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Gap analysis generally refers to the activity of studying the differences between standards
and the delivery of those standards. For example, it would be useful for a firm to
document differences between customer expectation and actual customer experiences in
the delivery of medical care. The differences could be used to explain satisfaction and to
document areas in need of improvement.

However, in the process of identifying the gap, a before-and-after analysis must occur.
This can take several forms. For example, in lean management we perform a Value
Stream Map of the current process. Then we create a Value Stream Map of the desired
state. The differences between the two define the "gap". Once the gap is defined, a game
plan can be developed that will move the organization from its current state toward its
desired future state.

Another tool for identifying the gap is a step chart. With the step chart, various "classes"
of performance are identified—including world-class status. Then, current state and
desired future state are noted on the chart. Once again, the difference between the two
defines the "gap".

The issue of service quality can be used as an example to illustrate gaps. For this
example, there are several gaps that are important to measure. From a service quality
perspective, these include: (1) service quality gap; (2) management understanding gap;
(3) service design gap; (4) service delivery gap; and (5) communication gap.

Service Quality Gap.

Indicates the difference between the service expected by customers and the service they
actually receive. For example, customers may expect to wait only 20 minutes to see their
doctor but, in fact, have to wait more than thirty minutes.

Management Understanding Gap.

Represents the difference between the quality level expected by customers and the
perception of those expectations by management. For example, in a fast food environment,
the customers may place a greater emphasis on order accuracy than promptness of service,
but management may perceive promptness to be more important.

Service Design Gap.

This is the gap between management's perception of customer expectations and the
development of this perception into delivery standards. For example, management might
perceive that customers expect someone to answer their telephone calls in a timely fashion.
To customers, "timely fashion" may mean within thirty seconds. However, if management
 designs delivery such that telephone calls are answered within sixty seconds, a service
design gap is created.

Service Delivery Gap.

Represents the gap between the established delivery standards and actual service delivered.
Given the above example, management may establish a standard such that telephone calls
should be answered within thirty seconds. However, if it takes more than thirty seconds for
calls to be answered, regardless of the cause, there is a delivery gap.

Communication Gap.

This is the gap between what is communicated to consumers and what is actually delivered.
Advertising, for instance, may indicate to consumers that they can have their cars's oil
changed within twenty minutes when, in reality, it takes more than thirty minutes.

IMPLEMENTING GAP ANALYSIS

Gap analysis involves internal and external analysis. Externally, the firm must
communicate with customers. Internally, it must determine service delivery and service
design. Continuing with the service quality example, the steps involved in the
implementation of gap analysis are:

• Identification of customer expectations

• Identification of customer experiences
• Identification of management perceptions
• Evaluation of service standards
• Evaluation of customer communications

The identification of customer expectations and experiences might begin with focus-
group interviews. Groups of customers, typically numbering seven to twelve per group,
are invited to discuss their satisfaction with services or products. During this process,
expectations and experiences are recorded. This process is usually successful in
identifying those service and product attributes that are most important to customer
satisfaction.

After focus-group interviews are completed, expectations and experiences are measured
with more formal, quantitative methods. Expectations could be measured with a one to
ten scale where one represents "Not At All Important" and ten represents "Extremely
Important." Experience or perceptions about each of these attributes would be measured
in a similar manner.

Gaps can be simply calculated as the arithmetic difference between the two
measurements for each of the attributes. Management perceptions are measured much in
the same manner. Groups of managers are asked to discuss their perceptions of customer
expectations and experiences. A team can then be assigned the duty of evaluating
manager perceptions, service standards, and communications to pinpoint discrepancies.
After gaps are identified, management must take appropriate steps to fill or narrow the
gaps.

THE IMPORTANCE OF SERVICE QUALITY GAP ANALYSIS

The main reason gap analysis is important to firms is the fact that gaps between customer
expectations and customer experiences lead to customer dissatisfaction. Consequently,
measuring gaps is the first step in enhancing customer satisfaction. Additionally,
competitive advantages can be achieved by exceeding customer expectations. Gap
analysis is the technique utilized to determine where firms exceed or fall below customer
expectations.

Customer satisfaction leads to repeat purchases and repeat purchases lead to loyal
customers. In turn, customer loyalty leads to enhanced brand equity and higher profits.
Consequently, understanding customer perceptions is important to a firm's performance.
As such, gap analysis is used as a tool to narrow the gap between perceptions and reality,
thus enhancing customer satisfaction.

PRODUCT APPLICATIONS

It should be noted that gap analysis is applicable to any aspect of industry where
performance improvements are desired, not just in customer service. For example, the
product quality gap could be measured by (and is defined as) the difference between the
quality level of products expected by customers and the actual quality level. The
measurement of the product quality gap is attained in the same manner as above.
However, while service delivery can be changed through employee training, changes in
product design are not as easily implemented and are more time consuming.

Gap analysis can be used to address internal gaps. For example, it is also applicable to
human resource management. There may be a gap between what employees expect of
their employer and what they actually experience. The larger the gap, the greater the job
dissatisfaction. In turn, job dissatisfaction can decrease productivity and have a negative
effect on a company's culture.

Ford Motor Co., for example, utilized gap analysis while developing an employee benefit
program. While management may believe it has a handle on employee perceptions, this is
not always true. With this in mind, Ford's management set out to understand employee
desires regarding flexible benefits. Their cross-functional team approach utilized focus
groups, paper and pencil tests, and story boards to understand employee wants and needs.
Their team, consisting of finance, human resources, line managers, benefits staff, and
consultants, identified gaps in benefit understanding, coverage, and communications. As
a result of gap analysis, Ford implemented a communications program that gained
employee acceptance.
This model offers an integrated view of the consumer-company relationship. It is based
on substantial research amongst a number of service providers.

In this Gap model service is a function of word of mouth communication, personal need
and past experience, and perceived service is a product of service delivery and external
communications to consumers.

There is Different level in this model:-

Level 1:- Word of Mouth communications, Personal Needs, Past Experience

Level 2:- Expected Service

Level 3:- Perceived Service

Level4:- Service Delivery, External Communications to Customers.

Level5:- Service Standards

Level 6:- Management Perceptions of Consumer exceptions

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Service Marketing Gap Analysis

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The unique requirements of the additional 3P’s—people, physical evidence, and process
are driven by the particular characteristics of service—intangibility, inseparability,
variability, and perish ability. These characteristics also pose more marketing
complexities which require different management activities.

All services are experiences—some are long in duration and some are short; some are
complex and others are simple; some are mundane, whereas others are exciting and
unique. (Wilson, Zeithaml, and Bitner, 2008) The delivery process of the service has been
entitled the Servuction System by Langeard and Eiglier. They argued that a bundle of
benefits are delivered through both visible and invisible parts which create an experience
for the consumer. The experience can be affected by the visible inanimate environment of
the organization which is part of the physical evidence, the invisible process for
delivering the service, and the people involved in, both the contact......
In business and economics, gap analysis is a tool that helps a company to compare its
actual performance with its potential performance. At its core are two questions: "Where
are we?" and "Where do we want to be?". If a company or organization is not making the
best use of its current resources or is forgoing investment in capital or technology, then it
may be producing or performing at a level below its potential. This concept is similar to
the base case of being below one's production possibilities frontier.

The goal of gap analysis is to identify the gap between the optimized allocation and
integration of the inputs, and the current level of allocation. This helps provide the
company with insight into areas which could be improved. The gap analysis process
involves determining, documenting and approving the variance between business
requirements and current capabilities. Gap analysis naturally flows from benchmarking
and other assessments. Once the general expectation of performance in the industry is
understood, it is possible to compare that expectation with the company's current level of
performance. This comparison becomes the gap analysis. Such analysis can be performed
at the strategic or operational level of an organization.

Gap analysis is a formal study of what a business is doing currently and where it wants to
go in the future. It can be conducted, in different perspectives, as follows:

1. Organization (e.g., human resources)

2. Business direction
3. Business processes
4. Information technology

Gap analysis provides a foundation for measuring investment of time, money and human
resources required to achieve a particular outcome (e.g. to turn the salary payment
process from paper-based to paperless with the use of a system). Note that 'GAP analysis'
has also been used as a means for classification of how well a product or solution meets a
targeted need or set of requirements. In this case, 'GAP' can be used as a ranking of
'Good', 'Average' or 'Poor'. This terminology does appear in the PRINCE2 project
management publication from the OGC.[clarification needed]

Contents

[hide]

• 1 Gap analysis and new products

o 1.1 Usage gap
o 1.2 Market potential
o 1.3 Existing usage
o 1.4 Product Gap
o 1.5 Competitive gap
• 2 See also
 • 3 Market gap analysis

• 4 References

[edit] Gap analysis and new products

The need for new products or additions to existing lines may have emerged from
portfolio analyses, in particular from the use of the Boston Consulting Group Growth-
share matrix, or the need will have emerged from the regular process of following trends
in the requirements of consumers. At some point a gap will have emerged between what
the existing products offer the consumer and what the consumer demands. That gap has
to be filled if the organization is to survive and grow.

To identify a gap in the market, the technique of gap analysis can be used. Thus an
examination of what profits are forecasted for the organization as a whole compared with
where the organization (in particular its shareholders) 'wants' those profits to be
represents what is called the 'planning gap': this shows what is needed of new activities in
general and of new products in particular.

The planning gap may be divided into three main elements:

[edit] Usage gap

This is the gap between the total potential for the market and the actual current usage by
all the consumers in the market. Clearly two figures are needed for this calculation:

• market potential
• existing usage

[edit] Market potential

The most difficult estimate to make is that of the total potential available to the whole
market, including all segments covered by all competitive brands. It is often achieved by
determining the "maximum potential individual usage", and extrapolating this by the
maximum number of potential consumers. This is inevitably a judgment rather than a
scientific extrapolation, but some of the macro-forecasting techniques may assist in
making this estimate more soundly based.

The maximum number of consumers available will usually be determined by market

research, but it may sometimes be calculated from demographic data or government
statistics. Ultimately there will, of course, be limitations on the number of consumers. For
guidance one can look to the numbers using similar products. Alternatively, one can look
to what has happened in other countries. It is often suggested that Europe follows patterns
set in the USA, but after a time-lag of a decade or so.[citation needed] The increased affluence
of all the major Western economies means that such a lag can now be much shorter.
The maximum potential individual usage, or at least the maximum attainable average
usage (there will always be a spread of usage across a range of customers), will usually
be determined from market research figures. It is important, however, to consider what
lies behind such usage.

[edit] Existing usage

The existing usage by consumers makes up the total current market, from which market
shares, for example, are calculated. It is usually derived from marketing research, most
accurately from panel research such as that undertaken by the Nielsen Company but also
from 'ad hoc' work. Sometimes it may be available from figures collected by government
departments or industry bodies; however, these are often based on categories which may
make sense in bureaucratic terms but are less helpful in marketing terms.

The 'usage gap' is thus:

usage gap = market potential – existing usage

This is an important calculation to make. Many, if not most marketers, accept the
'existing' market size, suitably projected over the timescales of their forecasts, as the
boundary for their expansion plans. Although this is often the most realistic assumption,
it may sometimes impose an unnecessary limitation on their horizons. The original
market for video-recorders was limited to the professional users who could afford the
high prices involved. It was only after some time that the technology was extended to the
mass market.

In the public sector, where the service providers usually enjoy a `monopoly', the usage
gap will probably be the most important factor in the development of the activities. But
persuading more `consumers' to take up family benefits, for example, will probably be
more important to the relevant government department than opening more local offices.

The usage gap is most important for the brand leaders. If any of these has a significant
share of the whole market, say in excess of 30 per cent, it may become worthwhile for the
firm to invest in expanding the total market. The same option is not generally open to the
minor players, although they may still be able to target profitably specific offerings as
market extensions.

All other `gaps' relate to the difference between the organization's existing sales (its
market share) and the total sales of the market as a whole. This difference is the share
held by competitors. These `gaps' will, therefore, relate to competitive activity.

[edit] Product Gap

The product gap, which could also be described as the segment or positioning gap,
represents that part of the market from which the individual organization is excluded
because of product or service characteristics. This may have come about because the
market has been segmented and the organization does not have offerings in some
segments, or it may be because the positioning of its offering effectively excludes it from
certain groups of potential consumers, because there are competitive offerings much
better placed in relation to these groups.

This segmentation may well be the result of deliberate policy. Segmentation and
positioning are very powerful marketing techniques; but the trade-off, to be set against
the improved focus, is that some parts of the market may effectively be put beyond reach.
On the other hand, it may frequently be by default; the organization has not thought about
its positioning, and has simply let its offerings drift to where they now are.

The product gap is probably the main element of the planning gap in which the
organization can have a productive input; hence the emphasis on the importance of
correct positioning.

[edit] Competitive gap

What is left represents the gap resulting from the competitive performance. This
competitive gap is the share of business achieved among similar products, sold in the
same market segment, and with similar distribution patterns - or at least, in any
comparison, after such effects have been discounted. Needless to say, it is not a factor in
the case of the monopoly provision of services by the public sector.

The competitive gap represents the effects of factors such as price and promotion, both
the absolute level and the effectiveness of its messages. It is what marketing is popularly
supposed to be about.

[edit] See also

• Capability (systems engineering)

• Gap analysis (conservation)

[edit] Market gap analysis

In the type of analysis described above, gaps in the product range are looked for. Another
perspective (essentially taking the `product gap' to its logical conclusion) is to look for
gaps in the 'market' (in a variation on `product positioning', and using the
multidimensional `mapping'), which the company could profitably address, regardless of
where the current products stand.

Many marketers would, question the worth of the theoretical gap analysis described
earlier. Instead, they would immediately start proactively to pursue a search for a
competitive advantage.
 The Customer Service Gap Model
Tagged in: Brainrants, 6 rants

This post was written by Sara Talebzadeh, who is currently studying a Master of Business
in Marketing at UTS whilst gaining work experience at brainmates.

_______________________________________________________________________
___________________

The Customer Service Gap Model

Today’s consumer has become increasingly demanding. They not only want high quality
products but they also expect high quality customer service. Even manufactured products
such as cars, mobile phones and computers cannot gain a strategic competitive advantage
through the physical products alone. From a consumer’s point of view, customer service
is considered very much part of the product.

Delivering superior value to the customer is an ongoing concern of Product Managers.

This not only includes the actual physical product but customer service as well. Products
that do not offer good quality customer service that meets the expectations of consumers
are difficult to sustain in a competitive market.

SERVQUAL (service quality gap model) is a gap method in service quality measurement,
a tool that can be used by Product Manager across all industries. The aim of this model is
to:

• Identify the gaps between customer expectation and the actual services provided
at different stages of service delivery
• Close the gap and improve the customer service

This model developed by Parasuraman, Zeithalm and Berry in 1985 identifies five
different gaps:

The Customer Gap: The Gap between Customer Expectations and Customer Perceptions

The customer gap is the difference between customer expectations and customer
perceptions. Customer expectation is what the customer expects according to available
resources and is influenced by cultural background, family lifestyle, personality,
demographics, advertising, experience with similar products and information available
online. Customer perception is totally subjective and is based on the customer’s
interaction with the product or service. Perception is derived from the customer’s
satisfaction of the specific product or service and the quality of service delivery. The
customer gap is the most important gap and in an ideal world the customer’s expectation
would be almost identical to the customer’s perception.
 In a customer orientated strategy, delivering a quality service for a specific product
should be based on a clear understanding of the target market. Understanding customer
needs and knowing customer expectations could be the best way to close the gap.

The Knowledge Gap: The Gap between Consumer Expectation and Management
Perception

The knowledge gap is the difference between the customer’s expectations of the service
provided and the company’s provision of the service. In this case, managers are not
aware or have not correctly interpreted the customer’s expectation in relation to the
company’s services or products. If a knowledge gap exists, it may mean companies are
trying to meet wrong or non-existing consumer needs. In a customer-orientated business,
it is important to have a clear understanding of the consumer’s need for service. To close
the gap between the consumer’s expectations for service and management’s perception of
service delivery will require comprehensive market research.

The Policy Gap: The Gap between Management Perception and Service Quality
Specification

According to Kasper et al, this gap reflects management’s incorrect translation of the
service policy into rules and guidelines for employees. Some companies experience
difficulties translating consumer expectation into specific service quality delivery. This
can include poor service design, failure to maintain and continually update their provision
of good customer service or simply a lack of standardisation. This gap may see
consumers seek a similar product with better service elsewhere.

The Delivery Gap: The Gap between Service Quality Specification and Service Delivery

This gap exposes the weakness in employee performance. Organisations with a Delivery
Gap may specify the service required to support consumers but have subsequently failed
to train their employees, put good processes and guidelines in action. As a result,
employees are ill equipped to manage consumer’s needs. Some of the problems
experienced if there is a delivery gap are:

• Employees lack of product knowledge and have difficulty managing customer

questions and issues
• Organisations have poor human resource policies
• Lack of cohesive teams and the inability to deliver

The Communication Gap: The Gap between Service Delivery and External
Communications

In some cases, promises made by companies through advertising media and

communication raise customer expectations. When over-promising in advertising does
not match the actual service delivery, it creates a communication gap. Consumers are
 disappointed because the promised service does not match the expected service and
consequently may seek alternative product sources.

Case Study: Amazon.com

Amazon.com provides books, movies, music and games along with electronics, toys,
apparel, sports, tools, groceries and general home and garden items. Amazon is a good
example of an online business that tries to close the service gaps in order to thoroughly
meet consumer expectations.

Understanding Customer Needs

From the time the consumer starts to shop at Amazon’s online store, Amazon will attempt
to understand their expectations. From when a customer first makes a product selection
Amazon creates a consumer profile and attempts to offer alternative goods and services
that may delight the consumer. The longer the consumer shops at Amazon, the more the
company attempts to identify their preferences and needs.

Customer Defined Standards

When a consumer buys a product from Amazon they selects the mode of delivery and the
company tells them the expected number of days it will take to receive their merchandise.

For example: standard shipping is three to five days but shipping in one or two days is
also available. The company has set standards for how quickly customers are informed
when a product is unavailable (immediately), how quickly customers are notified whether
an out of print book can be located (three weeks), how long customers are able to return
items (30 days) and whether they pay return shipping costs.

These standards exist for many activities at Amazon from delivery to communication to
service recovery.

Service Performance

Apart from defining their service delivery, Amazon goes one step further and delivers on
its promises. Amazon performs! Orders often arrive ahead of the promised dates; orders
are accurate and are in excellent condition because of careful shipping practice.

Customers can track packages and review previous orders at any time. Amazon also
makes sure that all its partners who sell used and new books and other related items meet
Amazon’s high standards. The company verifies the performance of each purchase by
surveying the customer and posting scores that are visible to other customers.

Managing promises is handled by clear and careful communication on the website. Every
page is very easy to understand and to navigate.
For example the page dealing with returns eliminates customer misunderstanding by
 clearly spelling out what can be returned. The page describes how to repack items and
when refunds are given. The customer account page shows all previous purchases and
exactly where every ordered item is in the shipping process

Amazon strategy has been well received by its customers and the Amazon brand is
known worldwide.

Conclusion

Effective product management is a complex undertaking which includes many different

strategies, skills and tasks. Product managers plan for creating the best products and
operational excellence to maximize customer satisfaction, loyalty and retention.
Recognising and closing gaps offers high quality customer service to the consumer and
helps them to achieve their goal whilst maximising market position, market share and
financial results through customer satisfaction. It also helps managers to identify areas of
weakness and make improvements to a company’s service delivery.

Service Sector in India

Service Sector in India today accounts for more than half

of India's GDP. According to data for the financial year 2006-2007, the

share of services, industry, and agriculture in India's GDP is 55.1 per

cent, 26.4 per cent, and 18.5 per cent respectively. The fact that the

service sector now accounts for more than half the GDP marks a

watershed in the evolution of the Indian economy and takes it closer

to the fundamentals of a developed economy.

Services or the "tertiary sector" of the economy covers a wide gamut

of activities like trading, banking & finance, infotainment, real estate,

transportation, security, management & technical consultancy among

several others. The various sectors that combine together to

constitute service industry in India are:

• Trade

• Hotels and Restaurants

• Railways

• Other Transport & Storage

• Communication (Post, Telecom)

• Banking

• Insurance
 • Dwellings, Real Estate

• Business Services

• Public Administration; Defence

• Personal Services

• Community Services

• Other Services

There was marked acceleration in services sector growth in the

eighties and nineties, especially in the nineties. While the share of

services in India's GDP increased by 21 per cent points in the 50

years between 1950 and 2000, nearly 40 per cent of that increase

was concentrated in the nineties. While almost all service sectors

participated in this boom, growth was fastest in communications,

banking, hotels and restaurants, community services, trade and

business services. One of the reasons for the sudden growth in the

services sector in India in the nineties was the liberalisation in the

regulatory framework that gave rise to innovation and higher exports

from the services sector.

The boom in the services sector has been relatively "jobless". The

rise in services share in GDP has not accompanied by proportionate

increase in the sector's share of national employment. Some

economists have also cautioned that service sector growth must be

supported by proportionate growth of the industrial sector, otherwise

the service sector grown will not be sustainable. In the current

economic scenario it looks that the boom in the services sector

is here to stay as India is fast emerging as global services hub.

An analysis of India's service sector
 Highlights
Tabulation
Economy Index
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Highlights

• The service sector now accounts for more than half of India's
GDP: 51.16 per cent in 1998-99. This sector has gained at
the expense of both the agricultural and industrial sectors
through the 1990s. The rise in the service sector's share in
GDP marks a structural shift in the Indian economy and takes
it closer to the fundamentals of a developed economy (in the
developed economies, the industrial and service sectors
contribute a major share in GDP while agriculture accounts for
a relatively lower share).
• The service sector's share has grown from 43.69 per cent in
1990-91 to 51.16 per cent in 1998-99. In contrast, the
industrial sector's share in GDP has declined from 25.38 per
cent to 22.01 per cent in 1990-91 and 1998-99 respectively.
The agricultural sector's share has fallen from 30.93 per cent
to 26.83 per cent in the respective years.
• Some economists caution that if the service sector bypasses
the industrial sector, economic growth can be distorted. They
say that service sector growth must be supported by
proportionate growth of the industrial sector, otherwise the
service sector grown will not be sustainable. It is true that, in
India, the service sector's contribution in GDP has sharply
risen and that of industry has fallen (as shown above). But, it
is equally true that the industrial sector too has grown, and
grown quite impressively through the 1990s (except in 1998-
99). Three times between 1993-94 and 1998-99, industry
surpassed the growth rate of GDP. Thus, the service sector
has grown at a higher rate than industry which too has grown
more or less in tandem. The rise of the service sector
therefore does not distort the economy.
• Within the services sector, the share of trade, hotels and
restaurants increased from 12.52 per cent in 1990-91 to
15.68 per cent in 1998-99. The share of transport, storage
and communications has grown from 5.26 per cent to 7.61
per cent in the years under reference. The share of
construction has remained nearly the same during the period
while that of financing, insurance, real estate and business
services has risen from 10.22 per cent to 11.44 per cent.

The fact that the service sector now accounts for more than