Service quality in the casino industry - Literature review Example

Table of Contents Introduction 2 Literature Review 3 The Components of Service Quality 4 Service Mix 7 SERVQUAL Model 10 SERVPERF Model 12 Customer Contact Model 12 Service Quality Gaps 13 Conclusion 18 References 20 Introduction “As an industry, casino gaming has always been a unique source of entertainment for its customers, and—all too often—a focus of governments’ regulatory spotlight” (PricewaterhouseCoopers, 2010, p.4). There have been different social perceptions associated with the industry from around the world. The industry has also attracted the attention of various government and other financial regulatory bodies as large amounts of money is involved in the industry. United States represents the largest market for the casino industry worldwide closely followed by the Asia Pacific region. The recent economic and financial meltdown had its effects on the casino industry with the US market registering negative growth of 2.8 percent. This is in contrast with the global decline of 12.2 percent as of the year 2009. The year 2011 is expected to boost the revenues of the industry segment as the global economy is showing signs of resurgence. The Asia Pacific region performed better in terms of revenues with the industry registering a spending margin of 7.4 percent. However, in the next year the industry witnessed approximately 50 percent rise in the levels of spending in the year 2010 (PricewaterhouseCoopers, 2010, p.4). Customer service is one of the most important areas that are important for the hospitality industry as it determines the competitive advantage of organizations to distinguish themselves from the rest of its competitors in the market (Kandampully, Mok & Sparks, 2001, p.57). Presence of large number of competitors in the market adds to the importance of customer service for organizations in the market. It is perhaps for this reason that organizations are essentially putting their focus on creating customer excellence so as to provide greater value to the customers in an attempt to gain consumer loyalty. Various customer relationship management practices are being adopted by organizations that seek to differentiate a firm with the rest of its kind in the market. Customer relationship in service industry becomes even more complicated considering the intangible nature of the product offering (Kandampully, Mok & Sparks, 2001, p.57). The present study would focus upon the aspect of service quality in the casino industry. The study would be covered under two parts, in which the first would be an analysis of the existing literature with regard to improvements in service quality. The second part would include a primary study which would be targeted at different individuals associated with the industry to help gain firsthand market information about the topic of study. Finally, a set of plausible conclusions and recommendations would be framed so as to prepare a guiding template for the marketers to gain competitive advantage (PricewaterhouseCoopers, 2010, p.4). Literature Review The Components of Service Quality A number of corporations think that enhanced long term sustainable profitability can be achieved through improved service quality and better customer satisfaction. This confidence is confirmed from a significant database on ‘profit impact of market share (PIMS)’, containing a substantial amount of data on large number of companies. Such evidences have made it prominent that enhanced service quality is considerably correlated with both enlarged market share and improved profitability ratios. During last few decades, the concept of quality management in service industry has seen to receive an increasing amount of attention from both the academia and the professional arenas (Lederer & Karmakar, 1997). The conformance of service quality relates to the acquiescence of the delivered service quality with the established specifications of any established service. This exemplifies that the conformance to the specifications is surely a significant component of total service quality. This is pretty significant unless the specific service specifications are inappropriate to the preferences of the customers (Lederer & Karmakar, 1997). To capture more of the components leading to better compliance with the customers’ preferences, a number of organisations use the concept of performance quality. It refers to the intensity of customers’ satisfaction which can be achieved through the proper execution of the service specifications. Performance quality in any service industry can be segmented in two quality types including design and class quality. Class quality relates to the differentiation in the terms of segmentation of the specific markets, while the design quality relates to the intensity of the satisfaction of the customer preferences through the proper execution of various specifications (Lederer & Karmakar, 1997). . Figure 1: Service Quality Components (Source: Lederer & Karmakar, 1997, p.174) In the above picture, communication quality is the accuracy by which the service specifications are put across to the consumers. All these types of service qualities are linked to the service specifications. In the figure, actual service quality refers to the extent at which the actual service is met with the customer preferences. Anticipated service relates to the intensity at which the customers’ expectations are aligned with the customer preferences. The residual service quality refers to the alignment of the attributes of delivered service with the customer expectations (Lederer & Karmakar, 1997). Several other researches that have been carried out to understand the influential and significant components that offers an enhanced and better service to the customers. Another study carried out by Kang and James has concentrated on the conceptualisation of the service quality with regard to technical quality, functional quality and image. The results have exemplified that both technical and functional quality influence the perception of total service quality. The image about the service has an influential impact on the individual perception of the quality of overall service. The findings indicate that the impact of functional quality on the image has been larger than that of the technical quality. This indicates that the functional quality has been more influential than the effect of the technical quality. The interaction, which takes place between the consumer and the representatives of the organisations, would have a considerably significant influence on the perceived image of the customers regarding the organisation and the evaluation of quality of the service, delivered (Kan & James, 2004). In some other papers, few other elements were mentioned which are an integral part of the service quality in any industry. The extent to which the customers understand the service attributes are equally important for the better quality perception of the specific service by the consumers. Customisation of service can put forward a better image regarding the extent to which the attributes would satisfy the requirements of the customers. The relevance of the service attributes against the customers’ requirements and preferences can be a significant influential factor to describe the quality of the service offered. In the gaming industry, the service provider can shape up their services according to the growth, development and specific competencies of the customers. Appropriates structure, reliability and fidelity of the services are influential components for better service quality (Kendrick, n.d.). Service Mix The analysis of products or service offering can be analysed using the framework of the product or service mix of an organization. The intangible nature of the service industry makes it even more complicated. In order to address this complicacy in the service industry, the existing product mix consisting of product, price, place, promotions was further extended to include three more components of people, process and physical evidence for the service industry (Nargundkar, 2006, p.45). People include the employees of the organization who would actually deliver the service to the consumers. In order to deliver a good service, it is essential that the employees are well trained so as to serve the customers in a better manner (Wannenburg, Drotsky & Jager, 2009, p.323). In case of casinos, it would imply having a large pool of talented employees such as bar tenders, slot machine handlers, cash registers etc. The employees should be trained in such a manner that they have a good understanding of the perception of a customer so that an appropriate level of service is delivered to the consumer. Process implies the manner in which a service is delivered to a customer. Casinos normally have a large number of technological aspects like slot machines, etc. It is important that high end technologies are used so that the customer gets good value for every unit of money spent at the casino. The speed of the a slot machine also contributes to the income for the casino. Efficiency and skilfulness of the employees would be desirable. Use of high end technology would help reduce the need for a large manpower and would also lead to better customer satisfaction (Chase, Jacobs, Aquilano & Agarwal, 2006, p.165). Physical evidence includes aspects like ambience, facilities etc. These are the only tangible aspects in a service delivery as they can be seen and felt by the customer. In case of casinos, it would include the physical ambience inside the casinos, decoration lighting etc. Good physical evidence amplifies the customer loyalty as it is one area of service delivery which is tangible for the consumers and is generally being used by the consumers to evaluate and distinguish the service quality level of different firms (Kandampully, Mok & Sparks, 2001, p.79). Customer relationship management is another key aspect in determining the service quality of casinos. For example, Harrah’s entertainment which owns the largest chain of casinos in the world maintains an everyday routine of managing relationships with its customers. This includes a loyalty program which has attractive offers for regular clients. The success of its loyalty program could be analysed from the fact that more than 80 percent of its customers use its reward card (Kotler, 2010, p.105, 106). In order to deliver quality service, it is essential that an organization evaluates the level of service it is offering to the customers. The level of service quality can be determined by using different models. The SERVQUAL model is one such model that helps in identifying the gaps between the expectation of a customer with regard to a service offering and the actual level of service being offered to the consumer (Kotler, 2010, p.105, 106).. SERVQUAL Model SERVQUAL or Services Quality Model is a model used to determine the service quality standards. This model is based upon four basic assumptions which include firstly, the expectations of the consumer as well as the manager with regard to the expectation of the consumers. Secondly, expectations regarding the quality of service standards, the specifications and nature of service delivery and finally communication with the consumers (Comeau & Thompson, 1992, p.309). The SERVQUAL model has been used widely in the hospitality industry to determine the gaps in between the service offering of a firm and the consumer’s expectation about a particular service. Service quality for a hospitality industry can be determined by analysing both tangible as well as intangible variables. The dimensions of the SERVQUAL model namely reliability, response, guarantee and sympathy are put under intangible factors. The tangible aspects include factors like ambience and other physical aspects associated with a service delivery (Wood & Brotherton, 2008, p.321). Figure 2: The SERVQUAL Model in the Hospitality Industry (Source: Juarez, Padilla, Pina & Matamoros, 2010, p.4) The figure above shows the SERVUAL model to be applied in the hospitality industry. The model uses the aspects of different service dimensions as well as aspects like communication, desires and demands of the consumers, previous experience as well as expectation about a particular service. These factors are used to determine the gap between the customer’s perception of service delivery and the actual service being provided by the firm (Juarez, Padilla, Pina & Matamoros, 2010, p.4). In case of casinos, the service delivery perceptions for the consumer would include aspects like use of high end technology in slot machines, efficient and well mannered staff, easy availability of accessory items like drinks etc. Applying the SERVQUAL model would help any hotelier to determine the perceived gaps between the perception and image of the service desired with the actual level of service being offered by the company. This would help the hotelier to formulate appropriate strategies so as to make the service more efficient in nature. This would serve to take care of the competition prevailing in the market (Juarez, Padilla, Pina & Matamoros, 2010, p.4). SERVPERF Model The SERVPERF model is another model that can be used by casino owners and hoteliers to measure the level of service being provided to the customers. This model uses a five point Likert scale to analyse the service offering of a firm from the perspective of the customer with regards to his/her expectation of a particular service offering. The five point scales being from strongly agree to strongly disagree. The basic presumption in this model is based on the premise that a performance and effectiveness of a service offering is directly dependent on the quality of service being provided by a firm to its consumers (Wannenburg, Drotsky & Jager, 2009, p.319, 320). Customer Contact Model An important dimension of service quality is the manner in which the service is delivered to the customer. This is more important considering the tangible nature of services which makes it difficult to measure the service quality (Schneider & White, 2004, p.67-68). The Customer Contact Model is unique in the aspect that it includes the consumers while determining the measure of service quality. This model defines an operational efficiency as a function of the time required to serve a consumer as well as the time required to generate the service. According to this model, an efficient service is one in which a minimum duration of the service creation time is devoted with a direct interaction with the consumer. According to this model, increased interaction duration with the consumer would lead to a poor service quality. An efficient service, according to this model, would be one in which the service delivery would be done with the minimum time spent with the consumer. In case of casinos, this would imply that the back end activities should be designed in a manner that every customer request is served in the shortest possible period of time. Such a timely action would lead to lower interaction time which would tend to make the process more efficient and would lead to greater customer satisfaction (Schneider & White, 2004, p.67-68). Service Quality Gaps Among the influential models in the service quality management, the conception of ‘Service Quality Gap’ has emerged as one significant arena in both the academia and the professionals. There is another such model which was introduced by Brogowicz back in the year 1990. This had certain kinds of encircling gaps including the gaps related to feedback, information, design, implementation, communication as well as customers’ expectations and their perceptions about the specific services (Shea & Condon, n.d.). Figure 3: Quality inconsistencies drawn from various literatures (Source: Clement & Slevam, 2008) Figure 4: Service Gap Model (Source: Clement & Slevam, 2008) The above model has identified certain elements and relates those elements with the required attention of the management. The proposed elements which are expected to fit the model include the perception of the management regarding the customer expectations about the service offered. Any organisation must have proper vision, mission, appropriate direction and required service strategy to remove the gaps. Some more significant elements are a focused analysis of the services, translation of the perceptions into the service design and expected specification of any particular service. Financial as well as human resource management have their significant contribution to remove the gaps between the anticipated and actual service quality. External communication with the customers is pretty important to enhance the service image in the consumers’ mind to enhance their perceptions about the same. Delivery system and suitable marketing strategies are significant to enhance the service quality and eradicate the gap between customers’ expectation and service attributes (Clement & Slevam, 2008). The model has identified certain gaps in the service quality management. The management has been one of the significant entities responsible for defining and describing the service attributes. According to the research done by Zemke and Schaff back in the year 1989, it has been identified that managers and responsible personnel used to concentrate more on the things which are less important to the customers (Clement & Selvam, 2006). As a result, the managers remain sightless about the value offered by the customers. Some of the reasons for such behaviour of the managers are their education and habits as well as the procedures and policies of the company which relate to marketing research and appropriate communication. The first gap relates to the management’s less understanding of the perceptions and expectations of the customers. An inadequate analysis of the service design and quality specifications can create significant gap among the actual service and the expected one. The second gap relates to gap in the service quality strategies. The strategies are required to be properly communicated and appear to be meaningful for the executives and personnel. An appropriate service strategy can be developed with assistance from the vital functions in an organisation (Clement & Selvam, 2006). Internal and external communication with the employees and customers as well as other stakeholders is equally important to eradicate the gap in the information handling and strategy development. This is also important to accelerate appropriate integration between every department, every activity, every function and every employee within the organisation and this integration, coordination would also add value to the value chain of the service delivery system. Proper selection, training, rewards with adequate extent of autonomy can change the motivation of the personnel towards providing a better service with enhanced quality. Eradicating these gaps would define the way to enhance the service and make it more valuable in compliance with the customers’ expectations and requirements (Clement & Selvam, 2006). Conclusion In today’s competitive environment, when all the service companies are competing to get hold of a large customer base, the main deciding factor would be the quality of the service offered to the customers. Better quality is expected to attract a larger customer base. However, there are certain factors which are also influential in defining the success of the service industry. One such significant element is the customers’ perception about the service and its attributes. To align the service qualities in line with the customers’ preferences and requirements is a great challenge for the service providers. The value and regards, the company offers to its customers, are significant the shape the perception of the customers about the specific service quality. The companies are required to show enough loyalty and commitment to the consumers they are catering to. It is pretty important that the companies must understand the requirement and needs of the customers. The company can encourage the involvement of customers to offer better service to them which would not only meet the requirements but also the expectations of the consumers. It is pretty significant that the service must strengthen the customers’ autonomy with appropriate customisation of the services. The company can assist the customers to choose the better services in compliance with the customers’ requirements and preferences. The attributes of the service must be conveyed to the customers in a way where the service processes are understood and seem to be meaningful to respective customers. The service is required to be affordable with its ability to adapt with changes in individual requirements. The service is required to be accessible and conveniently located with enough honesty, authenticity and integrity. As mentioned earlier, a company has to experience a number of gaps in the process to offer service to the customers. The company is required to identify the gaps and take the required steps and strategies to eradicate the service gaps in order to boost the service quality which would satisfy the customer expectations. References Chase, R.B., Jacobs, F.R., Aquilano, N.J. and Agarwal, N.K. (2006). Operations Management for Competitive Advantage. Tata McGraw-Hill. Clement, J. and Selvam, M. (2006). ‘Service Quality Gaps: A Retro Analysis’. [Online]. Available at: http://www.acadjournal.com/2006/v18/part7/p1/ [Accessed on Feb 22, 2011]. Comeau, M. and Thompson, W.N. (1992). Casino Customer Service the Win Win Game. University of Nevada Press. Comeau, M. Casino Customer Service the Win Win Game. University of Nevada Press. Juarez, A.B., Padilla, R.T., Pina, I.B. and Matamoros, M. (2010). ‘Viable Systems Model and Quality of Hospitality Services’. [online]. Available at: http://journals.isss.org/index.php/proceedings54th/article/viewFile/1404/505 [Accessed on Feb 20, 2011]. Kandampully, J., Mok, C. and Sparks, B.A. (2001). Service quality management in hospitality, tourism, and leisure. Routledge. Kang, G. and James, J. (2004). ‘Service quality dimensions: anexamination of Gro¨ nroos’s service quality model’. [online]. Available at: http://www.ida.liu.se/~steho/und/htdd01/1080140401.pdf [Accessed on Feb 08, 2011]. Kendrick, J. M. ‘Thirty Elements of Service Quality’. [online]. Available at: http://www.socialrolevalorization.com/articles/kendrick/thirty-elements-of-service-quality.pdf [Accessed on Feb 10, 2011]. Kotler, P. (2010). Principles Of Marketing: A South Asian Perspective, 13/E. Pearson Education India. Lederer, J. P. and Karmakar, S.U. (1997). The practice of quality management. Springer. 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