literature review on service industry

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Hospitality Industry relates many sources with customer interactions and relationships. In the oligopoly market, numerous businesses have had entered, failed and exit the competition. In this assignment, literature regarding customer service in hospitality will be reviewed to analyze the relationship with customers. Further, it describes how customer perceptions play a great impact on businesses, which then lead to customer satisfaction and to certain extent, customer loyalty. Moreover, we shall review the relationship between product quality and service performance as tools to build customer relationships.

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Customer Perceived Value and Service Quality

According to Blackwell et al (2001), providing value to customers is one of the most crucial marketing strategies in hospitality industry these days. In the competitive market, companies have to offer customers excellent quality of products and services, which create the value itself. Competitors have to be creative and responsive in regards to customer demands and needs in order to compete and sustain themselves in the competition (Dawkins and Reichheld, 1990). It means that a company that provides product and service quality with high creativity and responsiveness to satisfy customers demands would have higher chance to lead the competition in the market.

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To illustrate this argument, a family visited a restaurant and decided not revisit again because they had to rush their meals.

However, a customer visits the same coffee shop every morning before work during rush hours yet always leaves with a smile on the face to start the day. These two illustrations contrast the situation of delivering and perceiving value. The question would be what went wrong in the restaurant? Woodruff and Gardial (1996) mentioned the difference between customers perceived value and service quality.

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While in the case above, both the scenario happened during busy hours yet there are two different outcomes. The restaurant only provided what is necessary; product and service, which service quality only focused on.

Whereas the coffee shop delivered more than service quality, it offers value for customers to perceive through interaction and connection. Why customer perceived value is important? As mentioned before creating and delivering value to customers is an asset for a company to be utilized as a strategy or even competitive advantage. Creating and delivering the right value to the targeted customers is what boost customers’ perception about the company, which leads to customers relationship and trust with the company.