New service development using

gap-based quality function deployment

A mobile telecommunication case

Jing-hua Li

Zhejiang Gongshang University

P.R.China

02/06/2008 1
 Research questions
• Why study new service development ?
• Why combine the Gaps and QFD ?
• Why employ mobile telecom case ?

2
 Contents
• Combining two models ?
• New model
• Mobile phones in China
• What this means ?

3
 Combining two models?

• House of quality
• Gap model

4
 House of quality
technical
correlations

relative engineering
importance metrics

relationships
between
customer customer needs benchmarking
needs and
engineering on needs
metrics

target and final specs

5
 1
* Strong

1 Medium

O Weak
1
Rela tive
O O
* * Customer Perceptions
1

Informatiion
Service Elements

Equipment
o Village Volvo

Capacity
Attitu de
+ Volvo Dealer
1
Customer Expectations 1 2 3 4 5
Reliability 9 8 5 5 + o
Responsivene ss 7 3 9 3 2 o +
Assurance 6 5 9 6 + o
Empathy 4 7 + o
Tangibles 2 2 3 + o

+
o o
Comparison with Village Volvo
o o
Volvo Dealer
_ o

Weighted score Volvo Dealer

127 82 63 102 65
Improvement difficulty rank 4 5 1 3 2

Fitzsimmons, Fitzsimmons, 2001

6
 Gap model
Customer Satisfaction
Customer Expectations Customer Demands
Gap 5
Communication Customer / Marketing research
Gap 4 Gap 1

Service Delivery
Management perceptions
of customer expectations
Service performance Service design
Gap 3 Gap 2

Service Specifications

Parasuraman, et al., 1985, 1988

7
Combining two models?

8
 New Model

• Theoretical model
• Operational model
• Weights

9
 C u s to m e r
e x p e c ta t io n s

pe rce ptions
Cus tome r
S e r v i c e q u a li t y g a p

Cus tome r de mands

C u s to m e r R e q u ir e m e n ts o f
S e rvice de live ry

p e r c e p tio n s s e r v ic e q u a lity

C o m m u n ic a t io n g a p M a r k e t i n g in f o r m a t i o n g a p

S e r v ic e

Re quire me nts of
S e r v ic e d e liv e r y s p e c ific a t io n s

s e rvice quality
s pe cifications
S e rvice

S e r v ic e p e r f o r m a n c e g a p S ta n d a rd s g a p
10
 C u s to m e r
e x p e c ta tio n s

pe rce ptions
Cus tome r
S ER VQ U AL

S e r v i c e q u a li t y g a p

Cus tome r de mands

D e s ig n in g p r o c e s s
C u s to m e r
S e rvice de live ry

p e r c e p tio n s

M a r k e t in g in f o r m a t io n g a p
C o m m u n ic a t io n g a p a n d s ta n d a rd s g a p

S e r v ic e d e liv e r y
s pe cifications
S e rvice

S e r v ic e p e r f o r m a n c e g a p
11
Questionnaire

Cus tome r de mands

We ight
D e s ig n in g p r o c e s s

R e la t io n m a t r ix

Interview
Literature
12
Kano, et al, 1984 Weights of service quality
Performance • positive question
Attractive – Required elements can
be always found
Don’t fulfill
expectations
• reverse question
Must-be
– Required elements can
NOT be always found
Customer dissatisfaction

Positive Reverse questions

questions Happy Must-be Indifference Acceptable Unhappy

Happy Q A A A O
Must-be R I I I M
Indifference R I I I M
Acceptable R I I I M
Unhappy R R R R Q13
Matzler, Hinterhuber, 1998
 Mobile phones in China
• Background
• Model
• Questionnaire
• Interview

14
 China mobile phones Background
Source: www.drcnet.com.cn
600

500

400
Mobile subscribers
300
(million)
200

100

0
1998 2001 2004 2007

2500

2000

1500 mobile calling

(billion mins)
1000

500 message sending

(billion items)
0
2001 2002 2003 2004 2005 2006 2007
15
 12.54 4.31

China Mible (GS M)

Background
China Unicom(GS M) Source: www.drcnet.com.cn
China Unicom(CDMA)

S ubs cribe rs (million, April 2008)

399.5

120
100
80
60
40
20
0

Subscribers per 100 inhabitants, Winter 2007, China

16
Operators: Operators:
China Mobile China Mobile and China Unicom
Object: Object:
users of GoTone overall expansion
Content: Content:
local voice service local voice, toll voice, roaming service
Characteristics: Characteristics:
simple forms various kinds of packages, update
quickly, different means for sale

2001 Beginning 2002 2003 “Price chaos” 2005 2008

Development “Rational competition”

Operators: Operators:
China Mobile and China Unicom China Mobile and China Unicom
Object: Object:
an expansion of users interface comprehensive users
Content: Content:
local voice, toll voice, roaming service voice service. data service,
Characteristics: choose available
intensified competition, bundling sale Characteristics:
rational competition trend

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Tariff brands in China Mobile

• GoTone
businessman and other high earners
• M-zone
students
• Easyown
remaining sections of society

18
 New tariff package development
Market Definition Design of Design of Benefit Audit Tracking
tariff marketing
of for Launch & assess
strategy
package forecasts ment
forecasts objectives approval

·findmarket o ·make ·design ·select ·a pre-assess ·be presented ·salesman users tracking
pportunities marketing product mix of marketing ment on the p to China training
Objectives tariff package channels and ackage Mobile ·the effective
·consider the sale mode (headquarter) ·market sales assessment
copy strategy ·focus on target ·decide tariff ·predict the pr to get a
Consumers level in ·formulate the ofit and cost approval
advance publicity through
·analyze strategy ·determine the auditing
consumption tariff level
characteristic

Feedback & adjustment

19
 C u s to m e r
e x p e c ta tio n s

pe rce ptions
Cus tome r
S E R VQ U AL

S e r v ic e q u a l it y g a p

Cus tome r de mands

S e r v ic e p r o d u c t D e s ig n in g p r o c e s s
pe rce ptions
Cus tome r

C o m m u n ic a t i o n g a p M a r k e t in g in f o r m a t io n g a p
a n d s ta n d a rd s g a p

20
 Questionnaire
Elements of package
• G1 Required elements can be always found
• G2 The differentiation between elements is always significant
• G3 The elements of package are full enough
• G4 The package is simple enough
Range of free choice
• G5 I can choose elements of package freely
• G6 The packages with same brand can be chosen together
Personalization of package
• G7 The interval between new tariff packages is reasonable
• G8 The package is always improved with the changing of customer demands
• G9 The content of package is novel and personalized
• G10 The tariff package has image symbols
Price
• G11 The package is always with a preferential price
• G12 The package is always with a clear billing 21
 Profile
(125 subscribers, August 2007)
Index percent Index percent
Gender male 50.4 Degree < B. A. 16.8
female 49.6 B. A. 47.2
≥ M. A 36.0
Age ≤ 20 1.6
20–25 47.2 Income Monthly (RMB)
26–30 31.2 ≤ 500 9.6
31–45 17.6 500-1000 24.0
≥ 46 2.4 1000-3000 36.0
3000-5000 23.2
Career staff 33.6 ≥ 5000 7.2
student 30.4
manager 15.2 Package M-zone 55.2
teacher 8.8 GoTone 22.4
other 12.0 Easyown 22.4

22
Pearson correlations

23
Reliability and Validity customer demands
EFA Load
ID
Factor 1 Factor 2 Factor 3 Factor 4

Alpha 0.822 0.848 0.807 0.837

G1 0.317 0.624 0.465 0.037

G2 0.313 0.797 0.272 0.052

G3 0.362 0.667 0.193 0.227

G4 0.035 0.688 0.042 0.603
G5 0.089 0.244 0.845 0.293
G6 0.162 0.271 0.725 0.357
G7 0.601 0.369 0.228 0.325
G8 0.619 0.259 0.350 0.206
G9 0.776 0.146 0.339 0.082
G10 0.838 0.181 0.185 0.075
G11 0.407 0.223 0.348 0.687
G12 0.150 0.077 0.317 0.857

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The weights of service quality

25
 Interview I
• “left wall”-- customer demands
elements of package;
range of free choice;
personalization of package;
price

•“ceiling” -- design process of tariff package

market forecasts;
target orientation;
design tariff package;
planning marketing strategy;
revenue forecasts;
approval;
launching into market;
keeping track and evaluation;
26
improving according to the feedback
 Improving the tariff package accordin
Keeping track and evaluation of tariff
Analysing customer characteristics to

Submitting to headquarter for approv

Forecast of revenue on tariff package
design unique selling points for tariff

Pilot for tariff package and evaluate t

Marketing strategies based on differe
D e s ig n in g p ro c e s s o f ta riff p a c k a g e

Launch tariff package into market

Design of tariff package based on

Training of salespersons for new

Finding market opportunities by

Locking in the target market

research and data base

Planning and strategy
W e ig h t

market research

service product
tariff package

to feedback
and pricing
package

package
result
C u sto m e r d e m a n d s

R e q u ire d e le m e n ts c a n b e a lw a y s fo u n d 1 8 .2 3 0 ◎ ◎ ◎ ◎ ○ △ ◎ △ △ △ ◎ ◎
T h e d iffe re n tia tio n b e tw e e n e le m e n ts is a lw a y s
s ig n ific a n t 7 .4 2 0 △ ○ △ △ △ △ △ △ △ △
T h e e le m e n ts o f p a c k a g e a re fu ll e n o u g h 1 8 .9 1 6 ◎ ◎ ◎ ◎ ○ ○ ◎ △ △ △ ◎ ◎
T h e p a c k a g e is sim p le e n o u g h 2 0 .3 5 6 ○ ○ △ △ △ △ ○ ○
I c a n c h o o s e e le m e n ts o f p a c k a g e fre e ly 2 8 .4 3 6 △ △ △ △ △ △ △ △ △
T h e p a c k a g e s w ith s a m e b ra n d c a n b e c h o s e n
to g e th e r 3 8 .3 1 9 △ ○ △ △ △ △ △ △ △ △
T h e in te rv a l b e tw e e n n e w ta riff p a c k a g e s is
re a s o n a b le 2 7 .6 8 7 ◎ ◎ ◎ ◎ △ △ ○ ◎ ◎
T h e p a c k a g e is a lw a y s im p ro v e d w ith th e
c h a n g in g o f c u s to m e r d e m a n d s 2 2 .3 2 6 ◎ ◎ ◎ ◎ ◎ △ ◎ ○ ◎ ◎
T h e c o n te n t o f p a c k a g e is n o v e l a n d
p e rs o n a liz e d 1 5 .9 1 8 ○ ○ △ △ △ △ △ △
T h e ta riff p a c k a g e h a s im a g e s y m b o ls 8 .3 2 2 △ ○ ◎ ◎ △ △ ○ △ △
T h e p a c k a g e is a lw a y s w ith a p re fe re n tia l p ric e 1 4 .4 1 4 △ △ △ △ △ ○ ◎ ◎ ◎ △ △ ○ ○
T h e p a c k a g e is a lw a y s w ith a c le a r b illin g 1 3 .2 2 1 △ △ △ △ △ △ △ ◎ △ △ △
W e ig h te d s c o re 444 498 425 425 315 225 259 43 212 99 256 443 443
27
N o te : " ◎ " m e a n s s tro n g c o rre la tio n (3 ); " ○ " m e a n s c o rre la tio n (2 ); " △ " m e a n s w e a k c o rre la tio n (1 ).
 Interview II
• “left wall” -- customer perception
elements of package
range of free choice
personalization of tariff package
price

•“ceiling”-- tariff package

product
price
place
promotion

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 Times of voice service satisfy customer

differentiation between packages is significant

Simplifing tariff package and reducing

Provide preferential price according to

Provide preferential price according to
Provide preferential price for idle time

Set up special area for real experience

D e liv e ry o f ta riff p a c k a g e

Make differentiate pricing reasonable

Price differently in different stages of

Propagandize new service reasonably

Provide different preferential price to

Analyse tariff package regularly, and

Analyse tariff package regularly, and

Tariff package is related with special brand,

Provide consulting service to special

Evaluation and improvement of the

Train special consumers for special

Price differently for different brand
Latest data service can be included

Bundling of voice service and data

Hold promotions based on reliable

Combining a package with other

Flow rate of data service satisfy

Hold sales promotion regularly

special elements, i.e. services.

different groups of customers

consumers for special service

improve promotion activities

Price matches with its value

life cycle of tariff package

Clear market orientation

amount of consumption
launched tariff package

improve its marketing

forecasts and analysis

years of using service
W e ig h t

service is reasonable

types of packages
customer demand

of new service
demand

service
C u sto m e r d e m a n d s

R e q u ire d e le m e n ts c a n b e a lw a y s fo u n d 1 8 .2 3 0 ◎ △ ◎ △ ○ △ ○
T h e d iffe re n tia tio n b e tw e e n e le m e n ts is a lw a y s
s ig n ific a n t 7 .4 2 0 △ △ ○ △ ○
T h e e le m e n ts o f p a c k a g e a re fu ll e n o u g h 1 8 .9 1 6 ◎ ◎ △ ◎ △ ◎ ○ ◎ ○
T h e p a c k a g e is s im p le e n o u g h 2 0 .3 5 6 △ ○ △ ◎ △ ○ △
I c a n c h o o s e e le m e n ts o f p a c k a g e fre e ly 2 8 .4 3 6 ○ △
T h e p a c k a g e s w ith s a m e b ra n d c a n b e c h o s e n
to g e th e r 3 8 .3 1 9 ◎ △
T h e in te rv a l b e tw e e n n e w ta riff p a c k a g e s is
re a s o n a b le 2 7 .6 8 7 △ ◎ △
T h e p a c k a g e is a lw a y s im p ro v e d w ith th e
c h a n g in g o f c u s to m e r d e m a n d s 2 2 .3 2 6 △ ◎
T h e c o n te n t o f p a c k a g e is n o v e l a n d
p e rs o n a liz e d 1 5 .9 1 8 ◎ △ △ ○
T h e ta riff p a c k a g e h a s im a g e s y m b o ls 8 .3 2 2 ◎ ◎ △ ◎ △ ○
T h e p a c k a g e is a lw a y s w ith a p re fe re n tia l p ric e 1 4 .4 1 4 △ ◎ ◎ ◎ ○ △ ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ ○ ◎ ◎ ◎
T h e p a c k a g e is a lw a y s w ith a c le a r b illin g 1 3 .2 2 1 ◎ △ ○ ○ ○ ◎ ◎ ○
W e ig h te d s c o re 157 261 43 43 171 148 91 287 235 203 78 43 43 43 43 43 109 26 205 40 40 26 60 43 43

N o te : " ◎ " m e a n s s tro n g c o rre la tio n (3 ); " ○ " m e a n s c o rre la tio n (2 ); " △ " m e a n s w e a k c o rre la tio n (1 ).

29
 What this means ?
• New service development vs. service innovation
• Engineering vs. marketing
• Thought vs. methodology
• Theory vs. practice

30
 Acknowledgements
Natural Science Fund of China (Grant No. 70402016)
Natural Science Fund of Zhejiang Province (Grant No. Y605404)

Two co-authors’ contribution: Ms. Lei Xu, Ms. Xiu-lan Wu

Two anonymous reviewers of International Journal of Services Tec

hnology and Management

Mr. Jonathan Alyen’s kindly help on presentation and slide design

 References in slides
• James A. Fitzsimmons, Mona J.Fitzsimmons, Service Management: Operation, Strategy, and
Information Technology, Third Edition, McGraw-Hill Companies, Inc. 2001, p58
• A. Parasuraman, L.L. Berry, V.A. Zeithaml, A conceptual model of service quality and its impli
cations for future research, Journal of Marketing, Vol. 49, pp.41–50, 1985.
• A. Parasuraman, L.L. Berry, V.A. Zeithaml, SERVQUAL: A multi-item scale for measuring con
sumer perceptions of service quality, Journal of Retailing, Vol. 64, No. 1, pp.12–40, 1988.
• N. Kano, et al. Attractive quality and must-be quality, Hinshitsu (Quality, the Journal of Japane
se Society for Quality Control), Vol. 14, pp.39–48, 1984.
• K. C. Tan, T. A. Pawitra, Integrating SERVQUAL and Kano's model into QFD for service excell
ence development, Managing Service Quality, vol. 11, no. 6, pp. 418-430, 2001.
• K. Matzler, H. H. Hinterhuber, How to make product development projects more successful by
integrating Kano’s model of customer satisfaction into quality function deployment?
Technovation, Vol. 18, No. 1, pp. 25-38, 1998.

32
Welcome comments and questions !

Academic Visitor
Manchester Institute of Innovation Research
Manchester Business School
The University of Manchester

5.10 Harold Hankins Building

Tel: +44 161 275 0928(O)
Mobile (UK): +44 779 982 1004
Mobile (China): +86 139 581 600 47

Email: jinghua.li@mbs.ac.uk
Email: jhli@zju.edu.cn

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