Expectation Management in Service Qulaity

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					CLIENT MANAGEMENT (COMM2384)
Lecturer: Lukas Parker
Course: Professional Communication




                NGUYEN THI TRUC LY
                         S3192817
              Assignment 1: Research report
             Due: Monday 22 Nov 2010, 4PM




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TOPIC: Account Management


Account management is often said to be about ‘managing expectations’.
Explain what this means, give examples of how it does and does not
happen in practice, and explain how you believe it can be most
successfully achieved.




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                        TABLE OF CONTENTS


IINTRODUCTION _____________________________________________________1


METHODOLOGY _____________________________________________________2


CASE STUDY _________________________________________________________2


ADVERTISING SERVICE ______________________________________________3


CLIENTS’ EXPECTATION AND PERCEPTIONS OF SERVICE QUALITY ____4
     Expectation ______________________________________________________4
     Perceived service quality (PSQ) _____________________________________5
     Clients’ satisfaction________________________________________________5
     Interconnection of Clients’ Expectation, Perceived
     Service Quality (PSQ) and Satisfaction________________________________5


EXPECTATION MANAGEMENT ________________________________________6
      Service Quality Improvement Program (SQIP) or
      Client Satisfaction Improvement Program (CSIP) _____________________7
      Client relationship management ____________________________________8

RECOMMENDATIONS_________________________________________________9

REFERENCES _________________________________________________________11

APPENDIX_____________________________________________________________14




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INTRODUCTION


Expectations are defined as the clients’ beliefs about the service quality delivered; and, they are
viewed as the reference for comparing quality expected and quality received (Parasuraman,
Zeithaml & Berry 1994). Thus, expectations reflect an individual’s subjectivity of organization
performance and service quality. According to Coye (2004), service quality and clients
satisfaction are influenced by their expectations.


Advertising service is defined as a professional service (Belch & Belch, 2009) and possesses the
uncertainty as its nature (Greenwood, Li, Prakash & Deephouse 2005). Thus, clients are believed
to face difficulty in knowing the performance and abilities of agency.


Advertising market is claimed to be a dynamic market because of its exchange relationship
(Jensen, 2003). Clients of advertising service often choose one or more agencies (Belch & Belch
2009) or frequently switch service-providers based on several reasons (Broschak & Niehans
2007). Clients seek for another service-provider because of dissatisfaction of perceived service
quality (Mittal & Lassar 1998). Another justification is the broken personal relationship between
clients and account people of the agency (Halinen 1997).


The relationship dissolution occurs when clients decide to end the existing relationship and form
new ones (Swedberg 1994). Unfortunately, the relationship dissolution practice is commonly
practiced in advertising industry (Broschak 2004 & Broschak & Niehans 2007).


In some cases, the clients’ switching of advertising agency results from the clients’ misjudgment
of the agency performance and service quality (Broschak & Niehans 2007). For advertising
agency to establish and maintain a strong client relationship for future profits, clients’
expectation management needs to be master.


Therefore, the objectives of this report are to understand what clients’ expectations are formed
and how they affect the perceived quality and satisfaction of a given advertising service.



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Important concepts and the literature review about them will be presented. In addition, the
management of expectations will be discussed and recommended at the end of this report.


METHODOLOGY


Data collected for the literature review is primarily from scholarly published journals, books and
book chapters dated from 1990 to current. A case study strategy is adopted to shed light on the
concepts discussed throughout this report. Recommendations for managerial practice are
provided based on the integration of the literature review and real-life case study.


The case study was the original research of Professor Aino Halinen (1997) on the relationship
marketing in professional services, taking an advertising agency and its clients as the researched
objects.


CASE STUDY


From 1980 to 1991, Törmä, a Finish advertising agency was working with Fiskars, an
international corporation operating in metal and electronics industries. During the three and a
half year periods, many Fiskars’ assignments had been executed by Törmä. Upon undertaking
assignments, Törmä directly cooperated with three separate business units of Fiskars: the
marketing unit (Billnäs), the sales unit (Malmi) and the Head Office. In November 1986, Törmä
executed two projects for Fiskars which were the international marketing planning for Billnäs
and the company image campaign for the Head Office. One year later, in mid-1988, Törmä was
working on a media campaign for Malmi at the request of Billnäs, the marketing unit. Törmä’s
relationship with Billnäs and the Head Office started well at first; however, they became
declined gradually to the end of 1991. In contrast, Törmä and Milma relationship declined earlier
in 1990. This was claimed to be the result of un-cooperating interaction and the familiarity of the
task. Törmä was doing a familiar and routine task of media planning; therefore, Malmi had no
special attraction to Törmä.




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Törmä- Billnäs relationship fluctuated in 1980-1991 period. There was a growth in relationship
since Billnäs urgently needed an advertising agency as their business was expanded. These two
parties share same interest in the marketing plan and were committed in building a business
relationship. After the first success of Törmä in the package test, the relationship entered to
troubled phase because of Billnäs and Fiskars’ rejection of Törmä’s proposal for new campaign.
This trouble was intensified when the management structures of both Törmä and Billnäs
changed. Therefore, Uncertainty was increased and personal relationships were lost, which led to
a short decline, afterwards. However, since Törmä and Billnäs shared commitment to a new
Fiskars’ branding campaign, their communication was intensified. The relationship recovered
again in mid-1990.


At the same time, Törmä-the Head Office relationship was getting well from the start of 1980
and was strengthened in mid-1990. This was due to Fiskars’ new branding assignments to
Törmä. The personal relationship between Törmä and the Head Office was at the management
level and maintained in a cooperating interaction. Trust and commitment was strong in the
relationship.


However, this did not last long. In the beginning of 1991, Törmä’s relationships with both
Billnäs and the Head Office gradually declined because of the organizational changes of the two
parties. Particularly, it was the dissatisfactory expectations of Fiskars and that of its three
business units were claimed to cause the implicit failure of Törmä and Fiskars business
relationship in 1991.


ADVERTISING SERVICE


According to Normann (1991), there are five main characteristics of advertising service:
intangibility, people intensity, the interactive processes, customized service, and the ambiguity in
service exchange.


Generally, the process of delivering service, such as: planning and executing advertising is
intangible, so are service outcomes. According to Broschak (2004), one criterion for clients’

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agency selection is the firm’s reputation and the referrals or credentials of its existing or former
clients. The people-focus perspective distinguishes advertising service from other professional
services. Because of the uncertainty within advertising service (Alvesson 1993), personal
relationship plays an important role in client-agency relationship (Halinen 1997, p. 315;
Broschak 2004). Advertising services are highly customized because they are specialize in
designing and executing advertising campaigns for clients, which is not in the clients’ expertise
(Belch & Belch 2009). Therefore, clients’ expectations vary accordingly to their special needs, as
Alvesson (1993) classified advertising as a knowledge-intensive business service.


In advertising, the service is produced and consumed simultaneously in the interaction between
client and agency (Zeithaml, Parasuraman & Berry 1994). For a creative idea to be made reality,
client approval is required. Thus, client participation during the production process is crucial.
Getting clients involve and share responsibility for the outcome would determine their perceived
service quality (Pham, Goukens, Lehmann & Stuart 2010). It is claimed that the coordinating
relationship between client and agency encourages higher satisfaction of the service quality
(Halinen 1997, p. 191; Coye 2004).


CLIENTS’ EXPECTATION AND PERCEPTIONS OF SERVICE QUALITY


Expectation


Generally, in a given professional business service, there are three types of expectations:
normative predictive and minimal/adequate expectations, according to Parasuraman, Zeithaml
and Berry (1994). Normative expectation is the highest or the desired level of expected service.
Whereas, adequate or minimal expectations are the lowest level of service quality clients expect
to receive. Unlike those two, predictive expectation is the level of service that consumers predict
to receive based on their perceived performance of the agency. According to Hamer (2006), it is
the predictive expectations that have great impact on perceived service quality of clients.


Particularly, in a given service encounter, there are another set of expectations, including three
types: fuzzy, implicit and unrealistic expectation, according to Ojasalo (2001). Fuzzy

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expectations occur when customers do expect something from a given service but they do not
have a precise picture of what they want. Unlike fuzzy expectations, unrealistic expectations are
ideal and impossible to be met. On the other hand, implicit expectations occur when customers
do not believe that certain elements of service cannot be delivered during the encounter.


Perceived service quality (PSQ)


Perceived service quality (PSQ) is the clients’ perception of service quality offered (Zeithaml et
al 1994). Service quality is measured from the comparison of clients’ desired or normative
expectations and their PSQ; whereas, clients’ satisfaction is measured from the comparison of
their predictive expectations and PSQ (Lee, Lee & Yoo 2000).


Clients’ satisfaction


According to (Omachonu, Johnson & Onyeaso 2008), in professional business service, there are
three types of customers’ satisfaction, which are: overall satisfaction, satisfaction regarding
customization and satisfaction regarding reliability. Since one of the characteristics of
advertising service is customization (Halinen 1997, p.28) and trust is one of the antecedents of
relational bonds between client and agency (Halinen 1997, p.58), enhancing the customized
character and consolidate trust will encourage clients’ satisfaction of the service quality they
receive. On the other hand, Jones and Suh (2000) found that overall satisfaction of service
quality has direct impact on repurchase intentions.


Interconnection of Clients’ Expectation, Perceived Service Quality (PSQ) and Satisfaction


The relationship among clients’ expectation, their perceived service quality and their satisfaction
is also in the spotlight of managerial studies. According to Coye (2004), overall service quality
and customer satisfaction are influenced by their expectations. Furthermore, clients’ expectations
is claimed to be the predictors of PSQ (Hamer 2006). According to Lee, Lee and Yoo (2000),
PSQ is found to be the antecedents of clients’ satisfaction rather than vice versa. Therefore, in



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order to achieve high level of clients’ satisfaction, their expectations and PSQ need to be
managed (Lee, Lee & Yoo 2000).


One way to maximize the PSQ is to encourage clients to expect the highest level of service
(Hamer 2006). Consequently, it is suggested that the agency should realistically promise to its
clients and consistently deliver them. Failing to meet clients’ expectation, a firm runs the risk of
losing clients’ commitment; and, in turn, facing a threat of relationship dissolution between
client and agency (Broschak & Niehans 2007). There are two ways to mange clients’
expectation: firstly, understanding clients’ expectation, their sources and nature (Robledo 2001
& Ojasalo 2001; Coye 2004); and, secondly, enhancing service quality and clients’ satisfaction
through improvement programs (Simester, Hauser, Wernerfelt & Rust 2000; Wiele, Boselie &
Hesselink 2002).


EXPECTATION MANAGEMENT


As expectations are found to be the critical part of service quality evaluations (Robledo 2001), it
is recommended for an advertising agency to appropriately mange their clients’ expectation, so it
can deliver its performance accordingly (Hamer 2006). Expectation management occurs in two
levels. Clients expect differently at the point of service encounter and at the level of client-
agency relationship.


During a typical service encounter, what clients expect depend largely on what they need and
what is offered in that encounter (Coye 2004). It is recommended that expectation management
should aim to make fuzzy expectation clear, reveal implicit expectations to be explicit, and turn
unrealistic expectations to become more realistic and achievable (Coye 2004).


Often, after an agency accomplish clients’ assignments, the level of the client-agency
relationship is likely to determine if the clients want select that agency again (Broschak &
Niehans 2007). Robledo (2001) stated a model for managing expectations at this relationship
level, including two steps: expectation research and expectation management (see Appendix,
Figure 1). In the research stage, the compression of the sources of expectations and how they

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affect on clients’ PSQ is emphasized. Research tool to collect data on level of expectation is the
SERVPEX questionnaire, developed by (Robledo 2001). Data of perceived service quality is
collected by the SERVQUAL expectations questionnaire, developed by Parasuraman, Zeithaml
and Berry (1994). According to Zeithaml, Parasuraman and Berry (1990), there are five sources
of expectations: word-of-mouth communications, promotion, price, personal needs, and past
experience. However, Robledo (2001) stated other sources, including: past experience, informal
and formal recommendations, price, promotional mix, personal needs and corporate image.
Furthermore, it is suggested that while the past experience of client cannot be much affected, if
an agency could influence other sources, it is possible that client will consider another business
exchange with the agency.


In the second stage is to manage and influence clients’ expectation based on information
collected and analyzed in the first stage. By ensuring client’s expectations are realistic, rather
than subjectively desired, the agency can fulfill them (Robledo 2001). In action, a firm should
have promotional campaigns with clear position or mission statement, appropriate pricing
strategies and consistent delivery of flawless service (Robledo 2001; Hamer 2006).


Service Quality Improvement Program (SQIP) or Client Satisfaction Improvement
Program (CSIP)


According to Simester (2000), the implementation of SQIP or CSIP improves clients’ PSQ. As
long as customer satisfaction is enhanced, the firm's long-term profitability in the market is
secured (Zeithaml 2000; Wiele, Boselie & Hesselink 2002). Expectation management does not
only improve service quality but also mange factors influencing the satisfaction of service (Lee,
Lee & Yoo 2000). An advertising agency should allocate their budget to meet clients’ needs,
improve their satisfaction and, in turn, increase purchase intention (Rauyruen & Miller 2009).
Particularly, it can be achieved by using marketing research and quality tools to design and
implement a SQIP or CSIP.


Advertising firms should cooperate with marketing research companies to figure out what clients
need and want; and utilize appropriate quality tools, such as: budget allocation and the

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management of responsiveness between client and contact employees (i.e.: account people). In
advertising service, the delivery of services often occurs during the interaction between account
people and clients; consequently, the attitudes and behaviors of the contact people have
significant impacts on the PSQ of clients (Chase & Bowen 1991). According to (Lee, Lee &
Yoo 2000), the responsiveness between client and contact people depends on the agency’ culture
of service provision. Because of the intangible and ambiguous nature of advertising services,
individual people in an agency with their personal relationship are significant to the client-
agency relationship (Halinen 1997, p. 315). The capability of managing the human factors is
required for the effectiveness of an agency. It is recommended that individual people within an
agency with their expectations and relationship network needs to be strategically managed.


It is implied that for advertising agencies, people-based service companies, employees’
motivations, skills and knowledge should be improved. Therefore, agency’s top managers should
implement a SQIP or CSIP that motivates employees, particularly the contact people. Attitude
training, skill training, clear role perception and knowledge of the advertising service and
organization policies should be taken into account when managing client’s satisfaction and
agency effectiveness (Lee, Lee & Yoo 2000).


Client relationship management

In a broader picture, a key factor to an effective expectation management is to have an effective
client relationship management. The concept of relationship marketing focuses on client side
(Morgan and Hunt 1994).

In advertising service, long-term relationship is a common practice (Sharma 1994). This is
resulted from potential mutual benefits for both client and agency. Agency will find it less costly
to maintain and develop current client relationship than to seek a new one (Grönroos 1990). The
firm also yields benefits in term of referrals and credentials from existing clients. This is crucial
for advertising agency since it is the referrals and reputation of an agency that form clients’
expectations (Halinen 1997, p. 39) Moreover, as building a positive relationship with client,
agency also creates it competitive advantage by preventing the risk of switching service-provider
from their clients (Broschak & Niehans 2007). Therefore, clients are obviously beneficial in term


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of long-term trust and satisfaction with one service-provider. In order to build a mutually
beneficial business relationship, it is critical for an advertising agency to recognize changes in its
client relationship, and to act on them where necessary.



The development of client-agency relationships is viewed as evolutionary model, in which
critical events happening during the business relationship are explanatory to the success or
failure of the relationship development (Van de Ven, 1992, p.70). In relation to advertising
service, relationship management is claimed to affect clients’ selection of agency (Dowling
1994), relationship vulnerability (Michell, Cataquet & Hague 1992) and the structure of
advertising markets (Ripley 1991). There are also studies on the communication strategies for the
development of relationship (Beltramini and Pitta 1991), which propose the effects of time, mass
communication (Bendall-Lyon & Powers 2007); and, word-of-mouth on clients’ commitment
(Mangold, Miller & Brockway 1999).

A Process Model for client-agency relationship development was proposed by Halinen (1997,
p.180), which views the process as being dynamic and changing overtime. According to Halinen
(1997, p.314), the model comprises six categories for advertising agency to establish firmly long-
lasting relationship with its clients. They are the context of a business relationship; the
prerequisites for a business relationship; the content of a business relationship, including both
interaction process and interaction style; the evolving relational infrastructure; the perceived
outcomes of interactions processes; and, the evolving relational bonds. In order to manage
clients’ expectation, it is necessary to manage client relationship based on those six categories.



RECOMMENDATIONS


It is recommended that Törmä should manage clients’ expectation and client relationship at the
same time to boost the relationship development. Management of clients’ expectations should be
focused both at the point of service encounter and at the level of client-agency relationship.

For Törmä- Billnäs (the marketing unit) relationship



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At the encounter service point, when Törmä present new ideas for Billnäs’s international
marketing plan, Billnäs’s expectations and Törmä’s capabilities of delivery should be clearly,
explicitly and realistically communicated (see Appendix, Figure 2). This is to generate Billnäs’
satisfaction of service delivered. And, hopefully this can help rebuild lost personal relationships
between Törmä’s team and Billnäs’ management. Moreover, the interaction style needs to be
cooperating, less formal, more inviting two-way-communication. Törmä should provide
attitudinal commitment, intensive knowledge of Billnäs’ existing marketing plan, and define
clearer role of the agency. Moreover, Törmä should emphasize the innovative and creative ideas
which can provide benefits for both Billnäs and Fiskars. An interactive communication plan with
Billnäs can increase the intensity of communications and the number of people involved in the
interaction. Hopefully, the uncertainty of future relationship could be clearer.


For Törmä – Malmi (the sales unit) relationship


Since the relationship was not fully voluntary and Malmi had no special attraction to Törmä, it is
suggested that Törmä should try to keep a cooperating relationship with Malmi and never
overpromise anything that it possibly cannot fulfill.


For Törmä – The Head Office relationship

Törmä needs to define clearly its role as an advertising service-provider and also a market
consultant for the Head Office and Fiskars. This is to tighten the former open-door relationship
between Törmä and the Head Office. Since the infrastructure for the relationship has been
established at management level, Törmä should strengthen the relational bonds. It needs to
design and implement a Service Quality Improvement Program (SQIP/CSIP) to build trust in the
Head Office about its capabilities. An effective SQIP/CSIP possibly decreases the current
dissatisfaction in the relationship. In order to create an effective SQIP/CSIP, Törmä should take
into account the two step of expectation management. The agency needs to be comprehensive of
what the marketing department, sales departments and head office of Fiskars expect from the
agency and where they have those expectations. Then, having a strategic communication plan
designed to influence the sources of clients’ expectations could help Törmä fulfill its clients’
satisfaction and improve the relationship for future benefits.

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Hamer, LO 2006, ‘A Confirmation Perspective on Perceived Service Quality’, Journal of
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Jensen, M 2003, ‘The role of network resources in market entry: Commercial banks’ entry into
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Ojasalo, J 2001, ‘Managing customer expectations in professional services’, Managing Service
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Swedberg, R 1994, Markets as social structures. In Smelser & Swedberg (Eds), The handbook of
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APPENDIX




Adopted from: Robledo, MA 2001, ‘Measuring and Managing Service Quality: Integrating Customer
Expectations’, Managing Service Quality, vol. 11, pp. 22 - 31.




Adopted from: Ojasalo, J 2001, ‘Managing customer expectations in professional services’, Managing
Service Quality, vol. 11, pp. 200 – 212

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