Designing and Managing Services

AUTOMOBILE DEALER SALES & SERVICES

 SERVICES :
Any act or performance one party can offer to another that is essentially intangible and
does
not result in ownership of anything.

Characteristics:
Intangible
Inseparable
Variable
Perishable

SERVICE MIX:
The service component can be a minor or major part of the total offering.

Range of service offering:

Equipment based or people based ( varied on basis of skill)

Clients presence
Personal need or business need
Objectives (profit/ non-profit) or ownership (public/private)
 CONTINUUM OF EVALUATION FOR DIFFERENT TYPES OF PRODUCTS

Customers typically cannot judge the technical quality of some services even after they have
received them
MARKETING EXCELLENCE

Excellence in three broad areas:

External Marketing
Preparing, pricing, distributing and
promoting

Internal Marketing
Training and motivating employees

Inter-active Marketing
Employees skill in serving the client
 MONITORING SYSTEMS:
We can judge services on customer importance and company performance.
The following analysis helps us rate the various elements of the service bundle and identify the required
action.
IMPORTANCE PERFORMANCE ANALYSIS

Attribute Importance Performance

Description Rating Rating
1 Job done right the first time 3.83 2.63
2 Fast action for complaints 3.63 2.73
6 Courteous & friendly service 3.41 3.29
8 Perform only necessary work 3.37 3.11
12 Convenient to work 2.43 2.49
14 Send out maintenance notice 2.05 3.33
SERVICE QUALITY MODEL

Gaps that prevent delivery of high service quality:

Gap 1: may not correctly perceive customers want

Gap2: fails to set performance standard

Gap3: employee delivering the service is poorly trained

Gap4: poor communication of services to by company

representatives

Gap5: (Customer Gap) misperceive the service quality

CRITICAL INCIDENTS:
AUTOMOBILE DEALER SALES AND SERVICES
Situation 1

Mrs. Jones purchased a new 1989 car in June

Vacation ; 7,500 miles ; Lube facility ; Oil changed
After being home ; puddle of oil ; Garage floor
Replace entire engine oil pan ; Repair cost estimate $300
Consumer group ; Warranty flaw ; No charge

Solution

A. Ask Mrs. Jones to pay for the repair and then have her seek assistance from the automobile
manufacturers Customer Appeals Board

B. Explain that the repair was not covered by manufacturers warranty and offer to split the bill three

ways among manufacturer, the dealership and the customer.

C. Let the manufacturer pay the whole bill under its goodwill policy
Situation 2

San Francisco ; Dealers Customer ; Several Luxury cars

18,000 miles ; Scrubbing sound front wheels
Disc brakes problem ; repair cost $175
Customer refused ; First among all he owned ; Brake replacement

Warranty coverage 6,000 miles or 6 months

No evidence of Mechanical Problem with braking system
Some evidence on abnormal wear on front tires ; Heavier than normal driving

Solution:

Tell the customer he lives in San Francisco, drives a heavy car, and brake replacement at 18,000
miles was not abnormal . . . . So pay the bill
SITUATION 3:

Sequence of events:

Abnormal sound from Engine of the truck within first week after purchase
Dealership fixed the problem after extensive repair procedure

Problem: Customer is not willing to accept the truck back until new engine is installed

Solution could be:

i. Enforce the warranty procedure, and be prepared to repossess the truck
ii. Provide the customer an extended warranty plan at no cost to him with a value of $800
iii. Replace the entire engine for the customer at a cost of about $2000 over the Tech Service Bulletin
procedure
iv. Give the customer the office telephone number of the general manager of the automobile
manufacturer's parts and service division
SITUATION 4:

Sequence of Events:

Customers car with sever transmission problem

Entire Transmission system would have to be rebuilt at cost of approx. $1500
Car is 2yr old, 30000 miles
Car is not covered by Extended Service plan and companys powertrain warranty
Car was in rental service for one year and had two other owners
Dealer didnt sell it & wants to be paid full for repair and against any goodwill assistance to customer from
manufacturer
Customer is big user of our product (leased 100 of cars) and is willing to pay $100 (powertrain warranty)

Solution could be:

i. Tell the customer no, and enforce the no warranty status of the car
ii. Allow the customer to pay the $100 deductible and tell the dealer to complete the repair as a goodwill
adjustment chargeable to the manufacturer
iii. Have the car towed to a nearby AAMCO Transmission shop and have the repair done (and charged to
company) at about one-half the dealers quoted price
iv. Suggest the customer seek redress through small claims court
SITUATION 5

Problem in a luxury car which costs $1000

Water leakage in the trunk damaged his luggage
Supporting Documents
1. Dealer repair order : - Interior is sealed and correct water leak < 100miles
2. Invoice for the luggage
3. Invoice for stain removal on clothing
4. Service zone managers report on the leakage issue

SOLUTION:
A. Have customer submit the claim to insurance company
B. Offer to share the cost of the new luggage and cleaning of cloths
C. Write the customer a check for amount requested
D. Tell the dealer to pay for new luggage and cleaning, Since he should have recognized the
problem at before delivery
SITUATION 6:

William bought a third brand new car on Saturday

On Monday company announced $1000 rebate
He told company that this is unethical and diminish his family loyalty
He believe that the dealer should have changed the date by two days
As company is very customer centric, William reached to vice president
He told him that
This problem had become routine for all dealers and hundreds of customers

SOLUTION:

A. Have someone from local sales office and explain him about competitive situation and
companys policy precluded them on payments on an after-the-fact basis.
B. Refund $1000 to customer without informing dealer to stop future problems
C. Offer to split the refund with the selling dealer since this was also a good customer of the
dealer
D. Offer to buy back the car and put in company service as long as the dealer can still cancel the
sale and will agree to forgo the profit involved in the sale of this year. The drawback is that cy
SITUATION 7:

Both the trunk and hood are misaligned

Windshield needs replacement
Only one door that fit and closed properly
An air bag light that wouldnt go off
Broken anti-theft system
Electronic dish went out
Three visits for a front end alignment
Power steering pump started leaking
$3,500 Loss

SOLUTION:
1. Take no action, Mr. Brooks had already solved his problem by selling his luxury Cruiser and will probably
buy an imported luxury car anyway
2. Offer to refund $3,500 to Mr. Brooks as trade assistance on any of our products of his choice
3. Refund the $3,500 to Mr. Brooks with no stipulations on the replacement vehicle
4. Offer to repair and carefully inspect his original car and return it to him. Any out-of-pocket costs involved
in his sale back to the dealer would also be directly refunded by the company
Thank you