Chapter 3

Service Quality

STUDY OBJECTIVES

Having completed this chapter, readers should be able to:

1. understand the differences between service quality management and the traditional (goods)
quality management from a management perspective;

2. understand the distinctive process of service management, and the challenges faced by service
managers;

3. understand the outcomes and importance of service quality management for companies; and

4. have a thorough understanding of the various service quality models and their application in
the service-related industries.

OUTLINE

Introduction

Historic perspectives on quality

 The early days of quality control

 Post-war (World War II) developments

The quality 'gurus'

 Dr. W. Edwards Deming (1900-1993)

 Dr. Joseph M. Juran (1904-2008)
 Philip Crosby (1926-2001)

Economic impact of quality-Why quality is important

 Product differentiation and competitive advantage

 Market share and profitability
 The cost of quality-Is it worth it?

The core ideas of TQM

Uniqueness of quality theory for service

 Lacking a philosophy or conceptualization of service quality

 But service is different
 Looking to the customer
Outcomes of service quality

 Customer satisfaction
 Customer loyalty
 The relationship between satisfaction and loyalty
 Customer delight

Understanding service quality theory

 Comparing expectations and performance

 Confirmation and disconfirmation of expectations
 Meeting or exceeding expectations
 The effect of multiple consumption

Service-quality measurement-No easy task

 The 'Nordic' model (technical quality and functional quality)

 Two-dimensional model (process and output quality)
o Process quality
o Output quality
o Two types of output

The 'Gap' principle and the 'Gap' model

SERVQUAL model
 Zone of tolerance

SERVPERF (multi level models)

Electronic (Web) service quality

Summary

Introduction

In all industries, quality has long been recognized as essential to business survival. This chapter
begins with an outline of the history and development of quality management and the
contribution of quality 'gurus' to the formation and promotion of quality control principles.

Although these general principles of quality management in manufacturing do have relevance to

service industries, it must be recognized that service industries have characteristics not gener-
ally found in manufacturing (see Chapter 2). Ser- vice quality is therefore not the same as
product quality, and the management of service quality is not the same as the management of
goods quality.
Service quality is difficult to define and difficult to control, and various measures of service
quality have been proposed. However, in the final analysis, the expectations and perceptions of
customers are what matters in any assessment of service quality. Ultimately, the needs and
expectations of customers guide the design of quality strategies in services.

As service academics have recognized a need to define service quality accurately, and as service
practitioners have felt the need to manage it effectively with a view to a sustainable competitive
advantage, various ways of defining and measuring service quality have been introduced. This
chapter presents some of the most significant service quality management theories, together with
their implications for hospitality and tourism managers.

HISTORIC PERSPECTIVES ON QUALITY

The early days of quality control

Quality control was first developed in manufacturing by engineers and statisticians during the
1920s, with control focusing on the physical production of goods and internal measurements of
the production processes. Quality control was originally seen as a means of ensuring consistency
among the parts produced by different sections of a single company, so that parts could be
interchanged with confidence. At first this was achieved by inspecting 100% of all outputs.

A breakthrough occurred with the introduction of the concept of statistical quality control-the
idea that only a random sample of output warranted inspection to ensure an acceptable quality
level. Modern quality control began in the 1930s when Walter Shewhart, a physicist employed at
Bell Labs, invented process control, using control charts and the 'Plan-Do-Check-Act' cycle of
continuous improvement. During arms manufac- turing in World War II, American industry used
a combination of Shewhart's process control and the statistical sampling methods of an American
statistician and government consultant, Dr. W. Edwards Deming, who had become an early
disciple of Shewhart. The combination became known as statistical process control.

Post-war (World War II) developments

In 1951, another significant development in the story of quality management came with the
publication of the first edition of Dr Joseph Juran's, Quality Control Handbook-a publication that
became the 'bible' of the quality-control movement. Also in 1951, Armand V. Feigenbaum took
Juran's ideas a step further by propos- ing a concept of 'total quality control' (TQC).
Feigenbaum's ideas were based on his observation that all new products moved through three
stages of activity-design control, incoming material control, and product (or shop floor) control-
and that TQC required quality control at all stages.

While these new concepts were slowly gaining acceptance in Western countries, crucial changes
were tak- ing place in Japan following World War II. These changes resulted in Japan playing a
vital role in the historic development of the quality movement. At the end of World War II,
Japan's economic recovery was dependent on its only plentiful resource-people-and on their
ability to export manufactured goods produced from imported raw materials and energy. Japan's
likelihood of success at that time seemed remote.
It had a largely unskilled and illiterate labor force and its industries had been devastated by war.
At that time, Japan had a uni- versal reputation as a producer of cheap and unreliable goods.

In July 1950, the Japanese Union of Scientists and Engineers (JUSE) invited Deming to Japan.
Deming held a series of lectures during which he taught the basic principles of statistical quality
control to Japanese executives, managers, and engineers. This was followed by a meeting with
the presidents of 21 major Japanese companies, including the present-day world giants Sony,
Nissan, Mitsubishi, and Toyota. His teachings made a deep impression and provided great
impetus to the implementation of quality control in Japan. In appreciation, JUSE created a prize
in 1950 to commemorate Deming's contribution, and to promote the continued develop- ment of
quality control in Japan. Annual awards of the Deming Prize are still given each year.

More than six decades following the award of the first Deming Prize in Japan, the concept of
quality man- agement has become the recognized guiding strategy for almost all firms around the
world. Quality ultimately gives firms a competitive advantage. This emphasis has been felt
across all lines of business, whether profit, making or non-profit-making, in both the
manufacturing and service industries.

THE QUALITY 'GURUS'

The historic evolution of the quality movement has been led by three American experts on
quality who have become known as the quality 'gurus'-Dr. W. Edwards Deming, Dr. Joseph
Juran, and Philip Crosby. Their emergence was predominantly a response to changes in
American and Japanese markets, and the need to adapt to survive. The contributions of the
'gurus' extend from the mere theory of overall management philosophy to the development of the
practical tools of quality management.

Dr. W. Edwards Deming (1900-1993)

As aforementioned, Dr. W. Edwards Deming was the first of the American quality 'gurus' to
arrive in Japan and is generally considered to have been the 'father' of the Japanese quality
revolu- tion. Deming's message to the Japanese was really quite simple. It was encapsulated in
the so-called 'chain reaction' (Figure 3.1, below).

Although Deming did not introduce the Jap- anese to statistical quality control (these concepts
and their importance having been well known in Japan long before he went there), his
contribution was to help his hosts cut through the academic theory, such that the essential ideas
were presented in a simple way that was meaningful- right down to the level of production
workers.
Once the Japanese accepted his new approach, Deming concentrated on showing them how to
improve qual- ity by the use of statistical control of the process. While he was primarily a
statistician, Deming was clearly involved in more than the mere teaching of statistics. He was, in
fact, proclaiming a whole management phi- losophy. However, at that time, Deming's approach
represented the complete antithesis of conventional man- agement thinking.
As a result of Deming's influence in the early 1950s, various quality-control methods were
developed, and many good results were achieved. However, three major shortcomings in these
methods remained:

 overreliance on statistical methods;

 overreliance on promotion of standardization; and
 top management lagging behind in the progress toward effective quality control.

Dr. Joseph M. Juran (1904-2008)

Dr. W. Edwards Deming was not the sole instigator of the Japanese 'conversion, nor was he the
only 'prophet' on quality in the immediate post-war period. Another American, Dr. Joseph M.
Juran, visited Japan in 1954. He emphasized that quality control should be conducted as an
integral part of overall management control. Although a statistician himself, he did not limit his
work to statistical analysis. Juran pointed out that compa- nies could have a comprehensive
knowledge of the technical aspects of quality, such as statistical process con- trol, but that this
did not help them to manage quality. He was the first of the 'gurus' to emphasize that achieving
quality was all about communication, management, and people. His message was clear-quality
did not happen by accident; it had to be planned and executed by enlightened management. Juran
believed that the major- ity of quality problems were the fault of poor management, rather than
poor workmanship on the shop floor.

Philip Crosby (1926-2001)

Philip Crosby has probably done more to alert Western management to the need for quality
improvement, and management's responsibility for it, than all the other 'gurus' and experts
combined. Beginning with Quality is Free (1979), his books, speeches, and broadcasts have
influenced thousands of executives to change their behavior and commit themselves to quality.
Crosby's best-known ideas have been the exhortation to achieve 'zero defects' and the concept of
'do it right first time. Crosby's thoughts, expressed in his book Quality Without Fears (1984),
exerted a major influence on management in the 1980s and initiated a growing body of research
and literature in the field.

Crosby did not believe that workers should take prime responsibility for poor quality; the reality,
he said, was that management had to be improved. He argued that effective quality management
required:

1. a definition of quality that can be readily understood by all; that is, the beginning of a common
language that will aid communication;
2. a system by which to manage quality;
3. a performance standard that leaves no room for doubt or fudging by any employee; and
4. a method of measurement that focuses attention on the progress of quality improvement.

These points provided the premise for Crosby's 'four absolutes' for managing quality, as outlined
below. These steps have proved successful in many companies and therefore demand careful
examination.
1. Quality is defined as conformance to requirements, not as 'goodness' or 'elegance.
2. The system for producing quality is prevention, not appraisal.
3. The performance standard must be zero defects, not that which is close enough.
4. The measurement of quality is the price of non-conformance, not indices.

ECONOMIC IMPACT OF QUALITY-WHY QUALITY IS IMPORTANT

Product differentiation and competitive advantage

Conventional theory recognizes two generic strategic alternatives for developing a sustainable
competitive advantage. The first is product differentiation, and the second is overall cost
leadership (Porter, 1985). Quality control is a crucial element of the first of these. Although
product differentiation can take many forms, supe- rior quality is the most common basis of
differentiation (Crosby, 1979, 1984; Deming, 1982; Kiechel, 1981). If customers see a clear-cut
quality advantage, they usually favor that product, without trying to weigh all other factors.

A preoccupation with quality on the part of customers has become increasingly recognized, and
quality has become the key to gaining competitive advantage. Firms today know that they cannot
afford to ignore quality. Japanese domination of the market in the second half of the 20th
century, through the manufacture of exceptional quality products, had a significant effect on the
balance of payments in Western Europe and the USA. It became crucial, therefore, for
manufacturers to lift competitiveness in Europe and North America to meet the quality of the
reliable products offered by Japanese competitors.

This became even more apparent with the rapid development of 'globalization. In a competitive
global environment, with its fragmented and deregulated markets, it soon became apparent to
management that com- panies could not survive without quality. Profitability and long-term
sustainability depended on it.

Market share and profitability

This apparent link between quality and profitability has been confirmed by numerous studies
over the years, and depending on which market segment you are in, quality perceptions generally
drive loyalty. Quality soon became established as the means by which firms sustained their
position among competing firms over time, and the means by which they therefore maintained
market and profit share.

Many past studies have confirmed the strong positive association between quality and market
share. Simi- larly, subsequent studies of profit impact of market share (PIMS) indicated that
improved quality increased the market share of firms five or six times faster than those which
declined in quality. The link between quality of product (or service) and market share was
confirmed in subsequent studies by service researchers, who also found a positive association
between quality and profitability.
Although there are wide variations in research studies, there is a predominance of evidence
showing posi- tive correlations between customer variables (satisfaction, repurchase intention,
perceived quality, perceived value, and loyalty) and financial outcomes. We discuss the
relationships among satisfaction, quality, and loyalty later in this chapter.

The cost of quality-Is it worth it?

The concept of the 'cost of quality' is a relatively new phenomenon in the business world. Quality
costs. It costs money to achieve quality. But, more significantly, it costs money not to achieve
quality.

The cost of poor quality is well recognized. Grönroos (1991) noted that it is not too much quality
that really costs, but too much low quality-a point that had been made previously by Crosby
(1979) who coined the star- tling phrase 'quality is free' to emphasize the general point that the
presence of poor quality is the real drain on resources, rather than the costs of attempting to fix
the lack of quality.

Indeed, according to the literature on operations management, quality and costs have been
proven to be inversely related. That is, quality saves more than it costs. Or, to put it the other
way, the costs of improving quality are less than the resulting savings that would have otherwise
been lost in rework, scrap, and warranty expenses. This is a view widely held among Japanese
manufacturers, and explains much of their dedication to the goal of 'continuous improvement. Of
course this general truism must be tempered by circumstance. For example, the degree of quality
offered will vary depending on the service 'concept of a firm. Customers of a fast-food chain
should expect a different quality of service than customers of a five-star restaurant.

Product quality is synonymous with the absence of defects, and the costs in question are quality
costs. These quality costs include:

 prevention costs;
 appraisal costs;
 internal failure costs;
 external failure costs;
 the cost of exceeding customer requirements; and
 the cost of lost opportunities.

Crosby (1979) argued that, taken together, these various costs can drain a company of 20 to 30%
of its revenue or turnover. In service industries, this total cost can be as high as 40 to 45% of
revenue or turnover.

THE CORE IDEAS OF TQM

From the above discussion, it is apparent that there is no single entity called 'total quality man-
agement' (TQM). TQM is an overall management philosophy that has been influenced by
numerous academics and practitioners since the term 'total quality control' was further
highlighted by Armand Feigenbaum in a 1956 issue of the Harvard Business Review.
Because this movement has had input from many people over several decades, and because the
idea is difficult to define with any precision, there is little consensus in the literature regarding
the core ideas of TQM. Everyone seems to have a different set of essential principles.

Whichever words are chosen by different authors, and whichever points are emphasized, there
are certain recurring themes. In terms of these general recurring themes of TQM, we note that:

 TQM is focused on the customer and efficiency;

 TQM has a conscious philosophy of continual systemic improvement;
 TQM requires empowered employees involved in collaborative action; and
 TQM requires committed management showing inspiring leadership.

To summarize, TQM is a useful managerial concept, designed to focus on product quality,

reduced errors, and continuous and constant improvement. Its origins were to meet rising
customer expectations, increased competition, rising levels of quality, and globalization. It
essentially instructs managers that if we don't do things better, competitors will. What TQM has
failed to achieve is to move the focus from quality of products and organizational efficiencies
toward customer perceptions and the process of service and service delivery. In addition, there
has been no clear direction about precicley how to improve service quality. The evolution of
managerial focus from product to service quality is covered next.

UNIQUENESS OF QUALITY THEORY FOR SERVICE

Lacking a philosophy or conceptualization of service quality

Most of the above discussion on the historical development of quality 'control' has centered on
goods manufac- turing industries. In virtually all industries, the combination of globalization,
deregulation, and more demand- ing consumers has increased competition and pushed quality to
the forefront of management concerns. The service sector has certainly not been immune to these
developments. Indeed, delivering high quality service has been recognized as the most effective
means by which a service company's offerings can be made to stand out from a crowd of look-
alike competitive offerings. Research studies have repeatedly demonstrated the strategic
advantage of superior quality in contributing to market share and profits. For example, Gupta,
McLaughlin, and Gomez (2007) studied a national restaurant chain and linked customer
satisfaction, repeat-purchase intentions (customer loyalty), and restaurant performance (increased
sales), to the service-profit chain (see Chapter 8).

As we have seen, the 'quality movement' in goods manufacturing gained enormous impetus in
the decades immediately after World War II. But the service sector lagged behind in coming to
grips with these ideas, and 'quality' was not really introduced into the service literature until the
beginning of the 1980s.
When service quality did start to become an issue, it was, to a large degree, influenced by
traditional goods marketing, and it tended to follow a similar historical pattern. That is, initially,
there was minimal reference to an overall philosophy of quality; little was said about concepts of
quality, or management models of quality. Rather, service quality was more or less treated as a
given variable. Variations in quality were seen as an unavoidable fact of life. Indeed, this is a
situation that still unfortunately applies in many aspects of service businesses.

But service is different

As they attempted to develop an appropriate philosophy of service quality, managers recognized

that the char- acteristics of service did not fit the characteristics of physical goods. Although the
rendering of a given service might involve some physical goods, the service 'products'
themselves were clearly different. Whereas goods quality could be measured objectively by such
indicators as durability and the number of defects, there were no objective measures to assess the
quality of intangible services.
Because most published works on quality were focused on manufactured goods, the
differentiation of products from services (see Chapter 2) became an important issue. It was clear
that many of the 'quality strate- gies' available to manufacturers were inappropriate for service
firms. Researchers and practitioners alike realized that available knowledge about goods quality
was insufficient for a proper understanding of service quality.

Looking to the customer

Because of these historical and conceptual factors, ideas of service quality had to be developed
very much 'from scratch. Instead of using quality concepts from the manufactured goods
industry, service management researchers developed their own concepts of service quality. In
drawing up these 'service-specific models, they turned from an emphasis on manufacturing
design to an emphasis on consumer behavior, expectations, and satisfaction.

The consumer became central in these deliberations because, as many authors have noted, people
evaluate services in a fundamentally different way from that in which they evaluate goods. A
service is often a performance, usually conducted in the presence of the customer, and service
quality is therefore very much a function of subjective perception of an experience, rather than
objective examination of a physical object.

The service quality literature has thus been firmly based on the notion that service quality is
defined by the customer-as opposed to the situation in manufactured goods where quality tends
to be defined by designers or operations managers.

OUTCOMES OF SERVICE QUALITY

Before we progress with a review of the way service quality has been conceptualized and
measured, we first turn our attention to some of the reasons why we even care about service
quality-the 'hard' outcomes that businesses aspire for-satisfaction, repeat purchase, loyalty, word-
of-mouth behaviors, and so forth.
We look at these ideas in different places in this text (see also Chapter 6), but we offer a basic
overview here to help the reader understand the 'outcome' of effective service quality
management.

Customer satisfaction

Whenever discussions about service quality take place, there is inevitably overlap or even
confusion about the differences between the concepts of quality and satisfaction. Our aim here is
not to go too deeply into a detailed description of the conceptual differences between these two
terms, except to provide a few points of distinction and to make the case that there are definite
similari- ties and differences. The concepts explained in this chapter are focused mainly on
service qual- ity, not satisfaction.

Satisfaction is often defined as the degree of consumption-related fulfillment provided by a

product, ser- vice, or experience (for further information on this topic see the work by Richard
Oliver in the chapter read- ing list). That is, the "consumer senses that consumption fulfills some
need, desire, goal, or so forth and that this fulfillment is pleasurable. Thus, satisfaction is the
consumer's sense that consumption provides outcomes against a standard of pleasure versus
displeasure" (Oliver, 1999, p. 34).

If satisfaction is related to 'consumption, quality is more 'observational'/'attitudinal' or 'process'

driven. Satisfaction (with a firm) requires frequent and consistent positive experiences, whereas
quality is often evaluated on a transaction basis (meaning when the service interaction occurs).
There is research showing that high service quality perceptions do not necessarily lead to
satisfaction, and that low quality perceptions can lead to satisfaction. Service quality is only one
driver of overall satisfaction. For example, in a restaurant setting, factors that influence
satisfaction with the dining experience include "waiting time, quality of service, responsiveness
of front-line employees, menu variety, food prices, food quality, food-quality consistency,
ambience of the facilities, and convenience" (Gupta, McLaughlin & Gomez, 2007, p. 285). So
while satisfaction and quality are related concepts, there are important distinctions. And while it
would appear on the surface that satisfaction is an outcome of quality, it is not always the case.
Nevertheless, there is strong evidence to suggest that the right service provided at the right level
of quality for the customer segment leads to higher levels of satisfaction, which in turn leads to
customer loyalty. Like many concepts covered in this book, there is rarely a 'black and white'
answer in terms of how much of something is needed. Circumstances and context matter!

Customer loyalty

Another important consideration of any busi- ness is customer loyalty; that is, the degree to
which customers repeatedly do business with the firm. Customer loyalty has been described as
the feeling of attachment to or affection for a com- pany's people, product or service (Jones &
Sasser, 1995). Crotts and Ford (2008) define loyalty in terms of "high return frequency, high
likelihood to recommend, and high overall satisfaction" (p. 233). While Oliver, in a seminal
paper on the subject, defines loyalty as "a deeply held commit- ment to rebuy or patronize a
preferred product/ service consistently in the future, thereby caus- ing repetitive same-brand or
same brand-set purchasing, despite situational influences and marketing efforts having the
potential to cause switching behavior" (Oliver, 1999, p. 34). Loyalty is said to be either
attitudinal (a person feels or says they are loyal to a firm) or behavioral (when this attitude of
loyalty is converted into repeat patronage and even word-of-mouth advertising). Although both
are important, managers ultimately aspire for behavioral loyalty-the actions of customers to
continue to repurchase and share their positive experience with others. A basic business principle
related to loyalty is called customer lifetime value (CLV), where a firm seeks to maximize
profitability over the lifetime of a customer (Crotts & Ford, 2008). Oliver (1999) argues that
'ultimate loyalty' emerges from a combination of "product superiority, personal fortitude, social
bonding and their syn- ergistic effects" (p. 33). Similarly, Parasuraman, Berry, and Zeithaml
(1991) promote the need for businesses to become a 'customer franchise-with unwavering
customer loyalty which comes from exceeding customer expectations continually.

The relationship between satisfaction and loyalty

One might intuitively think that as satisfaction rises, so does loyalty. However this linear
relationship' does not generally hold up to scrutiny. Although satisfaction is a necessary step in
the formation of loyalty, there are many factors that influence loyalty. According to Jones and
Sasser (1995), seemingly loyal customers can still defect to the competition. In a competitive
environment, they argue, organizations must strive for extremely high levels of satisfaction to
avoid customer defection (rather than merely satisfied). They argue that, except in a few rare
instances, complete customer satisfaction is the key to securing customers. Their research
provides evidence that there is a significant loyalty gap between merely satisfied and completely
satisfied customers. Figure 3.2 shows how the relationship between satisfaction and loyalty can
change depending on circumstances. Note that in markets with little competition, customers can
be very dissatisfied, but still remain loyal (as they have few choices to switch to the
competition). However, in highly competitive markets, even moderate levels of satisfaction do
not equate with commensurate levels of loyalty.

Knowing and understanding the drivers of customer satisfaction and loyalty is critical. Studies
regarding restaurants have shown strong links between satisfaction and loyalty (repeat-purchase
intentions); however, the importance of one aspect of the offering can vary by type of restaurant
and the customer circumstance. For instance, food quality is the critical attribute influencing
repeat-purchase intentions in full-service restaurants, while speed and efficiency are more
important attributes in quick-service and fast casual restaurants (Gupta, McLaughlin & Gomez,
2007). Therefore, managers must realize that achieving satisfaction is not a 'one size fits all'
situation and needs to be framed by the particular context of the service.

Customer delight

Another stream of related research proposes the term 'customer delight, meaning a profoundly
positive emo- tional state generally resulting from having one's expectations exceeded to a
surprisingly large degree (Rust & Oliver, 2000). This approach is one that is followed by Ritz-
Carlton Hotels, highlighted by their "fulfilling even the unexpressed wishes of our guests"
commitment. However, this type of approach is a contentious strategy because at some point it
becomes unsustainable to exceed expectations of a customer who regularly patron- izes a
business. Other research (Dixon, Freeman, & Toman, 2010) suggests that in many service
settings, such as phone-based and self-service interactions, loyalty is driven not by how dazzling
the service experience might be, but rather by how well the company can deliver on the very
basic service promise. They found (through a very large study) that delighting customers does
not by itself build loyalty; rather, reducing the required effort of the customer and solving
problems quickly does.

One pattern developing in this discussion about service quality and the outcomes of ser- vice
quality is that it is important to understand customers in order to plan the type of service and the
degree of quality. Chapter 4 will explore the issue of understanding customers and their
expectations.

UNDERSTANDING SERVICE QUALITY THEORY

Service quality has become a great differentiator among service providers. Indeed, it is the most
powerful competitive weapon that many leading service organizations possess. Business survival
and success are dependent on the delivery of superior service quality. However, even though it is
well accepted that service quality is a crucial element in the success of any service organization,
there are no clear-cut definitions of service quality.

Service quality is an abstract and elusive concept because of the well-known feature
intangibility, perishability, heterogeneity, and inseparability of production and consumption (see
Chapter 2). Because of these features, definitions of quality can vary from person to person, and
from situation to situation.

In developing an understanding of service quality, it is therefore important to understand what

customers are looking for, and what they deem to be quality in service. According to Grönroos
(1982b), such an under- standing requires two distinct elements:

1. a clear conception of service quality-a conception that describes how customers perceive the
quality of a service; and
2. an understanding of how such service quality is influenced, and which resources and activities
affect service quality-that is, how service quality can be managed.

Comparing expectations and performance

How do consumers choose among various service offerings, and how do they evaluate the
quality of the service offerings they receive?

When purchasing physical goods, consumers employ various tangible cues to ascertain quality.
These include style, color, hardness, feel, package, brand name, price, and so on. In contrast,
when purchasing a service, consumers are forced to rely on a smaller number of available cues.
In many cases, tangible evidence is limited to the service provider's physical facilities,
equipment, and personnel. In a service where personal experience of quality is a high priority,
consumers who are attempting to evaluate service before purchase seek and rely on information
from personal (such as word-of-mouth and social media) sources rather than from non-personal
sources (such as advertisements).
Confirmation and disconfirmation of expectations

Having made a choice, how do consumers assess the quality of the service they have received?
According to theories of consumer behavior, the subjective evaluation of various experiences
associated with consumption is based on what is technically called a
'confirmation/disconfirmation paradigm'-that is, consumers compare their prior expectations of
performance with the actual performance.

Several studies have been conducted in an effort to clarify how customers' expectations and
preconcep- tions of performance affect the subsequent level of customer satisfaction or
dissatisfaction with actual performance. In these studies, after using the product or service, the
consumer compares the perceived or actual performance with the expected performance. In the
jargon of the 'confirmation/disconfirmation paradigm, we can say that:

▸ confirmation results when the two performances match; but

▸ disconfirmation results when the two performances do not match; this can be of two types-
positive dis- confirmation when the perceived performance exceeds expectations, and negative
disconfirmation when the perceived performance falls below expectations.

Because service experiences are inherently personal experiences, this confirmation or

disconfirmation (as defined above) leads to an emotional reaction-referred to as 'arousal. That is,
if a product or service appears to be performing above or below expectations, the customer
experiences an emotional reaction of significance (a sense of growing pleasure or a sense of
growing concern). This arousal is then followed by a final assessment of satisfaction or
dissatisfaction. In experiencing these changing emotions, the consumer is comparing prior
expectations with actual experience.

But what did they expect? What is an 'expectation'? The term 'expectations, as used in the
literature on consumer satisfaction, differs from the term as used in the literature on service
quality. In the consumer satis- faction literature, expectations are viewed as predictions made by
the customer about what is likely to happen during an impending transaction. In contrast, in the
service quality literature, expectations are viewed as what the customer desires, or wants, or
thinks should happen. The crucial difference is between what consumers expect a service
provider will offer and what they think the provider should offer. This subject will be discussed
in more detail below.

Meeting or exceeding expectations

Service organizations can achieve a strong reputation for quality service only when they
consistently meet or exceed customer service expectations. As we have seen, service quality is a
measure of how well the service (as received) positively matches with expectations (as
preconceived). And, as we have seen, these expectations might be expressed in terms of what is
likely to happen or in terms of what should happen. Firms that satisfy what is likely to happen
will do well. Firms that satisfy what should happen will do even better. Truly successful firms
are those that consistently exceed these customer expectations.
The issue of meeting and exceeding expectations (similar to the question of satisfaction vs.
delight) has been debated in the literature. For example, Johnston (2004) argues that "exceeding
expectations implies that organizations have continually to do more in order to deliver excellent
service and delight their customers. this definition of excellent service is inappropriate,
unachievable in the long term and difficult to operational- ize" (p. 129). Exceeding expectations
may be unnecessarily costly and "as delivered service quality increases so might customers'
expectations of subsequent service. As a result, what might previously have been regarded as
excellent service becomes simply adequate (expected) service, unless the organization continues
investing in this spiral of increasing quality and expectations in order to continually exceed
expectations" (Johnston, p. 130).

Exceeding Expectations-Ritz-Carlton Hotels

Carter Donovan was the concierge of the firm's Buckhead property in Atlanta. Donovan was
informed a little girl had lost her teddy bear in the hotel. Although she managed to track it down,
the bear went missing again on the day the family came for it. With the typical forethought dis-
played by all good Ritz-Carlton staff, Donovan realized that admitting to the little girl her bear
was lost would break her heart. Instead, she ran to the gift shop, bought a huge new bear, and put
it in the back of the hotel limousine. Taking the girl's hand, she opened the limousine door and
said "Look how big you've gotten while staying at the Ritz-Carlton!" It worked.

The effect of multiple consumption

In many service situations, other customers can affect positively or negatively the quality
perceived by any given individual. For example, a customer in a bar interacts with another
customer and creates an enjoyable conversation while the two jointly enjoy the live music at the
bar. Although the live music is good, it is the interaction with the other customer that makes the
experience lively and memorable. The effect of other cus- tomers on the perception of service
quality has been well explained by Grove and Fisk (1982) through a series of research projects
involving real-life 'dramatic' events. In their framework, using the idea of a drama being enacted
in a theatre, they considered that a number of people being served simultaneously was an
'audience' and that the service personnel were like 'actors' performing roles in a drama. In such
situations, the audience influences the performance, and some members of the audience affect
other members of the audience. The audience component clearly becomes important in an
environment in which consumers are required to share the same service facility.

The concept of multiple consumption is an important related idea. Unlike tangible goods, many
service products can be enjoyed by more than one consumer simultaneously-but without having
to share the prod- uct. Musical concerts, educational lectures, and cinema screenings are good
examples. However, although the consumers do not share the actual product, the intimacy that
links production and consumption of these ser- vices means that consumers are influenced either
positively or negatively by their co-consumers.

Furthermore, the size of the 'audience' can have an effect (positive or negative) on the service
experience.
In the case of a crowded dance floor in a nightclub, a large group adds to the atmosphere of the
experience. However, in the case of a crowded flight or grocery shop, a large number of
customers can have a negative effect on the service experience.

Service managers have difficulty controlling such customer-generated effects. However, being
aware of what cannot be controlled at operational stages encourages managers to assess overall
design modification. Assessment of these variables when designing (or redesigning) the service
process is an important aspect of quality management.

SERVICE-QUALITY MEASUREMENT-NO EASY TASK

So, how do customers assess service quality? What parameters matter in their assessment? How
can service quality be analyzed in conceptual terms? There have been various models proposed
by different researchers in the field. Some of these proposed models have certain similarities to
one another. Others are quite different in their ideas and arrangements of factors. The variety of
conceptions in the service literature demonstrates the difficulty in developing a single acceptable
model that adequately describes all aspects of service quality. This is to be expected. After all, it
is not easy to find a single model which takes into account every aspect of something as complex
as how human beings make a subjective assessment of a personal experience. And this is what
service quality is essentially all about-the subjective assessment of a complex human experience.
This is certainly not an easy concept to analyze and model in simple terms!

In this next section we offer a number of the more well-cited service quality conceptualizations
in order to provide a flavor of the thinking which has gone into the development of service
quality.

One of the earliest models was that proposed by Sasser, Olsen, and Wyckoff (1978), which
identified three diffrent dimensions of service performance-materials, facilities, and personnel.
Service performance (or ser vice quality) was conceived to be affected by:

 the quality of the materials that form part of the service offering (for example, food in a
restaurant);
 the quality of the facilities that complement the core offering (for example, comfortable
seating in an aircraft); and 4
 the quality of the personnel (for example, a friendly and pleasant hotel receptionist).

All have the potential to influence service quality. The important point to appreciate in this
trichotomy is the notion that service quality involves more than the outcome quality that is, the
methods and manner by which the service is delivered are of vital importance.

Developments and variations of this view of service quality have been offered by many
researchers (see for example Brady & Cronin (2001); Grönroos (1982a); Lehtinen & Lehtinen
(1983); Parasuraman, Zeithaml, & Berry (1985; 1988); Rust & Oliver (1994); and Dabholkar,
Thorpe, & Rentz (1996), among others).
They differ in their approaches, but what they have in common is recognition that service quality
is multifactorial, com- plex, and variable in origin. Space does not permit a full exploration of
each of them here, but all have important contributions to make. The rest of this chapter provides
an overview of these various models (see Table 3.1 on the following page). Readers who are
interested in particular models are invited to review the various contributions of researchers by
noting the reference citations given in this text. We stress the point that there is no 'one best way'
established in the literature. However, understanding the different ways that service quality has
been conceptualized over the years helps in gaining a greater understanding about the central
issues sur- rounding service quality challenges and opportunities.

The 'Nordic' model (technical quality and functional quality)

Grönroos (1982a) identified two dimensions in service quality. He argued that service quality is
a combination of technical quality and functional quality (see Figure 3.3, on page 67).

In discussing technical quality, Grönroos argued that, although service is basically intangible,
and although production and consumption are virtually simultaneous, the material content in the
buyer-seller interaction is still important in the customer's assessment of perceived service
quality. Examples of this technical quality include:

▸ food in a restaurant;
▸ the room and bed in a hotel;
▸ computerized systems in a bank;
▸ machines used in a car-repair service center;
▸ the ski-lift machine at a ski resort; and
▸ an employee's technical skills and ability in serving a firm's customers.

In short, technical quality relates to what the customer receives in material terms. Technical
quality represents the core component of the service, and the primary need of the customer. In
discussing functional quality, Grönroos (1982a) pointed out that, because a service is often a
subjective experience of the customer (for example, the experience of a meal in a restaurant), and
because these experiences are produced through close interaction with the employees of the
service firm, the technical quality dimension alone cannot account for customers' perception of
the total quality they have received. Customers will be influenced by the way in which the
technical quality is transferred to them. Examples of this functional quality include:
▸ the friendliness of a hotel receptionist;
▸ the behavior of a restaurant waiter;
▸ the helpfulness of a train conductor;
▸the attitude of a consultant; and
▸ the accessibility of a teller machine (in the context of technology-supported services).

In short, functional quality relates to how the customer receives a service.

What Grönroos sees as technical quality relates to what Sasser et al. (1978) identified to be the
first two dimensions of service performance-the materials and the facilities. Accordingly,
Grönroos' functional quality equates to Sasser et al. third service performance dimension-
personnel.

Of these two elements-technical quality ('what') and functional quality ('how') the former can
often be quantitatively measured (as an objective phenomenon), whereas the latter is difficult to
evaluate (because it constitutes a subjective perception). Despite the fact that technical quality is
easier to measure, it is often of lesser importance in the perception of service quality by the
customer. How the service is rendered (that is, the functional quality of a service) is, in most
cases, much more important than the material means by which it is rendered (that is, the
technical quality of the service).

There are exceptions to this, like in nearly any case of satisfaction and quality. For example, if
you pay a company to come to your home and wash your car, and the technician is the nicest,
most helpful, and friendly person (functional quality), but he does an awful job on the actual
cleaning (technical quality), then it is unlikely that you would see this as a quality experience. In
that case, technical quality wins out over functional quality. Technical quality relates to the core
service (see Chapter 1 about the difference between core and peripheral services), hence
customers will not compromise on any shortcomings in this area.

Functional quality commonly constitutes the key to an organization's success. From the
perspective of the customer, while technical quality is essential, any deficiencies in technical
quality can be compensated by supe- rior functional quality. However, it is important to note that
the opposite is not true. It is the functional quality that provides the perfect context for customer
experience that nurtures the all-important customer-firm rela- tionship. Crotts and Ford (2008)
agree that the organization that is able to create a guest experience that keeps customers coming
back will have a competitive advantage. Similarly Pine and Gilmore (1998) would also agree, as
they see the how (i.e., the experience) as being of greater importance than the what. Pine and
Gilmore argue that the world has entered a fourth economy-the experience economy-where
"experiences have emerged as the next step in what we call the progression of economic value...
From now on, leading-edge companies- whether they sell to consumers or businesses-will find
that the next competitive battleground lies in staging experiences" (see Chapter 6, p. 97).

In addition to this basic idea (that service quality involves both technical quality and functional
quality), Grönroos (1982b) also incorporated the concept of 'corporate image, arguing that the
customer-perceived image of a firm is of the utmost importance to most service organizations.
The most important part of a firm, as seen and perceived by its customers, is its service.
Combining this with his idea of technical and functional quality, he argued that corporate image
is derived mainly from a combination of a firm's technical quality and its functional quality. He
went on to suggest that corporate image often influences customers' expectations, and helps to
reinforce the organization's advertising, marketing, and public relations activities.
An example of the power of corporate image is that of Apple products. Many customers all
around the world buy Apple products simply because they have strong brand recognition and are
known for reliable, easy- to-use, and attractive technology items such as phones, computers,
iPods, and tablets (iPads). In a case of such strong and positive brand recognition, customer
perceptions of service quality can often be significantly influ- enced not by the item or the
service itself, but rather, or partly, by the image of the firm. Service organizations that can create
strong brand image can significantly increase value and quality perceptions.

Two-dimensional model (process and output quality)

Another way of conceptualizing service quality was proposed by Lehtinen (1983) who also
identified two sets of quality dimensions. He called his dimensions 'process quality' and 'output
quality. These, he said, are inherent in allservices, and combine to form service quality (see
Figure 3.5).

Process quality

Customer participation is integral to the experience of process quality. The intimacy of the
service- production process means that the customer experiences the production process through
interaction and par- ticipation. The customer therefore judges every component of the service
process and assesses its quality dur- ing the service (the 'process quality'). Given that customers
are unable to judge the outcome until the service is completed, their only option is to judge the
process they go through during the production process. Thus judging the process allows them to
stipulate whether the outcome they are going to receive will match their expectation/requirement.
This would mean that customers simultaneously judge the service provider's ability to interact
with them and to make them feel comfortable. For example, a bartender may chat and joke with
a customer who is sitting alone at the bar, so as to provide a feeling that he/she is with friends.
The interac- tive quality is judged by the customer according to how his or her expectations are
met during the service- production process and, more pertinently, how the customer's
participation style is understood by the contact persons (representatives of the service provider),
and the degree to which these persons can adapt their service styles accordingly.

The customer's judgment is essentially subjective-how the customer sees and assesses the
production process. For example, in delivering hairdressing services, the stylist's conversation
with the customer while cutting the customer's hair contributes to the experience of making the
long hairdressing process appear short and entertaining to the customer. Of course, the stylist's
demonstration of technical skill in cutting the hair is important, but process quality is what makes
the experience memorable. Process quality therefore is the cus- tomer's judgment of the
experience of the moments-of-truth (service encounters). Process quality therefore is the core of
the firm's ability to showcase how those technical services are delivered.

Parallels can be drawn between Lehtinen's 'processes quality' and Grönroos' 'functional quality.
Both dimensions relate to the delivery process-the 'how. The difference lies in Lehtinen's
emphasis on the role played by the customer in co-creating the service experience and how this
can affect the service quality.
Customer participation is present in almost every consumer and professional service production,
and is thus integral to the assessment of process quality. In some services where customer
participation is especially direct and active, such as in the case of the entertainment business,
including music concerts, magic shows, comedy shows, football games, and so on, customer
participation positively influences the customers' percep- tions of process quality, and
simultaneously positively influences the provider of the service, bringing out the best in the
performance.

Output quality

According to Lehtinen (1983), output quality is the consumer's evaluation of the service
following completion of the service-production process. For example, output quality depends on
evaluation of the appearance of a finished haircut. In addition, in some service situations, output
quality is not always evaluated by the customer alone, but is also evaluated by others. For
example, a haircut is often evaluated by friends and colleagues of the customer. When customers
value the judgment of friends and colleagues, this aspect of output quality becomes crucially
important.

However, Lehtinen (1983) asserted that the customer is the only one to judge the process quality
(as opposed to output quality). A classic example of this can be found in education. If a degree
obtained by a student from a famous university is considered by the student's friends and family
to be of a high quality (an assessment of out- put quality), the student's personal sense of status
and prestige is enhanced. However, the educational services that he or she received throughout
the period of academic study at the university were experienced only by the student, and thus
only the student is capable of judging the process quality of the educational services. Process
quality represents the moments-of-truth in a service organization and hence it represents the
experience from the customer's perspective (more on these 'moments-of-truth' are covered in
Chapter 4 in the context of the employee-customer interface and the customer journey). Often it
is the service process that creates the experi- ence that offers the memory. In a service context,
memory of a positive experience is one of the most important assets of a firm.

Two types of output

Lehtinen (1983) also drew attention to two types of output in service production, which he
termed 'tangible' (or physical) and 'intangible. Both a car wash and a haircut constitute typical
tangible outputs, since both can be evaluated by outsiders who have not participated in the
production process. In contrast, the output in tourism services is intangible-because it reflects a
feeling or an experience, and can thus be judged only by the customer. Thus, according to
Lehtinen, the output of any service-production process is created during the entire period of the
transaction. As a result, by controlling the process and process quality, output quality can also be
controlled.

The 'Gap' principle and the 'Gap' model

As noted previously (page 62), the quality perceived in a service can be determined as a function
of the gap between consumers' expectations of a service and their perception of the actual service
delivered. In other words, customers assess service quality by comparing the service they receive
(perceptions of 'what I get') with the service they desire (expectations of 'what I want') (see
Figure 3.6).

This 'gap' principle is used to operationalize a number of service quality models, for example the
SERVQUAL model discussed below.

The actual 'Gaps' model is more complex than this (see Figure 3.7.). The gap is made up of
several other gaps-all of which are potential breaks in the links of the relationship. Research has
identified four intermediate gaps which, taken together, lead to the overall gap between expected
quality and the overall perceived quality of service as received.

In developing this idea of four intermediate gaps (and a resulting overall fifth gap, being the total
of the other gaps), the researchers looked beyond a single transaction and developed a model of
service quality representing customer judgments across multiple intermediate encounters
involving service design, communication, management, and delivery (see Figure 3.7).

Gap I is the difference between consumer expectations and management perceptions of

consumer expec tations, also known as a listening gap. The primary reason that companies don't
meet customers' expectations is that the firms lack an accurate understanding of what customers
expect. This can be caused by lack of com- munication with the customers, lack of willingness to
find out their expectations, or lack of preparedness to address them. The absence of upward
communication from frontline employees (those who know customers well) can also contribute
to a larger gap.

Gap 2 is the difference between management perceptions of consumer expectations and the
customer- to as the service design and standards driven service dies and late customer
expectations into the means by which these expectations might be met and service quality
specifications which employees can understand and execute.

Gap 3 is the difference between the specifications for the service and the actual delivery of the
service it can referred to as the service performance gap'-that is, the extent to which service
providers do not per form at the level expected by management. The service performance gap
occurs when employees are unable or unwilling to perform the service at the desired level.

Gap 4 is the 'communication gap, which is the difference between service delivery and external
commu- nications (such as media messages that might exaggerate or falsely convey the offering).
Inadequate horizontal communications between marketing, sales, and operations, as well as
inappropriate pricing, may also contrib- ute to the gap widening.

Gap 5 is the overall difference between expected service and perceived service (or 'perceived
service qual- ity' gap as shown in Figure 3.6). This can be also referred to as the 'customer gap. It
is made up of the sum total of the preceding four gaps, and is thus determined by the nature of
the gaps associated with the overall design, marketing, and delivery of a service.
Overall, the Gaps approach to service quality evaluation serves as a framework for service
organizations wishing to improve their quality of service by closing each gap. This model
emphasizes a focus on the customer and use of knowledge about the customer to drive business
strategy.

SERVQUAL model

This model is the most commonly used and cited of all of the service quality models (and it also
is subject of fre- quent criticism!). In developing their SERVQUAL model of measuring service
quality, Parasuraman, Zeithaml, and Berry (1985) embarked on an extended, multistaged
research project designed to identify dimensions that accurately capture a measure of service
quality. Early stages of their research netted 10 items (see Table 3.2), which were later
statistically tested and reduced to five service dimensions (and 22 total items used to measure
these five dimensions) as factors that are considered highly by customers when assessing the
quality of service (see Figure 3.8).

The five 'final' dimensions were reliability, responsiveness, empathy, assurances, and tangibles.

1. Reliability represents the service provider's ability to perform service dependably,

consistently, and accurately, by 'doing it right the first time.

2. Responsiveness refers to the willingness to help customers and provide prompt service in a
timely man- ner; this includes helpfulness, friendliness, warmth, willingness, openness, and so
on.

3. Empathy involves the caring, personal attention that the firm offers its customers; this includes
ease of approach and contact, jargon-free, understandable communication, an understanding of
the cus tomer's needs, so on.

4. Assurance reflects the knowledge and courtesy of employees and their ability to inspire trust
and confi- dence in the customer; this includes competence, experience, qualifications, skills,
courtesy, politeness, credibility, trustworthiness, honesty, and security of all types (physical,
financial, confidentiality, and so on).

5. Tangibles consist of the appearance of physical facilities, equipment, personnel, and

communication materials used.

TABLE 3.2

The Original Ten Service Quality Factors from Parasuraman, Zeithaml, & Berry (1985)

1. Reliability-consistency of performance and dependability.

2. Responsiveness-willingness or readiness of employees to provide service.

3. Competence-possession of the required skills and knowledge to perform the service.

4. Access-approachability and ease of contact.

5. Courtesy-politeness, respect, consideration, and friendliness of contact personnel.

6. Communication-keeping customers informed in language they can understand.

7. Credibility-trustworthiness, believability, and honesty.

8. Security-freedom from danger, risk, or doubt.

9. Understanding/knowing the customer-making the effort to understand the customer's needs.

10. Tangibles-physical evidence of the service.

The SERVQUAL questionnaire measures asks customers 22 questions, about three or four each
on the five dimensions of SERVQUAL. The set of questions are asked twice-first before the
customer has the experi- ence, and then again after the customer had the service experience.
Thus, SERVQUAL uses the Gap principle and performance we derive as a score which
represents the difference (or the gap) between expectation and performance.

In subsequent work, Parasuraman, Zeithaml, and Berry (1991) further examined variances and
nuances of cus- could be further broken down into process tomer expectations and argues
assurance and tangibles, and one outcome dimension, being reliability. These being
responsiveness empathy, tolerance (ZOT) for customer expectations (see Figure 3.9) for process
and outcome dimensions. They concluded that even though reliability is the most important
element in meeting expectations, it is also the most difficult service quality dimension in which
to exceed expectations (because customers expect reliability and have minimal tolerance for this
expectation not being met). On the other hand, the process dimensions (especially
responsiveness, empathy, and assurances) are the key to exceeding expectations. This is because
with the process dimensions, the opportunity is present to surprise customers with uncommon
swiftness, grace, courtesy, competence, commitment, or understanding, and go beyond what is
expected (Parasuraman, Berry, & Zeithaml, 1991).

SERVPERF (multilevel models)

The complexity of human reactions to a service experience has led some researchers to propose
that percep- tions of service quality are not only multidimensional (as noted above), but also
occur at various levels.

Brady and Cronin (2001) proposed a hierarchical model to conceptualize perceived service
quality. Their model suggested three primary levels of service quality-interaction quality,
physical environment quality, and outcome quality. In turn, each of these were conceived to have
three subdimensions (see Figure 3.10). Thus:
  interaction quality was understood to be made up of the three subdimensions of attitude,
behavior, and experience;

 physical environment quality was made up of the subdimensions of ambient conditions,

design, and social factors; and

 outcome quality was conceived as being made up of the subdimensions of waiting time,
tangibles, and valence (variable personal factors that affect experience).

Their studies found that customers aggregate their evaluations of the subdimensions to form their
overall per- ceptions of an organization's performance in each of the three primary dimensions.
These perceptions, it was argued, lead to customers' overall service quality perception.

Electronic (Web) service quality The Electronic service de qualty occured in the 1970s and

The early conceptualizations of servicealing. Some of the original researchers involved in the
developmthe Internet and the explosion of onlanned ther attention to how customers all phases of
a customers in an platform. E' service quality was therefore broadly defined to encompass all
phases of a customer's interactione with a website-including the extent to which website facilities
create efficient and effective shopping purchasinghe deed haraman, Zeithaml, & Malhotra,
2005). Through another complex research process a measure of service quality was developed,
called 'E-S-QUAL' (for electronic service quality). The items proposed to measure online service
quality were:

1. efficiency: The ease and speed of accessing and using the site;

2. fulfillment: The extent to which the sites promises about order delivery and item availability
are fulfilled;

3. system availability: The correct technical functioning of the site; and

4. privacy: The degree to which the site is safe and protects customer information.

Summary

To remain in business, sellers in the modern marketplace must be able to offer quality to
increasingly demand- ing customers. This applies equally to those offering manufactured goods
and those offering service. Failure to maintain consistent quality standards jeopardizes a firm's
reputation and its ultimate profitability.

Quality has thus become essential to business performance. Although the importance of product
quality has long been recognized in the manufacturing industry-in which various quality
management concepts and strategies have been developed and implemented over the years-the
service sector has been less aware of the importance of these matters.
However, the increasing economic importance of the service sector and the emergence of service
marketing in recent years have highlighted the need for management to gain an understanding of
quality strategies that are specifically appropriate for service firms.

In today's economy, service is crucial to customer satisfaction and business success in every
industry. For a service firm, the ability to provide quality service is, in fact, the most effective
means of differentiating itself from competitors. But the distinctive nature of service
predetermines and requires different approaches and tools from those that are used in the
manufacturing industry. The quality of service is not only different but also more difficult to
define, measure, and control. In addition, a firm's service quality is significantly affected by the
subjective judgment of its customers.

From a marketing perspective, service quality is the most important determinant of customer
satisfac- tion. It is therefore imperative that hospitality and tourism managers understand the
factors that influence a customer's perceptions, expectations, and satisfaction with service-and
design their strategies accordingly.

This chapter has offered an overall understanding of quality concepts in general, as well as
specific infor- mation pertaining to quality management in a service context. It should thus prove
of assistance to service managers, as service providers, to focus their efforts and resources
effectively on improving their firms' market position through quality service and customer
satisfaction.

Review Questions

1. Analyze the importance of quality management in terms of costs and benefits.

2. Briefly describe various quality principles proposed by Dr. W. Edwards Deming, Dr. Joseph
M. Juran, and Philip Crosby.

3. Briefly describe the general recurring themes of 'total quality management' (TQM).

4. What is your understanding of service quality? How is service quality different from goods
quality?

5. What are the outcomes of effective service quality management? Explain the 'customer
franchise' concept.

6. How would you define customer satisfaction, customer loyalty and customer delight? Is there
any interdependence between them?

7. This chapter described the relationship between customer loyalty, and satisfaction relevant for
highly competitive industries. Now think and describe how the relationship between satisfaction
and loyalty would look for monopolies. Give examples of such service industries.
8. Explain the idea of multiple consumption and think of the challenges it might create for the
quality management.

9. What is the similarity between the Nordic model and the two-dimensional model?

10. Which dimensions of the SERVQUAL model should the service manager lever in order to
pursue cus- tomer loyalty? Which dimension on the ZOT would this relate to?