Chapter 3

Customer Behavior in Service Encounters

3.0 Explain service as a process
3.1.1 Explain service as a process.
• In service, their customers are often involved in service production and
may have preferences for certain methods of service delivery,
marketers do need to understand the nature of the processes through
which services are created and delivered.
• Furthermore, they should be involved in any decisions to change the
nature of a given process if that change will affect customers.
• A process is a particular method of operation or a series of action,
typically involving multiple steps that often need to take place in a
defined in sequence.
• A service encounter is a period of time during which customer interact
directly with a service
3.1.2 Differentiate level of Customer Contact

Levels of customer contact is the extend to which customers interact

directly with elements of the service organization.
• a. High contact services
• b. Medium contact services
• c. Low contact services
3.1.2 Differentiate level of Customer Contact
• High Contact Services
• Customers visit service facility
and remain throughout service
delivery
• Active contact among between
customers, service personnel
and equipment and facilities.
• Includes most people-processing
services
• Low contact services
• Involve very little if any physical
contact or no physical contact
with service personnel
• Contact usually takes places at
arm’s length through the
medium of electronic or physical
distribution channels
• New technologies (e.g. Web)
help reduce contact levels
3.1.2 Differentiate level of Customer Contact
Medium Contact Services
• Entail less interaction with service providers. They involve
situations in which customer visit the service provider’s
facilities ( or are visited at home or at a third-party location by
the firm’s employees) but either do not remain throughout
service delivery or she have only modest contact with service
personnel.
• Service that involve only a limited amount of contact between
customers and elements of the service organization.
Levels of Customer Contact with Service
Organizations (Fig. 2.2)
Emphasizes encounters
N u r sin g H o m e
High H a ir Cut with service personnel
4 - Sta r H o t e l
M a n a g e m e n t Co n su ltin g
G o o d Re sta u r a n t
Te le p h on e Ba n k in g
A i r l in e Tr a ve l ( Eco n .)

Re ta il Ba n k in g Ca r Re p a ir

M o te l I n su r a n ce
D r y Cl e a n in g
Fa st Foo d
Movie Theater

Ca b l e TV

Subway

• Internet Banking
Mail Based Repairs

Emphasizes encounters Internet-based

Services
Low
with equipment
3.2 Describe the service as a System

3.2.1 Describe service as a system

• a. Service Operation system
• b. Service Delivery system
• c. Service Marketing system
3.2.1 Describe service as a system
Service Operations (front stage and backstage)
• Where inputs are processed and service elements created.
The technical core is typically back stage and invisible to the
customer(eg: think of the kitchen in a restaurant
• Includes facilities, equipment, and personnel
Service Delivery (front stage)
• Where “final assembly” of service elements takes place
and service is delivered to customers.
• This subsystem includes customer interactions with
operations and other customers which is visible part of the
service operation system.
Service Marketing (front stage)
• Includes service delivery (as above) and all other contacts
between service firm and customers
Service Delivery System
• 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 audience—depending on type of
performance, may be passive or active
 Service Marketing System:
(1) High Contact Service--e.g., Hotel
Service Marketing System
Service Delivery System Other Contact Points

Other Advertising
Service Operations System
Customers Sales Calls
Interior & Exterior Market Research
Facilities Surveys
Billing / Statements
Technical Equipment The
Core Customer Miscellaneous Mail,
Phone Calls, Faxes, etc.
Service People Random Exposure to
Facilities / Vehicles
Other Chance Encounters
Backstage Front Stage
Customers with Service Personnel
(invisible) (visible)
Word of Mouth
 Service Marketing System:
(2) Low Contact Service--e.g., Credit Card
Service Marketing System
Service Delivery System Other Contact Points
Service Operations System

Advertising
Mail
Market Research
The Surveys
Technical Self Service
Core Equipment Customer Random Exposures
Facilities, Personnel
Phone, Fax,
Web site etc. Word of Mouth
Front Stage
Backstage (visible)
(invisible)
 Role and Script Theories
• Role: A set of behavior patterns learned through experience and
communication
• Role congruence: In service encounters, employees and customers must
act out defined roles for good outcomes
• Script: A sequence of behavior to be followed by employees and
customers during service delivery
• 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
3.3 Identify the core product and its supplementary
services
3.3.1 Differentiate between the core product and
its supplementary services

3.3.2 Identify supplementary services

( the flower of service)
 3.3.1 Differentiate between the core product and
its supplementary services
• Most firms offer customers a package of benefits:
• core product (a good or a service)
• supplementary services that add value to the core

Supplementary services help to differentiate

core products and create competitive advantage
by:
• facilitating supplementary services: supplementary services that aid
in the use of the core product or are required for service delivery.
• enhancing supplementary services: supplementary services that may
add extra value for customer and appeal of the core service.
Example: Core and Supplementary Services in a Luxury Hotel: Offer core & supplementary
service- facilitating and enhancing service
WHILE
(Cheap Motel: offer core& supplementary-facilitating service)

Reservation Core service

Cashier Valet
Parking
Business
Center Reception
Order taking :Reservation
A Bed for the
Room Night in an Baggage
Service Elegant Private Service Valet parking : safekeeping
Room with a
Bathroom
Wake-up Cocktail
Call Bar
Wake up call :
Telephone Restaurant
Entertainment/
Sports / Exercise
 The Flower of Service:
Categorizing Supplementary Services

Information

Payment Consultation

Billing Core Order-Taking

Exceptions Hospitality
KEY:
Facilitating elements Safekeeping
Enhancing elements
Facilitating Services - Information
Customers often require
information about how to
obtain and use a product or
service. They may also
need reminders and
documentation
Core Examples of Information elements:
Direction to service site
Schedules / services hour
Prices
Instructions on using core product/supplementary services
Reminders
Warnings
Conditions of sale/service
Notification of changes
Facilitating Services - Order-Taking
Many goods and services must be ordered
or reserved in advance. Customers need
to know what is available and may want to
secure commitment to delivery.
Once customers are ready to buy, a key
supplementary element comes into play-
order taking.

Order taking includes:

a. Order entry
 On site order entry
Core  Mail/telephone/email/online/mobile.app.order
a. Reservation or check-ins
 Seats/tables/rooms
 Vehicles or equipment rental
 Professional appointment rental
a. Application
 Memberships in clubs/program
 Subscription services( eg utilities)
 Enrolment-based services(eg. Financial credit,
college enrolment)
Facilitating Services - Billing
“How much do I owe you?”
Customers deserve clear, accurate
and intelligible bills and statements
Billing is common to almost all services. Timely billing
encourages people to make faster payment. Billing can
be:
 Periodic statement of account activity
Core  Invoices for individual transaction
 Verbal statements of amount due
 Online or machine display of amount due for self
payment transaction
 Facilitating Services - Payment
Customers may pay faster and
more cheerfully if you make
transactions simple and
convenient for them
Core
In most cases, a bill requires the customer to take action on
payment. Exceptions include bank statements and other direct
debit-paid services, which show charges that will be deducted
from a customer’s account.
A variety of payment option exist, but customers expect them to
be convenient and easy to use. They include:
a. Self service
 Insert card, cash or token into machine
 Transfer funds electronically
 Mail to check
 Enter a credit card online
 Use online payment system such as PayPal, google wallet or
Bitcoints
a. Direct to payee/intermediary
 Cash handling or change giving
 Check handling/credit/charge/debit card handling
a. Automatic deduction from financial deposits.
 Automated system
 Pre-arranged automatic deduction for bill payment through
direct debit
 Enhancing Services - Consultation
Value can be added to goods and
services by offering advice and
consultation tailored to each
customer’s needs and situation.
Core
• At its simplest, consultation consists of advice
from a knowledgeable service person in
response no the request: “ what do you
suggest?
• For example, you might ask your hairstylist
for advice on different hairstyles and
products. Effective consultation requires an
understanding of each customer’s current
situation before suggesting a suitable course
of action. Examples of consultation include:
 Customized advice
 Personal counseling
 Tutoring/training in service use
 Management or technical consulting
 Enhancing Services - Hospitality
Customers who invest time and effort
in visiting a business and using its
services deserve to be
treated as welcome guests (after all,
marketing invited them there!)
Core
• Hospitality-related services should ideally
reflect pleasure at meeting new customers
and greeting old ones when they return.
• Courtesy and consideration for customers’
needs apply to both face to face encounters
and telephone interactions. Include:
 Greeting
 Food and beverages
 Toilets and washrooms
 Waiting facilities and amenities
 Lounges, waiting areas, seating
 Weather protection
 Magazines , entertainment, newspapers
 Transport
Enhancing Services - Safekeeping
Customers prefer not to worry about
looking after the personal possessions
that they bring with them to a service site.
They may also want delivery and after-
sales services for goods that they
purchase or rent

When customers are visiting a service site, they often wants

Core
assistance with their personal possessions. Includes
• Child care, pet care,
• Parking for vehicles, valet parking
• Coat rooms
• Baggage handling
• Storage space
• Safe deposit boxes
• Security personnel
 Enhancing Services - Exceptions
Customers appreciate some flexibility
in a business when they make special
requests. They expect it when not
everything goes according to plan
Core
• Special request :
A customer may request services that require a departure
from normal operating procedures.
• Problem solving:
Sometimes, normal service delivery (or product
performance) fails to run smoothly due to accidents,
delay, equipment failure, or difficulty faced by a customer
while using a product.
• Handling of complaint/ suggestions/ compliments
This activity requires well defined procedures. It should
be easy for customers to express dissatisfaction, offer
suggestions for improvement, or pass on compliments.
• Restitution:
Many customer expect to be compensated for serious
performance failure. Compensation may take the form of
repairs under warranty, legal settlement, refunds, an offer
of the free service, or any other form of payment-in-kind.
 What Should Be the Core and Supplementary
Elements of Our Service Product?
• How is our core product defined and what supplementary elements
currently augment this core?
• What product benefits create the most value for customers?
• Is our service package differentiated from the competition in ways that
are meaningful to target customers?
• What are current levels of service on the core product and each of the
supplementary elements?
• Can we charge more for higher service levels on key attributes (e.g., faster
response, better physical amenities, easier access, more staff, superior
caliber personnel)?
• Alternatively, should we cut service levels and charge less?
3.4 Determine the flowchart
of service experience.
3.4.1 Develop the flowchart of service
experience
3.4 Determine the flowchart of service experience

• Flowcharting clarifies how customer • Offers way to understand totality of customer’s

service experience
involvement in service encounters
• Useful for distinguishing between core product
varies with type of service process - itself and service elements that supplement core
: • Restaurants: Food and beverage (core)
• People processing (e.g., motel stay): customer is • Reservations (supplementary services)
physically involved throughout entire process
• Possession processing (e.g., DVD repair): Instructions for creating a flowchart
involvement may be limited to drop off of physical
item/description of problem and subsequent pick backstage
up
• Mental stimulus processing (e.g., weather

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forecast): involvement is mental, not physical; here
customer simply receives output and acts on it
• Information processing (e.g., health insurance): frontstage
involvement is mental - specify information upfront
and later receive documentation of coverage

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 Simple Flowchart for Delivery
of a People-Processing Service
People Processing – Stay at Motel

Spend Night
in Room Check Out
Park Car Check In Breakfast

Maid Makes
up Room Breakfast
Prepared
 Simple Flowchart for Delivery of a
Possession-Processing Service (Fig 3.4)
Possession Processing – Repair a DVD Player

Travel to Technician Examines Return, Pick up (Later) Play

Leave
Store Player, Diagnoses Player and Pay DVDs at Home
Store
Problem

Technician Repairs Player

 Simple Flowchart for Delivery of Mental
Stimulus-Processing Service (Fig 3.4)
Mental Stimulus Processing – Weather Forecast

Turn on TV, Select View Presentation of Confirm Plans for

Channel Weather Forecast Picnic

Collect Meteorologists Input Data to TV Weatherperson

Weather Models and Creates Forecast Prepares Local
Data from Output Forecast
 Simple Flowchart for Delivery of An
Information-Processing Service (Fig 3.4)

Information Processing – Health Insurance

Printed Policy
Learn about Select Plan, Insurance Coverage
Documents
Options Complete Forms Pay Begins
Arrive

University and Insurance

Company Agree on Terms of Customer Information
Coverage Entered in Database