URGENT - SERVICE MARKETING - CUSTOMER VALUE REPORT - NEED DONE ASAP - OFFERING HIGH

ServicesMarketingLecture4CustomerSatisfaction1.ppt

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Lecture 4

Customer satisfaction and service quality

Based on Text Book Chapter 11

Marketing of Services Lecture 4

Five reflections from last week

Focus is a key foundation in marketing
Select target segments according to the firm’s ability to match or exceed competing offerings
Importance attributes get the firm into the contest but often determinant attributes ‘close the deal’
Positioning (the placement of a product or service in the minds of target consumers) is a powerful way to focus and anchor the brand
Service brands can gain advantage over competitors by establishing and communicating a point of difference (POD)

How might a service firm communicate a POD?

Marketing of Services Lecture 4

Objectives

Define customer satisfaction and quality in service industries
Explain the significance of customer satisfaction in achieving a competitive advantage
Describe various models of satisfaction and service quality
Explain the causal linkages with customer perceived value, service quality, satisfaction and loyalty
List the major drivers or determinants of satisfaction and quality in services
Describe how to measure and monitor satisfaction

Marketing of Services Lecture 4

Defining customer satisfaction

Satisfaction is a consumer’s post-purchase evaluation of the overall service experience (processes and outcome). It is an affective (emotion) state or feeling reaction in which the consumer’s needs, desires and expectations during the course of the service experience have been met or exceeded.

Two levels of satisfaction:

Transaction specific satisfaction
Cumulative satisfaction (Satisfaction across multiple experiences)

Marketing of Services Lecture 4

Benefits of customer satisfaction and service quality

Toyota (Asia-Pacific) has identified a correlation between Customer Satisfaction and:

Market Share
Positive WoM
Customer propensity to ‘forgive’ an error

Marketing of Services Lecture 4

Which emotions associate with satisfaction?

Contentment
Fulfilment
Surprise
Arousal
Pleasure
Relief
Delight

A delighted customer is six times more likely to repurchase a product or service compared to a (just) satisfied customer

Customer satisfaction
and financial performance

Take note that Service Quality and Customer Service are not the only drivers of Cumulative Satisfaction

Marketing of Services Lecture 4

Non-linear effects of satisfaction on customer loyalty

Marketing of Services Lecture 4

Disconfirmation of Expectations Paradigm

Satisfaction = Performance – Expectations
Performance is the Performance of the service
Expectations refers to pre-purchase beliefs about service provision that acts as a standard for judging performance. Expectations are shaped by previous experiences, WoM, Marketing Communications and performance of competing brands
If P ≠ E, this is called “Disconfirmation”
P > E is called ‘positive disconfirmation’
P < E is called ‘negative disconfirmation’
If P = E, this is called ‘Confirmation’

In B2B services, client expectations are also influenced by the newness, importance and complexity of the service

The Disconfirmation of Expectations Model

Marketing of Services Lecture 4

Zone of indifference

Service performance, even for the same supplier, is likely to vary from one occasion to the next
Customers have a ‘zone of indifference’ which is the range between their desired and minimum expectations
In other words, the ‘zone of indifference’ is the degree of service variation that customers are willing to accept
When poor performance falls below the minimum level of expectation, it may be magnified and result in considerable dissatisfaction
The ‘zone of indifference’ can expand or contract depending on circumstances. E.g. the higher the importance of a service attribute, the narrower the zone
The zone of indifference for the core service is narrow

Marketing of Services Lecture 4

Zones of indifference for first-time
and service recovery situations

Outcome = The core service delivery

Process = Supplementary services

Marketing of Services Lecture 4

Measuring Customer Satisfaction

Phase I – Qualitative Research (E.g. Focus groups)
Establish customer expectations
Determine what service attributes are most important in determining customer satisfaction
Phase 2 – Quantitative Research (E.g. survey)
Build a survey (questionnaire) using the information obtained in the previous phase
Start the survey with a global (overall) satisfaction question

Note that this question measures transaction specific satisfaction

Also note the use of the use of the disconfirmation of expectations

Overall, how satisfied are you with your visit to our restaurant today?
Much worse than expected	Somewhat worse than expected	As expected	Somewhat better than expected	Much better than expected
-2	-1	0	1	2

Marketing of Services Lecture 4

Measuring Customer Satisfaction

Phase 2 – Quantitative Research (continued)
Now pose questions about specific service attributes that emerged from the qualitative research (Phase 1)

Rate each of the following in relation to your service experience today:
Much worse than expected	Somewhat worse than expected	As expected	Somewhat better than expected	Much better than expected
Quality of the food Friendliness of the service Speed of the service Cleanliness of the toilets Etc….	-2 -2 -2 -2	-1 -1 -1 -1	0 0 0 0	1 1 1 1	2 2 2 2

Marketing of Services Lecture 4

Measuring Customer Satisfaction

Phase 2 – Quantitative Research (continued)
You can also determine how important customers perceive each attribute to be

Once survey results have been analysed, we can determine:

The average overall satisfaction with today’s visit (relative to expectations)
Which attributes contribute most to global (overall) satisfaction (using Linear Regression)
How important customers perceive each attribute to be

How important are each of the following aspects to you personally?
Not at all important	Somewhat important	Neither important nor unimportant	Somewhat important	Very important
Quality of the food Friendliness of the service Speed of the service Cleanliness of the toilets Etc….	-2 -2 -2 -2	-1 -1 -1 -1	0 0 0 0	1 1 1 1	2 2 2 2

Now we can weight each attribute’s score by its importance to determine a total score. For example, respondent 1 may rate speed of service as a 4 for performance and a 5 for importance. Thus the total score for this attribute is 20 (4 x 5) for respondent 1. The total scores can determine which attributes are most important in driving global (overall) customer satisfaction (by a process called linear regression). Knowing this enables the restaurant to focus on what’s perceived as important by customers

Marketing of Services Lecture 4

Service Quality

Service quality is the consumer’s judgement about an entity’s overall excellence or superiority
Whereas ‘satisfaction’ requires that you experience the service, you can have a perception of service quality without experiencing the service

The five dimensions of Service Quality are as follows:

Appearance of physical elements

Dependable, accurate performance

Competence, courtesy, credibility and security

Promptness and helpfulness

Easy access, good communications and customer understanding

Dimension	Description
Tangibles
Reliability
Responsiveness
Assurance
Empathy

Service Quality and Productivity

Improvement strategies for service quality and productivity must be considered jointly rather than in isolation
Marketing, Operations and HR managers should collaborate to ensure that quality customer experiences are delivered more efficiently
Service Quality and productivity are twin-paths to creating value for both customers and the service firm

Service Quality and Service Guarantees

Service guarantees are explicit promises made to customers about the level of service they can expect to receive
For example, McDonalds promised a maximum of 60 seconds waiting time or “you get a free big Mac!”
Guarantees are powerful tools that advance service quality and customer satisfaction because:
Guarantees reduce the customer’s perceived risk
Firms focus on what customers want
Guarantees set clear standards
Guarantees can generate customer loyalty
Guarantees provide meaningful customer feedback

Guarantees should be:

Unconditional
Easy to understand
Easy to communicate
Easy to invoke
Easy to collect

Service Quality Gaps

Service firms should seek to identify and close any gaps in the service delivery process:

Gap 1: Not knowing what customers expect
Gap 2: Service specification standards do not reflect what management thinks customers expect
Gap 3: Service delivery does not match service quality specifications
Gap 4: Not living up to the levels of service performance that are promoted and promised by marketing communications
Gap 5: The service that customers perceive they get falls below their expectations

Identifying Service Quality gaps
(Potential Fail Points)

Management does not know what customers expect

Service specification standards do not reflect what management thinks customers expect

Service delivery does not match Service Quality specifications

The service that customers perceive they get falls below their expectations

The quality of service performance that is promoted and promised is not delivered

Marketing of Services Lecture 4

PowerPoint to accompany

Lecture 4

The End

Marketing of Services Lecture 4