Page 62 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 3: Services and their Characteristics

However, setting goals and standardizing service delivery tasks can reduce this gap. Gap-3 is Notes
referred as ‘service performance gap’ because actual delivery of service does not meet the
specifications set by management. This can arise because of lack of teamwork, poor employee
selections, inadequate training and inappropriate job design and man specifications. Gap-4 is
the discrepancy between service delivery and external communications in the form of
exaggerated promises and lack of information provided for service personnel. Gap-5 represents
key challenges to ensure good service quality. The provider must meet or exceed customer
expectations, as perceived service quality is the result of the consumer’s comparison of expected
service with perceived service delivery. It is possible to identify the service quality gaps in each
of these levels and take corrective actions for solving the service quality management problems.

Self Assessment

Fill in the blanks:

12. ……………… means the willingness to help customers and provide prompt service.
13. Zeithaml, Parasuraman and Berry developed a model which explains ……………… gaps
that can lead to customer dissatisfaction.

3.5 Role of Services in Economy

The service sector has come to stay as one of the key drivers of modern economic systems.
While, consumer affluence is propelled by increase in income level, and generation of wealth
across majority of industrialized nations, it has also contributed towards growth in services. The
service economy contributed more than half of the Gross Domestic Product (GDP) in many of
the developed nations. Even in developing countries like India and China, services have emerged
as a key sector fuelling growth and success for business houses. Many of the successful
manufacturing companies like Tata, Birlas and Reliance have entered into the service business.
The service sector has become more competitive and is posing more challenges to managers to
apply principles and strategies to achieve success in the service sector. Deregulation, economic
liberalization and rising expectations of consumers have made managers to apply managerial
skills, practices and strategies to satisfy customers. Though the industrial revolution brought
manufacturing sector to the forefront, service sector contributed towards the rapid growth of
business. The industrial revolution saw development of many services whose existence was
important for economic development.

Example: Without development in transport and shipping services, goods would not
have been able to move across the nations; without financial services and distribution of finance
and wealth to entrepreneurs, business would not have got the desired feed for seeding and
growth.
So a strong service industry emerged to meet the needs of manufacturing sector, to meet the
demand patterns of intermediaries who took the output of manufacturing sector for wider
distribution to consumers. Since then, service sector has come to stay as the biggest source of
employment and value generation. Due to increase in competition, manufacturers started
differentiating the product offer through quality of service delivered to customers. There is a
close correlation between the level of economic development in an economy and the strength of
its service sector. Service sector facilitates improved productivity and higher employment for
the economy.
It is very difficult to find out the exact difference between products and services in today’s
context as what is being offered to consumers as a product is well supported by a bundle of

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