TABLE OF CONTENTS
1INTRODUCTION………………………………………………………………...7
1.1 Research question and secondary research…………………………….. 7
1.2 Background to the study……………………………………………….. 8
1.3 Purpose of the study and primary research…………………………….. 10
2THEORY…………………………………………………………………………..12
2.1 The importance of customers…………………………………………... 12
2.2 Customer needs………………………………………………………… 12
2.2.1Kano Model of customer needs and customer satisfaction...... 13 2.3 ISO 9000 Quality Management Principles…………………………….. 15
2.4 Customer-supplier relationships and total quality……………………... 16
2.5 Development of goods and services…………………………………… 17
2.6 Models for Service Quality…………………………………………….. 19
2.6.1Grönroos’ Service Quality Model……………………………… 19
2.6.2Dimensions of Service Quality and the SERVQUAL Model…… 20
2.6.3The Service Quality GAP Model……………………………….. 22
3KAUKOMARKKINAT OY OPTICAL DIVISION……………………………27
3.1 Kaukomarkkinat OY optical division’s retailer phone help and lens
order phone service………………………………………………………… 28
4SURVEY…………………………………………………………………………...30
4.1 Phone call observation…………………………………………………. 30
4.1.1Phone call observation results…………………………………. 31
4.1.2Phone call observation limitations…………………………….. 36
4.2 Discussion with the employees at the retailer phone help……………... 37
4.3 Gaps in employee, middle manager and upper manager perceptions
studied with the help of three questionnaires………………………………. 39
5DISCUSSION……………………………………………………………………...41
5.1 Gaps in employee, middle manager and upper manager perceptions….. 41
5.2 Optician shops’ needs from the retailer phone help……………………. 43
6IMPROVEMENT SUGGESTIONS……………………………………………..45
6.1 Minimizing the gaps in the retailer phone help’s service quality……… 45
6.1.1Gap 2……………………………………………………………46
6.1.2Gap 3……………………………………………………………46
6.1.3Gap 1 and 5…………………………………………………….. 48
6.2 Minimizing the amount of phone calls received by the retailer
phone help………………………………………………………………….. 49
6.3 Improving the information provided to the optician shops…………….. 51
6.4 Improvement suggestions and minimization of gaps in the retailer
phone help’s service quality………………………………………………... 53
6.5 Research limitations……………………………………………………. 55
7 CONCLUSION……………………………………………………………………56
8REFERENCES……………………………………………………………………58
APPENDIXES
Appendix 1Phone call observation form
Appendix 2Shop codes
Appendix 3Graph 4.1.1.1 and 4.1.1.2
Appendix 4Employee, middle manager and upper manager questionnaire
Appendix 5Maximum points and different participants’ results
Appendix 6Interviews with two external and two internal optician shops
1 INTRODUCTION
1.1 Research question and secondary research
The thesis was conducted in order to analyze and develop the activity of Kaukomarkkinat OY optical division’s retailer phone help, and to find areas that could be improved, in order to improve the overall service provided by the retailer phone help. Kaukomarkkinat OY sells its product in Tähti Optikko optician chain. The company provides the optician shops a retailer phone help, to help them choose the best lenses for the end user.
Customer satisfaction and customer relationship management has achieved a high priority in Kaukomarkkinat OY optical division’s strategy. End customer needs and satisfaction are studied on a regular basis at the optical division.However, needs and satisfaction of the optician shops, and the employees serving the optician shops, have not been measured. The author of the thesis considers the study important, as the employees’ ability to serve the optician shops affects the optician shops ability to serve the end customer. The internal optician shops’ ability to serve and satisfy the end customer directly affects Kaukomarkkinat OY, as the internal shops are owned by Kaukomarkkinat OY. Satisfied external optician shops will most likely continue cooperating and purchasing lenses from Kaukomarkkinat OY.
The author of the thesis laid out the following research question: “How can understanding customer and employee needs help to improve service quality?”The author wanted to show that understanding customer and employee needs, can help to improve service quality. The author’s main goal was to help develop the activity and service provided by the retailer phone help, by investigating external and internal optician shops needs from the retailer phone help. In order to find out how service quality can be improved by understanding employee needs, the authorinvestigated employee needs and service quality perceptions, and compared them to management perception of employee needs and service quality.
The author of the thesis introduced different theories of customer needs, such as Kano Model of customer needs and satisfaction as secondary research.In the theory part, the author also introduced ISO 9000 Quality Management Principles, and discussed Zeithaml’s Service Quality GAP Model and the SERVQUAL Model. The author used the Kano Model to discuss and determine the optician shops’ stated needs. The ISO 9000 Quality Management Principles were introduced to guide the company towards improving the service quality performance of the retailer phone help. The author investigated differences between the optician shops’ service expectations and service perceptions with the help of the SERVQUAL Model. The author used the Service Quality GAP Model to find out optician shop and employee needs.The GAP Model was also used to develop a new Gap Model that shows four gaps in Kaukomarkkinat OY retailer phone help’s service quality.
1.2 Background to the study
Kaukomarkkinat OY is a Finnish trading house specialized in international technical trade, import, wholesale and retail trade of goods, and import, manufacture and marketing of eye optics. In their mission statement Kaukomarkkinat OY emphasizes quality and excellent service. The company’s quality management strategy is based on ISO 9000:2000. End customer satisfaction is studied on a regular basis at Kaukomarkkinat OY optical division with the help of local customer satisfaction studies. Mystery shopping is used, and customer satisfaction surveys are sent to the customers of optician shops owned by Kaukomarkkinat OY.
The company emphasizes homogeneity in the customer satisfaction surveys. Their plan is to build up a specific customer satisfaction concept. All employees at the optician shops owned by Kaukomarkkinat OY will go through a training program in customer service and customer satisfaction during autumn 2005. After the training, the company will investigate the effects of the training with the help of mystery shopping. After the mystery shopping, there will be another training to cover the gaps found during the mystery shopping. A lot of time is spent on measuring and improving customer satisfaction, but retailer needs and satisfaction has not been measured. (Interview with the administration manager of Kaukomarkkinat OY optical division, 8th April 2005)
Kaukomarkkinat OY optical division sells its products in Tähti Optikko optician chain. The optical division provides a retailer phone help and lens order phone service for Tähti Optikko optician shops. The retailer phone help and lens order phone service serves as a “helpdesk” and lens order intake. Kaukomarkkinat OY optical division’s retailer phone help has two types of customers; by Kaukomarkkinat OY owned Tähti Optikko optician shops, and independent entrepreneur-run Tähti Optikko optician shops.
According to Lennart Sandholm (Sandholm, 2000, page 64) customers are divided into internal users, agents, buyers, external users and society. Independent Tähti Optikko optician shops and Tähti Optikko optician shops owned by Kaukomarkkinat OY are the agents of Kaukomarkkinat OY. The customers of the optician shops are the external users. In this study independent Tähti Optikko shops are referred to as “external”, while by Kaukomarkkinat OY owned shops are called “internal” customers of the retailer phone help.
Value and satisfaction might be influenced by many factors throughout the customers overall purchase, service and ownership experiences. These factors include a company’s relationship with its customers that help to build trust, confidence and loyalty. Customer satisfaction translates directly into increased profits. “Customers are the very center of total quality activity, and devotion to satisfying them is the first principle of total quality.” (Evans, 2000, pages 145-147)
The retailer phone help’s ability to instruct and help the optician shops affects the optician shops’ ability to serve the end customer. The internal optician shops’ ability to serve and satisfy the end customer directly affects Kaukomarkkinat OY, as the internal shops are owned by Kaukomarkkinat OY. Satisfied external optician shops will most likely continue cooperating and purchasing lenses from Kaukomarkkinat OY. By providing the best service, the retailer phone help can contribute in increasing the external optician shops’ satisfaction.
Customers are considered as active partners of a company, and the company’s quality activities are focused on the customers. According to the total quality approach to management, customers are considered to be a guarantee for a company’s continued existence. (Evans, 2000, pages 145-146)
Customer satisfaction and customer relationship management has achieved a high priority in the optical division’s strategy. (Kaukomarkkinat Yksikköstrategia, 2004) Creating existing customer relationships based on trust, loyalty and satisfaction is important because satisfied customers purchase more and are more willing to pay a higher price. (Evans, 2000, page 145) Retailer satisfaction contributes in increasing end customer satisfaction, and should therefore also be considered, measured and improved.
1.3 Purpose of the study and primary research
The thesis was conducted in order to help develop the activity of the retailer phone help, and to find areas that could be improved, in order to improve the overall service provided by the retailer phone help. The thesis was also conducted to show how understanding customer and employee needs can help to improve service quality. Possible lacks in informing and educating the employees were investigated. Kaukomarkkinat OY was also looking to improve the lens information given to the optician shops in form of a lens price book, journals and leaflets, in order for the optician shops to improve their lens knowledge.
The thesis studied, with the help of the Service Quality GAP Model, gaps in communication between management, employees at the retailer phone help, and internal and external Tähti Optikko optician shops. The study investigated a possible gap between service quality specifications and service delivery. The study investigated internal and external optician shops’ needs and expectations from the retailer phone help, and a possible gap between perceived service and expected service.
A phone call observation at Kaukomarkkinat OY optical division’s retailer phone help was conducted, in order to find out what kind of needs internal and external optician shops calling the retailer phone help have. The phone call observation was also conducted in order to find out which optician shops call most frequently the retailer phone help, and whether there are significant differences between internal and external optician shops calling the retailer phone help. The information obtained was used to choose four optician shops to interview, and to conduct the interview questions.
A middle manager, upper manager and employee at the retailer phone help filled in a questionnaire about the retailer phone help’s customer service quality. The answers were analyzed and compared, in order to find out how upper management, middle management and employee perception of service quality differ. The results from the questionnaire were used when discussing whether management has succeeded in translating and communicating customer needs and expectations to the service deliverers.
Two external and two internal optician shops were interviewed in order to find out their stated needs from the retailer phone help, their service expectations and actual service perception. Conclusions of possible existing gaps were drawn based on the interviews.
2 THEORY
2.1 The importance of customers
In the past customers were often considered as buyers who were important to a company because they increased the company’s profitability. Today many organizations consider companies, who are their customers, as active partners of the organization. Companies’ quality activities are more and more focused also on the customers. Satisfied customers are a valuable asset of a company. Creating existing customer relationships based on trust, loyalty and satisfaction is important because satisfied customers purchase more and are more willing to pay a higher price. (Evans, 2000, page 145)
Total quality is an organization-wide effort to improve the quality of products and services. Customers are at the centre of all total quality activities and the first principle of total quality is that the company and everyone inside it work to satisfy the customers. According to the total quality management approach customers are considered to be a guarantee for a company’s continued existence. Therefore, managers should focus on customers, rather than to focus only on internal issues. (Evans, 2000, pages 145-146)
2.2 Customer needs
“Customer needs refer to the benefits and features, of a good or service, that customers want to purchase” (Hitt, 1999, page 130). Different customers have different needs from a product or service. Companies must find out how to implement these different needs in order to create or reconstruct a product or a service that brings value to the customer.
“A Business-level strategy is an integrated and coordinated set of commitments and actions designed to provide value to customers and gain competitive advantage by exploiting core competencies in specific, individual product markets” (Hitt, 1999, page 129).
Customers are considered as the foundation of successful business-level strategies. In order to be successful a company must understand its customers and their needs. A company should focus on determining who its customers are, what the needs of these customers are, and how the company can satisfy the customers’ needs by implementing a strategy. A company that has succeeded in satisfying its customer’s needs have a high possibility to gain loyal customer and form long-lasting customer relationships. (Hitt, 1999, pages 129-130)
Instead of trying to serve the needs of an average customer, a company can divide its customers into different groups based on differences in their needs. By studying and listening to customers, managers can maintain valuable information about the customers’ needs. Managers can use this information to improve a product or a service, the technology behind it, and make better distribution decisions. (Hitt, 1999, pages 130-134)
2.2.1 Kano Model of customer needs and customer satisfaction
“The Kano Model of customer satisfaction classifies products attributes based on how they are perceived by customers and their effect on customer satisfaction” (Mont, 2003, page 27). Noriako Kano, a Japanese quality expert, developed a model for customer satisfaction with three types of customer needs, which determine the customer’s perception of quality.
The three types of needs are implied needs, stated needs and unconscious needs. Implied needs are fundamental needs, which the customer takes for granted. The needs are so obvious that the customer does not mention them. The presence of requirements that stand for a customer’s implied needs does not increase customer satisfaction, but the absence of these needs will increase customer dissatisfaction. Stated needs are needs expressed by the customer. These needs can either satisfy or dissatisfy the customer, depending on in what way they are fulfilled by a product or service. Unconscious needs are beyond customers’ expectations. By fulfilling customers’ unconscious needs a company can gain a competitive benefit and more loyal customers. If a company succeeds in fulfilling customers’ unconscious needs it can increase customer satisfaction. If a company does not fulfill its customers’ unconscious needs it
does not result in customer dissatisfaction, because the customers do not expect fulfillment of these needs. (Sandholm, 2000, pages 15-16)
Figure 2.2.1 The Kano Model shows how the implied needs, stated needs and unconscious needs affect customer satisfaction depending on the degree of fulfillment. (Sandholm, 2000, page 16)
Figure 2.2.1 shows how the different needs affect customer satisfaction depending on the degree of fulfillment. If the implied needs are not fulfilled the customers are very dissatisfied, but on the other hand fulfilled implied needs do not increase customer satisfaction. The figure shows that when the degree of fulfillment of implied needs moves slightly towards not at all, the customers become very dissatisfied. Even when the implied needs are fulfilled, they do not affect customer satisfaction in a positive way.
According to the figure, fulfillment of stated needs is a linear function of customer satisfaction. If the stated needs are not satisfied, the result is dissatisfied customers. The more fulfilled the stated needs are, the more satisfied the customers are. If fulfillment of stated needs increases two scales on the degree of fulfillment axis, customer satisfaction will increase two scales on the customer satisfaction axis.
A lack of fulfillment of unconscious needs does not affect customer satisfaction, but if a company succeeds in determining its customers’ unconscious needs it can lead to very satisfied customers. The figure shows that even a small increase in the fulfillment of unconscious needs will significantly increase customer satisfaction. (Mont, 2003, page 27)
2.3 ISO 9000 Quality Management Principles
The Quality Management standards of ISO 9000:2000 are based on eight quality management principles. Management can use these principles to guide their company towards improved performance. (ISO 9000 Quality Management Principles)
The first principle is customer focus. The principle encourages companies to understand their customers’ current and future needs. Companies should work to meet customer requirements and try to exceed customer expectations. Customer focus includes researching customer needs and expectations, and ensuring that the company’s goals are linked to customer needs and expectations. Management should communicate customer needs and expectations to all employees. Customer satisfaction should be measured and the company should act on the results. Customer focus can lead to increased revenue and market share, increased effectiveness in using company resources to improve customer satisfaction, and customer loyalty.
The second principle is leadership. Management should consider the needs of all parties such as employees, owners, suppliers, customers, financers, local communities and society. A clear vision of the company’s future should be established and challenging goals and targets should be set. The employees should be encouraged and inspired to perform their tasks well. The employees should be given the required resources, equipment, training and freedom to perform their jobs.