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Creating a sustainable competitive advantage by differentiating from competitors. Differentiation is must due to heterogenous nature of services.

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For instance, better service delivery levels continually make customers to expect more from their service providers

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E.g., industry growth lead to increase in customers' expectations. For instance, when the telecom industry moved from 2G to 3G, and from 3G to 4G, customers expectations increased.

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Since, company can't delight all customers due to heterogeneity, a company must modify service personalised to most decentralized manner.

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Mitigations: Asking customers about their expectations and informing them if they're being unrealistic. Opening them experience-centres.

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1) Customers' expectations are "unrealistic."

2) Sould company try to delight customer?

3) Should company exceeding customer service expectations?

4) Do customer service expectations continually escalate?

5) How must a service company stay ahead of competition in meeting customer expectations?

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Factors that influence desired and predicted service

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Factors that influence desired and predicted service

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Catastrophic or uncontrollable factors such as, earthquake, tornados, etc.

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A small town coming up with an airport. Customers are fine with mere 2-3 flights a day.

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Customers' expectations are influenced by individuals or group of people.

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It is the customers' generic attitude towards the proper conduct of service and meaning of the service.

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Physical, Social, Psychological and Functional. E.g., Aravind Eye Care Hospitals

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The zone of tolerance vary for service dimensions

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The zone of tolerance vary for service dimensions

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For tangible (high empathy) service/product and higher customer expectations, the zone of tolerance is wider. However, for high customer expectations and reliable services, the zone of tolerance is narrow. E.g., for broken or delayed services i.e., low reliability, the zone of tolerance is very narrow.

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The zone of tolerance is different for different customers

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The zone of tolerance is different for different customers

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For instance, busy customers may value short waiting time to be more weighted for a service.

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The extent to which a customer is able to recognize the heterogenous service and able to tolerate the variations.

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Japanese customers have high level expectations of service levels even in Great Britain.

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Possible Levels of Customer Expectations

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Possible Levels of Customer Expectations

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1) Minimum Tolerable Expectations are necessary for every service.
2) Acceptable Expectations
3) Experience based Norms may arise due to past experience of visits to the service.
4) Normative "Should" Expectations may arise due to set norms of industry. e.g., minimum requirements to announce a hotel as 3 star.
5) Ideal expectations or desires are extremely high levels of customer expectations. Special services, "wished for".

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- Recognising different customer's expectations for service performance.

- The controllable and uncontrollable sources of customer expectations of service.

- Types and sources of expectations are similar for end consumer and business customers. (for pure, product related, for experiences and inexperienced customers)

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US 2 star hotel will have clean room, large beds, air conditioning, etc. However, in the UK a 2 star hotel will have less amenities.