Consumer Behavior in Services

Stages in Consumer Decision Making and Evaluation of Services

The Purchase Process for Services
Prepurchase Stage

Service Encounter Stage

Post-Encounter Stage

Prepurchase Stage: Overview  Prepurchase Stage  Customers seek solutions to aroused needs Evaluating a service may be difficult Uncertainty about outcomes increases perceived risk What risk reduction strategies can service suppliers develop? Understanding customers¶ service expectations Components of customer expectations Making a service purchase decision  Service Encounter Stage     Post-Encounter Stage .

Customers Seek Solutions to Aroused Needs    People buy goods and services to meet specific needs/wants External sources may stimulate the awareness of a need Companies may seek opportunities by monitoring consumer attitudes and behavior Prudential Financial¶s advertising stimulates thinking about retirement needs .

medical procedures . taste. color.Evaluating a Service May Be Difficult  Search attributes help customers evaluate a product before purchase  Style. texture. sporting events  Credence attributes are product characteristics that customers find impossible to evaluate confidently even after purchase and consumption  Quality of repair and maintenance work . sound  Experience attributes cannot be evaluated before purchase²must ³experience´ product to know it  Vacations.

How Product Attributes Affect ease of Evaluation Most Goods Most Services Easy to evaluate Clothing Chair Motor vehicle Foods Restaurant meals Lawn fertilizer Haircut Entertainment Education Legal services Difficult to evaluate* Computer repair Complex surgery High in search attributes High in experience High in credence attributes attributes Source: Adapted from Zeithaml *NOTE: Difficulty of evaluation tends to decrease with broad exposure to a service category and frequency of use of a specific supplier .

delays leading to problems Physical²personal injury. unexpected extra costs Temporal²wasted time.Perceived Risks in Purchasing and Using Services  Functional²unsatisfactory performance outcomes Financial²monetary loss. damage to possessions Psychological²fears and negative emotions Social²how others may think and react Sensory²unwanted impact on any of five senses       .

How Might Consumers Handle Perceived Risk?        Seeking information from respected personal sources Relying on a firm that has a good reputation Looking for guarantees and warranties Visiting service facilities or trying aspects of service before purchasing Asking knowledgeable employees about competing services Examining tangible cues or other physical evidence Using the Internet to compare service offerings and search for independent reviews and ratings .

Strategic Responses to Managing Customer Perceptions of Risk   Offer performance warranties. sensory risks:   Offer previews. free trials (provides experience) Advertising (helps to visualize)  For products where customers perceive physical or psychological risks:     Institute visible safety procedures Deliver automated messages about anticipated problems Websites offering FAQs and more detailed background Train staff members to be respectful and empathetic . guarantees to protect against fears of monetary loss For products where customers worry about performance.

AOL Offers Free Trial Software to Attract Prospective Customers .

Understanding Customers¶ Service Expectations  Customers evaluate service quality by comparing what they expect against what they perceive  Situational and personal factors also considered  Expectations of good service vary from one business to another. and among differently positioned service providers in the same industry Expectations change over time  .

Components of Customer Expectations  Desired Service Level:  Wished-for level of service quality that customer believes can and should be delivered Minimum acceptable level of service  Adequate Service Level:   Zone of Tolerance:  Range within which customers are willing to accept variations in service delivery .

Dual Customer Expectation Levels ± Berry. Parsuraman and Zeithmal proposed that customers expectations operate at dual levels Desired Service Adequate Service .

The Zone of Tolerance ± The gap between the desired level of service and the adequate level Desired Service Zone of Toleran ce Adequate Service .

Personal Service Philosophies Personal Needs ± Physical. Derived expectations 2. Social. psychological Desired Service Zone of Tolerance Adequate Service .Factors That Influence Desired Service Enduring Service Intensifiers 1.

Personal needs ± those states or conditions essential to the physical or mental well being of the customer.Factors That Influence Desired Service   1. 2. Enduring service intensifiers/lasting service intensifiers ± are individual stable factors that lead to heightened sensitivity to service Derived service expectations ± occur when customer expectations are driven by another person or group Personal service philosophy ± the customer¶s generic attitude about the meaning of service .

Factors That Influence Adequate Service Temporary Service Intensifiers Emergencies. problems Desired Service Perceived Service Alternatives Zone of Tolerance Adequate Service Predicted Service Self-Perceived Service Role Situational Factors ± Bad Weather .

Factors That Influence Adequate Service      Temporary Service Intensifiers ± are usually short term individual factors that make a customer more aware of the need of service Perceived service alternatives ± are other providers from whom the customers can obtain service Self perceived service role ± Customers perception of the degree to which customers exert an influence on the level of service they receive Situational factors ± defined as the service performance conditions that customers view as beyond the control of the service provider Predicted Service ± the level of service customers believe that they are likely to get .

Factors That Influence Desired and Predicted Service Explicit Service Promises Implicit Service Promises Desired Service Zone of Tolerance Adequate Service Predicted Service Word-of-Mouth Past Experience .

Word of Mouth ± shapes the expectations of service Past experience ± the customers previous exposure to service that is relevant to the focal service.are service related cues other than the explicit promises that lead to inference about how and what the service should and will be like.Factors That Influence Desired and Predicted Service     Explicit Service Promises ± personal or non personal statements made by the organization to the customers Implicit Service Promises . The comparison may be with the same service provider or different service provider or even across industries .

Zones of Tolerance for Different Service Dimensions Desired Service Level of Expectation Zone of Toleranc Adequate Service e Desired Service Zone of Tolerance Adequate Service Reliability Tangibles Source: L. A. A. Zeithaml. Parasuraman. L. . and V. Berry. Report No. ³Ten Lessons for Improving Service Quality. 93-104 (May 1993).´ Marketing Science Institute.

Strategies to influence factors ± some of the less controllable factors        Enduring Service Intensifiers ± Market research to profile customers Personal needs ± Encourage customers to give feed back Temporary service intensifiers ± Increase delivery during peak periods Perceived service alternatives ± Research competitors offering and match/better the offer where ever possible Self perceived service role ± Educate customers to understand their roles Word-of-Mouth ± Stimulate word of mouth using testimonials and opinion leaders. use incentives for existing customers Past Experience ± Marketing research to profile customers previous experiences .

Strategies to influence factors   Situational factors ± Use service guarantees to assure customers / provide some extra incentives Predicted service ± Inform customers when service provision is higher/lower so that the predictions will not be inflated/poorly expected .

accurate promises. avoid engaging in price / advertising wars Implicit service promises ± Ensure that the price and tangibles accurately reflect the type and level of service . Controllable factors Explicit service promises ± Make realistic. 2.Strategies to influence factors  1.

Service Encounter Stage .

Service Encounter Stage: Overview Prepurchase Stage    Service Encounter Stage    Post-Encounter Stage Service encounters range from low-contact Understanding the servuction system Service marketing systems: highcontact and low-contact Role and script theories Theater as a metaphor for service delivery: An integrative perspective Implications for customer participation in service creation and delivery .

Service Encounters Range from High-Contact to Low-Contact (Fig 2.9) Levels of Customer Contact with Service Organizations .

Distinctions between High-Contact and Low-Contact Services  High-Contact Services    Customers visit service facility and remain throughout service delivery Active contact between customers and service personnel Includes most people-processing services Little or no physical contact with service personnel Contact usually at arm¶s length through electronic or physical distribution channels New technologies (e. the Web) help reduce contact levels  Low-Contact Services     Medium-Contact Services Lie in between These Two .g.

equipment.The Servuction System: Service Production and Delivery  Service Operations (front stage and backstage)   Where inputs are processed and service elements created Includes facilities. and personnel Where ³final assembly´ of service elements takes place and service is delivered to customers Includes customer interactions with operations and other customers Includes service delivery (as above) and all other contacts between service firm and customers  Service Delivery (front stage)    Service Marketing (front stage)  .

Faxes. etc. Mail. E-mails. Phone Calls.Service Marketing System for a High-Contact Service SERVICE MARKETING SYSTEM Service Delivery System Service Operations System Interior & Exterior Facilities Other Customers Other Contact Points Advertising Sales Calls Market Research Surveys Billing/Statements Technical Core Equipment The Customer Misc. Website Service People Random Exposure to Facilities/Vehicles Other Customers Chance Encounters with Service Personnel Word of Mouth Backstage (invisible) Front Stage (visible) .

The Customer Backstage (invisible) Front Stage (visible) .Service Marketing System for a ServiceLow-Contact Service Operations System SERVICE MARKETING SYSTEM Other Contact Points Service Delivery System Mail Advertising Market Research Surveys Billing/Statements Random Exposure to Facilities/Vehicles Word of Mouth Technical Core Self Service Equipment Phone. Website. Fax. etc.

They have their exits and their entrances and each man in his time plays many parts´ William Shakespeare As You Like It .Theater as a Metaphor for Service Delivery ³All the world¶s a stage and all the men and women merely players.

speak required lines. may wear special costumes. employees have roles. behave in specific ways Support comes from a backstage production team Customers are the audience²depending on type of performance. others improvised Front-stage personnel are like members of a cast Like actors. may be passive or active participants .Theatrical Metaphor: An Integrative Perspective       Service dramas unfold on a ³stage´²settings may change as performance unfolds Many service dramas are tightly scripted.

get desired results Customers should be given a realistic service preview in advance of service delivery.Implications of Customer Participation in Service Delivery   Greater need for information/training to help customers to perform well. so they have a clear picture of their expected role Tourists Appreciate Easy-to-Understand Instructions When Traveling .

Post-Encounter Stage .

Post-Encounter Stage: Overview Prepurchase Stage  Evaluation of service performance Service Encounter Stage  Future intentions Post-Encounter Stage .

Customer Satisfaction Is Central to the Marketing Concept    Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions Customers have expectations prior to consumption. observe service performance. personal and situational factors Research shows links between customer satisfaction and a firm¶s financial performance . price/quality tradeoffs. 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.

Customer Delight: Going Beyond Satisfaction     Research shows that delight is a function of three components: Unexpectedly high levels of performance Excitement (e.g. joy.g. Getting feedback during service delivery help to boost customer loyalty Progressive Insurance seeks to delight customers through exceptional customer service . or happiness)     Is it possible for customers to be delighted by very mundane services? Strategic links exist between customer satisfaction and corporate performance... surprise) Positive affect (e.