OMTEX CLASSES TYBMS - SEM V - SSM

Compiled by Kripa Kalro

CHAPTER 1:
PRODUCTIVITY AND QUALITY
 Components of Service Quality
 Garvin‟s 5 perspectives on Quality
 Dimensions/ Determinants of Quality
 RATER
 Servqual Scale
 5 Star of Quality
 Quality Shortfall
 Gap Analysis
 Service Guarantee
 Benchmarking
Productivity explains how inputs are transformed in to outputs. The same is brought out
by the transformation process. The Transformation process of services is similar to that of
goods, wherein conversion of inputs to outputs takes place through the service delivery
process. On completion of the process, the final output is measured through a
performance measurement program to check for deviations and the lessons are put into
practice from the next service delivery process.

Quality explains the degree of satisfaction a customer gets from a service. Services could
exhibit competitive advantage or disadvantage based on the level of quality provided. In
services quality is perceived by the number of supplementary petals. Research shows that
every dissatisfied customer tells 8-10 people of their dissatisfaction and one out of five
tells twenty people. This eye opening statistic has forced service providers to understand
quality dimensions, train and empower their employees.

Benefits of maintaining Service Quality

• Improve their image in the eyes of customers. When an organization provides quality
service it will build good brand image. Even the word of mouth will help increasing the
sales.
• Improve profitability. When there is word of mouth, it leads to increase in sales and also
increase in profits of an organization.
• Improve staff morale. Employees are having high morale while working with an
organization that is comply with all its duties and social responsibility towards society
and providing satisfaction to its customers.

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• Increase productivity. When an organization is esteem with good brand image and higher
staff morale the productivity would automatically increase.
• Reduce costs. With higher profitability company can spend more on research and
development that would add more value to product/services with reduced costs.
• Encourage employee participation. If there is proper working condition in an
organization, it would increase employee participation as well as profits and image of
company.
• Brings about continuous improvement. Employee participation, increased productivity,
reduced cost will bring continuous improvement.
• Minimize price sensitive. In long run customer will understand that quality comes with
higher price, and will be attracted towards the service of an organization.
• Increase customer satisfaction. Expected service quality, excellent after sales service will
lead to higher customer satisfaction.
• Differentiate themselves from the competitors. Competitive Service quality would
definitely differentiate themselves from those of competitors.

COMPONENTS OF SERVICE QUALITY

To compete successfully a firm must define how the customers perceive the service
quality and in what way the service quality is influenced. The quality can be of seen from
two angles (1) Technical quality (What is delivered) (2) Functional quality (How it is
delivered). When a customer comes to the service provider he comes with some expected
quality. When he takes the service he experiences a service quality – this is his perceived
quality.

Technical Quality: This also refers to Extrinsic Quality. Here the technical aspects of
service performance are stressed upon. For Example: When judging a hotel, we would
see whether the food provided by the hotel is made using correct ingredients.

Functional Quality: This is also referred to as Intrinsic Quality. Here the process of
service performance is stressed upon. For Example: When judging a hotel on quality, we
would see whether the waiter serving the food is polite and ready to help.

GARVINS 5 PERSPECTIVES ON QUALITY

Recently quality has gained significant relevance in context of service industry with
reference to customer needs and expectations. Generally there is no accepted definition of
quality. Different definitions have been categorized into five approaches to quality by
David Garvin. Garvin‟s five perspectives are discussed below:

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1. Transcendent Approach: This view of quality is synonymous with innate

excellence, a mark of uncompromising standards and high achievement, eg Rolls
Royce Car, Rolex Watches, in other words the best possible. This approach inherits a
danger that it confuses quality with grade. We always use the terms good quality or
bad quality without really having a clear idea of what it is that defines our concepts of
quality of products and services. Consumers usually presume expensive products
means high quality or high grade. The grade and quality of a service and product are
quite different. Grade refers to products standards, and is reflected in the
specifications of the product and quality refers to the extent to which a product or
service is and does what it claims to be and do.

2. Product Based Approach: This approach views quality as a precise and measurable
variable. Thus it can be argued that difference in quality reflects difference in the
ingredients or attributes of the product or service. Quality reflects the quantity of
ingredients or attributes a product or service contains. As attributes are considered
costly to produce, the higher quality goods will be more expensive.

3. Manufacturing Based Approach: In manufacturing based approach the focus is on

the supply side and is concerned primarily with engineering and manufacturing
practices. This approach is summed up by a phase-conformance to design
specifications. The product may not be the best in the world but is regarded as good
quality if it is manufactured or delivered precisely to its design specifications.

4. Value Based Approach: The value based approach defines in terms of costs and
prices. Value is the quality you get for the price you pay. A consumer may buy a
product with lower specifications if the price is low.

5. User Based Approach: The user based approach starts with a premise that quality
lies in the eyes of the beholder. According to this approach, the goods that best satisfy
customer preferences are believed to be of high quality. This approach equates quality
with maximum satisfaction. This is a subjective and demand oriented perspective.
This approach is useful, as it recognizes that different customers have different needs.

According to Garvin, these different views on quality assist to explain the conflicts which
sometimes arise between the function departments of an organization. Companies are
likely to suffer fewer problems if they employ multiple perspectives on quality, actively
shifting the approach they take as products move from design to market.

DIMENSIONS/ DETERMINANTS OF QUALITY

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In services, it is the consumer who defines quality. Therefore human side of service is the
key to deliver quality. No doubt many of the determinants for quality of products can be
applied to the service but the human side of service is missing to a considerable extent in
case of services. Parasuram A, Zeithaml V. A and Berry LL, a group of researchers in
marketing proposed 10 quality dimensions, as mentioned under:

Determinant Core Features Examples

Reliability  Consistency of  Airline ensuring that the baggage
performance and arrives on the sane flight as
dependability passenger at same destination
 Getting it right the  Waiters bringing the order to
first time correct tables
 Keeping promises  Opening a store at accurate time
Responsiveness  Willingness and  Responding to a customer enquiry
readiness of  Transport operations keeping to
employees to provide timeline
service.
 Timeliness of Service
Competence  Existence of required  Tourist information staff knowing
skills and knowledge exactly the best places to go to, and
especially in contact the best ways to reach there
personnel
Access  Ease of Contact  Hotels answering the telephone
within 3 rings
 Short waiting lines
Courtesy  Respect and  Visitor attraction staff helping
consideration families to enjoy their day without
being over-familiar
 Friendliness
Communication  Informing customers  Coach driver assuring passengers
in a language they that the party will reach the ferry in
can understand good time
 Explanation of
service offered
Credibility  Trustworthiness  Travel agents offering information
about long haul travel
 Believability
 Honesty
Security  Freedom from  A hotel providing locker facilities

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danger, risk or doubt for expensive items

Understanding  Making the effort to  Hotel reception staff making
the Customer understand customers customers welcome on arrival
needs and wants
Tangibles  Physical evidence-  Entrance of Bank
Facilities and  Colors on walls of restaurant
appearance

RATER

Later PZB (Parasuram A, Zeithaml V. A and Berry LL) re-analyzed their determinants of
quality and pooled them together to form 5 dimensions, as given under:

TEN DIMENSIONS (ORIGINAL FIVE DIMENSIONS (NEW MODEL)

MODEL)
Tangibles TANGIBLES
Reliability RELIABILITY
Responsiveness RESPONSIVENESS
Competence
Courtesy ASSURANCE
Credibility
Security
Access
Communication EMPATHY
Understanding the customer

The new model comprised 5 main dimensions of quality which was termed RATER:
1. RELIABILITY: Ability to perform the required service dependably and accurately.
• Normally this maybe termed as “no excuses” service delivery. Reliability
means that:
• Organization does what it is supposed to do
• It does it right
• It does it right the first time

2. ASSURANCE: Assurance relates to knowledge and accuracy of the employees and

their ability to convey trust and confidence. This inspires trust and confidence. This

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dimension is of great significance for services where a customer perceives high risk
and is not sure of the outcome. The type of services where a customer perceives high
risk includes legal services, medical services, and brokerage and stock services. Most
of these services are procured through a channel member who acts as a link between
the service provider and the customer. The knowledge, genuineness, honesty and
ability to perform the service by the link member or front office staff generated trust
in the minds of the customers.

3. TANGIBLES: Appearance of physical facilities, equipments, personnel and

communication material. The customers evaluate the quality of services on above
tangible features. The marketers of services emphasize on tangibilising the
intangibles. The service organization tries to enhance its image, provide continuity
and through tangibles signal quality to customers. Most organizations combine
tangibles and other dimensions to create a service quality strategy.

4. EMPATHY: Caring individual attention to the customer. It involves Customizing

services. Empathy means treating the customers as individuals, that is, it calls for
customized services. For organizations, each customer is unique and they provide
personalized services to their customers. To be empathetic, organizations make effort
to know their customers fully and make the customers feel important to the
organizations.

5. RESPONSIVENESS: Willingness to help customers and provide prompt service.

The focus, under this quality dimension, is our alternativeness and promptness in
dealing with the customer queries, that is, requests, problems, complaints and
questions of the customer. The customers relate responsiveness to length of time they
had to wait for assistance, queuing time, time taken to answer the queries and
handling problems. Successful organizations set speed of service standards for service
delivery from customer‟s point of view rather than organization point of view. This
quality dimension emphasizes training of service provider to respond to customers
expectations.

Examples of how customers judge the 5 dimensions of service quality:

Car repair (consumers):
1. Reliability: problem fixed the 1st time and ready when promised.
2. Responsiveness: accessible, no waiting, respond to request.
3. Assurance: knowledgeable mechanics.
4. Empathy: acknowledges customers by name, remembers previous problem and
preferences.
5. Tangibles: repair facility, waiting areas, uniform, and equipment‟s.

Airlines (consumers):

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1. Reliability: flights to promise destination, depart and arrives on time.

2. Responsiveness: prompt and speedy system of ticketing, in flight baggage handling.
3. Assurance: trusted name, good safety records & competent employees.
4. Empathy: understanding of special individual needs, anticipates consumer needs.
5. Tangibles: aircraft, ticketing counters, uniforms, and baggage areas.

Medical care (consumer):

1. Reliability: appointments are kept on schedule diagnoses prove accurate.
2. Responsiveness: accessible, no waiting, willingness to listen.
3. Assurance: knowledge, skills, credentials, and reputation.
4. Empathy: acknowledges patients as a person, remembers previous problems, good
listening, and patients.
5. Tangibles: waiting room, exam rooms, and equipment, written materials.

Architecture (business):
1. Reliability: delivers plans when promised and within budget.
2. Responsiveness: returns, phone calls, adapt to change.
3. Assurance: credential, reputation, and name of the community, knowledge and skills.
4. Empathy: understanding clients industry acknowledges and adapts to specific clients
needs, gets to know the client.
5. Tangibles: office areas, report, plan themselves, billing statement, dress of the
employees.

SERVQUAL SCALE

To measure customer satisfaction with different aspects of service quality, Parasuram A,

Zeithaml V. A and Berry LL developed a survey research instrument called
SERVQUAL. It is based on the premise that customers can evaluate a firm‟s service
quality by comparing their perceptions of its service with their expectations.
SERVQUAL is seen as a generic measurement tool that can be applied across a broad
spectrum of service industries. In its basic form, the scale contains 21 perception items
and a series of expectation items, reflecting the 5 dimensions of service quality- RATER.
(Reliability, Assurance, Tangibles, Empathy and Responsiveness.) Respondents complete
a series of scales that measure their expectations of companies in a particular industry on
a wide array of specific service characteristics: subsequently, they are asked to record
their perceptions of a specific company whose service they have used on those same
characteristics. When perceived performance ratings are lower that expectations, this is a
sign of poor quality; the reverse indicates good quality.

Criticisms of the SERVQUAL Scale:

• Doubts on conceptual foundation and methodological limitations
• Different scores measure only 2 factors: Intrinsic Service Quality (Functional
Quality) and Extrinsic Service Quality (Technical Quality)

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• Not stable over a period of time, since there are insignificant correlations between test
scores and retest scores
• Difficult to evaluate those services that are high in credence characteristics

A T E R
R

SERVICE QUALITY

5 STAR OF QUALITY
The 5 attributes of Quality- RATER can also be explained with reference to the 5 star of
Quality, as indicated below:

Reliability

Responsiveness Assurance

Empathy Tangibles

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RATER- AN EXAMPLE: HOTEL SECTOR

RELIABILITY Ensuring that quality of food and stay is upto the
mark.
Safety in and around hotel premises
ASSURANCE Trust the big names
Security, fire alarms

TANGIBLES Gate of bldg, surrounding area, park, car park etc

EMPATHY Interior designer, architect, watchman knowing

residents

RESPONSIVENESS Real estate agent, plumber, electrician of bldg come

immediately

QUALITY SHORTFALL
Customer expectations based on:
• Individual needs and wants
• Recommendations: word of mouth
• Service marketer/provider
• Past experience

Quality v/s expectations

1. Good quality: more than expectations
2. Adequate quality: within tolerance zone
3. Quality shortfall: outside/ below tolerance zone

Zone of Tolerance
The services provided are varying between organizations, between employees and even

with in employees at different times. The extent to which the customers recognize and are

willing to accept this variation is called as zone of tolerance. If the service levels fall

below this level, customers will be frustrated.

 Different customers possess different zones of tolerance

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 Zones of tolerance vary for different dimensions of service

 Zones of tolerance vary for first time and recovery service

GAP ANALYSIS
To manage the perceived quality of a service one has to match the expected service and
perceived service to each other so that consumer satisfaction is achieved. To keep the gap
between expected service minimal, two things are critical: -
The promises about how the service will perform given by traditional marketing
activities and communicated by word-of-mouth, must not be unrealistic when
compared to service received by the customer.
Managers have to understand how the technical and functional quality of a service
is influenced and how the customers perceive these quality dimensions.
In order to develop greater understanding of the nature of service quality and how it is
achieved in an organization, „A Gap Model of Service Quality‟ was developed. The
model clearly indicated that the consumer‟s quality perceptions are influenced by a series
of distinct gaps occurring in the organizations, which are as follows: -

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Customer CUSTOMER
needs
and
expectations
1. Knowledge Gap

Management
definition
MANAGEMENT
of these
needs
2. Standards
Gap
Translation into
design/delivery specs

3. Delivery
Gap
Execution of 4. I.C.Gap Advertising
design/delivery specs and
sales
promises
5. Perceptions 6. Interpretation
Gap Gap
Customer perceptions Customer interpretation
of product execution of
communications

7. Service Gap
Customer experience
relative to expectations

1. The knowledge gap: The difference between what the service provider believes
the customers expect and the customer‟s actual needs and expectations.

2. The standards gap: The difference between management perception of customer

expectations and the quality standards established for service delivery.

3. The delivery gap: The difference between specified delivery standards and the
service provider‟s actual performance on these standards. Eg. Pizza half hour
delivery promise.

4. The internal communication gap: The difference between what the company's
advertising & sales personnel think are the products features, performance &
service quality level and what the company is actually able to deliver.

5. The perception gap: The difference between what is actually delivered and what
customers perceive they have received.

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6. The interpretation gap: The difference between what service provider‟s

communication efforts actually promise and what a customer thinks was promised
by these communications.

7. The service gap: The difference between what customers expect to receive and
their perception of the service that is actually delivered.

Gaps 1, 6 and 7 represent external gaps between the customer and the organization. Gaps
2, 3, 4, and 5 are internal gaps occurring between different functions and departments
within the organization. Any of the seven quality gaps can damage relationships with
customers. The Service Gap (Number 7) is the most critical, because it represents the
difference between the customers overall assessment of what was expected as compared
to his or her perceptions of what was delivered.

The ultimate goal in improving service quality is to narrow this gap as much as possible.
But to achieve this, service providers may have to reduce or close the six other gaps.
Improving service quality requires identifying the specific causes of each gap and then
developing strategies to close them. The strength of the gap methodology is that it offers
generic insights and solutions that can be applied across different industries. What it does
not attempt, is to identify specific quality failures that may occur in particular service
businesses. Each firm must develop its own customized approach to ensure that service
quality becomes and remains a key objective.

REASONS FOR THE GAPS TO DEVELOP

These Gaps develop due to the following reasons:

• Lack of adequate market research

• Lack of upward communication between front line staff and Management
• Lack of interaction with the customers
• Lack of segmentation to identify specific needs of the customers
• Lack of commitment from Management (they may perceive that customer
expectations are un reasonable)
• Lack of Goal setting
• Lack of resources
• Ineffective recruitment
• Role ambiguity
• Lack of training/incentives to perform to the staff
• Lack of training to customer on use of service and their roles
• Lack of pre-testing when new procedures are introduced
• Lack of understanding of customer habits – how they prefer to consume a service (a
customer may prefer a slow delivery of food in an exclusive restaurant compared to
an Udipi restaurant)
• Exaggerated promises
• Ineffective communication
• Lack of Horizontal communications with in the organization

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PRESCRIPTIONS FOR CLOSING THE GAPS

1. Learn what customers expect

2. Establish the right quality standards
3. Ensure that the service performance meets standards
4. Ensure communication promises are realistic
5. Explain to the customer what the service has done for them
6. Pretest all advertising so there is no communication gap
7. Try to match customers perception to what is being delivered

SERVICE GUARANTEES

“Predefined standards where the customer is entitled compensation in case of failures”

It is a promise to customers ensuring highest of standards”

Advantages of Guarantees:
• Force firms to focus on what customers want & expect in each element of the
service
• Set clear standards telling customers and employees what the company stands for
• Require development of systems for generating meaningful customer feedback
and acting on it
• Force service organizations to understand why they fail and encourage them to
identify and overcome potential fail points
• Reduce the risk of purchase decision and build up long term loyalty

Service guarantee must be:

• Unconditional
• Easy to understand
• Meaningful
• Easy to invoke
• Quick and easy to collect

Service Guarantee types:

• Express/ stated/ explicit
• Implied/ implicit
• Satisfaction guarantee
• Service attribute guarantees

BENCHMARKING OF SERVICES

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Benchmarking means measuring the performance of a business against that of the

competitors in order to establish „best practice’. Benchmarking is a part of process of
continuous improvement. Benchmarking can be applied at three levels:
1. Internal Benchmarking.
2. Competitive Benchmarking.
3. Functional or Generic Benchmarking.

Internal Benchmarking: Internal Benchmarking is normally carried by large

organization by way of comparison between operation units. For e.g.. Super market chain
might benchmark operations across stores, financial across branches, different colleges
under the same authority. But important thing is how performance is measured &this is
clear link to the strategy of organization.

Competitive Benchmarking: At a second level competitive Benchmarking can be

used. This is probably the most frequently use where comparisons are made with directly
competitive organization. Customer participation is necessary because of which it will be
easy to achieve in some service environments. For e.g: As a hotel owner, it is possible to
„sample‟ the service to competitor simply by „posing‟ the guest. Often however, this is
done in informal manner. A comparative impression gained of the service without
examining the different facets in a structured way & attempting to measure them.

Functional or Generic Benchmarking: The third approach is Functional or Generic

Benchmarking, which compares specific functions such as distribution and after sale
service. The advantage here is that information is sometime easier to obtain than when
comparison is being made with competitors. Care has to be taken in selecting the
dimension & sales to be used for performance measuring and ensuring that due account is
taken of all relevant factors.

THE PROCESS OF BENCHMARKING.

Determine the Parameters to be measured

Identify BEST competition

Determine data collection method

Compare Competitors performance with

organization‟s performance

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Establish action plans to close Gaps
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