MKT203 Service Marketing Case Study: Failure, Recovery, and Retention

This case study analyzes a service failure scenario in a restaurant, focusing on customer complaints regarding loud music. The report examines service quality, customer satisfaction, and the gap between customer expectations and perceptions. It identifies the root cause of the issue and proposes a service recovery program, including acknowledging the problem, offering apologies, and improving service delivery, such as adjusting music volume to meet different customer preferences. Recommendations are provided to enhance customer loyalty and retention, including offering premium services, training staff, social consciousness, building trust, and providing attractive specials. The report concludes by emphasizing the importance of understanding customer expectations, addressing service failures effectively, and managing customer complaints to ensure long-term customer loyalty and business success. The report follows the guidelines for MKT203 Service Marketing, applying the theories learned in the course to a real-world service experience.

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Service marketing
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Introduction
Service quality is the perception in customers’ minds planning on purchasing products
or services in today’s market (Chaston 2012, p.78). For the customers to be satisfied, their
expectations on quality should be greater than their perceptions about the services they believe
should be provided by the company. Service quality, customer loyalty, and satisfaction are
crucial factors in global markets downturn for profitability, productivity and also retention in the
business as a whole. Through service quality, a company is able to evaluate and investigate
customer perceived and expected service attributes the outcome to their business (Bitner, 2016, p
240). This report will look into service quality, customer satisfaction, and also customer
perception toward services offered by companies to their customers. We will also take a look at
customer complains towards the services they have received and the strategies to handle those
complains. We shall also look at customer retention and loyalty and their benefits to the
business.
Service delivery failure scenario
In the restaurant that I used to work, we used to put on some music which we thought
was entertaining customers. we weren’t wrong, as a matter of fact, most of the customers we
received were young people as our restaurants were situated next to a college, hence, a bigger
percentage of our customers were students, though there were still other customers who were
older in age. We had an elderly couple as our customers one day who complained to me as I was
their server that day, about the loud music as they had a very hard time hearing each other over
the music. When I was confronted with this situation, I had to politely explain to them that the
music was adjustable which we would later adjust by lowering the volume. But the younger

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generation of customers used to murmur a lot when the volume is reduced as that wasn’t the first
time a server had to adjust the volume due to some complaints from the customers they served.
But this was a challenge to the staff as we usually had a hard time trying to balance our
customers experience variables like music volume and the lighting. I know for a fact that this
cost us some potential customers as some of would just leave if they didn’t like the loud music or
when the music volume is reduced. We needed our bosses to come in and help us solve the issue
in order to accommodate every customer who came to our restaurant as we wanted them to enjoy
the services they were getting from our restaurant for them to come back. We knew that the way
we would handle the situation would determine whether we would retain the customers we had
and also whether they would be fully satisfied with our services in general.
This was an instrumental complaint as the purpose of the complaint was to alter the
undesirable state of affairs which in this case is the music. Every customer who came into the
restaurants had his or her own preferences when it came to the issue of music volume (Wang
2017, p. 23). Hence, customers who complained were expecting that the music volume would be
adjusted to their preferred volume which irritated the other customers. In our restaurant, we
understood that understanding and meeting customer expectation to the best of our ability
translates in succeeding in the competitive market (Rust 2016, p. 89). But in our case, some of
the customers would feel dissatisfied when one of their experience variables is adjusted from
they prefer which cost us some customers. Most customers form expectations of the services
they want to get based on their own prior experiences, preferences and their familiarity which
was the main problem and cause of service quality failure we experienced at our place of work
(Mcdonald 2015, p. 49). Expectations and perceptions vary from one customer to another. The

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services that the restaurants delivered were high quality, however in some cases like the one
above, not what the customer had perceived.
Clearly, at times there existed a gap between what our customers expected and what
they received. We understood that, the larger the gap between the customers perceptions and
their expectations, the more the dissatisfaction to some of our customers, therefore the
management needed to do something to narrow the gap as much as possible and should be done
fast so as to fulfill our customers’ expectations (Moore 2018, p.57). Reason being if a problem
like this is not handled critically, it would keep on happening which would be catastrophic to the
business.
Quality is a crucial force which results to organizational success and growth in the
industry hence the need for a recovery program so as to improve customer satisfaction which
translates into the success of our business (Foxall 2018, p.45). This program would help the
restaurant in trying to indulge in sustainable and continuous quality improvements to survive in
the market. First of all is to acknowledge that there is a problem that needs to be solved and
should be handled with care considering the expectations of all the customers. By acknowledging
it, solving it would be easier as all parties involved would be included in trying to find a solution.
Secondly, is to apply apologetic strategies which are offered mainly aimed at customer retention
and loyalty. Business is all about relationships with your customers, and in order to solidify those
relationships, apologizing should be approached proactively (Huang 2013, p. 47). Lastly is to
offer improved services in general which should compel even the aggrieved customers to come
back. This should include adjusting the music volume to levels which would be less noisy to the
customers who consider it distracting and loud enough to the customers who actually love it.

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Recommendations
In order to maintain a successful business, cultivating valuable relationships with the
loyal customers is very important. To attain this, there are several recommended strategies that
should help the restaurant retain their customers and also their loyalty. First, they should offer
premium services, and also ensure the ones they are currently offering match customer
expectations (Gronroos 2014, p.38). Also regarding the issue of loud music as considered by
some customers, they should take on some strategic steps to ensure that every customer who
comes to dine in that restaurant feels appreciated and valued by hearing them out and responding
politely to their needs and to always put their preferences into consideration (Meldrum 2013, p.
123). They should also train all the staff members on customer service standards and to ensure
that they are met, and if there are numerous complains about some employees disrespecting the
customers, the management should always consider new staff members.
Secondly, they should be more socially conscious like the younger generation of
customers especially the fact that their target demographic involves millennial hence the
importance of them dipping their toes into the philanthropic realm. In our case, the restaurant is
near a college and therefore they should support the needy students by paying their school fees
and sometimes offering them internship opportunities (Dojanic 2011, p.227). This might lead to
customer retention and even attracting more as customers are more than willing to support
organizations which they believe that they are making a difference. Thirdly, they should also put
their focus in building trust with their customers through reliability by establishing themselves
into an organization that offers reliable services and when some customers show some concerns
about certain aspects in the organization, in our case a restaurant, they should show sincere
interest in trying to solve it.

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Fourthly, they should offer attractive food and drink specials which can take their focus
from the problem they have with the music volume which translates to retaining the customers
and even attracting new ones (Omar 2017, p. 57). Discounted late night foods, happy hours and
also drink specials can help them entice larger crowds. This is achieved by creating specials
through finding their niche which will keep the customers going back for exciting and new items.
They could also always be available when needed by the customers and even employees as a
way of cultivating customer loyalty.
Conclusion
The report focuses on the nuances of the perceptions and expectations of the customers
as far as the service marketing sector quality is concerned. It clearly shows that customer
expectations are derived way before the service is purchased and is entirely based on prior
experiences and sometimes based on customers; preferences like in our case above. Also, we
have seen that perceptions are formed after the service is consumed. For the customer to be fully
satisfied, then the service quality should meet the customer’s expectations. However, we have
seen that when there is a gap between customer’s perception and their expectations, it will lead
to dissatisfaction. These gaps are usually measured a service quality scale and organizations
should focus on minimizing them to ensure they retain their customers. Lastly, we have seen that
dealing with customer complaints well also ensures customer retention and loyalty.

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References
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Chaston, I 2012, Conclusion on service marketing, Handbook of Service Marketing, pp. 78-88.
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Dojanic, D 2011, Strategies to improve customer retention, Service Marketing Strategies, pp.
225-243. doi:10.4337/978085657884565600345
Foxall, G 2018 Customer expectation and perception, Service Quality Management, pp. 45-56.
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Gronroos, C 2014, Customer retention and loyalty, Service Marketing Components, pp. 35-87.
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Huang, MH 2013, Strategies on cultivating customer loyalty, Service Marketing, pp. 45-70.
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Wang, HS 2017, Service quality. Handbook of Service Marketing, 21-43.
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