1: There was a puzzled look on the face of Jan Smeets, European Marketing Manager for Liqui-Gas Gmbh, who was pondering the latest market research report to arrive from its research agency. In addition to the regular report on the state of the market –
size, growth rate, segment size, competitor market shares, and so on – at the urging of the Global Marketing Director, Jan had specially commissioned the agency to do a service quality report for Liqui-Gas. Liqui-Gas concentrates on the industrial market for liquefied petroleum gas (LPG). Jan’s major customers were in the manufacturing, construction and agricultural industries. LPG is used in these industries for such things as welding, space heating, fruit and grain drying, and manufacturing aerosols. Jan had never previously given a great deal of thought to whether these customers were concerned about customer service. They were, after all, business-people, and Jan assumed that they would be concerned about the price, the quality and the delivery arrangements for the product, but not much else. Indeed, if they got the right quality of product, at the right price, in the right place and at the right time, Jan had thought that was about all he had to worry about. However, his research agency seemed to think there was more to it than that. Jan continued to read the report.
The methodology we have applied to understand customers’ beliefs about the service quality they are receiving from Liqui-Gas is the SERVQUAL approach. This is the best-established approach to service quality measurement, having originally been developed by American professors Parasuraman, Zeithaml and Berry in the 1980s, and successfully applied to the measurement of service quality in a wide range of industries since then. The basic principle of the SERVQUAL approach is to measure service quality as the gap between customer perceptions of a company’s actual performance and customer expectations of the company’s performance. Simply, service quality is defined as customer perceptions of service minus customer expectations of service. Service quality is usually measured along five dimensions:
1. Reliability: the ability to deliver a promised service dependably and promptly.
2. Assurance: the knowledge and courtesy of employees, and their ability to inspire trust and confidence.
3. Tangibles: physical aspects of service delivery, such as equipment and facilities.
4. Empathy: providing caring and individual attention to customers.
5. Responsiveness: the willingness to help the customer and provide prompt service.
Other dimensions have been suggested, such as ‘recovery’ (the ability of the organization to rectify problems), but for this study we measured these five only. Each of these dimensions is measured using a number of indicators, all measured using 7-point Likert scales (1 = strongly disagree to 7 = strongly agree). Tables 5.3, 5.4 and 5.5 provide details of the indicators. The same indicators are used for customer perceptions (P) and customer expectations (E); for the former, customers are asked for their ‘desired service level’ (defined as excellent customer service), and for the latter, customers are asked what they think of Liqui-Gas’s actual customer service. For example, ‘When firms promise to do something by a certain time, they should do so’ is one indicator of service reliability; customers are asked for their desired service level, and then for their perception of Liqui-Gas’s service level. Using this approach, we can identify the overall gap between customer perceptions and expectations of service, the gap for particular dimensions of service quality, and the gap for individual indicators within the dimensions.

QUESTION

1. Decide what key points Jan should make in the presentation to the Global Marketing Director. As an exercise, it is useful to prepare a set of presentation slides that Jan could use. Remember that the Global Marketing Director likes hard facts, and believes that to manage something you have to be able to measure it. Provide evidence to support the proposed actions.