Consumer Behaviour in Services

Customer Behavior in Service Encounters
How people make decision about buying and using a
service and what determines their satisfaction with after consumption.
A Framework for Developing Effective Service Marketing Strategies

Two Key Themes in Services Marketing Strategy Framework:
Differences among Services Affect Customer Behavior
Three-Stage Model of Service Consumption
Prepurchase Stage: Search, evaluation of alternatives, decision Post-Encounter Stage: Evaluation against expectations, future intentions Service Encounter Stage: Role in high-contact vs. lowcontact delivery
Differences among Services Affect Customer Behavior

Consumers are rarely involved in the manufacture of goods
but often participate in service creation and delivery
Challenge for service marketers is to understand how
customers interact with service operations
Based on differences in nature of service act
(tangible/intangible) and who or what is direct recipient of service (people/possessions), there are four categories of services: People processing Possession processing Mental stimulus processing Information processing
Four Categories Of Services

Who or What Is the Direct Recipient of the Service? Nature of the Service Act Tangible Actions People People processing (services directed at peoples bodies): Barbers Health care Intangible Actions Mental stimulus processing (services directed at peoples minds): Possessions Possession processing (services directed at physical possessions): Refueling Disposal/recycling Information processing (services directed at intangible assets): Accounting Banking
Education
Advertising/PR
The Purchase Process for Services

Prepurchase Stage
Service Encounter Stage
Post-Encounter Stage
Prepurchase Stage: Overview

Customers seek solutions to
Prepurchase Stage
aroused needs
difficult
Evaluating a service may be Uncertainty about outcomes
increases perceived risk
What risk reduction strategies
can service suppliers develop? service expectations expectations decision
Understanding customers Components of customer
Making a service purchase
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
Evaluating a Service May Be Difficult

Search attributes help customers evaluate a product
before purchase
Style, color, texture, taste, sound
Experience attributes cannot be evaluated before
purchasemust experience product to know it
Vacations, sporting events, medical procedures
Credence attributes are product characteristics that
customers find impossible to evaluate confidently even after purchase and consumption
Quality of repair and maintenance work
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 attributes
High in credence attributes

Source: Adapted from Zeithaml
Perceived Risks in Purchasing and Using Service

Functionalunsatisfactory performance outcomes
Eg: Acceptance of credit card

Temporalwasted time, delays leading to problems
Eg: Waiting time in line/slow service

Physicalpersonal injury, damage to possessions Psychologicalfear and negative emotions Socialhow others may think and react
Eg: Approval /Disapproval by friends-relatives

Sensoryunwanted impact on any of 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
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
Media coverage, education, the Internet has made this possible
Factors Influencing Customer Expectations of Service

Personal Needs Desired Service Beliefs about What Is Possible ZONE OF TOLERANCE Explicit & Implicit Service Promises Word-of-Mouth Past Experience
Perceived Service Alterations Adequate Service Situational Factors Predicted Service
Components of Customer Expectations

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 that customer believes firm will actually deliver Zone of Tolerance: Range within which customers are willing to accept variations in service delivery
Service Encounter Stage: Overview

Service encounters range from high- to low-contact Service marketing systems: highcontact and low-contact Implications for customer participation in service creation and delivery
Prepurchase Stage
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 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. the Web) help reduce contact levels Medium-Contact Services Lie in between These Two
Implications of Customer Participation in Service Delivery

Greater need for information/training to help
customers to perform well, get desired results Customers should be given a realistic service preview in advance of service delivery, so they have a clear picture of their expected role
Post-Encounter Stage: Overview
Prepurchase Stage
Evaluation of service performance Future intentions
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, compare it to expectations Satisfaction judgments are based on this comparison

Positive disconfirmation if better than expected(post-purchase satisfaction will result) Confirmation if same as expected Negative disconfirmation if worse than expected (the consumer is likely to be dissatisfied)
Satisfaction reflects perceived service quality, price/quality tradeoffs,
personal and situational factors Research shows links between customer satisfaction and a firms financial performance
Customer Delight: Going Beyond Satisfaction

Research shows that delight is a function of three
components: Unexpectedly high levels of performance Arousal (e.g., surprise, excitement) Positive affect (e.g., pleasure, joy, or happiness) corporate performance. customer loyalty
Strategic links exist between customer satisfaction and Getting feedback during service delivery help to boost

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Customer Behavior in Service Encounters

How people make decision about buying and using a

service and what determines their satisfaction with after consumption.

A Framework for Developing Effective Service Marketing Strategies

Differences among Services Affect Customer Behavior

but often participate in service creation and delivery

Challenge for service marketers is to understand how

customers interact with service operations

Based on differences in nature of service act

Four Categories Of Services

The Purchase Process for Services

Service Encounter Stage

Prepurchase Stage: Overview

Evaluating a service may be Uncertainty about outcomes

increases perceived risk

Service Encounter Stage

What risk reduction strategies

can service suppliers develop? service expectations expectations decision

Understanding customers Components of customer

Making a service purchase

Customers Seek Solutions to Aroused Needs

Evaluating a Service May Be Difficult

Style, color, texture, taste, sound

Experience attributes cannot be evaluated before

purchasemust experience product to know it

Vacations, sporting events, medical procedures

Credence attributes are product characteristics that

Quality of repair and maintenance work

How Product Attributes Affect Ease of Evaluation

High in search attributes

High in experience attributes

High in credence attributes

Perceived Risks in Purchasing and Using Service

Eg: Acceptance of credit card

Eg: Waiting time in line/slow service

Eg: Approval /Disapproval by friends-relatives

How Might Consumers Handle Perceived Risk?

Understanding Customers Service Expectations

what they expect against what they perceive

Situational and personal factors also considered

Expectations of good service vary from one

Media coverage, education, the Internet has made this possible

Factors Influencing Customer Expectations of Service

Perceived Service Alterations Adequate Service Situational Factors Predicted Service

Components of Customer Expectations

Service Encounter Stage: Overview

Service Encounter Stage

Distinctions between High-Contact and Low-Contact Services

Implications of Customer Participation in Service Delivery

Post-Encounter Stage: Overview

Service Encounter Stage

Evaluation of service performance Future intentions

Customer Satisfaction Is Central to the Marketing Concept

Satisfaction reflects perceived service quality, price/quality tradeoffs,

Customer Delight: Going Beyond Satisfaction

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