Paper 14: Tourism and Hospitality Marketing

Module 10: Customer Behaviour

THE DEVELOPMENT TEAM

Principal Investigator Prof. S. P. Bansal

Vice Chancellor, Indira Gandhi University, Rewari

Co-Principal Investigator Dr. Prashant K. Gautam

Director, UIHTM, Panjab University, Chandigarh

Paper Coordinator Dr. Rajesh Verma

Mittal School of Business,
Lovely Professional University, Punjab

Paper Co-Coordinator Dr. Rahul Sharma

Mittal School of Business, L.P.U, Punjab

Content Writer Dr. Rahul Sharma

Assistant Professor Mittal School of Business, L.P.U (PB)

Content Reviewer Prof. Balram Dogra

Campus Director, Rayat Bahra University, Kurali, Punjab
TERMS DESCRIPTION OF MODULE

Subject Name Tourism & Hospitality

Paper Name Tourism and Hospitality Marketing

Module No. 10

Module Title Consumer Behavior

To understand and analyze the buying behavior of consumers and study the factors
Objectives
that affect consumer buying.

Consumer behavior, buying behavior process, cultural factors, social factors,

Keywords
personal factors, psychological factors, factors affecting consumer behavior.

TABLE OF CONTENTS
1. Learning Outcome
2. Introduction
3. Factors affecting consumer behaviour
3.1 Cultural factors
3.2 Social factors
3.3 Personal factors
3.4 Psychological factors
4. Buying decision process
5. Types of buying behaviour
6. Summary

QUADRANT-III

Service Gap analysis

1. Learning Outcome
After completing this module students will be able to:
i. Understand the importance of Service quality
ii. Understand the concept of Service Quality Gaps
 iii. Understand strategies to bridge in Service Quality Gaps

Service Gap Analysis

2. Introduction
Business are confronted with numerous business challenges and the advent of this ever-changing
global environment has fuelled up these challenges further. Troubled by the heated competition,
businesses are in quest to search for efficiency and profitable ways to differentiate themselves from
competitors. The idea is to attain competitive advantage. The service concept is trending in parallel
with economic development and increasing standards of living in domestic as well as international
markets. Particularly in some businesses - such as travel, tourism and catering, the delivery of
high-quality services to consumers is considered of paramount importance in gaining a profitable
market share. It is thus imperative to focus more on service quality dimensions which are used by
customers while evaluating a service firm’s overall service quality.
Managers in the service sector are under a constant pressure to elucidate that their overall business
focus is to provide superior customer services in all business functions. It is thus extremely
important for tourism and hospitality firms to identify customer expectations and perceptions to
identify service quality gaps if exist and to also formulate strategies to bridge in these gaps.
2.1 Service Quality

Service quality is an area that has grown in interest over a period of time. The concept has been an
area of academic debate since beginning. However, there is no consensus in the academic literature
as in what exactly service quality is composed of. Growing importance of this area has resulted
into the creation of a plethora of different "definitions" as to what is meant by ‘service quality’
exactly mean. One of the most commonly used perspective defines service quality as the degree to
which a service meets customers’ needs or expectations. Service quality thus is usually considered
as the gap between expected and perceived service quality. If there is positive gap between
expected and perceived service quality (higher expectation but poor perception), this leads to
customer dissatisfaction. Similarly, if there exists a negative gap (perception exceeds the
expectation) customer feels satisfied and happy with the service. A brief on various definitions of
Service quality as proposed by various researchers is displayed in the table below:
Table: 1: Definitions of Service Quality

Sr. No Definition
1 Sidin et al. (2001): Service quality is understanding and meeting customer needs
effectively.
2 Caruana (2002): Service quality compares customer’s perception against customer
expectations.
3 Nath and Zheng (2004): Service quality is an initiative taken by management to
understand how an organisation serves its customers in light of the expectations of their
perceived service.
4 Mohammad and Alhamadani (2011): Service quality definitely indicates what is left of
a customer’s previous perception of the service quality and the level of his/her
satisfaction with the current performance.
5 Parasuraman, Zeithaml, and Berry (1985): Service quality is the gap between
customer expectations and perceptions of service.

2.2 Service Quality and Customer Satisfaction

The ever-ending debate on the relationship between the service quality and its impact on customer
satisfaction has always attracted my eye balls. Customer satisfaction a result of a cognitive and
affective evaluation of a product or service. This happens when product or service performance is
measured against some pre-set performance (benchmark) yardstick. Since the rise of marketing
philosophy, satisfying customers by creating customer value as been the moral of the story. Due to
the same reason, customer satisfaction usually is defined in terms of a disconfirmation approach,
where a customer agrees or disagrees to having reported any gap between expectation (before
usage) and perception (post-usage).
As an assumption, a satisfied customer might be willing to pay higher price of the products and
services they believe rate higher in-service quality. Satisfied consumers are also assumed to be
faithful to the company and may offer a high customer life time value thereby helping the company
secure profitable returns. Assessing customer satisfaction is of utmost importance as a dissatisfied
customer not only switch to other competing brands but as well indulge in spreading negative word
of mouth. A research by Darak and Habib (2010) has shown that a satisfied customer will pass
positive word of mouth to five more users whereas a dissatisfied user will pass a negative word of
mouth to nine other users. Coupled with the information communication technology and social
networking, negative word of mouth has become electronic word of mouth which can kill a brand
if not addressed well. It is hence imperative for tourism and hospitality firms to try to develop the
ways in which customers can be satisfied with its service quality. It is very important to remember
that both, happy and unhappy customers may have an effect on the brand loyalty.
However debatable, most of the academic literature and practitioners strongly believe that service
quality an extremely important antecedent of customer satisfaction which leads to superior
financial performance and sustainable competitive advantage in service industry. Hence there is a
need to identify service quality gaps and also a need to devise strategies to bridge in these gaps
working towards an excellent service experience.

3. Service quality Gaps

Being able to provide superior service quality is an ongoing concern of marketers in any industry.
Products or services not being able to meets the expectations of consumers are difficult to sustain
in a competitive market. Since tourism and hospitality industry’s product is mostly a service,
service quality gap analysis becomes even more important for firms in a service industry.
SERVQUAL is a tool that can be used to identify and measure gaps in service quality that can be
used by manager across majority of service industries. The aim of this model is to:

• Estimate service quality gaps

• Help devise strategies to bridging in these gaps
This model was developed by Parasuraman, Zeithaml and Berry in 1985 and identifies five service
quality gaps:

Gap-I: The Knowledge Gap: The Gap between Consumer Expectation and Management
Perception

The Gap-I (knowledge gap) arises due to the difference between the customer’s expectations and
the company’s provision of the service. In other words, this gap arises when management fails to
translate identified customer expectations into service actions and specifications. This means in
this gap, managers usually fail to accurately interpret the customer’s expectation. Presence of Gap-
I reflects that company tried to meet wrong or invalid consumer needs.

Gap-II: The Policy Gap: The Gap between Management Perception and Service Quality
Specification

Gap-II arises due to the management’s incompetence to appropriately translate service policy into
rules and procedures for staff. Sometimes service firms might confront issues to appropriately
decipher consumer expectations into exact service delivery regime. This can be the result of poor
service design, failure to keep and continually apprise their delivery of good customer service. This
can also be the result of lack of standardisation. This gap might force consumers to search for
similar product (competing brand) somewhere else but with better service.

Gap-III: The Delivery Gap: The Gap between Service Quality Specification and Service
Delivery

Sometimes, management understands the customer expectations very well, have appropriate
service delivery procedures in place but still fail in providing services to the customers. This gap
signals towards the inefficiencies on the part of service staff that lacks in important skills to satisfy
the customers. This gap therefore brings out the weakness in service staff and their ability to
perform as per specifications. It must be remembered that employees are unable to manage
consumer’s needs as specified because management has done a poor job in skill development.

Gap-IV: The Communication Gap: The Gap between Service Delivery and External
Communications

Making consumers aware of the services offered by a service firm is extremely important.
Communication mix deployed by the firm can be used to educate the customers of what to expect
from the service firm. Sometimes too whimsical advertisements or promotional activities raise
customer expectations much beyond the level the firm can currently satisfy. Such cases lead to
Gap-IV usually known as communication gap. The result is customer dissatisfaction.

Gap-V: The Customer Gap: The Gap between Customer Expectations and Customer
Perceptions

Any difference in what customers expect and customer perceive post usage leads to Gap-V.
External communication (advertisements and other promotional resources) used by service firms to
educate customers of the service in conjunction with customer demographics, psychographics and
experience lead to consumer expectations as in how the product/service will perform. As customer
actually interacts with the product or service in a purchase/usage situation and subjectively
evaluates the value proposition, positive or negative perceptions is formed. Gap-V is the result of
this difference between what customers expect and what do they receive. Gap-V has been quite
often referred to as the most important gap.

4. Reasons behind Service Quality Gaps

Above discussed gaps influence consumer perception of service quality and customer satisfaction.
Here are basic reasons which cause the service quality gaps in service companies:

1. Gap-I: As discussed before, Gap-I represents the incompatibility between the management
and customers. The root cause of appearance of Gap-I is the inability of the management to
understand the customers’ actual expectations. Hence this gap is actually the result of
wrong interpretation of information concerning customers’ expectations, non-existence of
demand analysis and inadequate perception of the relationship between the company and its
customers. The important reason for the emergence of this Gap is the existence of too many
levels of management in the organisation which restrain and alter certain levels of
information about the expectations and demands of customers. Moreover, not
understanding the customers’ expectations can be as well the result of a bad management of
customers’ complaints and a poor feedback system.

Even when the problems concerning the mentioned variations are overcome, i.e. when
managers have understood the market demands/customers’ expectations, problems may
arise in the very process of realisation. The company even after knowing the wishes of its
customers might not be able to satisfy them. For example, management can adequately
evaluate the time that guests are willing to spend when checking in at the reception of a
hotel, but do not have enough staff to fulfil those expectations.

2. Gap-II: Root cause of Gap-II, i.e difference between perceptions of the firm about the
expectations of customers and provision of service quality are as following:
2.1 Poorly designed services:

Table 2: Reasons of poorly designed services

Sr. No Reasons
1 Unclear and undefined service design
2 Poorly designed service design

2.2 Lack of defined benchmark from customers’ view:

Table 3: Reasons for lack of defined benchmark from customers’ view

Sr. No Reasons
1 Benchmarks are not clearly demarcated understanding customers’ demands
 2 There is no technical focus upon customers’ expectations
3 Lack of procedures needed for setting up of suitable goals of service quality.

2.3 Insufficient service environment and physical elements:

Table 4: Reasons for Insufficient service environment and physical elements

Sr. No Reasons
1 Failing in developing perceptible values in sync with customers’ expectations
2 Poor service environment not drafted to suit the needs of customers and
employees

3 Lack in innovating the environment and commissioning necessary

amendments

Such issues might emerge due to the lack of inputs, growing demand and insufficient
assignation of company management.

3. Gap-III: Sometimes, management understands the customer expectations very well, have
appropriate service delivery procedures in place but still fail in providing services to the
customers. This gap signals towards the inefficiencies on the part of service staff that lacks
in important skills to satisfy the customers. This gap therefore brings out the weakness in
service staff and their ability to perform as per specifications. The reasons for the
emergence of Gap-III are the following:

3.1 Mistakes in managing the human resource

Table 5: Reasons behind mistakes in the human resources management

Sr. No Reasons
1 Undefined, ambiguous roles and conflict of opinions and interests
2 Lack of an appropriate system of evaluation and praising

3 Problems in team work, insufficient authority

3.2 Poorly harmonised proposal and demand:

Table 6: Reasons behind Badly harmonised offer and demand

 Sr. No Reasons behind Badly harmonised offer and demand
1 Failure to balance the demand extremes
2 Poorly selected target market
3 Overdependence upon the price when harmonizing the demand.

As it is clear that management is capable of understanding the customers’ expectations and

even is capable of defining specifications of services based upon the customers’ expectation in
this gap but the main cause behind the emergence of this Gap is employees’ inabilities in
delivering the service appropriately as per the standards. For example, management of an
Indian theme based restaurant plans that a specific food item order should be served within 10
minutes while the staff takes more than stipulated time to deliver the same order. Possible
reasons for that might be conflicts between the staff, poor interdepartmental cooperation
between the kitchen staff and the other restaurant staff, conflict with management and
customers, unskilled staff, inadequate system of motivation, obsolete kitchen equipment, too
much crowd in the restaurant etc.

4. Gap-IV: Inability to keep a promise that a service company makes to a customer of its
service quality using different forms of marketing communications is crucial for the
creation of customers’ expectations which under adverse conditions leads to Gap-IV. The
main reasons for not fulfilling these promises, which leads to the emergence of Gap 4, are
the following:
4.1 Lack of integrated service marketing communications:

Table 7: Reasons behind lack of integrated service marketing communications

Sr. No Reasons behind lack of integrated service marketing communications

1 Inability to observe and evaluate each piece of communication autonomously;
2 Lack of interactive marketing in the communication mix
3 Poor internal marketing.

4.2 Inefficient management of customers’ expectations:

Table 8: Reasons behind poor management of customers’ expectations

Sr. No Reasons behind poor management of customers’ expectations

1 Poor customer expectation management through all forms of communication
2 Inability to educate customers about what to expect and what not to
 4.3 Unreasonable promises:

Table 9: Reasons behind Unreasonable promises

Sr. No Reasons behind Unreasonable promises

1 Unreasonable and impossible promises in marketing communications.
2 Poor communication between staff designing communication strategy and staff
managing operations
3 Differences of opinion in pertinent policies and measures between different branches of
the same service company.

Insufficient management of customers’ expectations usually cause too demanding customers with
very high expectations which are practically impossible to meet. This results in offering services
below the expected level which leads to the creation of negative perception of the quality amongst
the customers.

5. Strategies to bridge in Service quality Gap

Below mentioned are some actions that need to be taken to minimize the Service Quality gaps:

Gap 1 Understanding customer expectations:

Table 10: Strategies to understand customers’ expectations
Managers must aim towards gaining a better access to customer expectations through frequent
grievance examination and consumer research. Some steps may involve:
Sr. No Strategies
1 Frequent management customer interactions
2 Simplifying and promoting upward flow of communication from contact personnel to
management
3 Cutting loose the levels between the customers and policy makers
4 Turning information and insights into action with a zeal to serve customers better

Gap II Prescription: Create the Right Service Quality benchmarks:

Managers must work towards setting right service quality standards in light of the customer
expectations. Some steps may involve:
Table 11: Strategies to create the Right Service Quality benchmarks
Sr. No Strategies
1 Ensuring top management puts customers’ expectations first is the key
2 Develop middle management to create a culture where customer and their interest is kept
at priority
Holistic skill development of employees must the goal
3 Encourage innovation and change. New ways of working that improve efficiencies must
be introduced
4 Standardize repetitive/duplicate activities. Use of technology can come handy
5 Set clear service quality objectives/goals that are specially designed to meet customer
expectations
6 Prioritize more important task and relate them with positive impacts than less important
tasks
7 Ensuring that employees understand and accept goals and priorities in their true sense
8 Measuring performance on a regular basis and providing feedback
9 Reward for goal accomplishment

Gap 3 Prescription: Ensure That Service Performance Meets Standards:

Managers must work towards ensuring that service performance meets standards. Some steps in
achieving that may involve:
Table 12: Strategies to Ensure That Service Performance Meets Standards
Sr. No Strategies
1 Clarify employee their roles and responsibilities in order to avoid any ambiguity and
mismatch
2 Educating all employees of how their jobs back to overall customer satisfaction and
hence adds to the service firm’s financials
3 Matching employees’ jobs with abilities and skills needed to perform
4 Train staff to instill skills desired to perform their assigned tasks effectively
5 Innovative contemporary recruitment and retention methods to attract skilled staff
6 Work towards improving employee performance by using suitable and current
technology and equipment to aid employees do their jobs effectively
7 Training employees about customer expectations, perceptions, and problems
8 Training employees about how to effectively interact and deal with customers under
demanding conditions like rush hours
9 Eliminate job conflicts by involving employees setting standards thereby co-creating
service performance benchmarks
10 Prioritize jobs and time management
11 Link incentives and recognition with effective delivery of quality service
12 Develop meaningful, timely, simple, accurate, and fair rewards to motivate people
 work effectively
13 Empower people by passing authority to take job specific decisions down the
organization. Autonomy motivates employee morale by adding to the overall service
quality.
14 Effective support to be provided to staff involved in providing direct services to
customers by support staff under all circumstance.
5 Encourage teamwork in the work routines and use team rewards as incentives
16 Clarify customers of their role during service delivery. Train and motivate them to
perform well in their roles as co-producers.

Gap 4 Prescription: Ensure That Delivery Matches Promises:

Managers need confirm that delivery matches service promise. Some steps may involve:
Table 13: Strategies to ensure that service matches promise
Sr. No Strategies
1 When new communication campaigns are being created, using inputs from concerned
staff can be immensely helpful in dropping overcommunication gaps
2 Try using real times while advertising as it creates genuine expectations
3 Providing the preview of advertisements to service providers before communicating
them to customers can help pass on real expectations outside
4 Develop educational and motivational campaigns to fortify the links between various
functional departments to work effectively under most situations.
5 Delivering services which are consistent with the per-set service standards must be
ensured in case of global service organizations.
6 Managers must ensure that communication strategy reflects upon service
characteristics on a real-time basis to not to heighten the customer expectations
7 It is extremely important to educate customers of what is and is not possible. This
minimized service gaps from over-demanding customers
8 Figure out uncontrollable variables that might reduce service performance.

6. Summary
GAP-I: The Gap-I (knowledge gap) arises due to the difference between the customer’s
expectations and the company’s provision of the service. In other words, this gap arises
when management fails to translate identified customer expectations into service actions
and specifications.
GAP-II: Gap-II arises due to the management’s incompetence to appropriately translate
service policy into rules and procedures for staff.
GAP-III: Sometimes, management understands the customer expectations very well, have
appropriate service delivery procedures in place but still fail in providing services to the
customers which leads to Gap-III
GAP-IV: Sometimes too whimsical advertisements or promotional activities raise customer
expectations much beyond the level the firm can currently satisfy. Such cases lead to Gap-
IV usually known as communication gap. The result is customer dissatisfaction.
GAP-V: Difference between expected service and experienced service leads to Gap-V