Consumer Behavior in Service CORE JAVA Encounter

By: Shivani Dahiya

Where Does the Customer Fit in a Service Organization?

Consumers rarely involved in manufacture of goods

but often participate in service creation and delivery

Challenge for service marketers is to understand how

customers interact with service operations

Flowcharting clarifies how customer involvement in

service encounters varies with type of process

Service Marketing | CONFIDENTIAL 2010

25 March 2012

What is the service encounter?

That period of time during which a consumer interacts directly with the service organisation
(Shostack 1985)

Dyadic interaction between a customer and service provider

(Solomon & Suprenant 1987)

Service Marketing | CONFIDENTIAL 2010

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Service Encounter
High Contact Services:

Customers visit service facility and remain throughout service delivery Active contact customers and personnel Includes most processing services between service

people-

Service Marketing | CONFIDENTIAL 2010

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Service Encounter
Low Contact Services:

Little or no physical contact with service personnel Contact usually at arms length through electronic or physical distribution channels New technologies (e.g. Web) help reduce contact levels

Service Marketing | CONFIDENTIAL 2010

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Levels of Customer Contact with Service Organizations

High
N ur si n g H om e

Emphasizes encounters with service personnel

M a na g e m e n t Con su lti n g

H a i r Cut
4 - Sta r H ot e l
G oo d Re sta ur a n t Ai r l i n e Tr a ve l ( Eco n .)

Te l e p h on e Ba n k in g

Re ta il Ba n k i n g M o te l

Ca r Re p a i r I n sur a n ce

D r y Cl e a n i n g
Fa st Food Movie Theater
Ca b l e TV

Subway Internet Banking Mail Based Repairs

Emphasizes encounters with equipment

Service Marketing | CONFIDENTIAL 2010

Internet-based Services

Low
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Managing Service Encounters-1

Service encounter: A period of time during which customers interact directly with a service Moments of truth: Defining points in service delivery where customers interact with employees or equipment Critical incidents: specific encounters that result in especially satisfying/dissatisfying outcomes for either customers or service employees
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Service Marketing | CONFIDENTIAL 2010

Managing Service Encounters--2

Service

success often rests on performance of junior contact personnel

Must train, coach, role model desired behavior Thoughtless or badly behaved customers can
Must
educate customers, expected, manage behavior clarify what

cause problems for service personnel (and other customers) is

Service Marketing | CONFIDENTIAL 2010

25 March 2012

The Purchase Process for Services

Awareness Needs Information Search

Define needs Explore solution Identify alternative Service suppliers

Pre-purchased Stage

Evaluating of alternatives
Review documentation Consult people Service supplier

Service from chosen supplier

Service Delivery
Evaluating the Service Performance Future Intentions
Service Marketing | CONFIDENTIAL 2010

Service Encounter Stage

Post-Purchase Stage
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The Purchase Process for Services

Pre-purchase Stage

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Awareness of need Information search Evaluation of alternative service suppliers Request service from chosen supplier Service delivery Evaluation of service performance Future intentions

Service Encounter Stage

Post-purchase Stage

Service Marketing | CONFIDENTIAL 2010

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Perceived Risks in Purchasing and Using Services

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Functional unsatisfactory performance outcomes Financial monetary loss, unexpected extra costs Temporal wasted time, delays lead to problems Physical personal injury, damage to possessions Psychological fears and negative emotions Social how others may think and react Sensory unwanted impacts to any of five senses
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Service Marketing | CONFIDENTIAL 2010

Perceived Risks in Purchasing and Using Services

Type of Risk Functional Risk Financial Risk
(Monetary Loss, unexpected cost) (unsatisfactory outcome)

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Example of Customer Concerns Will the drycleaner able to remove stains from this jacket? Will I incur a lot of unanticipated expenses if I go on this vacation? Will I have to wait in line before entering the exhibition? Will the renewal of my houses be completed before our friends come to stay with us?
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Temporal

(wasting time, consequences of delays)

Service Marketing | CONFIDENTIAL 2010

Perceived Risks in Purchasing and Using Services

Type of Risk
Physical Risk (Personal injury or damage to possessions) Psychological (personal fears & emotions) Social (how others think & react)

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Example of Customer Concerns Will the contents of this package get damaged in the mail? How can I be sure that this aircraft wont crash? Will my business colleagues disapprove of my selection of an unknown solicitor?

Sensory (unwanted impacts on any of the five senses)

Service Marketing | CONFIDENTIAL 2010

Will the coffee at breakfast taste disgusting?

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Benefits of customers satisfaction & Service quality

Insulates customer from competition Can create sustainable advantages

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Encourage for Purchase & loyalty

Customer satisfaction
Reduces failure cost Lowers costs of attracting new customers
Service Marketing | CONFIDENTIAL 2010

Enhances / promoter Towards of mouth

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Factors that Influence Customer Expectations of Services

Personal Needs Desired Service Beliefs about What Is Possible Word-of-Mouth Past Experience

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Explicit & Implicit Service Promises

ZONE OF TOLERANCE

Perceived Service Alterations

Adequate Service Situational Factors
Service Marketing | CONFIDENTIAL 2010

Predicted Service

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Components of Customer Expectations

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Desired Service Level: wished-for level of service quality that customer believes can and should be delivered Adequate Service Level: minimum acceptable level of service Predicted Service Level: service level customer believes firm will actually deliver that

Zone of Tolerance: range within which customers are willing to accept variations in service delivery

Service Marketing | CONFIDENTIAL 2010

25 March 2012

Intangible Attributes, Variability, and Quality Control Problems Make Services Hard to Evaluate Search attributes Tangible characteristics that allow customers to evaluate a product before purchase

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Experience attributes Characteristics that can be experienced when actually using the service Credence attributes Characteristics that are difficult to evaluate confidently even after consumption Goods tend to be higher in search attributes, services tend to be higher in experience and credence attributes Credence attributes force customers to trust that desired benefits have been delivered
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Service Marketing | CONFIDENTIAL 2010

Continuum of Evaluation for different type of products

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Most Goods

Most Services

Easy to evaluate
Clothing
Chair Foods Motor vehicle Haircut Restaurant meals Computer repair Legal services Entertainment Lawn fertilizer Complex surgery

Difficult to evaluate

High in search attributes

Service Marketing | CONFIDENTIAL 2010

High in experience attributes

High in credence attributes

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Customer Satisfaction is Central to the Marketing Concept

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Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions Customers have expectations prior to consumption, observe service performance, compare it to expectations Satisfaction judgments are based on this comparison Positive disconfirmation if better than expected Confirmation if same as expected Negative disconfirmation if worse than expected Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and situational factors Research shows links between customer satisfaction and a firms financial performance
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Service Marketing | CONFIDENTIAL 2010

Customer Delight: Going Beyond Satisfaction

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Research shows that delight is a function of 3 components Unexpectedly high levels of performance Arousal (e.g., surprise, excitement) Positive affect (e.g., pleasure, joy, or happiness) Is it possible for customers to be delighted by very mundane services?

Progressive Insurance has found ways to positively surprise customers with customer-friendly innovations and extraordinary customer service
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Service Marketing | CONFIDENTIAL 2010

Service as a System

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A service business is a system. comprising three overlapping subsystem. Service Operations (front stage and backstage) Where inputs are processed and service elements created. Includes facilities, equipment, and personnel Service Delivery (front stage) Where final assembly of service elements takes place and service is delivered to customers Includes customer interactions with operations and other customers

Service Marketing (front stage) Includes service delivery (as above) and all other contacts between service firm and customers
Service Marketing | CONFIDENTIAL 2010

25 March 2012

Service Marketing System

(1) High Contact Service-- e.g., Hotel
Service Delivery System Service Operations System
Interior & Exterior Facilities Other Customers

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Other Contact Points

Advertising Sales Calls Market Research Surveys Billing / Statements Miscellaneous Mail, Phone Calls, Faxes, etc. Random Exposure to Facilities / Vehicles

Technical Core

Equipment

The Customer

Service People

Backstage (invisible)

Front Stage (visible)

Other Customers

Chance Encounters with Service Personnel Word of Mouth

Service Marketing | CONFIDENTIAL 2010

25 March 2012

Service Marketing System

(2) Low Contact Service-- e.g., Credit Card
Service Operations System

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Service Delivery System

Other Contact Points

Advertising

Mail Technical Core Self Service Equipment Phone, Fax, Web site etc. Backstage (invisible)
Service Marketing | CONFIDENTIAL 2010

The Customer

Market Research Surveys

Random Exposures Facilities, Personnel

Word of Mouth

Front Stage (visible)

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Service as Theater

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All the worlds a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts
William Shakespeare

As You Like It

Service Marketing | CONFIDENTIAL 2010

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The Dramaturgy of Service Delivery

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Service dramas unfold on a stage--settings may change as performance unfolds

Many service dramas are tightly scripted, others improvised

Front-stage personnel are like members of a cast

Like actors, employees have roles, may wear special costumes, speak required lines, behave in specific ways
Support comes from a backstage production team Customers are the audiencedepending on type of performance, may be passive or active
Service Marketing | CONFIDENTIAL 2010

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Role and Script Theories

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Role: A set of behavior patterns learned through experience and communication to be performed by an individual in a certain social interaction in order to attain maximum effectiveness in goal accomplishment Role congruence: In service encounters, employees and customers must act out defined roles for good outcomes

The extent to which each person acts out his prescribed role during service encounter. Employees: fulfill customer expectation Customers: must play by rules or they will create problems for Employees Other customers
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Service Marketing | CONFIDENTIAL 2010

Role and Script Theories

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Script: A sequence of behavior to be followed by employees and customers during service delivery

Script are learned

EXPERNICES EDUCATION COMMUNICATION WITH OTHER

Some scripts (e.g. teeth cleaning) are routinized, others flexible Technology change may require a revised script Managers should reexamine existing scripts to find ways to improve delivery, increase productivity, enhance experiences
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Service Marketing | CONFIDENTIAL 2010

Role and Script Theories

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For Standardized services Tightly scripted performance For : highly customized services: Services script is flexible May vary by situation/ customer Services firm as teacher The services firms can educate the customers in different ways: Brochures Posted instructions Advertising By service providers Other customers
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Service Marketing | CONFIDENTIAL 2010

THANK YOU

CORE JAVA