)
Difference between company understanding of customer expectations and development of
customer-driven service designs and standards / Not selecting the right service quality designs
and standards
→ Avoid Gap 2: design services without oversimplification, incompleteness, subjectivity and
bias
1. Poor service design
- Unsystematic new service development process
- Vague, undefined service designs
- Failure to connect service design to service positioning
2. Absence of customer-driven standards
- Lack of customer-driven service standards
- Absence of process management to focus on customer requirements
- Absence of formal process for setting service quality goals
3. Inappropriate physical evidence and servicescape
- Failure to develop tangibles in line with customer expectations
- Servicescape design that does not meet customer and employee needs
- Inadequate maintenance and updating of the servicescape
Factors leading to GAP 3
The discrepancy between development of customer-driven service standards and actual service
performance by company employees / not delivering to service designs and standards
,→ Firm must have systems, processes, and people in place to ensure that service delivery
actually matches the design and standards
1. Deficiencies in human resource policies
- Ineffective recruitment
- Role ambiguity and role conflict
- Poor employee-technology job fit
- Inappropriate evaluation and compensation systems
- Lack of empowerment, perceived control, and teamwork
2. Failure to match supply and demand
- Failure to smooth peaks and valleys of demand
- Inappropriate customer mix
- Over-reliance on price to smooth demand
3. Customers not fulfilling roles
- Customers lack knowledge on their roles and responsibilities
- Customers negatively impact each other
4. Problems with service intermediaries
- Channel conflict over objectives and performance
- Channel conflict over costs and rewards
- Difficulty controlling quality and consistency
- Tension between empowerment and control
5. Inadequate service recovery
- Lack of encouragement to listen to customer complaints
- Failure to make amends when things go wrong
- No appropriate recovery mechanisms in place to service failures
Key factors leading to GAP 4 communication GAP
The difference between service delivery and the service provider’s external communications /
not matching performance to promises
1. Lack of integrated services marketing communications
- Tendency to view each external communication as independent
- Not including interactive marketing in communications plan
- Absence of strong internal marketing program
2. Ineffective management of customer expectations
- Not managing customer expectations through all forms of communication
- Not adequately education customers
3. Overpromising
- Overpromising in advertising, personal selling, and physical evidence cues
4. Inadequate horizontal communications
- Insufficient communication between sales and operations
- Insufficient communication between advertising and operations
- Differences in policies and procedures across branches or units
, * Services part is often the largest part of the companies income
→ 70% of jobs is in the services industry
* For services, expectations are not as clear as when buying a product. Therefore, the gap
between expectations and perceptions is often bigger.
Service
A change in the condition of a person or of a good belonging to some economic unit which is
brought about as a result of the activity of some other economic unit, with the prior agreement of
the former person or economic unit. (Hill,1977)
→ Deeds, processes and performances (intangible)
→ Provides added value (convenience, amusement, comfort, health)
* Vague grey area between a service and a good, often intertwined → tangibility spectrum
* Several matrices for services, but every matrix fits another situation best
Service Dominant Logic
Logic that the value derived from physical goods is really the service provided by the good.
→ Value is created when the customer integrates, applies and used the resources (value in
use)
→ A service involves interaction between a service provider and a customer
Services Process Matrix
Challenges for managers
- Low interaction/customization
Marketing, attention to physical surroundings, standardization of operations
- Low labor intensity (high cost of capital)
Capital decisions, technological advances, peaks in demands
- High labor intensity
Hiring, training, employee welfare
- High interaction/customization
Fighting costs, maintaining quality, reacting to customer intervention
