Topic 3 - Customer Expectations

CUSTOMER
EXPECTATIONS
1
INTRODUCTION
 In service marketing, due to the
inseparability nature of a service, customer
are part of the entire process of service
delivery and therefore it is very crucial to
know the type of a customer you are
dealing with.
 In a service delivery process customers has
a role to play in order to make the service
delivery process a success.
2
WHO IS A CUSTOMER?
 A customer is an individual or business that

purchases the goods or services produced by
a business.
 Attracting customers is the primary goal of
most public-facing businesses, because it is
the customer who creates demand for goods
and services.
3
WHO IS A CUSTOMER?...
 In fact there are different terms used to

describe a customer.
 In some cases a customer is known as a client,
a buyer, or a purchaser of a goods or service,
product or an idea - obtained from a seller,
vendor, or supplier via a financial transaction
or exchange for money or any other valuable
consideration.
4
TYPES OF CUSTOMERS
 Basically there are two types of customers;-
1. Internal customers
2. External customers
 Internal customers are employees within
the organization who are using services
offered by other employees as well.
Internal customers also play an important
role in the success of a business.
5
TYPES OF CUSTOMERS CONT…
 External customer
 An external customer is what is
commonly referred to as a ‘customer'.
This is a customer who purchases a
company’s products or services but is not
an employee or part of the organization.
 External customers are essential to any
business as they provide a revenue stream,
make repeat purchases and refer your
products to other people.
6
TYPES OF EXTERNAL CUSTOMERS
 Basically there are several types of external

customers which includes:-
1. Loyal customers
2. Discount customers
3. Impulsive customers
4. Need based customers
5. Wandering customers
6. Others are; potential customers, new
customer etc 7
TYPES OF EXTERNAL CUSTOMERS…
1. Loyal Customers
 These customers are less in numbers but
promote more sales and profit as compared
to other customers as these are the ones
which are completely satisfied.
 They revisit the organization over times
hence it is crucial to interact and keep in
touch with them on a regular basis and
invest much time and effort with them.
8
2. Discount Customers
 These are customers who are frequent
visitors, but they are only buy goods or
services offered with discounts.
 They buy only low cost products, thus the
more is the discount the more they are
likely to buy.
9
3. Impulsive Customers
 These are the customers who don’t have
any specific item into their product list but
urge to buy what they find good and
productive at that point of time.
 Handling these customers is a challenge as
they want the supplier to display all the
useful products they have in their tally in
front of them so that they can buy what
they like from that display.
10
4. Need Based Customers

 These customers are product specific and
only tend to buy items only to which they
are habitual or have a specific need.
 These are frequent customers but do not
become a part of buying most of the times
so it is difficult to satisfy them. They
should be handled +vely by showing them
ways and reasons to switch to other similar
products ..
11
5. Wandering Customers
 These are the least profitable customers as
sometimes they themselves are not sure
what to buy.
 These customers are normally new in
industry and most of the times visit
suppliers only for confirming their needs on
products.
 They investigate features of most prominent
products in the market but do not buy any of
those or show interest to buy.
12
13 CUSTOMER
EXPECTATIONS
INTRODUCTION
 Knowing what the customers expect from the
service provider is very important, because
customer tends to use their expectations to
judge the quality of the service delivered to
them.
 So by knowing what the customers expect will
enable the service provider to invest money,
efforts, time and resources on things regarded
important by customers.
14
WHAT IS CUSTOMER
EXPECTATIONS?
 Customer expectations can be defined ‘as
the beliefs about service delivery that
serves as standards or reference points
against which the performance will be
judged’.
 The expectation reflects customers hopes
and wishes of the customer towards the
services they are about to experience.
15
TYPES OF CUSTOMERS
EXPECTATIONS
 Customers have different types of
expectations about the service being
provided. These includes;-
1. Ideal expectation
2. Normative expectation
3. Experience based norms
4. Acceptable expectations
5. Minimum tolerable expectations
16
LEVELS OF
17
CUSTOMER
EXPECTATIONS
LEVELS OF CUSTOMER
EXPECTATIONS
 Although we have major 5 types of
customers expectations of service, there are
only two levels of those expectations.
 The upper level being termed as Desired
service and the lower level being termed as
Adequate service.
 Between upper and lower level of customer
expectation there is a zone of tolerance
18
LEVELS OF CUSTOMER EXPECTATIONS CONT…
DESIRED SERVICE
ZONE OF TOLERANCE
ADEQUATE SERVICE
19
DESIRED SERVICE
 This is the highest level of customer
expectations.
 It is a combination of what the customers
believe the service should be and can be.
 For example when a student sit for NBAA
exams and expect that after having CPA she is
going to have a nice Accounting job with a
good salary.
20
ADEQUATE SERVICE
This is the lowest level of customer expectation,
Generally this is the minimum level a customer
can accept the service, below that they will
strike.
For example when a student sit for NBAA
exams and expect that after having CPA she is
going to have a nice Accounting job with a
good salary, but knowing that due to the
economic conditions of the country at the
moment, she may accept a certain package as
an entry level or even internship.
21
ZONE OF TOLERANCE
 The service delivered by different providers,
different employees and even from the same
provider or employee differ due to
heterogeneity/ variability factor.
 Zone of tolerance is an extent to which
customer recognize and are willing to accept
service variations.
 It is also the range in which customer do not
notice service performance.
22
ZONE OF TOLERANCE CONT…
 Assume you went to the bank to withdraw

some cash, knowing that usually it takes
between 10-15mins to be served.
 If you stand in the line and being served
within that range you will never pay any
attention, but when you find yourself being
served within 5min, you will notice and
judge the services as an excellent.
 When you stand in the line for 20min without
being served it means you will be frustrated,
23
ZONE OF TOLERANCE
CONT…
 You should take into account that,
different customers’ are having different
zone of tolerance.
 Some customers have narrow zone of
tolerance while others have wide range
since there are number of factors which
lead to increase or decrease zone of
tolerance such as price, reliability and
empathy.
24
FACTORS
INFLUENCING
25 CUSTOMERS
EXPECTATIONS
FACTORS INFLUENCING CUSTOMERS
EXPECTATIONS CONT…
 Desired service which is the upper level

of customer expectations, can be
influenced by the following mentioned
factors;-
1. Personal needs
2. Personal service philosophy
3. Derived service expectation
26
 i. Sources of Desired service
PERSONAL NEEDS
PERSONAL SEVICE DESIRED SERVICE

PHILOSOPHY
DERIVED SERVICE
EXPECTATION
27
FACTORS INFLUENCING CUSTOMERS EXPECTATIONS CONT…
 1. PERSONAL NEEDS
 These are states or condition essential for
physical or psychological well being of the
customer and are the key factors which shape
what the customer desire in a service.
 Personal needs falls into the different
categories such as
1. Physical needs,
2. Social needs,
3. Psychological needs 4. Functional needs
28
FACTORS INFLUENCING CUSTOMERS EXPECTATIONS
CONT…
2. PERSONAL SERVICE PHILOSOPHY

 This refers to underlying generic attitude
about the meaning of service and proper
conduct of service provider.
 Usually the customers who are themselves in
service businesses or have worked in that
industry in the past seem to have especially
strong service philosophy.
 For example a retired marketer knows how
customer should be treated and he expected
to be treated like that. 29
3.DERIVED SERVICE EXPECTATIONS

 This occurs when a customer expectations are
driven by another person or group of people.
 In most cases you will find these customers
represent and must answer to other people or
group of people.
 A good example is the husband expectations
can be driven by the wife, a man by his
girlfriend, a student by her colleagues etc,
30
 Adequate service can be influenced by

the following factors;-
1. Perceived service alternatives
2. Situational factors
3. Predictive service
31
 ii. Sources of Adequate service
PERCEIVED
SERVICE
ALTERNATIVE
ADEQUATE PREDICTED
SERVICE SERVICE
SITUATIONAL
FACTORS
32
CONT…
 1. PERCEIVED SERVICE ALTERNATIVES

 This refers to other service providers from
whom the customers can obtain service.
 When a customer believe they have a several
service provider to choose from or if the can
provide the service for themselves, their
level of adequate service is higher than those
who doesn’t have alternatives, and therefore
their zone of tolerance is very narrow.
33
EXPECTATIONS
 2. SITUATIONAL FACTORS
 These are factors which affect people
expectation but they are considered to be
contemporary in nature,
 Basically we have two types of situational
factors which affect people expectations;-
1. Uncontrollable situational factors
2. Personal situation factors
34
 SITUATIONAL FACTORS cont…
1. Uncontrollable situational factors –

includes service performance conditions
that are viewed by customer that, they are
beyond the control of the service provider
eg. Earthquake, floods etc
2. Personal situation factors - these are
short term individual factors that make a
customer more aware of the need for
service or emergency situations which a
service is urgently needed. 35
 3. PREDICTED SERVICE
 These are predictions made by customers
about what is likely to happen during an
impending transaction or exchange,
 It implies some probability of performance
or estimate anticipated service performance
level.
 This is typically an estimate or a calculation
of the service that a customer will receive
in an individual transaction rather than
overall relationship with the service
provider. 36
 PREDICTED SERVICE cont…

 If the customer predict good service , their
level of adequate service are likely to be
higher than if they predict poor service.
 For example a Supplementary student at
TIA usually predict a faster food service at
the canteen since may students are on
their vacation. This made them to have
higher standards for adequate service
during that time than other times.
37
 Both Desired services and Predicted
services can be influenced by the
following factors;-
1. Explicit promises
2. Implicit promises
3. Word of a mouth
4. Past experience
38
3. sources of both desired service and predicted service
39
 1.EXPLICIT SERVICE PROMISES

 These are personal and non personal
statements made by an organization to the
customers through different marketing
communications such as advertising ,
personal selling, publicity, public relations
and direct marketing.
 They shape what customer desire in general
and what they predict will happen in the
next service encounter from a particular
service provider . 40
 2. IMPLICIT SERVICE PROMISES
 These are service related cues, other than
explicit promises that lead to inferences
about what the service should and will be .
 In most cases these quality cues are
dominated by price and other tangible
aspects where the service is being
delivered. Generally the higher the price
and the more impressive tangibles, the
more customer will be expect from the
service. 41
3. WORD OF A MOUTH
COMMUNICATION
 These are statements made by parties
other than the organization and convey to
customers what the service will be like
and influence both predicted and desired
service.
 Most customer tend to believe word of a
mouth as unbiased source rather than
communications made by organization
42
 4. PAST EXPERIENCE
 Past experience , refers to the customers
previous exposure to service that is relevant
to focal service.
 For example you may compare your stay in a
hotel with previous stay in the same hotel or
with other hotels.
 Past experience may incorporate previous
experience with the focal service provider
typical performance of similar service
offering and experience with the last
purchased 43
44
STRATEGIES INFLUENCING
CUSTOMER PERCEPTION
1. Enhance Customer Satisfaction thro’ Service
Encounters :
The service Firms should train & educate their
service personnel for positive service encounters,
with respect to :
oRecovery – by planning for effective recovery
oAdoptability – by facilitating adaptability and flexibility
oSpontaneity – by encouraging spontaneity
oCoping – by helping employees cope with problem
customers
45
CUSTOMER PERCEPTION…..
2. Reflect Evidence of Service :
The evidence of service – people, process,

physical evidence.
As discussed earlier provides a framework for
planning the marketing strategies that address
the expanded marketing mix elements (4Ps to
7Ps).
46
CUSTOMER PERCEPTION….
3.Communicate & create a Realistic Image :
Not only promises be made, they must be kept, there by
enhancing the image, reputation of a service
organisation. By this a positive word-of-mouth can be
created and spread
4.Enhance Customer Perception of Quality & Value
thro’ Pricing :
Similarly the pricing is also very critical & customers
must feel that the service is worth the price they pay for.
Service marketers should adopt a pricing strategy that
can give a hint about the true value & quality of service
47
TASK TO TAKE
Qn: Discuss the factors that determine

customer satisfaction
48

Topic 3 - Customer Expectations

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Topic 3 - Customer Expectations

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CUSTOMER

 A customer is an individual or business that

 In fact there are different terms used to

 Basically there are several types of external

4. Need Based Customers

 Assume you went to the bank to withdraw

 Desired service which is the upper level

PERSONAL SEVICE DESIRED SERVICE

2. PERSONAL SERVICE PHILOSOPHY

3.DERIVED SERVICE EXPECTATIONS

 Adequate service can be influenced by

 ii. Sources of Adequate service

 1. PERCEIVED SERVICE ALTERNATIVES

1. Uncontrollable situational factors –

 PREDICTED SERVICE cont…

3. sources of both desired service and predicted service

 1.EXPLICIT SERVICE PROMISES

The evidence of service – people, process,

Qn: Discuss the factors that determine

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