INTRODUCTION

Quality-based service marketing strategy is sustainable, as practice has shown that not all
competitors can achieve the expected service quality. As a rule, service companies basing their
marketing strategies on quality have a recognizable image on the service market, which
competitors cannot appropriate or copy. Such a service marketing strategy therefore poses a
barrier to developing competitive copycat marketing strategies.
Service quality is defined and attained by the service providers, while consumers perceive
quality during the service delivery process. Quality-based service company management should
especially focus on four key areas important for achieving quality:
o service encounters (moments of truth);
o service design;
o service productivity; and
o service provider's corporate culture.
The way consumers perceive moments of truth is directly reflected on the evaluation of total
quality service, especially in services whose deliveries are repeated, which implies highly
professional approach to moments of truth, aimed at building and maintaining long-term
consumer relations. Improving service quality and building long-term consumer relations
requires good knowledge of moments of truth, i.e. activities carried our within those, as well the
customer perception of those.
Service exchange on the market is not possible without the appropriate design of service
provision systems, whose functioning enables efficient service delivery. In service design
decision-making, the key dilemma is related to the choice between the service personnel and the
technological support to service delivery process, depending on whether the service provider is
focused on achieving maximum efficiency of full satisfaction of customer needs. Valid service
design decision-making implies distinguishing between operative efficiency and consumer
contacts.
Service productivity implies a relationship between the quality and quality of service delivery,
and the amount of engaged resources in the service delivery process. Productivity is much harder
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to achieve in service economy, bearing in mind the labour intensity of services and their general
characteristics. As consumers are active participants in the service delivery process, it is possible
to develop consumer participation strategies aimed at increasing service productivity.
A service provider's corporate culture is also significantly reflected on the quality of services.
Human resources and their organization patterns may be significant competitive advantages of
service providers. Service providers' corporate culture affects both internal and external relations
in service provision. Moreover, an appropriate service provider corporate culture also implies
appropriate management style, corporate confidence, loyalty, as well as generally adopted
working environment. A high degree of employees' trust in their management is the first
precondition for building recognizable service provider's corporate culture.
Defining service quality is still a source of disagreement among experts and practitioners,
primarily due to different understanding of:
o the nature of service quality, i.e. the dilemma whether quality is the perception of
service performances or (non)confirmation of the presumed;
o the dimensions of service quality, in terms of a unique concept with a single dimension,
or adopting the multidimensionality of service quality.

The currently dominant interpretation of the nature of service quality is that consumer perception
of service quality is connected to certain benchmarks, if a given service can be standardized.
Disagreements regarding the nature of service quality are mostly related to the relationship
between satisfaction and service quality, where one group of authors deem that, in addition to
quality, satisfaction is affected by a larger number of factors.
Diversity of definitions of service quality is even greater when it comes to understanding its
dimensions. Multidimensionality of service quality has resulted in the development of a large
number of service quality models, especially in the past twenty years or so. The complexity of
service quality definition requires it decompositions, aimed at clear definition and efficient
management.

SERVICE QUALITY GAP MODEL

The gap model (also known as the "5 gaps model") of service quality is an important customersatisfaction framework. In "A conceptual model of service quality and its implications for future
research", A. Parasuraman, VA Zeitham and LL Berry identify five major gaps that face
organizations seeking to meet customer's expectations of the customer experience.

The five gaps that organizations should measure, manage and minimize:

Gap 1 is the distance between what customers expect and what managers think they
expect - Clearly survey research is a key way to narrow this gap.
Gap 2 is between management perception and the actual specification of the customer
experience - Managers need to make sure the organization is defining the level of service
they believe is needed.
Gap 3 is from the experience specification to the delivery of the experience - Managers
need to audit the customer experience that their organization currently delivers in order to
make sure it lives up to the spec.
Gap 4 is the gap between the delivery of the customer experience and what is
communicated to customers - All too often organizations exaggerate what will be
provided to customers, or discuss the best case rather than the likely case, raising
customer expectations and harming customer perceptions.
Finally, Gap 5 is the gap between a customer's perception of the experience and the
customer's expectation of the service - Customers' expectations have been shaped by
word of mouth, their personal needs and their own past experiences. Routine
transactional surveys after delivering the customer experience are important for an
organization to measure customer perceptions of service.

Each gap in the customer experience can be closed through diligent attention from management.
Survey software can be key to assisting management with this crucial task.

BACKGROUND
Oliver stated that during the past decades, in the marketing literature and marketing practices, the
importance in the concept of service quality and service satisfaction has increased. Quality and
satisfaction are indicators for corporate competitiveness and explores the benefit of marketing
academics and practitioners. The relationship and nature of these customer evaluations remains
unclear though satisfaction and service quality comes from two big research paradigms;
expectations and perceptions which are considered as key instruments. Zeithaml et al, mention
that in empirical studies quality and satisfaction are introduced as synonyms within the service
business.
Schneider and Bowen and Tornow and Wiley found a positive correlation between the attitude of
employees, the attitude of customers and employee and customer perceptions of service quality.
They also found that customer satisfaction is directly related to the attitude and perceptions of
employees, in turn, the attitude and perceptions of employees relate to the organization and its
management practices. They also said that customer satisfaction is not just relating to the values
and attitudes of employees, which means that the overall effectiveness of the organization has
direct impact on values and attitudes.
According to Eskildsson over the past decades, many attempts have been made in both private
and public sectors in the hope of making improvements in processes and services from the
perspective of the customer. Many initiatives have been aiming for targeting the satisfaction of
external customers. Often research has shown that these programs have failed to satisfy the first
expectations. Consequently, consultants and experts have aimed for a broader focus within
organizations in order to include the perspective of employees and their interrelationships with
both managers and customers.
According to Oliver the customer satisfaction research literature concerns how well the service
delivery occurs in comparison with expectations. Today customer satisfaction is an important
subject and is also often discussed in marketing literature. Satisfaction can be described as a
number of post experience decisions. One reason for the big interest in this area
is that researches believe that customer satisfaction is crucial for all business organization.
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Researches also argue that satisfaction has positive impact on intention to repurchase.
Andreassen T W mentions that customer satisfaction can be viewed as an evaluation where
expectations and actual experience is compared. A service failure is when the service delivery
does not manage to meet customer expectations. Often service recovery begins with a customer
complaint. The aim with service delivery is to move customers from a state of dissatisfaction to a
state of satisfaction.
Butcher and Heffernan discuss the relationship between customer and employees and that social
regard plays an important role in service delivery, for example in a situation where a customer
has to wait. A number of studies have shown the importance of friendly behavior from the staff
in order to improve service delivery and create long term relationships.

CHARACTERISTICS OF SERVICES

The services have unique characteristics which make them different from that of goods. The
service literature highlights differences in the nature of services versus products which are
believed to create special challenges for service marketers and for consumers buying services.
Although there has been debate on the effectiveness of the four characteristics in distinguishing
between products and services (e.g Regan 1963) these are nevertheless widely accepted by
scholars and marketers (e.g Zeithmal 1981 ,Levitt 1981) and used both as the basis for
examining services buyer behavior and developing services marketing strategies. It is therefore
important to establish the extent to which these characteristics reflect the perspective of the
consumer.

Intangibility
The literature highlights intangibility as one of the key characteristics of services. Regan
introduces the idea of services being activities, benefits or satisfactions which are offered for
sale, or are provided with the sale of goods. Services are activities provided performed physical
by the provider, unlike physical products they cannot be seen, tasted, felt, heard or smelt before
they are to that appeal to customer's senses, their evaluation unlike goods, is not possible before
actual purchase and consumption. The marketer of service cannot rely on product-based that the
buyer generally employs in alternative evaluation prior to purchase. So, as a result of the services
which are not known to the customer's before they take them? For example: teaching,
Consulting, legal advices, restaurants, fast food centers, hotels and hospitals.

Inseparability
Inseparability is taken to reflect the simultaneous delivery and consumption of services and is
believed to enable consumers to affect or shape the performance and quality of service. Services
are typically produced and consumed simultaneously. In case of physical goods, they are
manufactured into products, distributed through multiple resellers and consumed later. But, in
case of services, it cannot be separated from the service provider. Thus, the service provider
would become a part of a service. For example: taxi operator drives taxi, and the passenger uses
it. The presence of taxi driver is essential to provide the service. The services cannot be produced
now for consumption at a later stage/ time. This produces a new dimension to service marketing.
The physical presence of consumer is essential in services. For example: to use the services of an
airline, hotel, doctor a customer must be physically present. Inseparability of production and
consumption increases the importance of the quality in services. Therefore, service marketers not
only need to develop task-related, technical competence of service personnel, but also require a
great input of skilled personnel to improve their marketing and inter personal skills.
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 Heterogeneity
Heterogeneity reflects the potential for high variability in service delivery. This is a particular
problem for services with a high labour content, as the service performance is delivered by
different people and the performance of people can vary from day to day . Since services are
performed by human beings, they have different performances at different times of the day
unlike tangible goods are standardized.
Hence service offered vary accordingly to performances or change in humour by those providing
them. The idea of heterogeneity arises from the assumption that no two customers are alike,
hence their demands are unique and the way they will experience the service will differ from
another person. So, the service firms should make an effort to deliver high and consistent quality
in their service; and this is attained by selecting good and qualified personnel for rendering the
service.

Perishability
The fourth characteristic of services highlighted in the literature is perish -ability. In general,
services cannot be stored and carried forward to a future time period. Onkvisit suggest that
services are time dependent and time important which make them very perishable. Services are
deeds, performance or act whose consumption take place simultaneously; they tend to perish on
the absence of consumption.
Hence, services cannot be stored. The services go waste if they are not consumed simultaneously
i.e value of service exists at the point when it is required. The perishable character of services
adds to the service marketer's problems. The inability of service sector to regulate supply with
the changes in demand; poses many quality management problems. Hence, service quality level
deteriorates during peak hours in restaurants, banks, transportation. This is a challenge for a
service marketer. Therefore, a marketer should effectively utilize the capacity without
deteriorating the quality to meet the demand.

DIMENSIONS OF SERVICE QUALITY

Dimension
Evaluation Criteria
Tangibles: Physical evidence of Appearance of physical
the service
facilities

Examples
A clean and professional
looking office.

Appearance of service
personnel

A clean and well dressed

lecturer

Tools or equipment used to

provide the service

The quality of food in a

restaurant
The equipment used in a
medical examination

Reliability: Consistency and

Accuracy of billing or record
dependability in performing the keeping
service
Performing services when
promised

An accurate bank statement

A confirmed hotel reservation
An airline flight departing and
arriving on time

Responsiveness: Willingness or Returning customer phone calls A waiter re-filling a customer's

readiness of employees to
glass of wine without being
provide the service
asked
Providing prompt service
Handling urgent requests

An ambulance arriving within

three minutes

Assurance:
Knowledge/competence of
employees and ability to
convey trust and confidence

Knowledge and skills of

employees

A highly trained financial

adviser

Empathy: Caring and

individual attention provided
by employees

Listening to customer needs

Company name and reputation A known and respected service

provider
Personal characteristics of
employees
A doctor's bedside manner

Caring about the customer's

interests
Providing personalized
attention

A store employee listening to

and trying to understand a
customer's complaint
A nurse counseling a heart
patient

Also access with regard to

approachability and ease of
contact from the customer is of
importance to issues that may
be raised by the customer.

THE FIVE DIMENSIONS OF SERVICE QUALITY MEASURED

BY THE SERVQUAL INSTRUMENT

The SERVQUAL Instrument measures the five dimensions of Service Quality. These five
dimensions are: tangibility, reliability, responsiveness, assurance and empathy.

Tangibility
Since services are tangible, customers derive their perception of service quality by comparing the
tangible associated with these services provided. It is the appearance of the physical facilities,
equipment, personnel and communication materials. In this survey, on the questionnaire
designed, the customers respond to the questions about the physical layout and the facilities that
FFR offers to its customers.

Reliability
It is the ability to perform the promised service dependably and accurately. Reliability means that
the company delivers on its promises-promises about delivery, service provision, problem
resolutions and pricing. Customers want to do business with companies that keep their promises,
particularly their promises about the service outcomes and core service attributes. All companies
need to be aware of customer expectation of reliability. Firms that do not provide the core service
that customers think they are buying fail their customers in the most direct way.

Responsiveness
It is the willingness to help customers and provide prompt service. This dimension emphasizes
attentiveness and promptness in dealing with customer's requests, questions, complaints and
problems. Responsiveness is communicated to customers by length of time they have to wait for
assistance, answers to questions or attention to problems. Responsiveness also captures the
notion of flexibility and ability to customize the service to customer needs.

Assurance
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It means to inspire trust and confidence. Assurance is defined as employees' knowledge of

courtesy and the ability of the firm and its employees to inspire trust and confidence. This
dimension is likely to be particularly important for the services that the customers perceives as
involving high rising and/or about which they feel uncertain about the ability to evaluate. Trust
and confidence may be embodied in the person who links the customer to the company, for
example, the marketing department. Thus, employees are aware of the importance to create trust
and confidence from the customers to gain competitive advantage and for customers loyalty.

THE CONCEPT OF SERVICE QUALITY

According to Parasuraman et al., companies can get their competitive advantage by using the
technology for the purpose of enhancing service quality and gathering market demand.
For decades, many researchers have developed a service perspective. Chang describes that the
concept of service quality should be generally approached from the customers point of view
because they may have different values, different ground of assessment, and different
circumstances. Parasuraman, Zeithaml and Berry mention that service quality is an extrinsically
perceived attribution based on the customers experience about the service that the customer
perceived through the service encounter. According to the work of Kumra, service quality is not
only involved in the final product and service, but also involved in the production and delivery
process, thus employee involvement in process redesign and commitment is important to
produce final tourism products or services.
Another research study on service quality is presented by Grnroos who focuses on a model that
is a comparison between customer expectations of the service and their experience of the service
they have received before. This model is named total perceived service quality. As he
emphasizes on what customer is really looking for and what they evaluate, the service quality is
based on two dimensions. The first dimension is the technical quality and this dimension refers
to the outcome, what is delivered or what the customer gets from the service. The next dimension
is the functional quality which refers to the manner in which the service is delivered or how it is
delivered. Both dimensions affect the corporate image and the perception of quality in various
ways. According to total perceived service quality model, perceived quality of a service is not
only affected by the experiences of the quality dimensions that the consumer used for evaluating
whether quality is perceived as good, neutral, or bad. It is al also affected by the perceived
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quality of given service as well as the outcome of the evaluation process.

Chang support the earlier line of thinking by Grnroos but Parasuraman, Zeithaml, and Berry
developed The Gap Analysis Model, which is a well known model of service quality. This
model shows an integrated view of the consumer-company relationship. The main idea of the
model is focused on the premise that service quality is dependent on the size and direction of the
five gaps that can exist in the service delivery process.
a. Gap 1: the gap between customer expectations and those perceived by management
to be the customers expectations.
b. Gap 2: the gap between managements perception of consumer expectations and the
firms service quality specifications.
c. Gap 3: the gap between service quality specifications and service delivery.
d. Gap 4: the service delivery, external communication gap.
e. Gap 5: the perceived service quality gap, the difference between expected and perceived
service.
The first four gaps are identified as functions of the way in which service is delivered from the
service provider to the customer, while gap number five is connected to the customer and as such
is considered to be the truth of service quality. Gap five is also the gap that the SERVQUAL
instrument influences. Edvardsson mentioned that it is important for a service organization to
define the level of quality at which to operate; he argued that it is more relevant to speak of the
right quality than of merely high quality.

Measuring service quality

Measuring service quality may involve both subjective and objective processes. In both cases, it
is often some aspect of customer satisfaction which is being assessed. However, customer
satisfaction is an indirect measure of service quality.

E-service quality: The next frontier

Given the widespread use of internet and e-commerce, researchers have also sought to define and
measure e-service quality. Parasuraman, Zeithaml, and Malhotra define e-service quality as the
extent to which a website facilitates efficient and effective shopping, purchasing, and delivery.
Wolfinbarger and Gilly define e-service quality as the beginning to the end of the transaction
including information search, website navigation, order, customer service interactions, delivery,
and satisfaction with the ordered product.
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A recent paper examined research on e-service quality. The author identified four dimensions of
e-service quality: website design, fulfillment, customer service, and security and privacy.

Measuring subjective elements of service quality

Subjective processes can be assessed in characteristics; in incidents and in problems assessed by

Frequenz Relevanz Analyse a German term. The most important and most used method with
which to measure subjective elements of service quality is the Servqual method.

Measuring objective elements of service quality

Objective processes may be subdivided into primary processes and secondary processes. During
primary processes, silent customers create test episodes of service or the service episodes of
normal customers are observed. In secondary processes, quantifiable factors such as numbers of
customer complaints or numbers of returned goods are analyzed in order to make inferences
about service quality.

Approaches to the improvement of service quality

In general, an improvement in service design and delivery helps achieve higher levels of service
quality. For example, in service design, changes can be brought about in the design of service
products and facilities. On the other hand, in service delivery, changes can be brought about in
the service delivery processes, the environment in which the service delivery takes place and
improvements in the interaction processes between customers and service providers.
Various techniques can be used to make changes such as: Quality function deployment (QFD);
failsafing; moving the line of visibility and the line of accessibility; and blueprinting.

Approaches to improve the conformity of service quality

In order to ensure and increase the 'conformance quality' of services, that is, service delivery
happening as designed, various methods are available. Some of these include Guaranteeing;
Mystery Shopping; Recovering; Setting standards and measuring; Statistical process control and
Customer involvement.

Service quality and customer satisfaction

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The relationship between service quality and customer satisfaction has received considerable
attention in academic literature. The results of most research studies have indicated that the
service quality and customer satisfaction are indeed independent but are closely related that and a
rise in one is likely to result in an increase in another construct.

DIFFERENT PERSPECTIVE OF SERVICE QUALITY

The word quality means different things to people according to the context. Lovelock and wirtz
mention that David Garvin identifies five perspectives on quality.
1. The transaction view of quality is synonymous with innate excellence: a mark of
uncompromising standards and high achievement. This viewpoint is often applied to the
performing and performing of visual arts. It is argued that people learn to recognize
quality only through the experience gained from repeated exposure and managers or
customers will also know quality when they see it is not very helpful.
2. The product- based approach sees quality as a precise and measurable variable.
Differences in quality, it is argued, reflect differences in the amount of an ingredient or
attribute possessed by the product or service. Because this view is totally objective, it
fails to account for differences in the tests, needs, and preferences of individual
customers or even entire market segments.
3. User based definitions starts with the premise that quality lies in the eyes of the beholder.
These definitions equate quality with maximum satisfaction. This subjective, demand
oriented perspective recognizes that different customers have different wants and needs.
4. The manufacturing based approach is supply based and is concerned primarily with
engineering and manufacturing practices, quality is also operation driven.
5. Value based definitions define quality in terms of value and price. By considering the
tradeoff between perception and price, quality comes to be defined as affordable.
Grnroos also describes different definitions and one of them comes from Philip Crosby who
defines service quality as conformance to specifications. Services are performances and often
they are performed in the presence of the customer. Services have a nature of varying from one
firm to on other and from one situation to on other. It is also possible to make a distinction
13

between technical and functional service quality, technical quality is connected to what is
delivered and functional quality is connected to how it is delivered. On other example is Jarmo
Lehtinen who describes customer quality in terms of process quality and output quality. The
process quality is evaluated during the service delivery and output quality is evaluated after the
service delivery.

In the study described by Grnroos ; 10 determinants of service quality was identified:

Reliability that is connected to the consistency of performance and dependability. Here it
is determined if the company give the service in the right way the first time and keeps to
its promises.
Responsiveness factor concerns to what extent the employees are prepared to provide
service. This involves factors such as mailing a transaction slip immediately, calling a
customer back in short time and giving prompt service.
Competence is connected the knowledge and skills of contact personnel, operational
support personnel that are needed for delivering the service.
Access factor is connected to the approachability which means for example if the
operating hours are convenient, the location of the facilities are convenient, the waiting
times are short and also easy access by telephone.
Courtesy factor involves politeness, respect, consideration, friendliness of contact
personnel (including receptionists, telephone operators and so on).
Communication is about keeping the customer informed in a language they can
understand and also listen to the customer. The company may have to make some
adjustments in order to include foreign customers.
Credibility. Factors such as trustworthiness, believability and honesty are included. It
means to the level the company has the customers best interest at heart. Factors that
affect the credibility are the company name, reputation, personal characteristics and the
degree to which the hard sell is connected to interactions with customers.
Security means freedom from danger, risk or doubt. Factors included are: physical safety,
financial security and confidentiality.
Understanding the customer is about making an effort to understand the customer which
involves learning about specific requirements, providing individualized attention and
recognizing also the regular customer.
Tangibles include physical aspects of the service such as physical facilities, appearance
of personnel, tools or equipment that is used to provide the service, physical
representations or other customers in the service facility.

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SERVICE-BASED COMPONENT OF QUALITY

Lovelock and Wirtz describe that researchers argue that the nature of service quality requires a
distinctive approach to indentify and measure service quality. The intangible, multifaceted nature
of many services makes it harder to evaluate the quality of a service compared to products.
Because customers are often involved in service production, a distinction needs to be drawn
between the process of service delivery and the actual output of the service which is called
technical quality. Other researchers suggest that the perceived quality of service is the result of
an evaluation process in which customers compare their perceptions of service delivery with the
expected outcome.

CUSTOMER EXPECTATIONS
Ekinci argues that the term expectation in service quality literature has different meanings for
different authors. According to Tam, it is important for success in influencing customer
satisfaction to understand how customer expectations develops and update even if the term
expectation is vague and difficult to interpret in surveys. Kandampully argues that the
management of these customer expectations is also an imperative concept in tourism companies
for further products and services designed to match and exceed those expectations.
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Grnroos suggested that in order to increase long term quality, the customer expectations should
be focused, revealed, and calibrated and he also developed the dynamic model of expectation
that describes that the quality of professional services develops in a customer relationship over
time. This model is illustrated which classifies the expectations into three distinguishable types
and can be characterized in the following;
a. Fuzzy expectations exist when customers expect a service provider to solve a problem
but do not have a clear understanding of what should be done.
b. Explicit expectations are clear in the customers minds in advance of the service process.
They can be divided into realistic and unrealistic expectations.
c. Implicit expectations refer to element of a service which are so obvious to customers that they do
not consciously think about them but take them for granted .
International dynamics = expectation management Unintentional dynamic

Explicit Expectations

Implicit
expectatio
ns

Fuzzy
expectations
Unrealistic

Realistic

A dynamic model of expectations (Grnroos,

2007)

Grnroos, stated that an explicit service provider should understand fuzzy expectations because
these expectations still have impact on customer satisfaction about quality and customers will be
disappointed in case the service provider does not fulfill it. The characteristics in this customer
expectations are: customers may feel that there is a need for understanding what would fulfill
this need or change their current state in general, but they do not have a clear understanding of
what would fulfill this need or change in the current situation also state that customers expect
something more in addition to be done but they dont know exactly what and how it should be
done. The author also said that if the service provider can make the explicit of these
expectations for the customer and for itself, it is an opportunity for the customer.
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Grnroos, mentions that customers normally presume that explicit expectations will be met and
unrealistic expectations might be exited. Service providers have to help customers adjust these
unrealistic expectations into more realistic ones to ensure that a service delivery will meet
customer expectations. In this stage, service providers should be aware of the more vague
promise or implied in-fact promise because it can form unrealistic explicit expectations that
lead customers to believe that services offered will include features that in fact are not included.
Beside explicit expectations, implicit expectations also have to be fulfilled because they are
apparent that customers are clearly expressed. Such implicit services will become explicit if they
are not fulfilled.
Grnroos, also mentions that both fuzzy and implicit provider expectations should be detected,
because they can form explicit expectation as seen in the thick narrows called intonation
dynamics. It shows how the service provider can and should actively manage expectations. At
last, the service provider should design the service offering to customers in order to meet all their
expectations, and the dynamic approach to manage service contexts are therefore concerned.

According to Lovelock and understanding the expectations of customers mean understanding

that when customers evaluate service they compare their expectations with what they think they
received from the supplier and if the expectations are met or even exceeded customers believe
that the service have high quality. Customer expectations vary depending on what kind of
business the service is connected to. Expectations also vary depending on different positioning
strategies of different service providers. Thirdly the expectations are influenced by previous
experiences of the service provider, competing services in the same industry or related services
in different industries. If the customer dont have any previous experience they are more likely to
base their expectations on word of mouth, news stories or the marketing efforts of the company.
One more thing to consider is that customer expectations vary over time because they are
influenced by advertising, new technologies, service innovation, social trends and so on. A
successful company is able to meet expectations in every step.

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PERCEIVED SERVICE QUALITY

Fiore and Kim present a conceptual framework that concerns the influences on the consumption
experience by environmental variables such as physical elements of the service environment,
individual variables, individual attributes and person-environment variables or situations. The
physical environment has the possibility to provide ideas about the influence of customer
perceptions on the brand image. Zeithaml and Bitner argue that customers do perceive quality in
more than one way and they also have perceptions about multiple factors when quality is
assessed.
Baker et al. ; Bitner; Minor et al also put forward that the environment influences customer
satisfaction. For example, the environment in a hotel will affect customer satisfaction. Lovelock
and Wirtz discusses how confirmation or disconfirmation of expectations relates to satisfaction
and delight: The terms quality and satisfaction are sometimes used interchangeably. Some
researchers believe, however, that perceived service quality is just one component of customer
satisfaction, which also reflects price/ quality trade-offs, and personal and situation factors.
Baker et al also describes three components that influence the service encounter elements. The
first component is physical environment and includes for example music, lightning and external
and internal environmental design, the second one is customer interactions with intangible and
tangible elements in the service environment and the periods when customers interact with
physical facilities and other tangible elements in the service environment. Andaleeb and Conway
mentions the second component that is connected to the relationship between the service
employee and the customer. Behaviour is a key determinant of how the service will be
appreciated.
Bitner; Baker et al., is describing the third component that is about how customers are influenced
from the appearance, perceptions and behaviour of other customers. Baker and Cameron,
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discusses that it is shown that the behaviour of other customers affect perceptions and that makes
it important for service providers to be careful about the interaction between customers.
According to Lovelock and Wirtz a service encounter is a period of time during which the
customer interact directly with the service provider. Some of these encounters are very brief and
consist of just a few steps. If you use a service that requires the customer to make a reservation
this first step might have been taken days or even weeks before the customer arrives at the
service facility.

Lovelock and Wirtz also. It is static and describes a single service encounter or moment of truth.
Service processes usually consist of a series of encounters, such as your experience with a flight
that consist of steps from making reservation to checking in, taking the flight, and retrieving
customers bags on arrival. Knowledge of role and script theories can help us to understand,
design, and manage both customer behavior and employee behavior during those encounters.
From the discussion above we understand that this part is connected to the Continuum of
Perceived Service Quality. The following model is shown below:

Repurchase
Expectations

Perceived
Process

Expectations Not

Unacceptable

Met

quality

Met

Satisfactory

Perceived Output
Quality
quality

Quality

Expectations

Exceeded

Continuum of perceived Service Quality (Parasurman et al, 1990).

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Ideal Quality

THE RELATIONSHIP BETWEEN CUSTOMER

EXPECTATIONS, PERCEPTIONS AND SATISFACTION
Oliver mentions that customer satisfaction has a big research tradition of more than three
decades. He also gives a definition about customer satisfaction: a judgment that a product or
service feature, or the product or service itself, provides pleasurable consumption related
fulfillment. On other definition from Oliver is that customer satisfaction is as an overall
emotional response to an entire service experience for a specific service encounter after
purchasing consumption.
In an earlier article Oliver discusses that satisfaction can be understood as the discrepancy
between expectations and perceptions. Differences are to be expected between importance
attributes but also segments. Pizam and Ellis explain that customer satisfaction can be described
as a comparison between performance and expectations.
Oliver and Swan expand the definition and mention that customer satisfaction is an affective
term and they identify five different types of satisfaction which are pleasure, relief, novelty and
surprise. There are many definitions but according to White and Yu one consensus that can be
found is that the construct includes either cognitive or affective responses and customer
satisfaction can be either product or service focused.

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Gibson found in his studies that satisfied customers become repeat purchasers of a product or
service and provide positive word of mouth. That means that it is important to understand what
factors that influences customer satisfaction in order to create good products or services.
Zeithmal and Bitner expands this discussion and describes that there is an overwhelming interest
in service quality and the reason for that is that both practitioners and researchers believe that
quality is crucial for the success of any business organization. The construct has great impact on
customer satisfaction, repeat purchase behaviour and in the long run also the profitability of the
organization. Bitner also mentions that if the service is affective it has a direct and immediate
effect on the customer satisfaction.
Zeithaml and Bitner argue that customer satisfaction has become a major contributor for
enhancing a service company such as long term profitability, customer loyalty, and customer
retention. That means for example that it is important to encourage the staff to deliver the right
service to the right people in reasonable time and showing good manner. Satisfied customers
may also give positive word of mouth and for that reason attract new customers and create long
term business profit.
Oliver suggest that in order to create customer satisfaction it is important for the company
managers to identify which product or service attributes that can enhance customer satisfaction
or delightfulness, than the performance can be improved and it will also be possible to find out
which attributes that are expected by the customers (expected attributes can create dissatisfaction
by their absence). Many researchers argue that customer satisfaction has big impact on customer
intentions to repurchase. Andersson and Furnell also argue that satisfaction is an indicator of
intentions to return to the supplier.

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CASE STUDY : SERVICE QUALITY

In an investigation conducted by Bryslan and Curry in a catering company, a total of 140
questionnaires were distributed to all of the previous year s customers and 52 useable
questionnaires were returned, resulting in a 37 per cent response rate. As can be seen from Table
I, all questionnaire responses were negative and an overall departmental weighted SERVQUAL
score of 1.6 was recorded, indicating a significant shortfall in meeting customer expectations
across all service areas and dimensions. The summary scores for each dimension are shown in
Table I, with the weighted average scores per dimension having been totaled to achieve the
overall SERVQUAL score. As can be seen from Table I, the highest gap scores were for
Reliability and Responsiveness; this is real cause for concern and provides a definite starring
point for service improvements. As can be seen from the results, the customer expects most from
the Reliability dimension of the catering service.
The relatively low importance of Tangibles could be attributable to the fact that customers are
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aware of the financial constraints which are typical in the local authority funding context, and
simply do not expect much when it comes to aesthetics; instead, they attach more importance to
the delivery aspects of the service. Customers allocated to Assurance the lowest weighting,
indicating it to be of least importance to them, yet they expect most from this service dimension.
This apparent anomaly is probably due to the fact that customers expect staff to be
knowledgeable about the service and therefore they can see no reason for this dimension not to
be achieved. It is assumed that for this reason, customers have weighted this dimension lowest
SERVQUAL scores for catering services (Bryslan and Curry, 2001)

Weighted
Dimension

Expectations Perceptions

Gap scores

Weightings

average

Tangibles

5.66

4.26

-1.40

19.8

-0.28

Reliability
6.06
Responsivenes
s
5.74

4.36

-1.70

29.6

-0.5

4.05

-1.69

19.9

-0.34

Assurance

6.13

4.58

-1.55

15.2

-0.24

Empathy

5.97

4.45

-1.52

15.7

-0.24

Note: Overall average weighted SERVQUAL score = -1.6

The research on measuring service quality has focused primarily on how to meet or exceed the
external customers expectations, and has viewed service quality as a measure of how the
delivered service level matches consumers expectations. These perspectives can also be
applied to the employees of a firm and in this case, other major gaps could be closed in the
service quality gaps model.
The concept of measuring the difference between expectations and perceptions in the form of
the SERVQUAL gap score proved very useful for assessing levels of service quality.
Parasuramanet al., argue that, with minor modification, SERVQUAL can be adapted to any
service organization.
They further argue that information on service quality gaps can help managers diagnose where
performance improvement can best be targeted. The largest negative gaps, combined with
assessment of where expectations are highest, facilitates prioritization of performance
improvement. Equally, if gap scores in some aspects of service do turn out to be positive,
implying expectations are actually not just being met but exceeded, then this allows managers to
review whether they may be "over-supplying" this particular feature of the service and whether
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there is potential for re-deployment of resources into features which are underperforming.

It seems that in almost all the existing resources, the SERVQUAL approach has been used only
for closing Gap 5. However, its application could also be extended to the analysis of other gaps.
It is important to note that SERVQUAL is only one of the instruments used in service quality
analysis and there are different approaches which might be stronger in closing gaps.
SERVQUAL has been extensively criticized on both theoretical and operational grounds (see
Buttle, 1996 and Asubontengetal., 1996), although Asubonteng et al. conclude that: "Until a
better but equally simple model emerges, SERVQUAL will predominate as a service quality
measure". It is also evident that SERVQUAL by itself, useful though it may be to a service
manager, will not give a complete picture of needs, expectations and perceptions in a service
organization context. As Gaster comments, "because service provision is complex, it is not
simply a matter of meeting expressed needs, but of finding out unexpressed needs, setting
priorities, allocating resources and publicly justifying and accounting for what has been done".
Service organizations are responsible and accountable to citizens and communities as well as to
customers and service users. There are wider service organization agendas than simply service
quality: improving access to existing services; equity and equality of service provision;
providing efficient and effective services within political as well as resource constraints. The
definition of service quality therefore takes on a wider meaning and accordingly its
measurement becomes both more complex and more difficult.

Besides the discussed weaknesses, a particular advantage of SERVQUAL is that it is a tried

and tested instrument which can be used comparatively for benchmarking purposes.
SERVQUAL does, however, benefit from being a statistically valid instrument as a result of
extensive field testing and refinement.
It therefore escapes the pitfall of being perceived by service users and providers as
"something that has been invented off the top of the head" or a questionnaire that has been
skewed to elicit certain types of response. As a generic and universally-applicable instrument,
SERVQUAL can also be administered on a repeated, regular basis and used for comparative
benchmarking purposes. To appreciate more fully the benefits of using SERVQUAL, surveys
should be conducted every year, for the following reasons:
to allow yearly comparisons;

to determine how service improvements have affected customers perceptions and

expectations of the service over time; and

to determine the effectiveness of service development and improvement initiatives in

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targeted dimensions.
It is important to note that the measurement systems themselves are often inappropriate
because the system designers do not know enough about what is to be measured. Measuring
customer perceptions of service may increase expectations and measuring too often may well
result in customers losing their motivation to answer correctly. Finally, there is no point in
measuring service quality if one is not willing to take appropriate action on the findings.

THE CUSTOMER SERVICE GAP MODEL

Todays consumer has become increasingly demanding. They not only want high quality
products but they also expect high quality customer service. Even manufactured products such as
cars, mobile phones and computers cannot gain a strategic competitive advantage through the
physical products alone. From a consumers point of view, customer service is considered very
much part of the product. Listen to Nick Coster Head of Training Services discuss the
Customer Service Gap Model with Phil Dobbie.
Delivering superior value to the customer is an ongoing concern of Product Managers. This not
only includes the actual physical product but customer service as well. Products that do not offer
good quality customer service that meets the expectations of consumers are difficult to sustain in
a competitive market. SERVQUAL (service quality gap model) is a gap method in service
quality measurement, a tool that can be used by Product Manager across all industries. The aim
of this model is to:

Identify the gaps between customer expectation and the actual services provided at
different stages of service delivery
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Close the gap and improve the customer service

This model developed by Parasuraman, Zeithalm and Berry in

1985 identifies five different gaps:

The Customer Gap: The Gap between Customer

Expectations and Customer Perceptions
The customer gap is the difference between customer
expectations and customer perceptions. Customer expectation is
what the customer expects according to available resources and is influenced by cultural
background, family lifestyle, personality, demographics, advertising, experience with similar
products and information available online. Customer perception is totally subjective and is based
on the customers interaction with the product or service. Perception is derived from the
customers satisfaction of the specific product or service and the quality of service delivery. The
customer gap is the most important gap and in an ideal world the customers expectation would
be almost identical to the customers perception. In a customer orientated strategy, delivering a
quality service for a specific product should be based on a clear understanding of the target
market. Understanding customer needs and knowing customer expectations could be the best
way to close the gap.

The Knowledge Gap: The Gap between Consumer Expectation and Management
Perception
The knowledge gap is the difference between the customers expectations of the service provided
and the companys provision of the service. In this case, managers are not aware or have not
correctly interpreted the customers expectation in relation to the companys services or products.
If a knowledge gap exists, it may mean companies are trying to meet wrong or non-existing
consumer needs. In a customer-orientated business, it is important to have a clear understanding
of the consumers need for service. To close the gap between the consumers expectations for
service and managements perception of service delivery will require comprehensive market
research.
The Policy Gap: The Gap between Management Perception and Service Quality
Specification
According to Kasper et al, this gap reflects managements incorrect translation of the service
policy into rules and guidelines for employees. Some companies experience difficulties
translating consumer expectation into specific service quality delivery. This can include poor
service design, failure to maintain and continually update their provision of good customer
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service or simply a lack of standardization. This gap may see consumers seek a similar product
with better service elsewhere.

The Delivery Gap: The Gap between Service Quality Specification and Service
Delivery
This gap exposes the weakness in employee performance. Organizations with a Delivery Gap
may specify the service required to support consumers but have subsequently failed to train their
employees, put good processes and guidelines in action. As a result, employees are ill equipped
to manage consumers needs. Some of the problems experienced if there is a delivery gap are:

Employees lack of product knowledge and have difficulty managing customer questions
and issues
Organizations have poor human resource policies
Lack of cohesive teams and the inability to deliver

The Communication Gap: The Gap between Service Delivery and External
Communications
In some cases, promises made by companies through advertising media and communication raise
customer expectations. When over-promising in advertising does not match the actual service
delivery, it creates a communication gap. Consumers are disappointed because the promised
service does not match the expected service and consequently may seek alternative product
sources.

CASE STUDY : GAP MODEL (AMAZON.COM)

Amazon.com provides books, movies, music and games along with electronics, toys, apparel,
sports, tools, groceries and general home and garden items. Amazon is a good example of an
online business that tries to close the service gaps in order to thoroughly meet consumer
expectations.

Understanding Customer Needs

From the time the consumer starts to shop at Amazons online store, Amazon will attempt to
understand their expectations. From when a customer first makes a product selection Amazon
creates a consumer profile and attempts to offer alternative goods and services that may delight
the consumer. The longer the consumer shops at Amazon, the more the company attempts to
identify their preferences and needs.

Customer Defined Standards

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When a consumer buys a product from Amazon they selects the mode of delivery and the
company tells them the expected number of days it will take to receive their merchandise. For
example: standard shipping is three to five days but shipping in one or two days is also available.
The company has set standards for how quickly customers are informed when a product is
unavailable (immediately), how quickly customers are notified whether an out of print book can
be located (three weeks), how long customers are able to return items (30 days) and whether they
pay return shipping costs. These standards exist for many activities at Amazon from delivery to
communication to service recovery.

Service Performance

Apart from defining their service delivery, Amazon goes one step further and delivers on its
promises. Amazon performs! Orders often arrive ahead of the promised dates; orders are accurate
and are in excellent condition because of careful shipping practice. Customers can track
packages and review previous orders at any time. Amazon also makes sure that all its partners
who sell used and new books and other related items meet Amazons high standards. The
company verifies the performance of each purchase by surveying the customer and posting
scores that are visible to other customers.
Managing promises is handled by clear and careful communication on the website. Every page is
very easy to understand and to navigate. For example the page dealing with returns eliminates
customer misunderstanding by clearly spelling out what can be returned. The page describes how
to repack items and when refunds are given. The customer account page shows all previous
purchases and exactly where every ordered item is in the shipping process Amazon strategy has
been well received by its customers and the Amazon brand is known worldwide.

CONCLUSION
Effective product management is a complex undertaking which includes many different
strategies, skills and tasks. Product managers plan for creating the best products and operational
excellence to maximize customer satisfaction, loyalty and retention. Recognizing and closing
gaps offers high quality customer service to the consumer and helps them to achieve their goal
whilst maximizing market position, market share and financial results through customer
satisfaction. It also helps managers to identify areas of weakness and make improvements to a
companys service delivery. Check out our blog post on The Value Curve: visualizing the value
proposition. This tool allows product managers to take information gleaned from gap analysis to
develop or refine products that are both compelling to customers and distinct from competitors.
Service quality(SQ) is a comparison of expectations (E) about a service with performance (P)
SQ=P-E.

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A business with high service quality will meet customer needs whilst remaining economically
competitive Improved service quality may increase economic competitiveness.
This aim may be achieved by understanding and improving operational processes; identifying
problems quickly and systematically; establishing valid and reliable service performance
measures and measuring customer satisfaction and other performance outcomes
For example, in the case of Taj Hotels Resorts and Palaces, wherein TAJ remaining the old
world, luxury brand in the five-star category, the umbrella branding was diluting the image of the
TAJ brand because although the different hotels such as Vivanta by Taj- the four star category,
Gateway in the three star category and Ginger the two star economy brand, were positioned and
categorized differently, customers still expected high quality of Taj.
The measurement of subjective aspects of customer service depends on the conformity of the
expected benefit with the perceived result. This in turns depends upon the customer's expectation
in terms of service, they might receive and the service provider's ability and talent to present this
expected service. Successful Companies add benefits to their offering that not only satisfy the
customers but also surprise and delight them. Delighting customers is a matter of exceeding their
expectations.
Pre-defined objective criteria may be unattainable in practice, in which case, the best possible
achievable result becomes the ideal. The objective ideal may still be poor, in subjective terms.
Service quality can be related to service potential (for example, worker's qualifications); service
process (for example, the quickness of service) and service result (customer satisfaction).

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