DELIVERING SERVICES AND SERVICE QUALITY

All service industries are experiencing cut-throat competition and rising desires of the customers. Hence,
success can be ensured only by offering current service in a good manner but also establishing the
innovative ways of catering the services. As service industry involves a right blend of processing and
delivering the services for ensuring a satisfied clientele, both these aspects must be given due
importance.

Environment for diversion or expansion is crucial for making strategic decisions about the new services,
especially for the marketers who are already engaged in offering services.

All the processes and procedures concerning the recognition of new service opportunities like designing
the services and its model and service marketing come under the scope of new service development.

Usually, service development is the enterprise development by adopting various marketing techniques.
Following are the necessary questions pertaining to this approach:

1) What are the ways to discover, reach, and appeal customers?

2) What are the ways for ensuring satisfaction of these customers with a novel approach?

Service Product Levels: Basic Service to Potential Service

1) Core Service: Core benefit is the most important level of hierarchy. At this level, the customer is
buying the essential benefit or service Here, marketers are the benefit providers to customer For
example, guest of a hotel is buying rest and sleep, a woman at spa resort is buying comfort and luxury.

2) Expected Service: At this level, the marketer needs to prepare an expected service. An expected
service comprises of all those attributes which a customer expects while buying a service. For example, a
visitor at a restaurant expects clean table, good quality food, quick services and vibrant ambience.
Mostly, all restaurants try to provide these attributes, but customers also look for least expensive
restaurant along with these attributes.

3) Augmented Service: The third level of service provides augmented service to its customers, which is
beyond their expectations. These types of services have additional attributes and benefits which enable
the customers to differentiate between the available service and other services offered by competitors.
For example, a hotel may include fine dining and 24*7 room service, fresh flowers, a remote-control
television set, rapid check-in and express check-out, which are all extended services provided by the
hotel to build up a augmented service.

4) Potential Service: The last and the fourth level is that which offers the potential service. This type of
service covers all the prospective alterations and extensions that the service may go under in future. At
this level, the companies make most of their efforts to find out new ways to gratify their customers and
offer unique services to them. For example, an innovative transformation of the traditional hotel service
can be like offering all-suite hotels where the occupant books a set of rooms.
 TYPES OF NEW SERVICES
The types of new services are as follows:

1. Style modifications : refer to the basic form of innovation which does not involve any changes in
either. nd it can also encour staff. For example, giving a new colour to the retail outl means of
transportation, redesigning the uniform of the introducing payments through a new bank check or intro
trivial change in the service guidelines for the staff.

2) Service Improvements: Service improvement is the usual fo innovation. It involves moderate changes
in the efficiency products by either enhancing the basic product or adding additional services. For
example, extending service hours of adding facilities to the hotel room, etc.

3) Supplementary-Service Innovations: ser innovations include adding supplementary service to a basic

further enhancing the supplementary services.

4) Process-Line Extensions: Process-line extensions are not innovative as process innovations. However,
it involves novel of delivering the products or services, which offers more com and a novel experience
for the present customers. It is also help in attracting those customers who find the traditional method
unattractive..

5) Product-line Extensions: Product-line extension refers to adding more products to the existing
product lines. Those who take the firs move are considered as pioneers and the rest as followers. These
services can cater to serve broader needs of the existing customers and/or attract new ones with
varying needs.

6) Major Process Innovations: When the existing core services of an organisation are offered with h new
service processes alongwith additional benefits, it is called process innovation. These innovations help in
adding new customers to the organization .

7) Major Service Innovations: Major service innovations refer to introducing novel services in the
market which have never seen before. Generally, these services have new features/benefits and are
offered through new processes.

PRE-REQUISITES FOR NEW SERVICE DEVELOPMENT

Following are the pre-requisites for new service

1) Organisational Feasibility :- before buying a service if it will match with strategies of org. it is vital
to assess . If an organisation's strategy is to serve only corporate or business customers it would be a
unique idea to launch services for the retail consumers.

2. Market Analysis: After matching the new service idea with the organisational strategy it is required
to have the market analysis report for any service development. Market analysis encompasses
identifying the possible market for the new service. Only after conducting market analysis, the next
formalities n new service design can be implemented.

3. Business Case Development and Pricing: The next essential prerequisite is the establishment of a
business case for a new service, after deciding about its market prospects. Though the service may have
an abundant market potential but if its business case is absurd (i.e., it will not be able to bring sufficient
returns or the return on investment (ROI) would take a long time), there will be no point to initiate it
with the service design process.

4) Service Description: The service description (or service definition) is the most vital document related
to the service requirements. It helps in determining the questions like:

i) What is the actual service?

ii) What are the drivers for developing the service?

iii) What service features are offered to the customers?

iv) What will be the reaction of the customers on using the service? v) How the service features would
be used by the customers? And how would they get benefited from it?

5) Understanding the Requirements: A very important pre-requisite for new service development is
understanding the requirements for the new service and comprehending why they are essential.
Requirements refer to the needs or the desires of the customers/end users as they only can define basic
standards and situations in which these needs can be fulfilled.

NEW SERVICE DEVELOPMENT PROCESS

1. Concept generation
2. Concept screening
3. Premilinary design
4. Design Evaluation and Improvement
5. Prototyping and Final Design
6. Developing the Operations process

Stage 1: Generating the Concept: The ideas about new services can be generated internally or
externally. Internally, the sources can emerge from sales staff, front office staff or specifically R&D
department, whereas the external sources can be the information about customers' needs or the
actions of the competitors in the market. The data can be acquired in a structured and formal manner.

Stage 2. Concept Screening: It is not possible to markets al understanding and assessing the flow of
concepts. There can be in diferent functions. Usually, there are trest of criteria for assessing market
positioning of the products, its operationstechnical implications and assesment of finance. This concept
screening stage involves answering the following questions:
1) Does the proposed product or service possess an attractive position in the market which also matches
with the marketing strategy of the organisation?

2) Does the proposed product or service use current resources capabilities or can help in developing
new capabilities?

3) Is it feasible to invest in the proposed product or service, and is the return on investments satisfactory
on this product or service?

Stage 3: Preliminary Design: The detailed work on the design of the product or service starts from this
stage. It includes product or service would encompass. Different information are collected for this, like
the service, the exact quantity.

Stage 4: Design Evaluation and Improvement: At this stage, attempts are made to improve the
preliminary design, before introducing the prototypes/samples in the market. Various techniques can be
used at this point for assessing and improving the preliminary design. A few techniques are related with
finding the total expense incurred and making it cost-effective. Others are related with finding technical
features of the product or service for improving the total worth.

Stage 5: Prototyping and Final Design: Usually close to final' designs are 'prototyped'. Sometimes, the
design activity is also partially carried in next stage to make an improved design as a prototype, which
can be tested. It may help in knowing more about the nature of the projected product or service but
usually, it helps in lowering the risk factor associated with introducing it directly in the market.

Stage 6: Developing the Operations Process: Almost every model of product and service development
works on the assumption that the final stage will help in developing the operations processes which will
finally help in producing the intended product or service. However, practically product/service
development and process development are inevitably linked. However, keeping this step in the end
does not support the idea that development process for designing products and services, as per the
market needs, can take place after deciding on its features. Only, when the operations processes are
comfortable with the service design, the process decisions can be taken.

NEW SERVICE DEVELOPMENT SUCCESS FACTORS

The factors which can ensure the success of new service development process are as follows:

1) Nature of Service: These factors are associated with exploring the basic nature of the service in terms
of cost, complexity, innovation, quality, and whether it is people or equipment based. The success
factors associated with service are innovation, quality, adaptability and exportability. The success factors
add value to service for the users and offer competitive advantage to the service providers.

2) Product-Market Characteristics: The factors which help ensuring the market success of the new
service/product attractiveness, competitiveness suitability, and satisfaction of the particular market
segment. The assessment the marketability of a new product or service is obvio Usually, those products
or services are successful in the targ market, which help in catering to identified customers' need which
are adaptable enough to match with their changing need and which consistently match with the values
of the customer .

3) Project Synergy: Synergy is associated with two dimensions of success, viz., consistency with the
technical competence, resources funds or the firm, and competency with the current product line and
experiences of clientele. The successful service is the one which "matches the needs of the customers
and is supported by expertise knowledge for catering the service". Therefore, service system similarity is
crucial for the new service development.

4) NSD Process: Almost every study concerned with measuring success factors suggested the
development of a formal and systematic NSD process. It is the crucial factor for the success of new
service development. The speed and process formulation for NSD are statically and significantly related,
where information technology (IT) functions as an enabling factor.

5) Service Innovation Culture: The last important success factor for the new service development is the
service innovation culture in the organisation. The organisational culture is represented by the
management style and organisational structure. It has been observed by Cooper and Kleinschmidt that a
positive culture and climate is vital for successful product development. Organisational practices which
promote an optimistic work culture include supportive teamwork, encouragement of product
champions, rewards, supportive risk-taking behaviours, giving independence in handling failures,
motivation for novelty and innovation, offering time off for thinking new ideas and providing venture
capital and seed money for internal projects.

SERVICE STANDARD
Generally, the term 'standard' (or quality) refers to the least acceptable level by customers. However,
alongwith knowing about what level is considered standard by customers, it is also vital to find ways to
attain that level. Yet, it is quite unfortunate that the judgments of customers regarding a standard level
are not accompanied with the details about why it is considered standard.

The standard set by the service provider highlights his/her view about the time that should be dedicated
to complaint resolution and enquiry handling of the customers. The actual time engaged denotes the
service performance. Either it is service performance below the set standard or the failure to provide
the standard service, the customer turns out in both the cases.

A customer service standard can be denoted as the interface between the service firm and the
customer. Some of its essential aspects ar excellence, timeliness, prompt response, accessibility and
commitment All business draws out of customers in one way or another, hence, it vital to constantly
strive towards improving services. For this purpos regularly monitoring customer service standards and
making it a part of the strategic plan of the organisation is essential.
 TYPES OF CUSTOMER DEFINED SERVICE STANDARD

Service standards can be explained in terms of hard and soft measures These have been described
below:

1) Hard Measures: Hard measures relate to measurement aspects of the service - how many, with what
accuracy, with what speed, etc. Generally, two out of the five quality dimensions are open to hard
measures. The first dimension being reliability of services is measured in terms of "right first time" or
being "right on time". For example, arrival of flights or trains, scheduled appointment with doctor,
delivery date given by dry cleaners, boutiques, etc. Similarly, responsiveness is another dimension which
is given consideration while evaluating service design standards. Responsiveness tries to gauge the time
the customer has to wait between asking for a service and getting it delivered. For example, waiting in
the restaurant for the order or waiting for the electrician to come after placing the request for a
defective electrical appliance.

2. Soft Measures: In comparison with hard measures, evaluating soft measures is relatively more
difficult both factually and against a standard. They are often developed in response to customers. For
example

i) How did the customer feel?

ii) What was the level of information and consultation that was given to the customer?

FACTORS NECESSARY FOR APPROPRIATE SERVICE STANDARDS

1. customer not company define standards ; service standards, which help in attaining internal goals of
the organisation associated with productivity, competence, price or technical quality. For minimising the
gap, the organisation's standards should be based on the expectations of customers instead of its
internal goals.

2) Standardisation of Service Behaviours and Actions: Conversion of the customers' expectation into
quality standards relies on the extent to which it is possible to standardise tasks and behaviours.
However, some managers and executives believe that it is not wise to standardise services, as
customised services are essential for ensuring high-end services. In some specialised services like
consulting, accounting, dentistry and accounting, what is needed are personalised services as
standardised services are considered to be detached, insufficient and unable to meet customers' need.

3) Formal Service Targets and Goals: Formal goal setting is considered to be appropriate in the service
sector. Firstly, as particular goals as per needs of clients. Secondly, goals are set for the departments for
percentage of achievements. Those firms which are successful in constantly delivering high quality
services are considered notable in the industry for guiding employees appropriately, regarding formal
standards for providing services. These firms precisely know the importance of delivering quality
services to customers and have quite accurate perception about the time taken to meet services,
chances of failure and time taken for rectifying them..

PROCESS FOR DEVELOPING CUSTOMER DEFINED STANDARDS

Step 1: Identify Existing or Desired Service Encounter Sequence: The foremost stage is concerned with
describing the service encounter sequence. For this purpose, a blueprint of the sequence may be used.
In an ideal situation the firm will openly explore service encounter sequence as per the desire of
customers.
Customer-defined standards are based on what is considered vital by the customers. Although critical
actions and behaviours are chosen to set the standards, the organisation could improve the services to
meet the standards. It is done without interrupting the organisational goals and overall customer
satisfaction.

2) Standards Include those Performance Areas that must be Enhanced or Maintained:

Customer-defined standards must be established based on performance areas that need to be

enhanced or maintained. The organisation can get better returns by concentrating on those areas which
must be improved.

3) Standards Include Actions and Behaviours of Employees that can be Improved: The employees can
constantly adhere to set standards only if it is under their control. It is not possible to bring about any
improvement by asking employees to control things which are beyond their reach such as quality
maintenance or timely manufacturing of new products. This is the reason for which only controllable
factors should be included in the service standards.

4) Standards are Recognised and Accepted by Employees: The employees can consistently adhere to the
set standards only when they recognise and accept them. Forceful adherence to standards can only
result in annoyance, absenteeism, reluctance or falling standards. Several companies set the unrealistic
standards, e.g., standard time which should be taken for services (instead of actual time taken) and
further lowering time taken for bringing down the labour cost

5) Standards are Predictive Rather than Reactive: It is important to note that customer-defined
standards should not be based on customers' complaints or other reactive feedbacks. Reactive feedback
is associated with previous concerns of customers, instead of their present and future needs. Hence, it is
prudent to take proactive action for knowing affirmative and negative perceptions of customers in
advance instead of waiting for the complaints

Stage 4: Deciding Whether Hard or Soft Standards Appropriate: In the next stage, decision is taken
whether hard standards will be more appropriate. One of the blunders in this that hard standards are
taken readily. As organisation knows abo operations, it holds a biased view about itself. Thus, hard stan
should show the precise picture of action and behaviours to match customers' expectations. One of the
best ways to decide if the standard is suitable is to primarily establish a soft standard thr trailer calls and
then to decide about operations which will appropriately match best with the soft measure. M

Stage 5: Developing Feedback System for Measuring Standards: ascertaining, whether hard or soft
standards will match with custome requirements, it is vital to develop a system of feedback that match
with standards. Usually, hard standards involve mechanical counts technology driven measurement of
errors. The measurement of standards involves assessment of perceptions through trailer surveys
through employees monitoring. Employee monitoring is evident in th form of listening to employees'
calls by supervisors. The idea behin such monitoring is to give feedback about employees' performance
if matches with set standards for meeting customers' needs. A crucia feature of the feedback system is
that it helps in ensuring that performance is at par with customers' desire instead of perceptions the
organization

Stage 6: Establishing Measures and Target Levels: The next stage involves fixing up target levels as per
standards. In absence of this stage it will not be easy to measure the level of achievement of standards.
Figure 3.4 depicts a good example of approach for fixing standards, for timely response in a service
company. Every time customer come with a complaint and it is resolved, employees log-in and ask
customers' about their satisfaction level. The data obtained through each complaint help in plotting a
chart about the level of performance of the company, the levei at which it desires to reach

Stage 7: Track Measures against Standards: The next stage for developing customer defined standards is
tracking the measures against the standards. Different types of techniques are available for measuring
against standards. One such method is PDCA Cycle. The P-D-C-A cycle (Plan-Do-Check-Act) is applied to
process the data for measuring and constantly improving the level of performance. Different statistical
methods are also used for measuring..

Stage 8: Providing Feedback about Performance to Employees: It is vital to analyse and distribute the
acquired data to support decisionmaking process at multiple levels. It is also important to organise the
data for facilitating the decision-making process. The employees should be communicated regarding
their roles in fulfilling service requirements. The service performance of all the departments should be
internally measured and then it should be correlated with the outside service requirements of
customers.

Stage 9: Periodically Updating Target Levels and Measures: In the final step, target levels and customers'
requirements are revised and =measured regularly to stay tuned with expectations of customers.

SERVICE DELIVERY/ DISTRIBUTION

Place of distribution is a critical element of marketing mix. It is the location where goods are made
available for purchase. This is also termed as distribution channel. It becomes convenient for some
manufacturers to sell their products to wholesalers who in turn sell them to the retailers, while other
manufacturers prefer to directly sell their products to retailers or customers. This whole process is
known as distribution channel'. The decisions related to place activity is majorly dominated by
distribution channel

According to Philip Kotler, "Every producer seeks to link together set of marketing intermediaries that
best fulfil the firm's objectives. set of marketing intermediaries is called the marketing channel trade
channel or channel of distribution)".

Here 'place' refers to the location where services can be ava conveniently. The production and
consumption of services take plac the same point because they are inseparable in nature. Due to
inseparability, neither the service providers can produce the service place where the cost of production
is low nor can they sell them higher prices where the demand for service is high. Hence, either will be no
distribution channel for marketing of services or there will a small one. For determining the place for
service, following decisio must be considered:

1) The nearby environment and physical appearance of the place be considered while selecting a place
for providing service.

2) The locality from where the service is to be provided is also a ve essential factor. For example, banks
are trying to establish the ATM's at such locations where customers feel its importance most.

3) The intermediaries should be selected carefully in such a way th they can easily provide the services
to customers and can enhan the organisation's operational efficiency.

Characteristics of Service Delivery

1) Inseparability of Production and Consumption: When it comes t services, it is important to assure
simultaneous production and deliver of services. The presence of the customer should be ensured in the
premises when the consumption is required. This signifies that in most of the services, the presence of
the customers is available in the premis as they want to consume the services personally.

2)Difficulty in Balancing the Demand and Supply of Services When we talk about goods, inventory can
be used to overcome demand and supply gap. When demand is more than the supply, the stocks will be
reduced and vice versa. But when it comes services, as the storage of the services is not possible, there
will be a formation of queue when the demand is more than the to services.

3) Lack of Standardisation in Services: In many situations, in order to fulfil the individual demand of the
customers, the services are customised. Thus, the frontline employees should have a better
understanding of the accurate requirements of the customers, choosing the correct services which can
fulfil the demand of the customers and then finally delivering the service to the customer. Still, most of
the service organisations recruit the junior or less experienced manpower in the frontline.

4) Recovery Services: Opposite to the products, there can be some incidents where there might be
some issues despite having the high quality services. There can be an incident of service failure at the
first time. But in most of the cases, a second chance is provided to the service providers by the
customers. But by then the nervous are worn, there can be uneasy service delivery atmosphere and
there can be some arguments. But in case of failed services, during the second delivery, most of the
customers tend to have the negative attitude towards the service provider.

SERVICE CHANNEL
Service distribution has also to be taken care of by the service marketers. The target customers must be
able to avail the services since marketing would be impossible without it. However, it is generally seen
that the service marketers try to adopt those channels which are used for distributing the goods, but
they fail in doing so. The primary reason behind such failure is the uniqueness in the features of services.
 Services cannot be transported as material goods since they are intangible in nature. Also, one cannot
separate the services from its service provider and this feature proves to be a major hurdle in the free
transportation of services. Moreover, it is practically impossible to store services at a central place and
transfer them to different distribution centres due to their perishable nature.

The delivery of the services can be ensured by using any of the below mentioned combination of the
distribution channels:

1) Agents and Brokers: These are the wholesalers who do not have the title of the products. In return to
their services, a commission or fee is being paid to them and they are mainly the agents, purchasing
agents, selling agents and facilitating agents of manufacturers and service providers.

Services Providers Agents: These are the agents who provide the services to two or more non-
competing and closely related service creators in a certain geographic location.

ii) Selling Agents: Selling agents are the agents who provide complete range of services of a service
provider and responsible for the marketing activities of these services wh are mentioned in the
contractual agreement. They have exclusive rights of negotiating on behalf of the service provid Without
owning the title of the products, they can act a wholesaler. They offer their services mainly for the small
fi For example, tour packages.

iii) Purchasing Agents: These agents have long-term association with the customers and are responsible
for judging and buyin the services on behalf of them. They have adequate knowled and provide useful
information to the clients and in-retur obtain the best possible prices and services. Most of the fin and
individuals hire the purchasing agents for finding out to rare jewellery, art, antiques.

iv) Facilitating Agents: They are mainly used in the marketing activities by offering expertise and
different types of support like risk-taking, financial services or transportation services There is no
particular association of the brokers with any specific service providers. They have expertise in some
certain fields and provide an interference point so that buyers and sellers can negotiate with each other.

2) Franchising: Franchising is one of the most widely used methods for facilitating the services. The
franchiser, the franchisee, and the customers are the main parties involved in this process. This class i
mainly dominated by the business format franchising'. A lot of success is seen in these kinds of
franchising arrangement in India particularly in the areas of restaurants and hotels (McDonald's), health
clubs and fitness centres (Fitness First), photographic development and printing services (Fotofast),
tuition and coaching classes (Career Launcher), computer training institutes (Uptech and NIIT), etc.

3) Electronic Channels: The only field which does not need any of direct human interaction is the
electronic channels. In fact, some kind kinds of pre-designed services Telephone, television channels,
internet, web, etc., are the services which are known to most of the masses and there might be several
other types of electronic mediums which are still developing. Multimedia libraries and databases,
interactive news and music, interactive, network-based games, movies on demand, banking and
financial services, channels.
 SERVICE DELIVERY STRATEGIES

The service providers can use any one of the below mentioned distribution strategies to offer their
services to the customers:

1) Intensive Service Distribution: In this kind of distribution strategy, all the possible channels which are
present in a certain area are utilised. The items which have a wide appeal in almost all the customer
groups can be distributed with the help of intensive distribution strategy.

In order to facilitate the services widely and conveniently to various customer segments which are
targeted by the service firm, the maximum number of service outlets can be utilised by a service
provider. Having the maximum number of service outlets which is possible by a certain service firm can
be seen as an intensive network of distribution. The intensive distribution strategy is mainly
implemented by mobile services network, cyber cafes and banking services so that the customers
available in the different locations can be served.

2) Exclusive Service Distribution: In this type of distribution, only a single wholesaler or retailer is used
for facilitating the products and services in a certain location. In this method, a very exclusive and
limited network of service outlets is used for distributing the services of the service providers. This
strategy is mainly adopted to maintain the exclusivity in serving the customer segment of a particular
brand. The main focus of the service distributors will be achieving exclusivity in terms of product traits
and geographical location.

There can be some kind of loss of market coverage when the exclusive distribution is adopted by the
marketer, but most of the time, an image of quality and prestige is carried by them. Apart from this, the
cost incurred in the marketing is controlled in a great deal number of accounts. There will be a retailers
in exclusive the prices
2) Limited Options: The market expansion becomes the main factor on the basis of which different
business firms or social organisations measure their growth. There will be only two options for the
service provider when it comes to expansion of market operations. Either he can develop service outlets
in different locations offering similar quality and packages or can use private distribution network.

3) Quality: The encounter between the service provider's manpower and the customer dictates the
service quality. The service provider has the most difficult task of ensuring the performance standards at
the service outlet.

In fact, if the services are provided by the middleman, the risk of service quality degradation increases
and it can result in the bad reputation of the service firm

4. Availability: Facilitating the services at the right time and at the right place and making them
easily available to the customers are the main objectives of the service distribution. A greater
level of customer contact will be required in case of intangible services such as education,
consultancy, etc.
For example, person-to-person interaction can be reduced with the help of ATM machines in
banking services.

5) Limited Scope of Market Expansion: The scope of market expansion is restricted by the inseparability
of services and the issues of front-line management and chances of standardisation are restricted by the
variability of service.

6) Criticality in Demand and Capacity Management: Demand and capacity management becomes quite
vital due to perishability of services. A friendly environment and equipment at the service distribution
outlet are quite important to have better customer participation.

7) Problem in Classifying and Convincing Customers: As the ownership of the services does not change,
the importance of frontline employees of the service providing firm becomes quite vital in clas the
customers.

ELEMENTS OF SERVICE DELIVERY SYSTEM

The primary or main levels and the overall design of a service delivery system are explained below:

1) The Service Encounter and Experience: The term 'service encounter' refers to the place (where) and
the service (what) which is delivered by the service provider and the term 'service experience' refers to
materiality of service delivered. These two components are the crux of the delivery system. However, it
is crucial to examine every aspect and figure out a balancing technique to improve the system. It is
essential for the service encounter to determine expectations and beliefs of the customers with regards
to what the service provider will supply. the services are provided by the customers wants and the
actuality of offerings (what exactly the organisation plans to do and how effectively and successfully it
accomplishes it).
2) The Market: The external conditions or state of affairs in which the service delivery system is required
to be established and the exact stage where the procedure of design and development begins are all
provided by the market. The description for the design of the service delivery system consists of
determining volumes, the suitable qualifiers and order winners to maintain the existing and expand the
share in selected markets alongwith the specifications of design and service mix.

3) Retention: Maintaining and expanding the share in the market is one of the major objectives of the
service delivery system. Hence, the delivery system while establishing the measures to overcome
failures should check its success level. It is true that the rate of retention is largely influenced by failures
but through service recovery, the organisation can address the complaints and grievances of the
customers which will be helpful in regaining the lost business and customers

FACTORS CONSIDERED IN DESIGNING SERVICE DELIVERY

3) Facility Location and Layout: Service organisations regard location as one of the most significant
competitive priority. This is because it impacts the travelling time of the customers. Good location
decisions form the basis for various service facilities including bank branches, retail stores, hotels, health
clinics, post offices, emergency service facilities, rental car firms, libraries, health clubs etc. For example,
there is an extensive presence of Starbuck's Coffee shops across shopping malls, airports and in several
cities. In all, customer satisfaction and perception alongwith the cost and flow of process are influenced
by the service facility layout.

4.Service Process and Job Design: The task of creating an effective series of activities to meet internal as
well as external customer* needs and wants can be achieved by service process design. In this regard,
the techniques and procedures that will ensure quick and simple interactions between the service
providers and customers, proper timing of doing things and avoiding human errors need to be
developed by the designers of the service process.

For example, a high level of precision and quick response time is maintained by many fast food joints
through their meticulously outlined processes. For this purpose, various latest systems and technologies
like hands-free intercoms, TV screens displaying order of customers and microphones that decrease the
noise from the kitchen, etc., are used.

5) Servicescape: All kinds of physical proofs a customer can utilise to create an impression of the service
is known as servicescape. The behavioral environments where serv encounters occur are also included
in servicescape. For example, the servicescape of the world famous fast food chain, McDonald's, is
universally identified. McDonald's competitive priorities of speed, cleanliness, uniformity.

MANAGING EFFECTIVE SERVICE DELIVERY

Service characteristics like inconsistency, inseparability, intangibility, etc., have resulted in certain types
of service distribution. Products which usually consumed or rented and where there is no transfer of
ownership are known as service products. However, availability of service is a critical factor for selling a
service. Also, the service must be easily accessible. For this purpose, there must be an effective
distribution system, i.e., the channels or medium through which a service provider can make contact
with the potential customers of the service product.

When the delivery system fails, any operating strategy designed specifically for providing a particular
service into a target market does not function. A good distribution system requires a group of well-
qualified and capable persons having the right set of attitude for desirable performance alongwith
suitable facilities, equipment, workflow structures and cautiously designed layouts for well-defined
goals.

Good delivery systems provide the right level of capacity for effectively meeting the usual customer
demands. They aid in decreasing the riskrelated perceptions of customers and also ensure that every
service quality standard is considered. Designing an effective distribution system can build barriers to
entry in the competitive market and can change the perception of customers regarding the service
products. Different ways to manage service delivery are as follows:

1) Delivering Services through Employees: Quality services can be delivered through HR practices and
service employees. Here, it is presumed that many discontinuities remain in the service quality when it is
not delivered as desired even when the expectations of customers are well evaluated (Gap 1) and those
expectations are conformed by specifically designing the service (Gap 2). In the service quality
framework, these discontinuities are regarded as the service performance gap (Gap 3). HR related issues
are considered as a critical reason for this gap as the service is frequently delivered by the employees.

2.Delivering Services through Customers: The extent to which the customers take active participation
and get involved in the process of service delivery is known as customer participation. It becomes
unavoidable in the process of service delivery. Services can be regarded as performances or activities
that are simunltaneously ltimate outcome of the service is often between customers,

3) Delivering Services through Intermediaries: In service prov there is a direct interaction between the
customers and the providers (except situations where e-channels are used for delivery like distance
education). The service providers sh either seek methods to include other members in the distrib
process or be present at the time of service delivery as the servic produced and consumed
simultaneously.

4. Delivering services through electronic channel Organisations use electronic marketing channels
when they internet for making available the various products and services the customers/business
buyers. Along with helping the firm adopt various advertising strategies through websites, electro
channels also help in decreasing the costs by eliminat intermediaries.

ROLE OF EMPLOYEES IN SERVICE DELIVERY

Delivery of quality service is greatly determined by the practices service employee and human
resources. Sometimes desp understanding the customer expectations appropriately (Gap 1) an
specifying and designing the services as per those expectations (Gap? the quality of the service may be
not upto the mark.

This is so because of the defect in the delivery process of the service This is referred to service
performance gap or Gap 3. These gaps main result from the issues related to human resources as
services ar frequently delivered or performed by the employees.

The direct interactions which exist between service providers and th customers at various 'touch points',
are the main point of differentiation for service industry. A shop floor employee will rarely interact with
the customer while he may be having a regular interaction with the supervisor and colleagues. Absence
of customer interaction is quite in the service industry.

SIGNIFICANCE OF EMPLOYEES IN SERVICE DELIVERY

 Following points describe the significance of service employees to the service sector:

1) They are the Service: In most of the cases, only employees are present and nothing else is there. In
this case, employees on their own represent the service, e.g., legal services, haircut, physical training,
etc. This indicates that the employee is the service which is being offered by the organisation. This
implies that investment in employees in service industry is similar to investment made in the products in
case of manufacturing organisation.

2) They are the Organisation in the Customers' Eyes: The true picture of the service organisation is
drawn by people with the help of observing its customer-contact service employees even if he/she is not
involved in the service delivery. When a person goes to a hospital, his/her opinion about the hospital is
formed on the basis of his/her interaction with the employees; this may be the receptionist, the clerk,
the nurses, or the doctor.

3) They are the Brand: Employees sometimes act as the service brand. A typical example can be seen in
the form of a university which is considered as a valued one among the students. The talent of the
faculties who teach in the universities decides the brand value of those universities. Until and unless the
students interact with the faculty members and find out their expertise, they do not make a positive
perception towards the university. Here, the faculty members are the service brands.

4. They are Marketers: As the organisation is represented by the contact employees and they have a
greater influence on the customer satisfaction, they act as marketers. They on their own are the services
as well as walking promotional tool for the service organisation.
b) Service Inclination: The interest which a person has in performing the service related works is termed
as service inclination. The orientation of candidates to serve the customers and others on the job and
their attitude towards the service job reflects their service inclination.

iii) Being the Preferred Employer: One way to recruit right people is to create a good image in the eyes
of the candidates. The organisation has to become a preferred employer for the candidates. For this, the
organisation should have certain attributes like, attractive remuneration, excellent training, exciting
career and growth opportunities, good internal support, etc.

2) Developing People to Deliver Service Quality: In order to ensure better representation, it is quite
important to facilitate the training and work orientation of the employees after their selection in the
organisation. Specially, attitude training is vital for the new service staff. Alongwith the new employees,
these trainings should also be provided to the existing staff members working in different departments.
Supervisors monitor the performance of the frontline employees. The staff members are motivated to
handle the various issues with the help of their own ideas. But if they are not able to deal with a certain
issue, the manager will come to take them out of these situations.

WAYS TO DEVELOP PEOPLE FOR DELIVERING SERVICE QUALITY

i) Training for Technical and Interactive Skills: Once the correct staff members are appointed at the
right place, there will be a requirement for regular training relating to technical and interactive skills so
that employees can be developed to offer quality services to the customers. Training underwriting
procedures in insurance sectors, cash machine methodology in retail stores, etc., are the typical
examples of this. Training is a significant feature of the big service organisations.

ii) Empowering Employees: Some service organisations have come to know that it is essential to
empower front line employees for delivering the effective services to the customers. Giving authority to
the service employees to take decisions on behalf of the customers is the real sense of the
empowerment. In order to make these decisions, the correct knowledge, tools and quired by the service
employees, it motivates making

iii) Promoting Teamwork: Teamwork among service employee quite important to retain the service
quality in the organisation most of the researches, the importance of teamwork in facilita the quality
services has been identified. The individual effects cooperation, competition, and independence on
performance service employees have been studied by different researche The performance
improvement of service employees through cooperation is much more than that through the
competition independence.

4) Providing Needed Support Systems: Customers are sometimes involved in the production of services
and accordingly value creation. The customers can have the decisive role in determining whether the
services are provided as per the standards specified by them, and thus, they can also contribute in
increasing the performance gap (Gap 3). Therefore, defining the role of the customers in the service
delivery process is the next strategy for managing the service employees. In order to narrow down this
gap (Gap 3), the role of the customers must be clearly defined by the organisation. It means that
formulation of customer-oriented support is required.

WAYS TO DEVELOP CUSTOMER-ORIENTED INTERNAL SUPPORT

i) Measuring Internal Service Quality: The organisation can analyse and reward the internal service for
facilitating customeroriented internal support. The internal organisations can identify their customers,
analyse their requirements, evaluate their performance and implement improvement with the help of
an action, i.e., auditing. The analysis of internal service quality can be ensured with the help of internal
service guarantees.

ii) Providing Supportive Technology and Equipment: In order to improve the service performance,
technology integration is provided effectively and suitably. In order to perform the jobs effectively and
efficiently, there will be a necessity for the technology which can assist the efforts of workers as well
customers. The services to customers can be improved with the help of technology.

iii) Developing Service-oriented Internal Processes: The internal processes of any organisation must be
devised keeping the customer satisfaction and value in mind so that it can further assist the front line
service oriented internal processes. Traditions, requirements of internal employees, administrative
rules, and cost-effectiveness, are the factors which mainly govern the internal processes.

4. Retaining the Best People: Promoting and rewarding the strongest service employees is necessary for
the organisation if it wants to retain them. In order to retain the best service employees in the
organisation, a number of rewards are utilised. In fact, service performance and the conventional
methods of rewarding such as one-time monetary awards, promotions, and higher pay are linked to
each other.

WAYS TO RETAIN PEOPLE

i) Including Employees in the Company's Vision: The inclusion of employees in the vision of the
organisation is necessary if the organisation wants to motivate and retain them. Vision and direction of
the organisation being clear and motivating, encourage the employees to serve the organisation in its
tough times to follow the vision.

ii) Treating Employees as Customers: The concept that employees are also the customers of the
organisation is recognised by some of the service organisations. Therefore, organisations can utilise the
fundamental marketing strategies to these employees also. In order to estimate the balance between
work life and job, periodic internal marketing surveys are being conducted by the organisations in order
to evaluate the satisfaction and needs of the employees. The employees will continue to work in the
same organisation if they have the feeling of being valued and if their needs are fulfilled by it.
 iii) Measuring and Rewarding Strong Service Performers: Different types of methods must be used by
the organisations to reward and promote their best performers to sustain them for a long period of
time. There must be a clear connection between the organisational vision and the reward system and
also the results which are to be accomplished. The concept of "peer award" is being implemented in
some of the organisation so that the employees can recognise each other and it is given to that
employee who is hest performer in customer service.

ROLE OF CUSTOMERS IN SERVICE DELIVERY

The level at which customers appear to be engaged and participating in the service delivery process is
known as cu participation. This customer participation at a certain level is unpreve in service delivery
process. The actions or performances of employe service organisation are the real services which are
produced and con at the same time. Several times, in order to produce the service; empl customers and
even the other participants in the service enviro interact with each other. As they contribute to the
service process, they a crucial role in their own satisfaction of the services

Being interactive and dynamic in nature, delivery of services req active cooperation from the service
organisation, the service prow and even from the customers. The efficiency and productivity of service
organisation improve due to active participation from customers and ultimately it leads to improved
service performance.

In services, customers alongwith other customers are found present i place called service place or
factory where they interact with the serv providers or or service employees. For example, students
(custome sitting in a class (service place or factory) alongwith other studer (other customers) interacting
with the lecturer (service provider) actually attending a class (consuming the education services

TYPES OF CUSTOMERS' ROLES

Productive resource, quality and satisfaction contributor or competitot are the three major roles played
by the customers in the service delivery process. These are described below:

Customer as Productive Resource: It is necessary for servic businesses to have customers in the process
of service delivery becaus it results in getting the desired services in the return from the service
employee and the overall satisfaction of the customers. The quality of the services offered to customers
totally depends on their level d cooperation. Thus, they are considered to be the productive resource of
the service organisation in order to deliver the quality service. They can affect the productivity of the
service organisation by their nature of cooperation.
 1) Take Advantage of Innovation and Modern Technology: Sever new service organisations have
been successful in discoveri expeditious and efficient methods to communicate with the customers.
These involve application of various programmes like live chats and other advanced programmes on
their websites customi to individual customer requirements. For example, several cable
organisations provide live chat facility to help customers manage general problems. Customers can
seek help from customer service representatives or technicians who help them in troubleshooting
and resolving the issues. This live chat with a live representative can help the customers to rapidly
confront their concerns instead of being put on hold on the telephone line for an unending time
period.

2) Automated Sales Process: Several service businesses implement an automated sales process for their
online buyers. Once the buyer orders online he/she will receive an automatic e-mail concerning their
purchase. It contains the receipt and the details as to when will their products will be shipped and
delivered. The system also enables them to track their orders by a shipping confirmation number; they
are also informed about any known delay to be caused in the delivery of their products.

3) Hire Competent Staff: It is necessary for service organisations to hire only professional and skilled
Customer Service Representative (CSR) with proven experience in the field. Organisations always
motivate such employees to acquire regular extensive training all through their tenure of service with an
intention to reinforce their expertise and interpersonal skills. New business organisations have to
necessarily recruit proficient customer service personnel as they have obtained experienced training and
are capable of continuously communicating with and get feedback from customers.

4.Company Employee Retention Strategy: Customer service jobs experience a very high turnover rate.
At times it is very hard to encourage employees who particularly have the same typical roles and
responsibilities on an everyday basis. Several companies are taking the pioneering initiative to provide
various distinct career incentives such as sponsoring higher educational degrees with a view to stimulate
employee confidence and commitment. Organisations also extend other benefits to their customer
service

5) Choose the Right Customers: The pre-requisite for a service organisation before starting the process
of educating and socialising customers for their respective roles and duties is to attract the right
customers to fill their roles. Customers comfortable with their roles should only be given the necessary
preference. An organisation should explicitly convey the expected duties and responsibilities in
advertising, personal selling and other company messages to attract customers.

6) Customer is Always Right: A service organisation will be able to extend excellent customer service
only if it assumes that the customer is always right. This is one of the crucial constituents of any business
organisation as it helps in avoiding verbal engagements/conflicts with the customers and satisfies
customers immediately by adopting such professional responsibility. The principal reason for loyal and
true customers doing frequent business with an organisation is customer appreciation. It is always a
good actice to fulfil customers' requirements irrespective of the situation encountered by the
organisation.
 7. Get Referrals/Leads from Existing Customers: A positive wordof-mouth is obviously expected
when customers are satisfied with an organisation's products or services and the quality of
customer service they receive. Satisfied customers share their experiences with others and in
this way, they refer the service organisation. Such word-of-mouth or referrals from the
customers compel their friends and relatives to do business with the service organisation. Such
type of effective networking is a must for every new service organisation. In order to enhance
the repeat purchases and add more customers to the business, new service organisations treat
their customers remarkably.

DEMAND MANAGEMENT
Demand is the quantity of a particular product that the consumer wants to buy at a particular price. The
consumers generally have the tendency to buy more goods when its price decreases, therefore, the
demand curve usually slopes downward. The demand for a product or service is also influenced by
factors like price of complementary or substitute prodxucts. In extreme cases, the demand may not be
related to the price or say it may be infinite at a given price. The market price of a product is determined
as a function of the demand and the supply. As the services cannot be stored unlike product, managing
demand for a service becomes very difficult. If the services provider fails to meet the demand of his
customers on time, he may lose his business forever. Hence, the best thing a service provider should do
to minimise his loss is effective planning and adopting feasible strategies.

FACTORS INFLUENCING DEMAND

The factors influencing demand are as follows:

1.Contraction and Recession: Contraction and recession prevailing in the economy is an important
factor influencing the demand pattern. When there is a reduction in the growth of economy or in any
economic activity, the phase is regarded as contraction. It can be observed in the form of high inflation,
unemployment, lower production, low GDP and so on. This usually occurs due to the depression stage in
the overall economy, Under this way usually have lower purchasing power and lesser demands fon and
services.

2) Expansion or Boom: Contrary to the contraction, expansion when the overall economy grows. When
the expansium y prevails for a longer period of time, it is regarded as boom in this period, people are
recognised as having higher purch power and higher demand for products or services. Also, the lower
unemployment, and presence of good factor.

3) Technological Developments: Technological advancements regarded as one of the most potential

demand sources in produs services. There has been a tremendous growth in computers, int and
telecommunications over the past decade which has comples changed the world we live in. Thus,
changes in technology # affect the demands of people. Thus, change in technology affects the demand
pattern.
4.Demographics: The demographic factor involved in the serve sector also influences the demand
pattern. Business Procza Outsourcing (BPO) industry in India is the most suitable example #
demographic factor governing demand. This is due to:

i) Well-versed employees having fluency in English, communicate well the information related to
the services, and ii) Skilful and low-cost workforce available for delivering effective service.

BPO sector in India is huge in size which provides a variety of services across the globe.

5) Natural and other Disasters: These are other crucial facton influencing the demand. Disasters like
earthquakes, outbreak of floods, cyclone, Tsunami, big accidents, terrorist attacks, wars, etc. have a
great impact on the demand of both sufferers and the not sufferers due to the fear of consequences.

MEASURES TO RESPOND TO CHANGES in Demand

All service firms face the issue of changing demand patterns of th e customers. Firms are more
likely to end with insufficient inventory of additional inventory as they fail to analyse to ever-
changing needs and wants of the customers. The problem faced by service firms is more severe
as compared to manufacturing firms.
However, the service firms can try to increase their existing capacity to meet the rising
demands in future. The following measures can help service firms to respond to the changes in
customer demand:
1) Supplementing Generalists with Specialists
2) Cross-Training
3) Supplementing Specialists with Generalists
4) Using Self-Service Technology
5) Utilising Technical Support Operations that Shift Communication

1) Supplementing Generalists with Specialists: Service firms can provide training to the
generalists who are capable of handling 80 to 90 per cent of work. For the rest 10 to 20 per
cent of work, companies can refer to specialists who possess greater skills that demand
much more than the skills of generalists. This decreases the number of persons required for
maintaining realistic waiting intervals as there will be little change in per day transactions of
total service as compared to the changes in every kind of transaction. The requirement of
people to handle changes in hourly or per day transactions in a reliable manner increases
with increase in specialised services. This kind of arrangements are observed in most of the
banks as a teller is able to handle most of the daily bank works but for customers who seek
services of special kind are referred to specialists.
2)
2) Supplementing Specialists with Generalists: This approach is just opposite of the previous
one as in this case, service organisations provide training to specialists who are capable of
handling a major portion of daily work. Further, for handling changes in demand, service firms
have a small group of multi-skilled employees. Under this approach, the benefits of
specialisation (i.e., lesser mistakes, higher speed and short learning span) are mixed with
methods that prevent random variations in hourly/daily work. This type of approach is generally
observed in call centres. Similarly, retail firms adopt this approach in their operations in which
an individual at senior position knows everything about various job and operations in the firm.
This approach is suitable where:

i) A large variety of work categories exists.

ii) The company's turnover is huge or the work is complex and dissimilar for maintaining
generalists.

3) Cross-Training: Some tangible components alongwith their attendant personnel may not be
utilised to their fullest even if the service delivery system may seems to operate at its maximum
capacity. There is a need to change the job positions of personnel for compensating the
changing demands. For this purpose, cross training is essential. This approach is often adopted
by retail operations as the number of cashiers (employees handling payments) increases when
there are more customers in queue. This approach is suitable when the service firms possess:

Cross training is not suitable when the service firms have crosstrained employees who are not
spending ample time in different job roles for developing and maintaining their expertise. Also,
it is ineffective if the employees do not shift their jobs easily and swiftly.

4.Using Self-Service Technology: When the customers are capable of completing their
transactions online rather than waiting for a service representative to assist them, the service
firms should adopt self-service technology. In the following cases self-service technology can be
used: i) Online enquiries or applications for loans.

ii) E-commerce websites like flipkart.com, snapdeal.com, etc., customers do not need any
customer representative or cashier to enquire or buy any product.

5) Utilising Technical Support Operations that Shift Communication: Service firms can make
use of technical support functions that transfers the communication to e-mails from telephonic
conversations in order to deal with the day-to-day variations in demand without developing
undesirable waiting intervals.

Therefore, by choosing the most suitable staffing approach and implementing appropriate
technology and process designs, the service firms can provide higher levels of customer service
and deal with the variations in customer demands at comparatively lower costs.
 STRATEGIES FOR MATCHING DEMAND TO CAPACITY: DEMAND STRATEGIES

Variation in demand is an unavoidable phenomenon and is beyond the control of any firm. With
the help of active and passive methods, service systems can manage and control their demand
patterns. Although
2) Advertising and Sales Promotion: Many times, organisations use advertising techniques for altering
the de patterns. Advertising is helpful in shifting demand from high to b period as it portrays the free
and idle time of a service to the ta audience. It can also communicate a particular time period for the
service and can encourage customers to use it at that partic time. The main purpose of such advertising
technique is to boos sales during lower periods. For example, restaurants can adveie their menu of
breakfast if they are not operating at full capacity the morning hours. Here, the aim is to create extra
demands for breakfast meals and not to shift the demands of lunch meal morning hours

Similar to advertising, sales promotions are also helpful in changing the demand patterns of customers.
For example, many amusement parks offer discounts and attractive offers on weekdays in order to shift
some portion of their demand from weekends to weekday thereby encouraging additional demands.
Money-oriented people often wait for such offers to visit these parks.

3.Service Variations: There can be alterations in the nature of service due to changes in the demand
patters like changes in day of the week. service requirement depending upon particular weather
conditions, * Several examples of service variations are as follows:

i) Chartered accountants usually focus on tax management during closing months of the financial year.
However, during rest of the year, they perform their regular tasks of general consultancy and internal
audit.

ii) Several hotels offer their facilities on rent for exhibitions and presentations when the wedding season
is over.

iii) Extra product benefits like free trips to nearby locations. discount coupons for theme
parks/restaurants, etc., are provided by the tour operators at low-volume times (time period when
customers visit are low).

iv) During festivals, the postal services often open their collections centres of gifts and greeting cards.

4) Modifying Timing and Location of Service Delivery: For meeting the demands of customers, many
service firms shift the place and time of delivery.

This is because when there are variations in the demand for a nonstorable product, time sensitivity
occurs. For example:

i) PNB (Punjab National Bank) changed its service delivery time by offering its services all the days in a
week and naming it 'seven days bank'.
ii) PNB modified its service delivery time and offer its services at some branches in the evening so that
the customers who cannot come in the day time can come in the evening.

iv) Sometimes services are delivered at some different locations according to the customers. Delhi Public
Library provides its services to different customers at different locations through its mobile van. This
signifies a change in location of service delivery. Similarly, some doctors visit their patients on their
preferred locations or residence.

v) In some cases, customers do not change the service location as some dry cleaners provide pick and
deliver services by taking the clothes from customers' location and send them back to their home.
Similarly, many car service providers send their mechanic to the residence of their customers.

5) By Adjusting Prices: Pricing has always remained useful in influencing the demand patterns. By
providing cheaper services at lower demand intervals, service firms can attract and move their
customers away from peak time intervals. The economics of supply and demand forms the basis for this
approach. For example,

i) Movie tickets of morning shows are cheaper than afternoon or evening shows as it is less desirable
that customers will go for a movie in the morning.

ii) Many luxurious hotels lower their prices during off-season in order to attract those customers who
wish to experience the services of luxury hotels.

Price wars are easily observed in airlines industry as they highly emphasise on price differentiation. As a
whole, the industry has suffered a lot as every airline is focused on attracting maximum customers by
offering the best competitive price deals. Customers often seek similar prices during peak time intervals
which may dissatisfy them as they do not get same discounted prices.

THE RISKS INVOLVED WITH DIFFERENTIATED PRICING STRATEGY

i) There is a possibility of complete loss of service industry due to price wars.

ii) Customers seek discounted prices every time they pay for services which can often dissatisfy them.

iii) Differentiation pricing strategy can create a negative impact the market image of service firm.

iv) There is a possibility of segmentation failure as non-targeted or undesirable customers can also get
attracted.
 CONSIDERATIONS WHILE MAKING PRICING DECISIONS

i) Maximising the level of capacity utilisation.

ii) Economic outcomes or the organisational goals in terms of return on investment.

iii) Target market segment.

6) Developing Complementary Services: Several restaurants are now recognising the advantages of
adding a bar and providing complementary services. During peak time intervals, customers can wait in
the bar under a soothing atmosphere which is also profitable for the restaurant. The waiting customers
can be provided with complementary services.

7) Promoting Off-Peak Demand: Seeking various demand sources may result in effective utilisation of
off-peak capacity. For example, business groups can conduct their meeting or programmes at resort
hotel during off-peaks. Similarly, many telecom companies provide lower tariff rates or rate cutter after
midnight or at weekends.

CAPACITY MANAGEMENT

Due to the dynamic nature of demand, it cannot be controlled completely. For effectively managing the
available resources, service firms require to consider and understand the need for varying capacity. The
firms can reduce their capacity during off-peak times and increase it during peak intervals for meeting
high customer demands. It is essential for the firms to understand capacity constraint in order to
formulate operative strategies for effective demand management.

Capacity management can be understood as the management of the extents of a firm's resources (land,
labour, capital, inventory, machines, etc.)

According to the American Production and Inventory Conte Society (APICS). "Capacity planning or
capacity requirement planning is the function of establishing, measuring and adjusting f or levels of
capacity. The term 'Capacity Requirement Planning in context is the process of determining how much
labour and max resource is required to accomplish the tasks of production".

While taking decisions with regard to capacity planning, it is imperat that the costs as well as the
revenue aspects of the planning evaluated meticulously, especially in view of the fact that an attracte
return on investments is sought after by the planners. Another way defining the capacity of a facility is
‘It is the maximum load, which be managed by the facility during specified period. Such load can be
conveyed in terms of the level of inputs or outputs.

TYPES OF CAPACITY PLANNING

The different types of capacity planning are as follows:

1) Lead Strategy: Under this strategy, capacity is added due to t anticipation of increase in the existing
demand. The main objective of this strategy is to push customers away from the competitors This is why
this strategy is considered as an aggressive strategy Companies adopting this strategy can face a demerit
of excessive inventory which is unwanted and costly.

2) Lag Strategy: Under this strategy, capacity is added when the company is running at its maximum
capacity and has to move ahead due to rise in existing demand. This strategy is considered as a
conservative strategy as it reduces the risk of wastage. However, i often results in loss of potential
customers.

3) Match Strategy: Under this strategy, capacity is added in small quantities according to the changes in
market demand. This strategy is considered as a moderate strategy.

STEPS INVOLVED IN CAPACITY PLANNING

Following steps are involved in capacity planning:

1) Determining Service Level Requirements: Determining the level of service requirements is the first
step in the process of capacity planning. Under this step, the work done by the systems are categorised
and the expectations of users are analysed for understanding how work can be completed.

2.Analysing Current Capacity: Under this step, the existing capacity of the system is evaluated in order
to analyse whether or not users needs are met.
several colleges like to hire guest faculty for compensating for provisional deficit in the requirement of
faculty members. Likewi many hotels hire additional staff like bellboys, cleaning personne, etc., on
contractual basis during high demand periods.

2) Cross-Train Employees: During usual work, staff members ar generally trained for doing a particular
job. During high deman periods, staff members can be trained for performing more than job so as to
compensate the requirement of additional staff. Fe example, a delivery boy can be trained for driving to
pick and drop guests, a gardener can be trained housing and cleaning activities the hotel, a gym
instructor can become a lifeguard if he know, swimming and so on. Service firms know that these
employees can perform more than one job role if provided with good training Therefore they define
their job as flexible with multiple-skill se requirement. Cross training is suitable for small-scale firms that
do not have enough funds to hire specialists for every skill set.

3) Increase in Capacity through Customer Participation: Many restaurants and hotels offering a la carte
food, face issues in meeting the demand for food during peak seasons. For example, hotels near beaches
usually have full occupancy during vacations. Also, additional visitors may come for dine-in. In such case,
serving order(s) of each and every customer on time becomes very difficult. The provision of offering
lunch or dinner at restaurants and hotels requires a great involvement of the personnel for various
purposes like reception taking orders, waiters, serving drinks, serving multi-cuisine food items and
elaborating them, service desserts, answering queries, taking feedbacks, preparing bills, etc. A high
attendance of staff members is thus required for successfully performing all the aforementioned tasks.

In order to manage the facility constraints and orders during peak seasons, the restaurants suspend the
a la carte and at its place offer buffet lunch or dinner. Under this, customers can enjoy a wide variety of
multi-cuisine dishes. Buffet system is also good for the staff members since they have to provide limited
services due to self-service in the buffet. Likewise, the chef and kitchen staff feels less burdened as they
can prepare food items in advance.

4.use of Sub-contracting to Increase the Capacity: Capacity can be increased by sub-contracting. It

means to transfer the obligations deliver a service to another party under a fixed contract for fulfilling to
thesame within stipulated time and conditions. For example, the Central Board of Direct Taxes, i.e.,
income tax department has recognised the growing requirements of issuing PAN cards. This work has
significantly affected the other important activities of the department. As a result, the income tax
department has sub-contracted this important work to the Unit Trust of India computerisation division.
This helps the IT department to fulfil the momentarily raised demands for PAN cards.

5.Sharing of Capacity: For managing demands, service firms often share capacity. For example, Air India
and Zambia Airways were previously operating different flights for Mumbai to Lusaka. During low
demand periods, the two airlines realised that the joint capacity of both airlines was very high. As a
result, they decided to provide a combined or joint flight which increased their financial viability. Also,
this significantly reduced the operational costs and pressure to lower prices for attracting customers. By
sharing their capacity, both the airlines remain gainful by engaging different airplanes on substitute
days. Likewise, many domestic as well as international airlines off-load the willing customers and give
them confirmed tickets of competitors' airlines, if they are overbooked. This trade is often reciprocated
as airlines often help other airlines if they face seeking support. By this, both the airlines remain into
existence.

6) Stretch Existing Capacity: For meeting the changing demands, the service firms often temporarily
expand the existing capacity of service resources. Under such situations, no additional resources are
used rather the existing facilities, people, and equipment are encouraged to work harder for more time.

i) Stretch Time: It means to elongate the service hours for a time being so as to meet the risen demand.
For example, retailers often open their shops or outlets for a longer duration in festive time. Similarly,
accountants extent their appointment durations when tax deadlines approach.

ii) Stretch Labour: During peak seasons, employees are stimulated to work harder for longer period of
time. For example, very often consulting firms face ups and downs in their demand. During peak
seasons, the associates are encouraged to work for additional hours and take up extra projects.

iii) Stretch Facilities: Existing facilities are often stretched for meeting the raised demand. For example,
classrooms, movie theatres, restaurants sometimes expand their facilities for a short period of time by
including more tables, chairs and other equipment required for accommodating customers.

iv) Stretch Equipment: Similar to facilities, service providers often stretch their existing equipment for
accommodating the raised demands. For example, telephones, computers. maintenance tools, etc., are
often de available in additiona amount during peak seasons.

7) Modify or Move Facilities and Equipment: In order to meet the varying demands, service providers
often adjust, shift or creatively alter their current capacity. For example, a guesthouse having two
different rooms with an in-between door can offer it as a suite in off-peak seasons, while the same can
be offered as two different rooms during high demand periods. Similarly, in the airline industry,
passenger aircrafts can be modified quickly according to the market demands. The Boeing 777 aircraft is
often reconfigured for higher capacity during high demand periods.

8) Schedule Down Time' during Periods of Low Demand: It becomes vital to plan maintenance,
renovations and repair works during low demand periods if equipment and facilities are intensely used
during peak times at their maximum capacity. By doing this, the service firm ensures that the equipment
and facilities essential for service delivery are in good condition whenever required. Likewise, staff
members should be provided training and vacations during off-peak seasons so that they work at full
capacity during high demand periods.

QUALITY IN SERVICE MARKETING/SERVICE QUALITY

The service industry thrives on a culture of high service quality. "Service quality" has been described by
different service models. Managers are helped in this endeavour by many service quality models.

These models help managers to identify the service problems and take the necessary steps to overcome
these problems. One such theory is the theory of service quality gaps.

The first theory is the theory of "GAPS" which defines service quality in terms of four potential gaps. If
the organisation is unable to address these gaps then it leads to a fifth and more fatal gap. The second
theory is the theory of "SERVQUAL" which was developed based on American experiences by
Parsuraman, Zeithaml and Berry. These uses five dimensions to measure service quality.

SIGNIFICANCE OF QUALITY IN SERVICES

There is a great overlapping in marketing and operations in case of services. Thus, managing the quality
of all service marketing mixes will be regarded as quality of service. The following reasons can be given
in order to understand the importance of service quality:

1) Reduced Costs: By having higher level of quality, it is possible to have lesser mistakes for any repeat
task, refunds to dissatisfied customer or service recovery exercises. The cost can be reduced with the
help of various preventive and corrective measures and thus improving the productivity.

2) Resistant or Less Affected to Price War: Some additional differentiating traits are possessed by those
firms which are considered to have higher quality of their services and thus they are able to avoid
service commodity trap. As greater benefits in comparison to the competitors are provided, thus these
firms can charge more prices for their services.

3) Greater Customer Loyalty: Greater customer satisfaction can be ensured by higher service quality
which results in greater customer loyalty and greater profits.

4) Higher Market Share: Positive word-of-mouth publicity will be received from the loyal customers
which will help the firm to increase their customer base with minimum costs.

5) Loyal Internal Customers: There is a linear relationship which exits along the profitability of the firm,
loyal customer and happy employee. There can be a sense of proud among the employees for the firm
in which they are employed and higher level of inspiration and delivery of higher quality service can be
achieved from the employees having sense of belongingness with the firm.

6) Higher ROI (Return on Investment): High quality service can be facilitated via service profit chain
which will result in higher profitability.

CATEGORIES OF SERVICE QUALITY

Service quality is a term in management field which portrays the extent of accomplishment of an
ordered service. The objective and subjective aspects of service quality can be differentiated as follows:
1) Objective Service Quality: It is a measure which determines how well the concept in practice
measures against the defined objective,

2) Subjective Service Quality: It is the way the consumers perceive the actual result with the expected
benefit that they seek. It is thusa process of matching the consumers imagined service with the service
provider's claim of offering a reasonable service Sometimes, the defined result is unreachable. In this
scenario, the objective ideal result can be regarded as the best outcome though the subjective
assessment may yet be unsatisfactory.

. PERSPECTIVES OF QUALITY

Quality can have different implications for different people. In general, it has the following key
perspectives:

1) Transcendent Perspective/Approach: This oach says that the quality is synonymous with the inner
excellence of the product or service. This is often applied in the area of performing arts. This approach
explains that people appreciate quality through a process of sustained exposure. However, this
approach is not practical when viewed from the perspective of management.

2) Product-Based Perspective/Approach: This approach views quality as something that can be

measured accurately and precisely. This approach says that differences in quality can be viewed as the
excess or deficiency of an attribute or trait in the product or service. Since this assesses quality in a very
objective manner, it fails to take subjective matters like tastes, needs and attitudes of consumers into
account.

3) User-Based Perspective/Approach: This approach is based on the premise that quality lies in the eyes
of the beholder. It measures quality in terms of total customer satisfaction. This is a very subjective
assessment of quality and recognises that every consumer will have a different expectation of quality as
the needs of all customers are different.

4,.Manufacturing-Based Perspective/Approach: This approach is basically concerned with manufacturing

and engineering goods. In many ways, the quality is operations-driven in this set-up. Here, the quality is
measured in terms of how it conforms to internal laid down standards which are often a result of the
productivity goals of the organisation.
play a crucial role. Depending on their competency to pres continuous service improvement, service
managers m selected, trained, promoted, evaluated and rewarded. If such K focus is missing it would
gradually lead to decrease in enthusiasm and support to enhance quality.

3) Addressing People Effectively: Employees act as vital constitu in any long-term development
initiative. In the presence of f kind of support and leadership, these employees may become fruitful.
Dealing with the "human side of quality" in an orderly a coherent manner will help to attain the long-
term improvements service quality.

All employees should be provided necessary training to deve effective communication skills, teamwork,
conflict resolution and accomplish optimal performance. Feedback provided by e employees on matters
influencing workplace as well as continuou improvement must be noted. It is necessary to give human
eleme paramount importance with a view to avoid negative a unfavourable results.

4) Continuously Improving the Quality Efforts: Developing and growing together with the dynamics of
varying needs leads to bette service quality by an organisation. Ways to achieve long-term quality
improvements must be reviewed from time to time.

Through modifying corrective action measures and assessing a evaluating feedback mechanisms, the
quality standards can be continuously improved. Service quality will decay if these alterations are not
made, resulting in negative consequences.

5) Leadership Commitment: Following are some of the key questions that need to be addressed by
every manager of service organisations because answers to these queries are crucial and indicate an
organisation's leadership adherence towards long-term sustained improvements:

i) Do you focus on quality improvement regularly?

ii) Do you motivate your employees to do the same?

iii) Do you offer your leadership to tackle persistent quality problems?

iv) Do you offer your leadership to improve the current quality enhancement initiatives?