LITERATURE REVIEW

Defining Service
The American Marketing Association defines services marketing as an organisational function and a set of
processes for identifying or creating, communicating, and delivering value to customers and for managing
customer relationship in a way that benefit the organisation and stake-holders. Services are (usually)
intangible economic activities offered by one party to another. Often time-based, services performed bring
about desired results to recipients, objects, or other assets for which purchasers have responsibility. In
exchange for money, time, and effort, service customers expect value from access to goods, labor,
professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the
physical elements involved.[ Christopher Lovelock and Jochen Wirtz - 2011]

Historical perspectives
Adam Smith's seminal work, The Wealth of Nations (1776), distinguished between the outputs of what he
termed "productive" and "unproductive" labor. The former, he stated, produced goods that could be stored
after production and subsequently exchanged for money or other items of value. But unproductive labor,
however "honourable,...useful, or... necessary" created services that perished at the time of production and
therefore didn't contribute to wealth.
French economist Jean-Baptiste Say argued that production and consumption were inseparable in services,
coining the term "immaterial products" to describe them.[ Smith - 1776]. In the 1920s, Alfred Marshall
was still using the idea that services "are immaterial products."[ Marshall - 1920]. In the mid nineteenth
century John Stuart Mill wrote that services are "utilities not fixed or embodied in any object, but
consisting of a mere service rendered ...without leaving a permanent acquisition."[ Mill, J.S - 1852]

Contemporary perspectives
Contemporary definitions of service focus on the performance or experience When services marketing
emerged as a separate sub-branch within the marketing discipline in the early 1980s, it was largely a
protest against the dominance of prevailing product-centric view.[ Gummesson, E - 2006][Schembri, S -
2006]. In 1960, the US economy changed forever. In that year, for the first time in a major trading nation,
more people were employed in the service sector than in manufacturing industries.[ Bell, D - 1973] Other
developed nations soon followed by shifting to a service based economy.[ Jones, B - 1996] Scholars soon
began to recognise that services were important in their own right, rather than as some residual category
left over after goods were taken into account. This recognition triggered a change in the way services were
defined. By the mid twentieth century, scholars began defining services in terms of their own unique
characteristics, rather than by comparison with products.[ Berry, L.L. and Parasuraman, A - 1993] The
following set of definitions shows how scholars were grappling with the distinctive aspects of service
products.[ Furrer, O. and Sollberger - 1993][Fisk., R. and Grove, S.J - 2007]

"Goods are produced: services are performed."[ Rathmell, J.M - 1966]

"A service is an activity or a series of activities which take place in interactions with a contact person or a
physical machine and which provides consumer satisfaction."[Lehtinen, U - 1983]
"The heart of the service product is the experience of the consumer which takes place in real time...it is the
interactive process itself that creates the benefits desired by the consumer."[ Bateson, J - 1992]
"Services are deeds, processes and performances."[ Zeithaml, V. and Bitner, M.J - 1996]
"Services are processes (economic activities) that provide time, place, form, problem-solving or
experiential value to the recipient."[ Lovelock, C - 2007]
"The term 'service' ... is synonymous with value. A supplier has a value proposition, but value actualization
takes place during the customer's usage and consumption process."[ Gummesson, E - 2008]

The four most commonly cited characteristics of services are:[ Zeithaml, V.A, Parasuraman -
1985]
Intangibility - services lack physical form; they do not interact with any our senses in a conventional way,
they cannot be touched or held.
Implications of intangiblity: Ownership cannot be transferred, value derives from consumption or
experience, quality is difficult to evaluate prior to consumption or purchase.

Inseparability - production and consumption cannot be separated (compared with goods where production
and consumption are entirely discrete processes)
Implications of inseparability: Services are typically high contact systems and are labour-intensive; fewer
opportunities to transact business at arm's length, fewer opportunities to substitute capital for labour;
subject to human error.

Perishability - service performances are ephemeral; unlike physical goods, services cannot be stored or
inventoried.
Implications of perishability: Demand is subject to wide fluctuations, no inventory to serve as a buffer
between supply and demand; unused capacity cannot be reserved; high opportunity cost of idle capacity.

Variability (also known as heterogeneity) – services involve processes delivered by service personnel and
subject to human variation, customers often seek highly customised solutions, services are inherently
variable in quality and substance.
Implications of variability: Service quality is difficult to manage; fewer opportunities to standardise service
delivery.
The unique characteristics of services give rise to problems and challenges that are rarely paralleled in
product marketing.

Service recovery
Service recovery is, according to Fitzsimmons (2011 - p136), a "Service recovery converting a previously
dissatisfied customer into a loyal customer." It is the action a service provider takes in response to service
failure. [Grönroos, Christian - 1988] By including also customer satisfaction into the definition, service
recovery is a thought-out, planned, process of returning aggrieved/dissatisfied customers to a state of
satisfaction with a company/service [Lewis, Barbara R - 1996] Service recovery differs from complaint
management in its focus on service failures and the company’s immediate reaction to it. Complaint
management is based on customer complaints, which, in turn, may be triggered by service failures. [Stauss
- 2005] However, since most dissatisfied customers are reluctant to complain,[ Andreasen - 1977][ Singh -
1990] service recovery attempts to solve problems at the service encounter before customers complain or
before they leave the service encounter dissatisfied. Both complaint management and service recovery are
considered as customer retention strategies [Halstead - 1996] Recently, some researches proved that
strategies such as value co-creation, follow up, etc. can improve the effectiveness of service recovery
efforts [Gohary - 2016]

Service recovery Strategies [Lovelock - 2007]

The first strategy is to make the service fail-safe by doing it right the first time. It avoids negativities of
failures and it is the most important dimension of service quality. In order to achieve that, there must be a
top management commitment and a positive firm culture of ‘zero defection’ and appreciate ‘relationship
value of customers’ to uphold the standards of service without blindly adopting the Total Quality
Management from the product perspective.

The second strategy is to encourage and track complaints. According to research, almost 50% of customers
encountered problems by do not complain. This segment will have a higher chance of switching to
competitor as organization has no control over it. Encouraging complaint is healthy and it will allow
organization to learn. Tracking complaints will ensure no complaints are left out. Technology can be used
to aid in handling of complaints.

The third strategy is to act quickly. Complaining customers want quick responses and do not want to be
ping-pong around different employees, which will seem to be shirking responsibilities. Even when full
resolution is likely to take longer, fast acknowledgement is required to appease them. There is positive
correlation between fast service recovery with satisfaction and loyalty.

The fourth strategy is to provide adequate explanations. This allows customers to understand why the
failure occurred. According to attribution theory, customer will understand and appreciate what is going on
and they will be more forgiving. The content and the style of the delivery must be suitable to the affected
customers subjectively

The fifth strategy is to treat customers fairly. They want justice in their complaint-handling process, which
involves procedure (speed, convenience, follow-up etc), interaction (behavior of service representatives)
and outcome. Therefore it is important that the process be handled properly to return them the justice they
seek. Recent research indicates that justice considerations have a large impact on how customers evaluate
firm's recovery effort. Therefore, if they do not perceive themselves being just, they will rate the recovery
badly even when it is perfectly done. [Tax and Brown 2000]

The sixth strategy is to cultivate relationship with customers. Long term relationship will allow customers
to be more forgiving and open to the recovery process. Cultivation of strong relationship can provide an
important buffer to service firms when failures occur. The biggest challenge would be to restore their
confidence and trust again.

The seventh strategy is to learn from recovery experience. Organizations can learn through using tools to
help evaluate experiences. They can use blueprinting, control charts, fishbone diagram (cause and effect
diagram) to use those acquired knowledge in their recovery effort. The last strategy is to learn from lost
customers through market research and get into the root cause analysis of why they left.
Reference
- Christopher Lovelock and Jochen Wirtz (2011), Services Marketing: People, Technology, Strategy, 7th
ed., Upper Saddle River, New Jersey, Prentice Hall
- Smith, A., The Wealth of Nations,1776
- Marshall, A., Principles of Economics, 8th edition, (1920), Mac Millan, London
- Mill, J.S., Principles of a Political Economy, 1852 vol. 1, J.W. Parker, London, 1852
- Gummesson, E., "Implementing the Marketing Concept: From Service and Values to Lean
Consumption," Marketing Theory, [Invited Commentary], vol. 6, no. 3, 2006, pp 291–293
- Schembri, S., "Rationalizing Service Logic, or Understanding Services as Experience?" Marketing
Theory, vol 6, no. 3, 2006, pp 381–392.
- Bell, D., The Coming of a Post-Industrial Economy, (1973), Basic Books, 1999
- Jones, B., Sleepers Wake! Technology and the Future of Work, Oxford University Press, 1996
- Berry, L.L. and Parasuraman, A., "Building a New Academic Field: The Case of Services Marketing,"
Journal of Retailing, Vol. 69, no. 1, 1993, pp 13-60
- Furrer, O. and Sollberger, P., "The Dynamics and Evolution of the Service Marketing Literature: 1993–
2003," Service Business, vol. 1, no. 2, 2006, pp 93-117
- Fisk., R. and Grove, S.J., "The Evolution of Services: Building a Multi-disciplinary Field", [unpublished
manuscript], 2007
- Rathmell, J.M., "What is Meant By Services?" Journal of Marketing, October, 1966
- Lehtinen, U., "On Defining Service", Proceedings of the X111th Annual Conference of the European
Marketing Academy, Bruekelen, 1983
- Bateson, J., Managing Services Marketing, Dryden, Forth Worth, 1992
- Zeithaml, V. and Bitner, M.J., Services Marketing, International ed., Mc Graw-Hill, N.Y. 1996
- Lovelock, C., Patterson, P.G. and Walker, R.H., Services Marketing: An Asia-Pacific Perspective, Pearson
Education Australia, French's Forest, NSW, 2007
- Gummesson, E., "Exit Services Marketing- Enter Service" in Michael Baker and Susan Hart (editors),
The Marketing Book, 6th edition, Butterworth-Heinemann, 2008, pp 451-471
- Zeithaml, V.A, Parasuraman, A. and Berry, L.L., "Problems and Strategies in Services Marketing,"
Journal of Marketing, Vol. 49, No. 2, 1985, pp. 33-46
- James A. Fitzsimmons and Mona J. Fitzsimmmons: Service management: operations, strategy,
information technology, 2011, 7th edition, p136.
- Grönroos, Christian. "Service Quality: The Six Criteria of Good Perceived Service Quality." Review of
Business 9, no. Winter (1988): 10-13.
- Lewis, Barbara R. "Service Promises, Problems and Retrieval. Working Paper." Paper presented at the
QUIS, Karlstad, 1996.
- Stauss, Bernd, and Wolfgang Seidel. Complaint Management. The Heart of CRM. Mason, OH: Thomson,
2005.
- Andreasen, Alain R., and Arthur Best. "Customers Complain-Does Business Respond?". Harvard
Business Review 55, no. July–August (1977): 93-101.
- Singh, Jagdip. "A Typology of Consumer Dissatisfaction Response Styles." Journal of Retailing 66, no. 1
(1990): 55-97.
- Halstead, Diane, Edward A Morash, and John Ozment. "Comparing Objective Service Failures and
Subjective Complaints: An Investigation of Domino and Halo Effects." Journal of Business Research 36,
no. 2 (1996): 107-15.
- Gohary, Ali , Hamzelu, Bahman and Alizadeh, Hamid. "Please explain why it happened! How perceived
justice and customer involvement affect post co-recovery evaluations: A study of Iranian online shoppers."
Journal of Retailing and Consumer Services Volume 31, July 2016, Pages 127-142.
- Lovelock, CH, Patterson, PG & Walker RH 2007, Services Marketing: An Asia-Pacific and Australian
perspective, Pearson, NSW
- Tax, S and Brown, SW 2000, Handbook of Services Marketing and Management,, Sage Publication Inc.
- Zeithaml, VA, Bitner, MJ & Gremler, DD 2009, Services Marketing. 5th ed, Mc-Graw Hill, New York
Effects of service recovery strategies on customer
satisfaction in hotel industry in Bangladesh

Questionnaire
Dear respondent,
I am the student of BBA, Jagannath University conducting an Internship report survey about “Effects
of service recovery strategies on customer satisfaction in hotel industry in Bangladesh” and would
like to know your views and opinions. Would you mind spending a few minutes to help me by
completing this questionnaire? The data collected through the survey will be used for only developing
the internship report and will not be disclosed elsewhere.

Please put the tick (√) marks in the appropriate box.

Personal information
Name : ...............................................................................................

Age : 15-25yrs 25-35yrs 35-45yrs 45-above

Gender : Male female

Occupation : Student Service holder Business man Others

Service recovery information

Strongly Strongly
SL Dimensions Information Agree moderate disagree
agree disagree
Hotels provide service
1 5 4 3 2 1
right the first time.
There is a top management
2 5 4 3 2 1
commitment firm culture.
Hotels appreciate
Service fail-
3 relationship value of 5 4 3 2 1
safe
customer.
There is a positive firm
4 5 4 3 2 1
culture of "zero defection".
Hotels maintain the
5 5 4 3 2 1
standards of service.
 Hotels encourage
6 5 4 3 2 1
complaints.
Hotels Track complaints.
7 5 4 3 2 1
Encourage
and track Hotels use technology
8 complaints tools to track the 5 4 3 2 1
complaints.
9 Hotels learn from failure. 5 4 3 2 1
Hotels use complaints box
10 5 4 3 2 1
to get the complaints.
Complaining customers
11 5 4 3 2 1
get quick responses.
Employees are very
12 5 4 3 2 1
responsive to complaints.
Employees are trained
Act quickly
13 enough to solve the 5 4 3 2 1
problems.
Customers get solution of
14 5 4 3 2 1
any problem quickly.
The employees enough
15 5 4 3 2 1
knowledgeable to serve.
Hotels allow customers to
understand why the failure
16 5 4 3 2 1
occurred.

Employees promptly
17 5 4 3 2 1
explain the failures.
Employees are willing to
Provide
18 explain the failures every 5 4 3 2 1
adequate
time.
explanations
Hotels give proper
19 explanation according to 5 4 3 2 1
the complaints.
The content and the style
of the delivery suitable to
20 5 4 3 2 1
the affected customers.

Treat The customers get justice

21 customers in their complaint-handling 5 4 3 2 1
fairly process.
22 The Customers suffer for 5 4 3 2 1
their complaints.
 Hotels handle every
23 5 4 3 2 1
complaint properly.
Hotels solve the
24 complaints without any 5 4 3 2 1
cost.
the recovery procedure is
25 5 4 3 2 1
convenient.
the hotels are strong
26 enough to restore 5 4 3 2 1
customer's trust.
Hotels have enough
27 resources to build long 5 4 3 2 1
term relationship.
Cultivate Hotels maintain good
28 relationship policies to build 5 4 3 2 1
relationship.
Employees are cooperative
29 to build good relationship 5 4 3 2 1
with customers.
Long term relationship will
30 allow customers to be 5 4 3 2 1
more loyal.
Hotels use tools to help
31 5 4 3 2 1
evaluate experiences.
Hotels analyze service
32 5 4 3 2 1
failure.
Hotels use cause-effect
33 Learn from diagram in recovery 5 4 3 2 1
recovery efforts.
experience The customers show
34 positive attitude after 5 4 3 2 1
getting service recovery.
Hotels learn from lost
35 customers through market 5 4 3 2 1
research.

15. Any Recommendation?

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Thank You