+

Services
Marketing
Service Quality

Tom Chapman
www.marketing101.co.uk
Twitter @idlehans
1
+
Introduction

Defining Service Quality

Evaluating Quality

Technical & Functional Quality

Researching Service Quality

The SERVQUAL instrument

2
+
What do you think?

Define Quality

Why is Quality important?

How do you evaluate it?

3
+
Defining Quality

quality is an ambiguous term

although we cannot define quality, we know what
quality is (Pirsig, 1987)
quality is fitness for use, the extent to which the
product successfully serves the purpose of the user
during usage (Juran, 1974)
quality is zero defects - doing it right the first time,
Parasuraman, Zeithaml and Berry, 1985)
quality is exceeding what customers expect from the
service, Zeithaml, Parasuraman and Berry, 1990)

4
+
Service Quality - early writings

service quality results from a comparison of what

customers feel a service provider should offer (i.e. their
expectations) with the providers actual performance
(Parasuraman, 1996: 145)

Service quality is a measure of how well the service level

delivered matches customer expectations. Delivering
quality service means conforming to customer
expectations on a consistent basis
Lewis and Booms (1983)

5
+
Why is Quality Important?

Superior product/service quality relative to

competitors is the single most important factor
affecting profitability (PIMS study)
Premium prices
Customer preference
Customer retention
Market expansion/market share
Other benefits:
productivity, advertising, distribution/access

6
+
Changing management focus

Creating better value

2000+ for customers and
the organisation
1990s
Quality
1980s

1970s Productivity

7
+
Service Quality - shifting focus

in
the past, industry focused particularly on
defining and meeting internal quality or
technical standards
today the focus has shifted to quantifying
customers assessments of services and
products (external measurement) and then
translating these into specific internal
standards
delivering quality service is fundamental to
corporate success because research shows it is
closely linked to profits

8
+
Service Quality
a major business concern
Quality is an elusive concept not easily articulated by
consumers

can lead to better market share, profitability, lower costs and

improve productivity

performances, not objects, which may vary with quality

evaluations not made solely on service outcome but also on
service process

9
+
Service Quality profits/costs

increased profits found to be due particularly

to:
fewer customer defections
stronger customer loyalty
more cross-selling of products and services
higher margins (due to service enhancements of core
products)
improved service quality cuts costs
fewer customers to replace
less corrective work to do
fewer inquiries and complaints to handle
lower staff turnover and dissatisfaction

10
+
Enhancing service value

11
+
What is Quality?

Conformance quality
producing the product/service according to
specification every time, with no correction required

Quality-in-use
customer judgements about quality received and
resultant level of customer satisfaction

Technological quality
superior performance features of product/service
derived from advanced new technologies

12
+
Service Quality

Total quality

Image (corporate/local)

Technical Relational
quality of the Functional quality: by
outcome: WHAT quality of the WHOM is the
offered/receive process: HOW service
d delivered

13
+
Evaluating Quality

access (physical approachability of service location, ease of

finding way around the service environment and route clarity)

aesthetics (extent to which service package components are

agreeable or pleasing to the customer, including appearance
and ambience of the service environment, appearance and
presentation of service facilities, goods and staff)

attentiveness/helpfulness (extent to which service, especially

contact staff help the customer, interested in them and show a
willingness to serve)

availability (of service facilities, staff and goods available to the

customer)

14
+
Evaluating Quality
care (concern, consideration, sympathy and patience shown
to customer, including putting at ease and feeling emotionally
comfortable)

cleanliness/tidiness (of the tangible components of the

service package)

comfort (physical comfort of the service environment and

facilities)

commitment (staffs apparent commitment to their work,

including pride and satisfaction, diligence and thoroughness)

communication (ability of service provider to communicate

in a way the customer will understand; ability of staff to listen
and understand the customer)

15
+
Evaluating Quality

competence (skill, expertise, professionalism with which

service is executed; correct procedures, execution of
customer instructions, product knowledge displayed by staff,
giving sound advice)

courtesy (politeness, respect, propriety shown by the

service - usually staff)

flexibility (willingness and ability to amend/alter the

service to meet customer needs)

friendliness (warmth and personal approachability of

service providers, especially contact staff)

16
+
Evaluating Quality

functionality (fitness for purpose)

integrity (honesty, justice, fairness, trust in treating

customers)

reliability (and consistency of performance of service

facilities, goods and staff; keeping agreements)

responsiveness (speed and timeliness of service delivery,

responding promptly to customer requests, minimal
waiting/queuing time)

security (personal safety of customers and possessions

while participating in the service process)

17
+
Zeithaml, Parasuraman and Berry

Ten dimensions Five dimensions

tangibles tangibles

reliability reliability*

responsiveness responsiveness*

competence
courtesy
credibility assurance
security

access
communication
empathy
understanding the
customer

18 Zeithaml, Parasuraman and Berry

+
Expectations

little
known about what determines
expectations and how formed
Individualistic
own norms, values, wishes, needs

changing over time

changes in aspiration
changes in need

do customers know what is expected of them?

19
+
Expectations

expectations
can be formulated in terms of what
should be done and what will be done
fourdifferent performance standards
distinguished:
deserved or equitable performance
ideal or desirable performance
expected performance
minimal tolerable performance

the
difference between the desired service level
and adequate service level is the

20
+
Perceptions

perception is defined as the process by

which an individual selects, organizes and
interprets stimuli into a meaningful and
coherent picture of the world (Schiffman
and Kanuk, 1987)
subjective and selective
resulting
attitudes about a particular
service provider may change over time
(long-term attitudes may be more stable
than immediate attitudes)

21
+
Satisfiers and Dissatisfiers

critical incidents
courtesy
Behaviour
understanding
Responsiveness
communication

negative experiences
competence
reliability

22
+
Satisfiers and Dissatisfiers

greater perceived control by the customer may decrease the

sources of customer dissatisfaction
consumers check whether their expectations are in line with
actual experiences of the service and service delivery
looking for gaps between expectations and perceptions is
important in detecting what needs to be improved
satisfaction emerges when actual service meets expectations
or when it exceeds expectations (positive disconfirmation)
dissatisfaction occurs when actual service is below expected
level (negative disconfirmation)

23
+
Customer Perceptions of Quality

Critical incidents
events throughout service delivery impact on perceived quality

Evaluation
customers check whether their expectations are in line with actual
experiences of the service

Satisfaction
actual service meets or exceeds expectations (positive disconfirmation)

Dissatisfaction
actual service is below expected level (negative disconfirmation)

Gap analysis
looking for gaps between expectations and perceptions is important in
guiding quality improvement

24
+
Dimensions of Service Quality

Reliability
ability to perform the promised service dependably
and accurately delivering what is promised

Responsiveness
willingness to help customers and provide prompt
service
adapting the service to customer needs

Assurance
employees knowledge and courtesy
ability to inspire trust and confidence

25 (Parasuraman, Zeithaml & Berry, 1988)

+
Dimensions of Service Quality

Empathy
caring, individualised
attention
customers are unique and special
customers are understood and valued

Tangibles
appearance of physical facilities, equipment,
personnel and communication materials
continuity
perceived quality

26
(Parasuraman, Zeithaml & Berry, 1988)
+
Gaps Model of Service Quality
Word of Mouth
Personal Needs Past Experience
Communications

Expected Service

Customer
Gap

Perceived Service
Customer

Company
Service Delivery External Communications
to Customers
Gap 1 Gap 4
Gap 3

Customer Driven Service

Design

Gap 2

Company Perceptions of
Consumer Expectations

(Parasuraman, Zeithaml &

27 Berry, 1985)
+
Service Quality Gaps
Company Perception
Customer
of Customer
Expectations
Expectations

Gap 1 Not knowing what customers expect

Inadequate market research
Poor market segmentation
Lack of upward communication (contact employees to
managers)
Insufficient customer relationship focus
Inadequate service recovery
28
+
Service Quality Gaps
Company Perception Customer-Driven
of Customer Service Design &
Expectations Standards

Gap 2 incorrect service design & standards

Inability to translate customer expectations into clear quality
specifications
Lack of management commitment to service quality
Customer expectations thought to be unreasonable or unfeasible
Absence of a formal quality programme (guidelines, standards)
Poor service design
29
+
Service Quality Gaps
Customer-Driven
Service Design & Service Delivery
Standards

Gap 3 Not delivering to service standards

Employees unwilling or unable to perform the service at the desired level
Poor internal organisation
ineffective recruitment, inadequate teamwork, employees not motivated, role conflict,
role ambiguity, poor supervision

Poor employee-technology job fit (appropriate tools to perform roles)

Failure to match supply and demand
Customers unaware of roles and responsibilities
Problems with service intermediaries

30
+
Service Quality Gaps
External
Service Delivery Communications
to Customers

Gap 4 Promises do not match performance

Over-promising in advertising, personal selling or physical
evidence cues
Management wants to show services offered in best possible light
Poorly-integrated marketing communications
Insufficient communication between marketing/sales & operations
Ineffective management of customer expectations

31
+
Service Quality - attributes

in 1988 PZB operationalised the construct (of

perceptions and expectations differences) as the
difference measured between two 7 point rating scales
-
one scale measuring customers expectations about service
companies in general within the service sector/category
being investigated
the other scale measuring customers perceptions about a
particular company whose service quality is being assessed

PZB measured the extent to which customers felt

companies should possess a specified service attribute
and the extent to which customers felt a given company
did possess the attribute

32
+ Service Quality - expectations and
perceptions statements
attributes were put as statements, with which customers were
asked to express the degree of agreement/disagreement on
a 7 point scale
expectations statements:
e.g. the physical facilities at hotels should be visually
appealing
the behaviour of hotel employees should instil confidence
in customers
hotels should give customers individual attention

corresponding perceptions statements:

the physical facilities at ABC Hotel are visually appealing
the behaviour of ABC Hotel employees instils confidence
in customers
ABC Hotel gives customers individual attention

33
+
SERVQUAL construction

PZB thus developed a comprehensive set of statements

to represent facets of the 10 service quality dimensions
this yielded 97 statements (approx. 10 per dimension)
a two part instrument developed - part 1 consisted of 97
expectations statements, part 2 - 97 perceptions
statements
roughly half the statements were worded negatively
instrument piloted on a sample of 200 customers
resulting in a reduced 34 item instrument with 7 rather
than 10 dimensions (PZB 1988)

34
+
SERVQUAL five dimensions

reliability and validity of the reduced instrument was assessed

further - data collected of 4 US service companies, samples of
200 customers of each - this produced consistent results

further elimination of items created a 22 item instrument,

grouping the 22 items into just 5 general dimensions

3 of the original 10 dimensions remained intact in the final 5

dimensions (tangibles, reliability and responsiveness) plus the
remaining 7 original dimensions clustered into 2 broader
dimensions:
(1) assurance (knowledge and courtesy of employees and
their ability to inspire trust and confidence) basically a
combination of the original dimensions of competence,
courtesy, credibility and security

35
+ Service Quality - SERVQUAL
refinements
(2) empathy (caring, individualised attention the firm
provides its customers) represents access, communication
and understanding the customers
SERVQUAL is most valuable when it is used periodically to
track service quality trends, and when it is used in
conjunction with other forms of service quality
measurement (PZB, 1988:31)
In 1991 PBZ further refined SERVQUAL:
three types of services and 5 companies
data collected through mail surveys of independent samples
of customers of each company, giving combined sample size
of 1,936
the distribution of expectations ratings obtained was highly
skewed toward the upper end of the 7 point scale

36
+
SERVQUAL refinements

the statements were revised to capture what customers will

expect from companies delivering excellent service e.g.
original expectations statement was hotels should give
customers individual attention was revised to read excellent
hotels will give customers individual attention

the negatively worded statements in the original SERVQUAL

instrument were problematic - they were awkward, could have
confused respondents and may have lowered the reliabilities for
dimensions containing them - so they were changed to a positive
format

finally, 2 original items (one under tangibles and assurance)

were replaced with 2 new items, to capture more fully the
dimensions

37
+
SERVQUAL usage

despite refinements, reliability always emerges as the

most critical dimension and tangibles the least critical
SERVQUAL can be used:
to determine the average gap score (between
customers perceptions and expectations) for each
service attribute
to assess a companys SQ along each of the 5
SERVQUAL dimensions
to compute a companys overall weighted SERVQUAL
score which takes account of the SQ gap on each
dimension and the relative importance of the
dimension

38
+
SERVQUAL usage

usedto track customers expectations and

perceptions on individual service attributes
and SERVQUAL dimensions over time
to
compare a companys SERVQUAL scores
against those of competitors
toidentify and examine customer segments
that significantly differ in their assessments of
a companys service performance
toassess internal service quality - i.e. quality
of service provided by one dept/division to
others within the company

39
+
SERVQUAL concerns

questions raised about SERVQUALs expectations

components (Babakus & Mangold, 1992, Cronin &
Taylor, 1992)
the interpretation and operationalisation of
expectations (Teas, 1993)
the reliability and validity of SERVQUALs difference
score formulation (Babakus & Mangold, 1992, Brown,
Churchill & Peter, 1993)
SERVQUALs dimensionality (Carmen, 1990, Finn (
Lamb, 1991)
but counter-arguments by PBZ 1991, 1993, and 1994,
and Parasuraman, 1996

40
+
SERVQUAL concerns
is it necessary to measure expectations? - studies show
scores on the perceptions-only component of SERVQUAL
explain significantly more variance in customers overall
evaluations of a cos SQ (measured on a single item
overall perceptions rating scale) than are perception-
expectation difference scores. PZB argue that measuring
expectations has diagnostic value (i.e. pinpoints SQ
shortfalls)
how should the expectations construct be
operationalised? multiple ways the term expectations
can be interpreted - SQ researchers have generally
viewed expectations as normative standards (customer
beliefs about what a service provider should offer) but
customer satisfaction/dissatisfaction researchers have
typically considered expectations to be predictive
standards (what customers feel a service provider will
offer)

41
+
SERVQUAL operationalisation
but both should and will expectations have been used in
measuring SQ although ZBP in 1993 went on to develop a
conceptual model of expectations

can we operationalise SQ as a difference score?

operationalising any construct as a difference between 2

other constructs is questioned on psychometric grounds;
critics suggest that direct measures (i.e. non-difference
scores) of the expectations-perceptions gap may be
psychometrically superior - but this issue is not resolved

does SERVQUAL have 5 distinct dimensions that cross

different contexts? replication studies have not been able to
reproduce a clean 5 dimensional factor structure as the
original PZB 1988 study - differences may be due to data
collection and analysis procedures

42
+
further SERVQUAL criticisms
(see Buttle 1996)
SERVQUAL is based on a disconfirmation paradigm rather
than an attitudinal paradigm
little evidence that customers assess SQ in terms of P-E gaps
process orientation rather than service encounter outcomes
SERVQUALs five dimensions are universals with high
intercorrelation between 5 RATER dimensions (reliability,
assurance, tangibles, empathy and responsiveness)
dont consumers use standards other than expectations to
evaluate SQ? and yet it fails to measure absolute SQ
expectations
4 or 5 items cannot capture the variability within each SQ
dimension

43
+
Further considerations
customer assessments of SQ may vary from moment of truth to
moment of truth

using a 7 point Likert scale is flawed

reversing polarity of items in the scale causes respondent error

Cronin & Taylor (1992, 1994) say SERVQUAL is flawed, with

perceived quality is best thought of as an attitude

PZB describe satisfaction as more situation or encounter specific

and quality as more holistic, being developed over a longer time
period

argued that PZB are inductive, and take no account of the literature
in economics, psychology and statistics

arguments about the marginal revenue of SQ improvements always

exceeding the marginal cost

44
+
Dynamics
interdependencies among the dimensions of quality are
difficult to describe
also is the customer value of improvements a linear or non-
linear function?
SERVQUAL fails to capture the dynamics of changing
expectations (customers learn from experiences) indeed,
Gronroos (1993) says we need to know more about how
expectations are formed and change over time
from the customers viewpoint, failure to meet expectations
often is more significant than success in meeting or
exceeding expectations
while process of service delivery focused, its argued that
outcome quality is already contained within reliability,
competence and security

45
+
Service Quality - other models

Richard & Allaway (1993) tested an augmented SERVQUAL

model which incorporates both process and outcome
components - they concluded that process and outcome is a
better predictor of consumer choice than process or outcome
alone

the number of SQ dimensions may be dependent on the

particular service being offered (Babakus & Boller, 1992)

Teas (1993b) believes respondents may be using one of six

interpretations of expectations:
service attribute importance (customers may respond by
rating the expectations statements according to the
importance of each attribute)

46
+
Performance specification
forecasted performance (customers may respond
by using the scale to predict the performance they
would expect)
ideal performance (the optimal performance, what
performance can be)
deserved performance (the performance level
customers feel performance should be)
equitable performance (the level of performance
customers feel they ought to receive given a
perceived set of costs)
minimum tolerable performance (what
performance must be)

47
+
Standards
Lacobucci et al (1994) would drop the word expectations
and prefer the word standards; they believe several
standards may operate simultaneously, among them ideals,
industry standards etc.

Gronroos (1993) refers to the bad service paradox - a

customer may have low expectations based on previous
experience with the service provider - if these expectations
are met, there is no gap and SQ is deemed satisfactory

so, do customers always evaluate SQ in terms of expectations

and perceptions or are there other forms of SQ evaluation?

what form do customer expectations take, how best (if at all)

they can be measured) and are expectations common across
a class of service providers?

48
+
Attitudes

do attitude-based measures of SQ perform better than the

disconfirmation model and which attitudinal measure is most
useful?

can we integrate outcome evaluations into SQ measurement and

how can this be done?

is the predictive validity of perception measures of SQ better

than P-E measures?

what are the relationships between SQ, customer satisfaction,

behavioural intention, purchase behaviour, market share, word-
of-mouth and customer retention?

what is the role of context in determining E and P evaluations?

what context markers do consumers employ?

49
+
Evaluation
are analytical context markers (such as tangibility and consumer
involvement)useful in advancing SQ theory?

do evaluative criteria in intangible-dominant services (e.g.

consulting) differ from those in tangible-dominant services (e.g.
hotels)?

how does customer involvement influence the evaluation of SQ?

how do customers integrate transaction-specific or moment of truth

(MOT) specific evaluations of SQ? To what extent are some MOTs
more influential in final evaluation than others?

what are the relationships between the five RATER factors? How
stable are these relationships across contexts?

what is the most appropriate scale format for collecting valid and
reliable SQ data? and to what extent can customers correctly
classify items into their a priori dimensions?

50
+
SERVQUAL additions
ZBP (1993) conceptual model of expectations - customers
have 2 different service levels that serve as comparison
standards in assessing SQ:
Desired Service (a level of service representing a blend of
what customers believe can be and should be
provided
Adequate Service (the minimum level of service customers
are willing to accept)

separating these 2 levels is a Zone of Tolerance that

represents the range of service performance a customer
would consider satisfactory

because SERVQUAL expectations component measures

normative expectations, the construct represented by it
reflects the desired service construct

51
+
SERVQUAL additions

theSERVQUAL structure did not capture the

adequate service construct so PZB (1994b)
augmented and refined SERVQUAL to:
capture not only the discrepancy between
perceived service and desired service - called a
measure of service superiority but also
the discrepancy between perceived service and
adequate service, labelled a measure of service
adequacy
PZBtherefore, rated desired, adequate and
perceived service, and went on to label adequate
service as minimum service

52
+
Diagnostic value
tests have shown that measuring perceptions alone should
suffice if the sole purpose of SQ measurement on individual
attributes is to try to maximise the explained variance in overall
service ratings but

from a practical viewpoint, it is important to pinpoint SQ

shortfalls and take appropriate corrective actions (therefore,
there is diagnostic value in measuring perceptions against
expectations)

clearly operationalising customer expectations as a zone or

range of service levels is feasible empirically and diagnostically

using the zone of tolerance as a comparison standard in

evaluating service performance can help companies in
understanding how well they are at least meeting customers
minimum requirements and how much improvement is needed
before they achieve service superiority

53
+
Measuring Service Quality

SERVQUAL:
One scale measuring customer expectations about
service companies in general within the relevant
service sector
One scale measuring customer perceptions about a
particular company
Based on five dimensions of service quality
Compare expectation scores with perceived quality
achieved
Used for internal performance management,
benchmarking versus competitors, customer
segmentation, tracking expectations/perceptions
over time

54
+
Measuring Service Quality

SERVQUAL criticisms:
Doubts over conceptual foundation & methodology
Only measures technical (outcome) & functional (process)
service quality
Results not re-producible over time (lacks stability)
Risks in assessing customer satisfaction relative to prior
expectations (if expectations low, even poor service might
seem good)
Only valid for services with high search or experience
characteristics problems with credence characteristics
better to use questions about performance (= perception)
only (Cronin and Taylor, 1992 and 1994 - SERVPERF) - higher
predictive validity
Measuring expectations has only diagnostic value
(pinpointing service quality shortfalls)

55