2. 1 Meaning and Types of Expected Service 2 Factors That Influence Customer Expectations of Service 3 Current Issues Involving Customer Service Expectations

3. 1. Meaning and Types of Expected Service

4. Customer Expectations of Service Customer Expectations Beliefs about service delivery Serve as standards or reference points against which performance is judged. Customers compare their perceptions of performance with these reference points when evaluating service quality.

5. Expected Service: Levels of Expectations Possible Levels of Customer Expectation Ideal Expectations or Desires Normative “Should” Expectations Experience Based Expectation Acceptable Expectations Minimum Tolerable Expectations Desired Service Quality Adequate Service Quality

6. Possible Levels of Customer Expectations

7. Ideal Level of Service Highest level of service which can be delivered Customers do not expect this level of service because it rarely takes place Normal Level of Service It is the level of service that everyone is receiving This level of service is fair treatment Experience Based Expectation It is connected with the past experience of customers Acceptable Level of Expectation This is the OK level of service.

8. Adequate Level of Expectation It is the minimum level of service Service below this level causes negative impact Tolerable Level of Expectation It is the most minimum level of service which one can tolerate for the 1 st time

9. Dual Customer Expectation Levels Desired Service:  Level of service that customer hopes to receive Adequate service:  Level of service the customer will accept. Zone of Tolerance: The extent to which customer recognize and are willing to accept this variation. Zone of Tolerance Gap between Desired Service & Adequate service

10. The Zone of Tolerance  Range or window in which customers do not notice service performance  When service falls outside this range(either very high or very low), the service gets the customer’s attention in either a positive or negative way

11. Different customers possess different Zone of tolerance Some customers have narrow zones of tolerance They require tighter range of service from providers Others allow a greater range of service An individual customer’s zone of tolerance vary for a number of factors e.g. price, personal needs, behavior etc.

12. Zones of Tolerance for Different Service Dimensions Source:Berry, Parasuraman, and Zeithaml (1993) Most Important Factors Desired Service Zone of Tolerance Adequate Service Desired Service Zone of Tolerance Adequate Service Least Important factors Level of Expectation

13. Sources of Customer Expectations Personal Needs Personal Service Philosophy Derived Service Expectations Perceived Service Alternatives Situational Factors Explicit Service Promises Implicit Service Promises Word-of-mouth Communication Past Experience Predicted Service

14. Sources of Desired Service Expectation Personal Needs Personal needs can be physiological, social, psychological, etc. Degree of need determines the desired level of service E.g. a person with high degree of social and dependency need may have higher expectations for hotel’s ancillary/auxiliary services Personal Service Philosophy It refers to the customer underlying general attitude about the meaning of service and proper conduct of service providers E.g. belief that waiters should not keep customers waiting longer than 15 minutes to take their orders

15. Derived Service Expectations It refers to the expectations driven by other person or group of people E.g. for birthday celebration a person selects a restaurant which can service various menus that qualify for his/her friends

16. Sources of Adequate Service Expectations These sources have short-term influence and tend to fluctuate more than the factors that influence desired service Perceived Service Alternatives It refers to other service providers from whom the customer can obtain service Higher the perceived service alternatives higher will be the adequate service expectation and vice versa Situational Factors Uncontrollable situational factors Situational factors beyond control of service provider Lower adequate service expectations

17. Personal Situational Factors Short-term, individual factors that make a customer more aware of the need for service E.g. personal emergency situation; medical emergency raise the higher adequate service expectation from service provider Predicted Service It refers to the level of service that customers believe they are likely to get for a particular time If customers predict good service, their levels of adequate service are likely to be higher than if they predict poor service

18. Past Experience Previous experience of the customer influences the desired and predicted service expectation

19. Sources of Both Desired and Predicted Service Expectation Explicit Service Promises It involves the personal and non-personal statements about service made by the organization to customers Done through advertisements, brochures, pamphlets, etc. Implicit Service Promises Cues, other than explicit promises, that lead to inferences about what the service should and will be alike Involves price and physical evidence Word-of- mouth communication They are independent and unbiased communications made by parties other than the organization

20. https://www.youtube.com/watch?v=RmWLo0Trl8I https://www.youtube.com/watch?v=fpCOZYUxzr4&t =71s

21. 2. Factors That Influence Customer Expectations of Service

22. Factors That Influence Desired Service Expectations Internal Factors External Factors Situational Factors Supplier Controlled Factors

23. Factors That Influence Desired Service Expectations Internal Factors: Factors which are within the customer. They include-  IndividualNeeds:-ifcustomerfeellackof something,hemotivatedtotakeactiontofulfillit. Security Maslow explain, needs exist in a hierarchy. Lowerorderneeds-Physiologicalneeds, needs Higher order needs- Social needs, Esteem needs, Self actualization need  Level of Involvement:- if customer is more involved, his expectations will be more & consumers become very particular about the type of service they expect.

24. Factors That Influence Desired Service Expectations  Past experiences- The experience that a customer has with the following are all important- Service provider A competing service in the same industry A related service in a different industry E.g.- If the visit to a dentist leaves you satisfied then you will expect the same service next time but if you have had an unpleasant experience and for some reason have to go to the same dentist, you will go with lowered expectations.

25. Factors That Influence Desired Service Expectations  Personal Philosophy of the individual- Each of us has our own standards and we view the world according to these standards. These standards have developed in our lives because of our hereditary and our environment as we were growing up.  Demographical reason- expectations may vary according to the demographic group one belongs to. Fore.g.menmayhavedifferentexpectationsfrom women when they go for a hair cut. Olderconsumersmayhavedifferentexpectationsfrom younger ones, Blue collar workers may have different expectations from white collar workers.

26. Factors That Influence Desired Service Expectations External Factors:- Several external factors can influence customer expectation. These are- Competitive Options Available- Consumer’s expectations are often impacted when they compare one service provider with another. E.g.- If one mall provides free parking facility the customer will start expecting it from another mall. Social Setting- people’s expectation often increase when they are with others or in socially crucial situations. E.g.- If you go out for a causal dinner with your family, you may be more tolerant of delay but if you have taken an important client out to dine, your expectations will increase.

27. Factors That Influence Desired Service Expectations Word-of-mouth Communications- We vary often ask our friends their opinion about a new movie which has just released. We then go into the hall with a certain level of expectations. CulturalContextandNormsRegardingthe Service- Expectations differ from country to country. E.g.- It may be acceptable for a train to arrive several are hours late in India but in Switzerland the rail schedules are very precise and customers set their watchesbyarrivalofatrain.Inthatcasethe of expectationofcustomersregardingpunctuality train services in Switzeland will be very high.

28. Factors That Influence Desired Service Expectations Situational Factors: Consumer expectations are affected by many situational factors that include – Type of Service and Industry: Customer expectations will also vary from one industry to another reflecting industry reputations and past experiences. In some countries, people may have very low expectations. In some countries, people may have very low expectations from government service providers but may have very high expectations form private service providers. Eg. -The expectations of the consumer taking his pet to a vet for treatment will be very different from his expectations when he visits the doctor himself for treatment.

29. Factors That Influence Desired Service Expectations Reason for Purchase: The reason why a service is purchased can have an impact upon consumer expectations. Eg. - Suppose you hire a taxi for an out-of station office trip your expectations will center around the hiring cost (Which should match the allowance you are given by your office) whereas if you hire a limousine to impress your date your expectations will center around luxury and style. Consumer’s Mood: Individual in a good mood may be more tolerant of delay or inadequate service than a consumer who is in a bad mood. That is why service providers pay a lot of attention to setting the mood.

30. Factors That Influence Desired Service Expectations Weather:- Imagine a situation where an aero plane is caughtupinathunderstorm.Theconsumerswill focustheirexpectationsongettingbackonland safetywithnothoughttodelay.Thus,eventhe weather can influence consumer expectations. Time constraints:- If a company has approached a placement agency to fill up a post and needs to do so really quickly. It may compromise on the qualifications if the individual selected because it lacks the time to find the person who fulfills all the required criteria. Thus, Time constraints can influence consumer expectations.

31. Factors That Influence Desired Service Expectations CriticalPositioning-Emergenciesand catastrophes expectations. doinfluenceconsumer Undernormalcircumstances, consumers may have very high expectations from hospital staff but if there is a disaster like a fire or earthquake which has meant that the hospital is overflowing with patients consumers may become more tolerant. News in media- Any publicity- positive or negative or any report in the media may have an impact upon the consumer expectations.

32. Factors That Influence Desired Service Expectations Supplier- Controlled Factors:- Supplier controlled factors such as Advertising, pricing & the physical appearance of the service facility and its employees will greatly influence consumer expectations. Promotion:- The promises that service providers may make in advertisement & sales promotions will create a certain level of expectations in the customers. For example Management Institute mentions a state of the art computer laboratorythen the students will join the institute with high expectations from the computer facilities.

33. Factors That Influence Desired Service Expectations Pricing:- The higher the price of a service, the higher will be the consumer’s expectations. Example- If you pick the most expensive service provider you will obviously expect the very best from them. Positioning:- if the airlines has positioned itself as a no- frills, low cost airline then consumer expectations will be low but if the airlines has positioned itself as a premium airlines then consumer expectations will be very high.

34. Factors That Influence Desired Service Expectations Distribution:- When a service provider has many outlets then a consumer who has used the service one, forms a certain level of expectations. If the service provider is a single unit, consumers may not know what to expect. E.g.- A family holiday McDonald’s, because it is familiar and they have certain expectations from it. Service Personnel:- The attitude & behavior of employees as well as what they say will influence consumer expectations. E.g.- If the beautician promises you a glowing skin after the facial she gives you, you will be expecting that.

35. Factors That Influence Desired Service Expectations Accompanying Tangibles- The tangibles cues in the service facility like décor, furniture, equipment used, level of hygiene & cleanliness, displays and dress of the personnel, etc. Other Customers- A customer who goes to a gym may observe how the instructors treat and instruct other consumers. Their expectations will therefore be formed according to that. Image of the Firm- The goodwill and image that a firm created for itself also influences the expectations of consumers. We have a certain image of ITC and expect an ITC hotel to live up to our expectations.

36. Managing Customer service Expectations It is a critical component in the marketing plan of a service business. Consumer expectation must be managed during the- pre purchase phase, the service encounter, the post purchase phase. https://www.youtube.com/watch?v=nxtaMdu55Ug

37. During the pre purchase phase- Managing customer expectations during the pre- purchase phase consist of 3 steps which are as follows- i) Learn what Customer expect:- Learning customer expectations during the pre purchase phase requires communication. ii) Tell customer what they expect- Advertising, sales personnel, tangible cues, point of purchase displays and sales promotions some of the methods that can be used. iii) Consistently provide the service that customer expect- Past experiences and word of mouth are two critical variables used by consumers in making purchase decision.

38. During the Service Encounter 3 strategies can be used during the service encounter to manage customer expectations which are as follows- Service personnel must communicate with the customer during the service encounter. If possible, service providers should modify the service to meet the customer’s expectations. If the service cannot be modified, the service personnel should explain why the customer’s expectations cannot be met. The goal during this phase is to ensure the service being provided matches the customer’s expectations.

39. During the post-purchase Phase Managing consumer expectations do not stop after the service is performed. Service firms have 3 strategies they can use after the service has been completed which are as follows:- Companies should communicate with customers immediately after the service is completed to see if expectations were met. Firms can use a follow-up program, such as an evaluation survey sent to the customer through the mail or a phone call. Companies should have a procedure for dealing with dissatisfy customers that will assist in managing future expectations.

40. Exceeding Customers Service Expectations thattherearenonegative experiencesbutalsowithtryingto This strategy is appropriate for those organizations which define service quality as delighting the customers. It is concerned with trying to ensure exceed expectations by creating some positive transaction outcomes.

41. Exceeding Customers Service Expectations There are 3 approaches for exceeding customer service expectation:- 1. Customer Relationship- Maintaining customer relationship is one of the approach for exceeding service expectations. 2. Underpromise the Service:- The strategy is underpromise and overdeliver. If the promise is less than what will eventually happen, customers can be delighted frequently. 3. Unusual service as Unique:- A final way to exceed the expectations without raising them in the future is to position unusual service as unique rather than standard.

42. SMSM CUSTOMER PERCEPTIONS OF SERVICE

43. Objectives: Customer Perceptions of Service Provide you with definitions and understanding of customer satisfaction and service quality Show that service encounters or the “moments of truth” are the building blocks of customer perceptions Highlight strategies for managing customer perceptions of service

44. Customer’s Perceptions Perception is to realize, feel, understand or to experience It is the process of systematic organization and interpretation of an experience Perceptions are always considered relative to expectations It is called the quality of service received by the customer Service encounters or the “moments of truth” are the building blocks of customer perceptions Expectati on Encount ers Percepti on Positi ve Negati ve Satisfacti on Dissatisfact ion Quality Gap

45. Customer perception Customer’s perception is relative to expectation. Evaluation of service quality are in constant flux. https://www.youtube.com/watch?v=5Tb_p L47AVM https://www.youtube.com/watch?v=5Tb_p L47AVM

46. Service Quality The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected. Process and outcome quality are both important.

47. SERVQUAL Attributes 1.RELIABILITY 2.ASSURANCE 3.RESPONSIVENESS 4.EMPATHY 5.TANGIBLES

48. Reliability Ability to perform promised service Promise of core service attribute 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.

49. Responsiveness Willingness to help and prompt service. 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.

50. Assurance Firms ability to inspire Trust and confidence Assurance is defined as employee’s 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 customer’s loyalty.

51. Empathy Caring and individualized attention to customers. It means to provide caring individualized attention the firm provide its customers. In some countries, it is essential to provide individual attention to show to the customer that the company does best to satisfy his needs. Empathy is an additional plus that the trust and confidence of the customers and at the same time increase the loyalty. In this competitive world, the customer’s requirements are rising day after day and it is the companies duties to their maximum to meet the demands of customers, else customers who do not receive individual attention will search elsewhere.

52. Tangibles Physical facility, equipment,written materials Important dimension for hospitality service. 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 are offered to its customers.

53. Video Example of Five dimensions https://www.youtube.com/watch?v=94t-IkTuUdQ

54. Customer Satisfaction Satisfaction is the consumer’s fulfillment response. It is a judgement that a product or service feature, or product or service itself, provides a pleasurable level of consumption- related fulfillment. Satisfaction is the fulfillment of desire or expectation It refers to the customers positive evaluation towards organization, product or service Customer Satisfaction = f(Value and Cost) Satisfaction and quality are different; satisfaction is the effect, quality is the cause

55. Outcomes of Customer Satisfaction Increased customer retention Positive word-of-mouth communications Increased revenues

56. What determine customer satisfaction? Customer satisfaction is influenced by specific product or services features, perceptions of product and services quality, and price. In addition, personal factors such as the customers mood or emotions state the situation factor such as family member option influence satisfaction. Product and service feature: Customer satisfaction with a product or service is influenced significantly by the customers evaluation of product and services features Customer Emotions: These emotions can be stable, pre-existing emotions-for example, mood state or life satisfaction. Emotions play a major role in satisfaction

57. Attribution for service success and failure: Attributions- the perceived cause of events- influence perceptions of satisfaction as well. When customers have been surprised by an outcome, they tend to look for the reasons, and their assessments of the reasons can influence their satisfaction. Perception of equity and fairness: Customer satisfaction is also influenced by perception of equity and fairness. Perception occurs when the customers think to themselves “have I been treated properly” on comparison with the others. For example family decisions about vacation destination and satisfaction with the trip are dynamic phenomena, influenced by the reactions and emotions of individual family members. it is greatly influenced by experience, behavior, and view point of others.

58. Figure 4-3 Relationship between Customer Satisfaction and Loyalty in Competitive Industries 100% 80% 60% 40% 20% 0% Very dissatisfied Dissatisfied Neither satisfied nor dissatisfied Satisfied Very satisfied Satisfaction measure Loyalty (retention) Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

59. The Five Dimensions of Service Quality Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to convey trust and confidence. Physical facilities, equipment, and appearance of personnel. Caring, individualized attention the firm provides its customers. Willingness to help customers and provide prompt service. Reliability Assurance Tangibles Empathy Responsiveness

60. Perceived Value Overall assessment of Utility What they receive and what is given

61. Factors influence Customer Perception Service Encounter Evidence of Service Image Price

62. The Service Encounter occurs any time the customer interacts with the firm Vivid impression is developed from experiences with service Encounters or moment of truth, when the customer interacts with the service firm. From an organizations point of view each encounter presents an opportunity to prove its potential as a quality service provider and to increase customer loyalty.

63. Check-In Request Wake-Up Call Checkout Bellboy Takes to Room Restaurant Meal Figure 4-4 A Service Encounter Cascade for a Hotel Visit

64. Common Themes in Critical Service Encounters Research Recovery: Employee Response to Service Delivery System Failure Adaptability: Employee Response to Customer Needs and Requests Coping: Employee Response to Problem Customers Spontaneity: Unprompted and Unsolicited Employee Actions and Attitudes

65. The Service Encounter Negative Experience with Any One of the Encounters may lead to Negative Overall Evaluation of the Service First Impression lead to successive positive feeling

66. The Service Encounter All the Encounters are equally Important Composite of Positive Experiences develops Positive Image

67. The Service Encounter Certain Encounters are Key to Customer Satisfaction https://www.youtube.com/watch?v=AAFhKsy3u_4&t =126s https://www.youtube.com/watch?v=AAFhKsy3u_4&t =126s

68. The Service Encounter Types of Encounter: – Remote Encounter – Phone Encounter – Face to face Encounter

69. Evidence of Service Types of Encounter: – People – Process – Physical Evidence

70. Customer Perceptions of Service Quality and Customer Satisfaction Servi ce Quali ty Reliability Responsiveness Assurance Empathy Tangibles Prod uct Qual ity Pric e Perso nal Fact ors Custo mer Satisfact ion Situatio nal Factors

71. Determinants of Customer Satisfaction Customer value and cost Productand service features Consumer emotion Customers judgement of causes or events Perception of Equity or Fairness Follow consumers/Group members behavior

72. Customer Value and Cost Customer Value Product Value Service Value Personnel Value Image Value Mental Satisfaction Physical Pleasure Customer Cost Monetary Costs Time Costs Energy Costs Psychic Cost Customer Delivered Value (CDV) = Total Customer Value – Total Customer Cost If CV > CC, Higher Satisfaction If CV = CC, Satisfaction If CV < CC, Dissatisfaction

73. Outcomes of Customer Satisfaction Customer Loyalty Word of Mouth Support the growth and continuity of business Market price Better economic environment Quality of life of customer