Service management focuses mainly on the supply aspect of a business. It mainly considers the service offered by the business in its daily operations (Wentz 2007, p. 22). In virtually all the supply chains, the customer is usually the target. Customers have their own perceptions regarding the service offered by the supplier. Similarly, the provider also has his own perception of the same service. For a business to be successful, the expectations of the receiver of the service should be fulfilled (Johnston 2008, p. 14). Many times, the provider assumes that he meets the customers’ expectations. This leads to provision of services, which are unsatisfactory to the customer. This leads to the business performing poorly mainly due to poor service delivery. This is usually common with businesses, which are involved in service intensive supply.
To overcome such failures, the expectations of the customer are vital. The gap between the expectations of the receiver and those of the person rendering the service should be minimal (Johnston 2008, p. 45). This is achieved through research of the market. This gives a clear understanding of the market, thus, making it easy for the business to concentrate on the segment, which it can cater for effectively. The lesser the gap between the expectations of the parties involved in the business, the more effective the business is (Wentz 2007, p. 27). In addition, service management reduces the costs involved in service-oriented businesses. Such businesses are costly in various aspects of their operations. Effective management maintains these costs at a minimum, improving the performance.
Service-intensive ventures require constant inventory to monitor operations. This proves to be very costly to many businesses, rendering this sector unattractive (Malhotra 2004, p. 31). Adoption of good service management techniques eliminates most inventory elements in the business. This reduces the costs of operation, making such businesses profitable ventures.
It also has the advantage of improving the quality of the services offered. This creates a sense of customer satisfaction and, thus, helps in retention of customers, as well as attracting new ones (Fitzsimmons 2006, p. 37). It also improves earnings from the services sector, since it cuts the service costs. Various theories exist in service management. All aim at providing satisfactory services to the customers. This occurs mainly through meeting the expectations of the customers. They take different approaches, however; the aim is mainly meeting the expectations of the customers.
It is one of the approaches adopted in the field of service management. It is regarded as the basis for management of services. This concept lays emphasis mainly on the sharing of expectations of the services rendered (Johnston 2008, p. 63). The parties involved share all the aspects involved in the services business. It incorporates both, the delivery and the customer expectations of the service. All these are geared towards an outcome; success lies mainly on the effective management of the service. This concept views all the processes involved in the management of the service as one (Andelin 2003, p. 83). These processes vary from operations to marketing. They also involve other aspects of the business, such as the delivery of the service (Malhotra 2004, p. 39). The main goal of this concept is to reduce as much as possible the gap between the expectations of the parties involved. It ensures that the providers have almost if not all the actual understanding of the expectations of the customer.
This concept is applicable mainly in markets where classes exist. The provider of the services has to understand the nature of the customers and their expectations of the service rendered (Fitzsimmons 2006, p. 53). In such markets, it is very difficult to satisfy all the customers with one product. Each class in the market has its own preferences, and, thus, there is a need to satisfy each one of them differently. This calls for an effective service management strategy to cater for such intricate markets. Consumer research is the basis of all service management strategies for each business. In service concept, this research helps the management to understand the consumer in depth (Fitzsimmons 2006, p. 59). Ultimately, the management makes a decision on the most viable option based on the outcome of the research. Various service businesses are well served by the service concept. The understanding of the consumers created by the research helps greatly in the sharing of the expectations by the parties involved.
Various service businesses are managed by the use of this concept. It is applied in businesses where an understanding of the classes in the market is vital for the performance of a business (Andersson 2006, p. 71). Understanding of each class helps the business to provide services specifically for the class, which best suits the strategy of the firm (Collier 1985, p. 82). Here, a shared expectation between the parties involved is achieved and at a lower cost. This makes the ventures successful in terms of profitability. An example is the service-intensive aviation industry, where this concept is mostly applied. Flights are usually designed according to economic classes. Companies serve various classes in accordance with the economic ability of the customers (Collier 1985, p. 82). Minimal differences exist in the product of the service offered.
Customers may be flying to London using different flights, but with the aim of getting to London at the same time. The only difference is the expectations of each customer regarding their flight of choice. High-end customers will choose an expensive flight with the expectations of high quality in-flight services. For success to be achieved by the provider, the high quality services expected by the customer must be provided. For low-end flights, the expectations of the customer are not so high. The cost of the flight should, thus, be in tandem with the services provided. An understanding of the types of customer the flight provider is dealing with is, thus, vital in order for a common sharing of the expectations to be achieved (Collier 1985, p. 93). This common sharing of the expectations builds a successful management strategy for the business. This helps in effective management strategy, which helps the business to choose the more viable option.
This concept is very useful tool in the management of service businesses. However, it has its own limitations, which hinder its effectiveness. A common sharing of the expectations by both parties is the main idea behind this concept. Failure to achieve a shared expectation is the main limitation for this concept (Frauendorf 2006, p. 33). When this happens, the business strategy fails to meet the business targets. The expectations of the customer are not met by the perceived expectations of the provider. This results in failure of the concept, since the customer feels that his expectations are not met. On the other hand, the provider’s perception is that he has met the expectations of the customer. Such lack of a shared expectation leads to a failure in this concept.
This is also known as segmentation of the market. It is applied in markets, which vary across a range of market factors. These factors may be demographic or even physical and, thus, affect the market differently (Frauendorf 2006, p. 33). To serve such markets effectively, an understanding of the divisions in the market is important. In this theory, customers are dividend into segments in consideration of the prevailing factors. These may be factors such as age or gender among others. This comes up with homogenous market segments, which the provider can cater for effectively (Johnston 2008, p. 43). After thorough research, the business targets a specific market, which has same characteristics. The targeted market has its own expectations and the provider strives to understand the expectations of this segment. Customer segmentation theory aims at dividing a mixed market into homogenous segments. These segments share common factors, which make it easier for the provider to fulfill the expectations of the customer.
Various factors are used in market segmentation. All aim at creating discrete markets out of the more mixed markets (Fitzsimmons 2006, p. 37). This theory is applicable in markets where various factors influence the markets differently. This makes it difficult for a business to provide effectively for the entire market. To meet the expectations of the customers, the provider segments the market into homogenous markets (Johnston 2008, p. 45). This makes it easy for the business to provide for the market. The business comes up with products, which aim at satisfying the expectations of each segment of the market. Some of the segments may not present good business opportunities. The provider may opt to leave out such unattractive segments in his line of products. Segmentation is vital in service provision, since other market factors such as competition are easily identified. The management is able to focus on segments, which are more viable for the business because of segmentation (Johnston 2008, p. 45). Segmentation helps the business to satisfy easily the expectations of the market. It makes it easy for the sharing of expectations between the parties involved.
This theory, as it is with other theories, is not devoid of limitations. Market segmentation is a complex process. It is time involving and expensive to carry out, since good market understanding is needed. This calls for intensive research which is expensive and, thus, adds to the cost of business. A good understanding of markets needs a research on a wide variety of data. Proper analysis of such voluminous data calls for advanced data analyzing techniques (Frauendorf 2006, p. 33). These include such techniques like data mining which are expensive to use. This increases the cost of business when the market segmentation approach is applied.
SERVQUAL is a service management tool that has been in use for a very long time. Earlier on, it was used to determine the expectations of a customer by evaluating ten aspects of a service (Gannage 2009, p. 17). However, the model was revised and now focuses on five aspects of the service rendered. These are measured against the expectations of the customer. The five aspects were given the acronym RATER (Gannage 2009, p. 8). This stands for reliability, assurance and tangibles. In addition, it caters for empathy and responsiveness of the service to the expectation of the customer. The main aim of this model is to reduce the gap that exists between the expectations of the customer and the perception of the management. It is an important tool in service management, since it brings the management to the reality of the customer’s expectations.
The gaps in the expectations that the management should address are as follows. The first one is the disparity between the customers’ expectations and the managements’ imagination of the expectations (Gannage 2009, p. 8). The managements’ imagination is usually theoretical and, thus, research is vital in coming up with the actual expectations of the customers. Thorough research on this gap helps to reduce this disparity and, thus, satisfaction of the customers’ expectations is met.
The second gap is in the definition of the expectations by the consumer. In most cases, what is defined as the expectations of the customer by the management is not usually true. The second attempt, thus, involves the reconciliation of the perception by the management with the reality about the expectations (Lankhorst 2009, p. 48).
The third gap exists in what is specified as the experience and its delivery. Analysis is done on the consumers to determine whether the specified experience is the expected one they receive. This is achieved through research on the customer experience of the service. If disparities exist, then the delivery process needs to be revised to achieve the desired experience (Kaufman 2009, p. 16).
The fourth gap exists in what customers experience and what the management purports to offer (Gannage 2009, p. 11). Many companies do not give the exact information on what the customers should expect. They spice up the experience to make it appealing to the customer. The customer feels his expectations are not met after using such a service. Reducing this gap is vital for performance of the business. This is because the customers’ expectations will not be bloated and, thus, will be satisfied by the service.
The last gap occurs between the expectations and the experience of the service (Kaufman 2009, p. 21). It is vital after offering a service; the management carries out a follow up research. This gives an indication whether this kind of a gap exists in its line of operation. After such a gap is identified, measures are put in place to reduce the gap between the two.
The SERVQUAL model is applicable in businesses which have complex customer expectations (Lankhorst 2009, p. 62). In such cases, satisfaction of the expectations is affected by various factors. A detailed analysis of the degree of customer satisfaction is, thus, vital for a successful business. This is achieved through the analysis of the existing gaps in the delivery process. This model has its limitations in that it is complex to use. It is also worth noting that the five aspects covered by the model are not universal. It also avoids some practical aspects, such as statistical aspects of markets.
Service management is essential for a satisfactory service delivery. Services are mainly measured by the satisfaction of the customer’s expectations. A good understanding of customer expectations leads to a successful service business (Addy 2007, p. 9). This understanding is achieved through proper research of the market and customer satisfaction. Various theories are applied in understanding of service management.
Service concept is one example of such theories. It is applicable in markets where classes exist, and preferences among these classes come first. It, however, has limitations where it is difficult to have a shared expectation. The other theory is the customer segmentation theory. It is applied in heterogeneous markets where it is difficult to define the expectations of the customers. Its limitation is that it is expensive and complex. SERVQUAL model is another theory used in service management (Addy 2007, p.12). It is applied in complex businesses, which need to be assessed on gaps existing between expectation and satisfaction by the service. It is noted as a complex model to use in analyzing businesses.