Operations Management (OM)

(KMBN 205) MBA 1st Year 2nd

Semester
E Content Unit 2 (Based on Operations
Concepts) by Mr. Nikhil Verma
TOPIC 1: Services Scenario in India
The economic development of any country is directly dependent on the advancement and
progress of the three sectors of the economy viz. primary sector, secondary sector, and tertiary
sector. The primary sector of an economy makes direct use of natural resources that are
involved in the production and extraction of raw materials from agriculture, fishing, forestry,
mining, dairy, etc., and the secondary sector also known as the industrial sector is
associated with the activities which involve the conversion of raw material into usable
products.

The majority of India’s population is engaged in the primary sector which in turn is the main
reason for underemployment in the country. Though in the last couple of years, manufacturing
has been a great focus, not much growth has been seen in the secondary sector (including
heavy manufacturing, light manufacturing, energy-producing, food processing, etc.) due to a
lack of infrastructure. So in order to quickly absorb this underemployed population, there is a
need to shift to the tertiary sector.

The tertiary sector also known as the service sector involves a variety of things under its
umbrella. Some of these are health and welfare, tourism, leisure, and recreation activities as
well as retailing and sales of goods to the people. In the past six years, the service sector has
undergone a great evolution which in turn has given it the independent status of the productive
sector of the country. Moreover, this sector also provides a major impact on foreign exchange
and thus contributes greatly to the modern economic development of the country.

Advantages of the Service Sector

Below are the 5 Advantages of the Service Sector in India’s economy:
1. No Inventory:
In the service sector, there is no need to built-up a reserve of inventory that needs to be stored
in a warehouse. Because the product that you are selling is your skills and expertise wherein
you’ll only need to have the necessary equipment required to perform the required services, no
warehouse full of inventory needed.
2. Easy to start up:
In comparison to other business industries, starting a business in the service sector is relatively
easy. Because business in the service sector requires little more than a license, phone, and a
person with the required skills and expertise to get up and going. This not only makes it quite
easier but also very affordable to get started.
3. Flexible hours:
Working in the service sector provides flexibility in the working hours, which in turn allows
you to get an opportunity to further increase your skill and education and to accomplish other
important tasks at times you might not otherwise be able to.
4. Greater adaptability to changes:
The service sector companies are able to adapt to the changes in customer needs much easily
and quickly in comparison to product-based companies.
5. Provides job even during economic crisis:
During an economic dip, when people are cutting down their expenditure and are only paying
for basic necessities, the service sector helps to keep the job and bring in the revenue as service
sector experts are always in demand.

Significance of the Service Sector

1. Promotes industrialization:
The service sector provides various facilities such as transportation, banking, electricity, repair,
or communication in support of the distribution of the manufactured goods which directly
affects the development of an industry in a country. For example-transport systems helps to
carry laborer, raw material and finished goods to their destination, communication networks
are required to make a market for the product and for the industries to prosper, we require
banking and electricity. Moreover, the feedback from the marketplace, fast delivery as well as
the ability to customize products are all dependent on the service industry.
2. Growth Of Economy:
India is the one of the fastest growing economies of the world and the growth rate was the 2nd
highest among the G20 countries. According to World Bank data in the year 2023, India has
become the 5th largest economy with a GDP of 3.7 trillion USD, demoting France to the 7th
position, allowing for the growth of the service sector in the country.
3. Growth of Agriculture:
By providing network facilities, service sectors help in the development of agricultural
products such as helping in the transport of raw material and finished goods from one place to
another.
4. Increase in the productivity of the goods:
The service sector helps in providing appropriate technical knowledge/education to the
workers as well as provide them with proper medical facilities. Moreover, the service sector
also facilitates an organized network of communication and transport systems which helps in
increasing mobility and information among the workers. This results in an increase in the
productivity
5. Provides Good Quality Life:
By providing better services in the field of education and health, banking and insurance as well
as communication and transportation, the service sector has helped in increasing the quality of
life in the country and thus helping in raising the country’s human development index (HDI).
6. Growth of Market:
This sector provides various services catering to the needs of both primary and secondary
sectors and thus helps in providing a market for the finished goods as well as raw materials or
semi-finished goods for both i.e. agriculture and industries.
7. Increase in international trade:
India’s trade in services recorded substantial growth as the country became globally
competitive in ICT services which increased exports manyfold and led to an increase in India’s
trade surplus. Service exports have contributed to the inclusive economic processes by
increasing the amount of well-paid jobs and by reallocating labor to a high-productivity sector.
8. Removes regional disparities:
The service sector has made it possible to connect every small town and village through a well-
organized system of communication and transport. Moreover, the expansion of education,
medical as well as banking services in various backward areas of the country has helped in
removing the regional imbalances and disparities throughout the nation.

TOPIC 2: Difference between Product & Services

Difference between Goods and Services
Basis Goods Services

Services are intangible that cannot be

Goods are tangible items that
Meaning seen, felt, touched or seen; but are
can be felt, touched or seen.
experienced by the consumer.

Nature Goods are tangible in nature. Services are intangible in nature.

Services are heterogeneous and

Goods are homogeneous and can depend upon the person providing
Type
be produced exactly the same. the service and the customer’s
preferences.

The ownership of goods can be The ownership of services cannot be

Transfer of
transferred from one transferred from one person to
Ownership
person(seller) to another.
 Basis Goods Services

another(buyer).

There is inconsistency in services, as

There is consistency in case of different customers have different
goods, as different customers get demands and get their demands
Inconsistency
standardised demand fulfilled. fulfilled accordingly. For example,
For example, laptops. different people need different
services in salons.

The production and

consumption of goods can be
The production and consumption of
separated. For example, chairs
Inseparability services happen simultaneously. For
are manufactured first and are
example, eating food at a restaurant.
used by consumers later after a
while.

One can keep goods in stock as One cannot keep services in stock as
Inventory inventory. For example, a inventory. For example, getting a
warehouse full of watches. haircut at a salon.

Involvement of customers at the There is involvement or participation

Involvement time of delivery of goods is not of customers at the time of delivery
possible. of services.

Once purchased, goods can be Once provided, services cannot be

Return
returned to the seller. returned to the service provider.

Goods can and cannot be

Perishability Services are perishable.
perishable.
 TOPIC 3: Characteristics of Services
Some of the important characteristics of services are as follows: 1. Perishability 2. Fluctuating
Demand 3. Intangibility 4. Inseparability 5. Heterogeneity 6. Pricing of Services 7. Service
quality is not statistically measurable.

1. Perishability:
Service is highly perishable and time element has great significance in service marketing.

Service if not used in time is lost forever. Service cannot stored.

2. Fluctuating Demand:
Service demand has high degree of fluctuations. The changes in demand can be seasonal or by

weeks, days or even hours. Most of the services have peak demand in peak hours, normal

demand and low demand on off-period time.

3. Intangibility:
Unlike product, service cannot be touched or sensed, tested or felt before they are availed. A

service is an abstract phenomenon.

4. Inseparability:
Personal service cannot be separated from the individual and some personalised services are

created and consumed simultaneously.

For example hair cut is not possible without the presence of an individual. A doctor can only

treat when his patient is present.

5. Heterogeneity:
The features of service by a provider cannot be uniform or standardised. A Doctor can charge

much higher fee to a rich client and take much low from a poor patient.
6. Pricing of Services:
Pricing decision about services are influenced by perishability, fluctuation in demand and

inseparability. Quality of a service cannot be carefully standardised. Pricing of services is

dependent on demand and competition where variable pricing may be used.

7. Service quality is not statistically measurable:

It is defined in form of reliability, responsiveness, empathy and assurance all of which are in

control of employee’s direction interacting with customers. For service, customers satisfaction

and delight are very important. Employees directly interacting with customers are to be very

special and important. People include internal marketing, external marketing and interactive

marketing.

TOPIC 4: Concept of Product & Service Design, Factors Affecting

Service Design
TOPIC 5: Service Designing Process
Services have been around forever they used to be simple but then the world got more
complicated we found more and more ways for customers to interact. These complications can
be seen in how many businesses deal with their customers and these complications in design
can be addressed and removed with the help of Service Design. Service Design is the process
of analyzing the workflows and the tasks that are performed to complete a service, and
bringing in changes to improve this experience which results in a better experience for both
users and employees.

Service Design is the process of analyzing the workflows and the tasks that are performed to
complete a service, and bringing in changes to improve the experience of the customer going
through a Service which results in a better experience for both users and employees. Service
Design simplifies the complexity of delivering a service by allowing the designer to see the
world from the customers’ point of view from their first interaction to the building of a long-
term relationship. Service Designers work directly with customers, frontline employees, and
internal teams to prototype and iterate better interactions. Service Design helps us manage and
diagnose existing services, or compose completely new services.

The three important questions that Service design addresses are:

1. What do customers want?
2. What are customers needs?
3. How would customers like to do business?
Benefits of Service Design
 Bridging Organizational Gaps: In most of the organizations various teams work in silos
meaning that departments like sales, product, marketing, and support aren’t communicating
about the holistic customer experience. In any business, each team understands the user not
the experience of one user across many touchpoints. These knowledge gaps can result in
inconsistencies in the end product. Service Design comes in play here and bridges the gap
between various departments making sure that the customer experience is good as well as
consistent.
 Reducing Redundancies: Redundancies in terms of design are the various component of
design or processes that have very less to no impact on the improvement of the final design
and can be considered as a waste of time and resources. The Service designers get a better
picture of what user wants from the product or service and hence they play an important
 role in Reducing redundancies by defining where duplicate efforts occur and redesigning
them.
 Improving the customer and employee experience: Service Design is the process of
analyzing the workflows and the tasks that are performed to complete a service, and
bringing in changes to improve this experience of the customer going through a Service
which results in a better experience for both users and employees.
 Surfacing Conflicts: Surfacing conflicts refers to figuring out the issues with the
experience of the service and the difference between what the company wants to deliver
and what it delivers. It is the job of a Service designer to surface conflicts like
misalignment between the business models and the service the organization delivers and
figure out possible solutions to these conflicts. This increases the importance of Service
Design since it helps in managing and diagnosing existing conflicts in the services being
offered to customer.
 Fostering Conversations: In any Company or business even when each team understands
their user in isolation, they are likely not paying attention to the experience of one user
across many touchpoints. These conversations gaps can result in inconsistencies and user
pain points. Service designers make sure that the teams communicate their goals with each
other so that all the teams are on the same page.
Service Design vs Product Design
The difference between the process of Service Design and Product Design are highlighted
under following points:
Service Design Product Design

Service Design is the process

of analyzing the workflows
and the tasks that are Product design is a set of
performed to complete a processes that collectively is
service, and bringing in about imagining a product
changes to improve this and then bringing it into
experience of the customer reality by designing it and
going through a Service iterating until the desired
which results in a better prototype is formed.
experience for both users and
Definition employees.

1. Service design expertise

2. Communication
1. Wireframing, Prototyping
3. Collaboration
and creating Storyboards
4. Empathizing
2. Design Systems
5. User research
3. User research & testing
6. Customer journey
4. Presentation
mapping
5. User Personas
7. Extract insights from
Skills Required research data points
 Service Design Product Design

Service designer have to Product Design does not

work on forming include forming relationships
relationships, by facilitating and Product designers have a
discussions across limited role in bridging the
departments and creating a communication gap between
Communication shared understanding. various teams.

Average salary of a Service Average salary of a Product

Designer in the US is about Designer in the US is about
Salary $80k $100k

According to a survey, According to a survey,

Service Designers rate their Product Designers rate their
work life balance as 4.5 out work life balance as 4 out of
Lifestyle of 5. 5.

Working Process
The working process of Service Design can be divided into 6 sub steps:
1. Defining clean Objectives for Service Design
2. Understanding the users using data or User Personas
3. Go through the current design ecosystem
4. Identifying issues and optimizations in current design ecosystem
5. Ideation or coming up with innovative solutions
6. Testing and Iterating the changes

TOPIC 6: Service Blueprinting

The service process is an element of augmented marketing mix and vital point of value chain.
Service process is a way of undertaking transaction, supplying information and providing
services in a way which is acceptable to the customer and effective to the organization. One of
the keys to matching service specification to customer expectation is the ability to describe the
critical service process characteristics objectively and to depict them so that the employees,
customers and managers alike know what the service is, can see their roles and understand all the
steps and flows involved in the process. Shostack introduced the concept of Blueprinting for
designing and specifying intangible service processes.

A service blueprint is a visual portrayal of the service plan that displays the service by
simultaneously depicting the process of service delivery, the point of customer contact, the role
of customer and employees and the visible element of the service. It allows the marketer to
evaluate which tasks are more critical and which are prone to failure. This technique can be used
not only for developing new innovative services as well as for improving the existing services.
(Valarie A. Zeithaml)

Building a Service Blueprint

The development of the blueprint needs to involve a variety of functional representatives as

well as information from the customer. Following points should be considered.

Step 1- Identify the service process to be blueprinted – Oneshould break down the complex
process into small steps and identify those parts of services which are not visible to the clients.
Example: Purchasing of supplies.

Step 2- Identify the customer or the customer segment experiencing the service– The needs of
the each customer segment is different and requires the variation in the service design. Blueprints
are useful when developed for customer or the customer segment assuming that the service
processes varies across the service segment. Separate blueprint should be developed to avoid
confusion and maximize their usefulness.

Step 3 – Map the service process from the customer’s point of view – This step involves
charting the choices and actions of the customers in purchasing, consuming and evaluating the
service. This step will help avoid focusing on processes and the steps that have no customer
impact. This step focuses on who the customer is and involves the considerable research and
observation to determine exactly how the customer experiences the service. Sometimes the
beginning and ending of the service from the customer‟s point of view are not obvious.

Step 4- Map contact employee actions – First the lines of interaction and visibility are drawn
and the process from the customer contact person‟s point of view is mapped, distinguishing
visible onstage activities from the invisible backstage activities. For the existing services this
step involves preparing frontline operation employee to learn what they need to do and which
activities they are expected to perform in full view of customers versus which activities are
carried out in back-office.

Step 5- Link contact activities to needed support functions – The line of internal interaction
can be drawn and linkages from contact activities to internal support functions can be identified.
In this process, the direct and indirect impact of internal actions on the customer becomes
apparent. Internal service processes take on added importance viewed in connection with their
link to the customer. Alternatively, certain steps in the process may be viewed as unnecessary if
there is no clear link to essential internal support service.

Step 6 – Add evidence of service at each customer action step – Finally, the evidence of the
service can be added to blueprint to demonstrate what the customer see and experience as
tangible evidence of the service at each step in the process. A photographic blueprint, including
photos, slides or the video of the process can be very useful at this stage to aid in analyzing the
impact of the tangible evidence and its consistency with the overall strategy and service
positioning.
 Step 7 – Isolate fail points – In this step the expert should build failure-safe sub process in
order to correct possible errors

Step 8- Establish time frame – The execution time frame of services is a major cost
determinant factor for calculating maximum of deviation.

Step 9- Analyze profitability – The expert must quantify the cost of delay and establish the
time of service execution standard in order to analyze the profitability from the distribution of
service. (Valarie A Zeithaml)

Different Components of Service Blueprinting

The convention for drawing service blueprint is not rigidly defined. Thus, the particular
symbols used the number of horizontal lines in the blueprint and the labels for each part of
blueprint may vary somewhat depending on complexity of blueprint being described. One of the
service blue printing‟s major strengths is its flexibility when compared with other mapping
approaches. The key components of the service blueprint are given below with the example of
Hotel Stay Service:-

1. Customer actions: This area involves the steps, choices activities and interactions that a
customer performs in the process of purchasing, experiencing and evaluating the service. The
total customer experience is apparent in this area of blueprint. For example, as shown in above
blueprint for the overnight hotel stay service customer is actively involved and his activities and
interactions in the hotel at various point of time is shown in customer action component such as
arrive at hotel , checks in , sleep shower receive food ,checks out and leave.

2. Contact employee action: Parallel to the customer action there are two areas of contact
employee action which are as follow-:
 (i) Onstage/Visible contact employee action-: The activities that the contact employee
performs that are visible to customer are onstage / visible contact employee actions.(Valarie A
Zeithaml) For example in above diagram employees directly interact with the customer
through the activities such as greet and take bag, process registration, deliver bags , deliver food ,
process checkout.

(ii) Backstage/invisible contact employee action-: These are the actions that occur behind
the scenes to support the onstage activities. In the above example backstage activities include
take the bag to room and take food order.

3. Support processes: This section covers the internal services, steps, and interactions
that take place to support the contact employees in delivering the service. As in the above
example activities which are performed to support frontline employee actions are registration
system, prepare food and registration system.

4. Physical evidence: In the blueprint physical evidence is listed at the top of each point of
contact. These are also known as peripheral evidence. These are not essential for the operation of
core service, but have important bearing on the service delivery. A customer may get attracted or
detracted from the services because of these peripheral evidence such as newspapers or
magazines to read, appointment cards. As in the above example, each step in the customer
section area is also associated with various forms of physical evidence, from the hotel parking
area and hotel exterior and interior used at guest registration, the lobby, the room and the food.
(R.Srinivasan)

Preparation of Service Blue Print

The stages involved in blue printing preparation are:-

1. Representation of Product (Service) in its molecular structure: In case of services the

intangible elements dominates in the blueprint design. In blue print design intangibles elements
are represented by circles, whereas tangible elements are represented by square. As each
intangible element of molecular structure have varying degree of importance. The size of
element will be drawn according to its prominence. For example in hair dressing service the
larger circle will be drawn for hair cutting skills as it is a key intangible element of the hair
dressing service whereas for the skills like hair styling will be shown by smaller circles as it is
subsidiary intangible element.

Though some service providers argue that the molecular structure stage could be omitted in
the preparation of service blue printing and final version of molecular diagram may seem very
obvious but it may be undertaken for the following reasons.

a) It concentrates the mind and provokes the valuable discussion: This stage helps in knowing
actual skills required to meet the customer wants.
 b) It increases the understanding of the services being offered: In this stage we establish the
importance of the different skills required for the service by evaluating these skills which further
helps us in better understanding of the services being offered.

2. Breaking down the process into logical steps: At this stage the whole service process is
broken down into logical steps. To affect a satisfying experience, service provider develops a
script which is defined as pre-determined, stereotype sequence of actions that defined a well-
known situation. The script basically tells the customer what his role should be in the sequence
of the events and what other people are likely to do. For each step in the process performance is
monitored and set against organizations specifications and customer expectations. More the
service received confirms to the script more is the customer satisfaction.

3. Recognizing the variability in the process: In the service blueprint fan symbol is used to
denote variability within the process. The variability can be either planned or unplanned. Where
the variability is planned the fan follows a rectangle whereas variability is unplanned the fan
follows the circle. It is important, at this stage, in the service design process to design where the
unplanned variation may occur and to anticipate a potential service failure point. Also set the
executional standards that are tolerance around each function which are acceptable from the
customer and the cost point of view.

4. Identify the back stage elements in the process: Backstage elements are shown in the
process after the line of visibility, which distinguishes front office from the back office. These
elements include the activities which are performed to support visible actions of the employees.
Many of the backstage elements themselves can be represented as processes.

Service Mapping

It is a technique which is used to portray an existing service situation and provides a useful
tool to assess and identify service evidence opportunities. These are built on blueprints and
provide two important additional information features to the service provider.

1. Provide greater attention to customer interaction that is paying more attention on front stage
activities.

2. Provide visual representation of the structure of the service by drawing additional vertical
layers.

In the service map the horizontal axis represent the process and the vertical axis represent the
structure of the service. A service map may be read horizontally from left to right to understand
the actions or steps that might be performed by either customer or the contact employees of firm,
or it may be read vertically to understand structural relationship that exist to support the actions
of the customer and the employees. Larger the service organization the greater the need to make
clear structure in order that service logic is understood by employees. In service map, the service
organization structure depicted on the vertical axis becomes more clear through dividing lines.
These lines are as follows:-
 SERVICE BLUEPRINT COMPONENTS

1. Line of Interaction: This denotes the distinction between the customers and the
frontline employees.

2. Line of Visibility: This line separates all the service activities visible to
customer from those not visible to customer. This line also separates what the contact
employees do onstage from what they do backstage. For example in a medical
examination situation the doctor would perform the actual exam and answer the
patient‟s questions above the line of visibility or onstage, whereas the doctor might
reads the patients chart in advance and dictates notes following the exam below the
line of visibility or backstage.

3. Line of Internal Interaction: This line separates the customer-contact employee

activities from the operations support staff activities. The interaction between them
normally occurs out of sight of customers.

4. Line of Implementation: This line divides the operations staff and general
management services. The latter may be located physically at a distance from the
former and are not therefore directly involved with implementing the service.

Advantages of Blueprinting

1. Provides an overview: The employees can relate „what I do‟ to the service
viewed as an integrated whole, thus reinforcing a customer oriented focus among
employee.
 2. Identifies fail points: Blueprint helps to identify weak points of the chain of
service activities. These points can be the target of the continuous quality
improvement.

3. Improves service design: Line of interaction between internal customers and

employees illuminates the customer‟s role and demonstrate where the customer
experiences the quality, thus contributing to informed service design.

4. Rational service design: line of visibility promotes a conscious decision on

what the customer should see and which employee will be in contact with customer,
thus facilitating the rational service design.

5. Continuous quality improvement: line of the internal interaction clarifies

interfaces across departmental lines, with their inherent interdependencies thus
strengthening continuous quality improvements.

6. Identifies resources-: Provide the basis for identifying and assessing cost,
revenue, and capital invested in each element of service.

7. Facilitates top down bottom up approach to quality improvement: It

enables the manager to identify channels and support quality improvement efforts of
gross root employee working both frontline and support teams. Employee work team
can create a service map and thus more clearly apply and communicate their
experience and suggestion for improvement.

8. Constitute a rational basis for internal and external marketing: Service

blue print becomes a rational basis for internal and external marketing. For example
the service map makes it easier for an in-house promotion team to overview a service
and select essential messages for communication.

Service Failure

Whether it is drawing a blueprint or a service map, failures cannot be totally

avoided. However, the points of potential service failures can be identified and “Fail
Safe” can be designed to reduce their occurrences. According to Chase and Stewart,
server errors can be described as a task, treatment or tangibles.

 Task errors-: These errors include doing work incorrectly or work not requested, or
doing work in the wrong order or too slowly.
 Treatment errors-: These errors include failure to acknowledge, listen to, or react
appropriately to a customer.
 Tangible errors -: These errors may be caused by failure to clean facilities or provide
clean uniforms, or by failure to control the ambient conditions in the
physical environment.

In the case of auto dealer service, all these types of errors do commonly occur. It is
only by a reduction of such errors does a service quality improve. Customer errors can
be related to preparation of the service encounter, the encounter itself, or to the
resolution of the encounter.

 Preparation errors -: These errors may occur because of the failure of the customers
to understand their roles properly in a service encounter.
 Encounter errors-: These errors may be due to customers‟ failures to follow the
service process properly.
 Resolution errors-: these errors may be due to failures of the customers to point
out the service failures, lack of learning from experience, or lack of appropriate post-
encounter actions.

By taking proper proactive strategies, potential service failure points can be

minimized.

Application of Service Blue Print

The service blue print of existing service displays the real moments of the service
provision. It is possible to have a better understanding of the process success factors.
Further analysis of service can be done with different goals in the mind.

Possible objectives could be to increase the client satisfaction, to diminish the

process times, to reduce costs or to increase the service quality. The service blueprint
can be used as starting point for process cost analysis. Service blue print based
simulation can aid in service analysis. Depicting a service with service blueprinting
does not automatically guarantee its validity. With the help of simulations, trouble
spots in the process design can often be exposed.

Complexity, Divergence and Service Positioning using Blue Prints

According to Shostack blueprints can be used to determine the level of complexity

and degree of divergence of a service. Complexity relates to the number of steps and
intricacies, the greater is the complexity. The extent of planned scope or latitude
which contact personnel are given refers to the degree of divergence. Low divergence
can result in a high level of standardization. The symbol fan on the blueprints refers to
points where varying degrees of divergence can be considered. This complexity is
related to the size and number of elements in the blueprint, and divergence depends on
the number of fans in the diagram. Any change in complexity and divergence reflects
on service provider‟s judgments on the current and potential customer base. The
molecular diagram of the blueprint will focus on the elements of the process which
affects the positioning and operation.

TOPIC 7: Service Capacity Planning

 TOPIC 8: Dimensions of Quality in Services
Service Quality Dimensions

In the year 1984, Gronroos identified two major dimensions of the service quality and
provided a differentiation of the same. The first dimension was technical in nature and it offered
to explain the “what” aspect of a service quality. This means, this aspect of quality dimension
was the core benefit being offered to the consumer. The second dimension was the “how” aspect
of the service which means that in what process the service was being offered and delivered to
the potential consumers.

In the year 1991, Parasuraman et al developed an instrument called as SERVQUAL, which

became very popular in measuring the quality of the services. This instrument proved very useful
in identifying the service gaps between the customer‟s expectations from the service quality and
the consumer‟s perception about the service being delivered. The instrument consists of 22
statements for assessing consumer perceptions and expectations with respect to the quality of the
service. The respondent is expected to rate their level of agreement or disagreement with the
the given statement related to the service quality. These statements represent the various
dimensions of the service quality. There are five different dimensions which are sought to be
measured by the Servqual instrument. Let us look at these dimensions one by one:

a) Tangibility

We have time and again discussed that the difficulty in measuring the quality of the services is
that these are intangible in nature. However, there are some services which have certain tangible
aspects which may be associated with the service, thereby resulting in the evaluation of services
along with the perception of the quality of these tangible variables. For example, the hospitality
services are intangible in nature. But the measure of its quality is usually done along with the
quality of the food, ambience and cleanliness it offers to the consumers. Thus, one of the most
important dimensions of Service quality is the tangibility aspect. The aspect of tangibles in the
restaurant, therefore, shall include the services and behavior of the service personnel, physical
environment and the facilities, equipment and communication material associated with the
service.
 b) Reliability

The second dimension of Service Quality is the degree of reliability of service qualit y
deliverables it offers to the consumers. Reliability is the ability of the service provider to
consistently offer promised services dependably and accurately to eth potential consumers in
each of service transactions. To offer reliable services means that the producer is meeting the
promises it made related to service delivery, various service provisions, service performance,
grievance redressal, service guarantees, and prices or discounts in every service transaction it
makes. The dimension of reliability is significant as every consumer prefers dealing with a
marketer who keeps his promises, especially the promises which are related to the performance
of the services and the pricing structure. It is thus, important for the service marketer to
understand about what the consumers expect from the service marketers. If any marketer fails to
assess the needs of the consumers or does not come up to the expectations of the consumers, the
marketer may fail to allure the target consumers in the most direct way.

c) Responsiveness

The third dimension of Service quality refers to the willingness of the service provider to help
the customers in satisfying their most sought after need or benefit in the most economical
manner and at the earliest. Being responsive means to be able to react quickly to the requests of
the consumers or the complaints put in by the consumers. The consumers may even want a
response from the service provider related to the problem or a query that they may face in
relation to the service. Let us explain this concept with the help of an example. Consider that you
have purchased a new Health insurance policy. You have been given certain amount of benefits
in getting the claim of the pathological tests or the expenses of the hospital stay or medicines etc.
After a few months of the purchase of the policy, you wish to claim the benefit by getting a
cashless medical facility in a particular hospital or path lab. For this, you inquire about the
procedure for the same from the health insurer but are unable to get a quick and satisfactory
reply, you may be highly dissatisfied. Further, there could be a medical emergency in which a
policy holder may like to make use of the cashless services and may be hard pressed for time. In
such emergent medical situations it is highly expected that the service provider should be quick
in responsiveness. If he fails to respond quickly, the customer may have a very low image of the
seller and may not speak good about the service quality of the seller. Hence, responsiveness is
related to the length of time taken to assist a customer and also the degree of flexibility on the
part of seller to customize a service and satisfy the needs of the customer.

d) Assurance

Another dimension of service quality refers to the trust or confidence that a consumer has in
the service seller, called as Assurance. This may be defined as the perception about the service
seller in its ability to offer consistent level of service performance and an empathetic delivery
system to meet the consumer‟s needs in the most reasonable price range. Coming back to the
aspect of intangibility of the services, many a times the decision to purchase the services from a
given seller may be a result of the trust that the seller may inculcate in its dealing amongst the
potential buyers. This confidence in the seller facilitates overcoming the high risk or uncertain
 buying situations of any service. Assuming, that a consumer wants to make a purchase of a
holiday package from a seller, he may be confronted with a number of offers in the market. Since
there may be a lot of uncertainty involved in the type of hospitality one receives at holiday
destinations and locations as well as the overall entertainment experience may also be uncertain,
the consumer may end up choosing a seller who is able to instill a sense of assurance in the
consumer and whom the consumer personally has trust on. It is important to note that most of the
times, in services marketing this trust may be developed due to the personal dealing of a service
marketing employee.

e) Empathy

Empathy is the fifth dimension of service quality. It refers to the care and individualized
attention offered to the consumer for the satisfaction of his needs and expectations by the service
seller. A service provider having the perception of a marketer offering customized services to the
consumers to cater to their individual requirement is considered to be of a higher quality. Let us
take for an example, if a consumer hires an event management organization for the management
of an event like a road show for the promotion of its Brand, it may have certain specific
requirements and expectations in the arrangement of the show. The event management
organization cannot use a standard format of holding an event and will have to have a tailor
made show based on the expectations of the outcomes of the potential consumer. It is important
for the service marketer to ensure offering creative services to each of its customers so that the
ever increasing demands of the consumers can be met.

TOPIC 9: Measuring Service Quality Gap Using SERVQUAL

Model
The Gap Model of Service Quality has been developed by Parasuraman and his colleagues which
helps to identify the gaps between the perceived service qualities that customers receive and
what they expect.

The Gap Model of Service Quality identifies five gaps:

1. Consumer expectation — management perception gap.

2. Management perception — service quality expectation gap.
3. Service quality specifications — service delivery gap.
4. Service delivery — external communications to consumer’s gap.
5. Expected service — perceived service gap.
1. The first gap is the difference between consumer expectations and management perceptions of
consumer expectations. Research shows that financial service organizations often treat issues of
privacy as relatively unimportant, whilst consumers consider them very important.
2. The second gap is the difference between the management perceptions of consumer expectations
and service quality specifications. Managers will set specifications for service quality based on
what they believe the consumer requires. However, this is not necessarily accurate. Hence many
service companies have put much emphasis on technical quality, when in fact the quality issues
associated with service delivery are perceived by clients as more important.
3. The third gap is the difference between service quality specification and the service actually
delivered. This is of great importance to service where the delivery system relies heavily on
people. It is extremely hard to ensure that quality specifications are when a service involves
immediate performance and delivery in the presence of the client. This is the case in many
service industries: for example, a medical practice is depending on all the administrative, clerical
and medical staff performing their tasks according to certain standards.
4. The fourth gap is the difference between service delivery intention and what is communicated
about the service to customers. These established expectations within the customer may not be
met. Often this is the result of inadequate communication by the service provider.
5. The fifth gap represents the difference between the actual performance and the customer
perception of the service. Subjective judgement of service quality will be affected by many
factors, all of which may change the perception of the service which has been delivered. Thus a
guest in a hotel may receive excellent service throughout his stay, apart from poor checking out
facilities. But this last experience may damage his entire perception of the service, changing his
overall estimation of the quality of the total service provided from good to poor.

The The Gap Model of Service Quality outlined above provides a framework for developing a
deeper understanding of the causes of service quality problems, identifying shortfalls in service
and determining the appropriate means to close the gaps.