CASE STUDY $5\mathrm{.}1$ LIQUI$-$GAS ENJOYS A LESSON IN

SERVICE QUALITY

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 $1980$s$,$

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

$($Continued$)$

$140$ B$2$B MARKETING ANALYSIS AND STRATEGY

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 $5\mathrm{.}3,5\mathrm{.}4$

and $5\mathrm{.}5$ 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.

Although Jan understood most of this, it seemed rather academic and quite far$-$removed

from the day$-$to$-$day realities of competing in the European industrial LPG market.

Nevertheless, it was important to make sense of the information pretty quickly. The

Global Marketing Director was currently visiting the European office and expected Jan

to give a presentation based on the latest market research report. The Global Marketing

Director would no doubt be particularly interested in the service quality aspects of the

report. What Jan had read so far was not much use. The Global Marketing Director would

expect some hard facts, and was known to believe in the maxim $$If you can$$t measure it$,$

you can$$t manage it$.$ Jan read on$,$ very much hoping to find some hard facts and some

concrete measurements.

TABLE $5\mathrm{.}3$ Liqui$-$Gas customers$$ desired service levels $($expectations$)$

SERVQUAL

dimension Indicator

Mean score

$(85$ customers$)$

Reliability $1.$ Providing customer service as promised $6\mathrm{.}14$

$2.$ Dependable in handling customer service problems $6\mathrm{.}31$

$3.$ Performing customer service right first time $6\mathrm{.}42$

$4.$ Providing customer servic