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Services Marketing
Notes 9. A company advertises that exotic holidays at just `.9999 per person for the employees who
sell packages worth ` 2, 00,000 or more is ………………… marketing.
10. ………………… model focuses on the internal customers more than operations.
11. Critical incidents or service encounters are also called …………………
12. ………………… is a measure of the degree of probability of the product delivering what
had been promised.
6.3 Importance of Quality
The importance of quality can be assessed by going though the following points:
z Lower Costs: Higher quality of services imply fewer mistakes for any repeat tasks, service
recovery exercises or refunds to disgruntled customers. Preventive and corrective measures
through quality control processes lower costs and increases productivity.
z Immune or Less Vulnerable to Price War: Service firms known for their high quality
services have an additional differentiating attribute and can avoid the service commodity
trap. They can afford to have a higher price as they offer more benefits than the competition.
z Higher Customer Loyalty: As mentioned in the previous unit and section, service quality
ensures customer satisfaction that drives customer loyalty and enhanced profits.
z Higher Market Share: Loyal customers contribute to positive word-of-mouth publicity
(the ‘buzz effect’), which broadens customer base with minimal costs.
z Loyal Internal Customers: The previous unit has explored the linear relationship between
happy employees and customer loyalty, and a firm’s profitability. Employees become
proud of the firm for which they are working; having a sense of belonging is known for
inspiring and delivering high quality services. Lower attrition level lowers manpower
and training costs and the service firm can leverage on the knowledge and skill of its
employees.
z Higher RoI: The service-profit chain had established in the previous unit that high quality
services contribute to higher profitability.
Self Assessment
State whether the following statements are true or false:
13. A service firm that provides high quality services can afford to have a higher price as they
offer more benefits than the competition.
14. Loyal customers contribute to positive word-of-mouth publicity.
15. Higher the quality of services provided by the provider, higher will be the attrition rate
with the provider.
6.4 Summary
z In manufacturing, quality is defined by the degree of compliance between stated goals
and achieved targets. It is therefore rather easy to measure and conform to a standard.
z In service it becomes difficult to comprehend the concept of quality and measure it. This is
due to the mother of all characteristics for services – the intangibility factor – and it makes
measurement and assessment of service quality extremely challenging.
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