Consumer Behavior in

Services

Overview
How consumers seek, choose, purchase,
experience and evaluate services
Two most important influencesconsumers life stage and the generation
in which he/she was born
Diff generations of consumers have
personalities shaped by events, history
and people drive their needs for different
types of services .

Search, experience and credence

properties
Search Qualities
attributes a consumer can determine prior to purchase of
a product. Eg color, price, fit, feel Eg jewelry, cars clothing
Experience Qualities
attributes a consumer can determine after purchase (or
during consumption) of a product eg taste wear ability Eg
vacations and restaurant meals
Credence Qualities
characteristics that may be impossible to evaluate even
after purchase and consumption Eg surgeries

Continuum of Evaluation for Different

Types of Products

Most
Services

Most
Goods
Easy to evaluate

Medical diagnosis

Auto repair

Root canals

Legal services

Television repair

Child care

Haircuts

Vacations

Restaurant meals

Automobiles

Houses

Furniture

Jewelry

Clothing

Difficult to evaluate

High in searchHigh in experience

High in credence
qualities
qualities
qualities

Perceived risks in purchasing and

using services
Perceived risk is relevant for services that are
diff to evaluate before purchase and
consumption
First time users more uncertain
Eg functional risks: unsatisfactory performance
outcome, financial risk: monetary costs,
temporal risk : wastage of time, consequence
of delays, physical risk : personal injury and
damage to possessions, psychological risk :
personal fear and emotions,social risk and
sensory risk

How do customers handle perceived

risks?
Seek info from personal/family sources (family,
friends, peers)
Rely on firm that has good reputation
Guarantees and warrantees
Visit service facilities or trying aspect of services
before purchasing
Ask knowledgeable employees about competing
services
Examine tangible cues or physical evidence
Use internet for competitor service offerings and
to search for independent review and ratings

Risk reduction strategies developed

by suppliers
Offer performance warrantees
Money back guarantee
Prospective customers can preview service through
brochures/web/tv
Encourage prospects to visit service facilities
Institute visible safety procedures
Train staff to be respectful and empathetic in their
dealings with customers
Provide toll free no/website
Deliver messages to cell phone (delayed flights by
airlines)
Giving customers online tracker to track order status

Strategic responses to
manage risk
Services high in experience/credence attributes- lot of intangible
elements are involved
Thus variability of inputs/outputs leads to QC issues
Thus present a special challenge to marketers regarding reassuring
customers and reducing risks
Eg products high in experience attributes- generate free trials for
prospective customers
Advt also used to stimulate consumer interest. Eg credit card use
Providers of services with high credence attributes often display
their credentials to reassure of quality service Eg Doctors, architects
Evaluation of such services may be also affected by customers
interaction with physical environment
Smart providers also engage in evidence management- an organized
approach to present coherent evidence- employees dress,
behaviour,furnishings,equipment and facilities

Understanding Customers service

expectations
Customers evaluate service quality by comparing what is
expected with what they receive from supplier
If expectations are met/exceeded, customers believe that they
have received high quality service. If price/quality relationship is
acceptable and other situational factors are positive- customers
likely to make repeat purchases and remain loyal to that supplier
Customers expectation of a good service varies from one
business to another. Pre experience also plays an imp part
Expectations also vary depending upon positioning Eg no frills
airline service vs full service airline service.
Service expectations change over time influenced by advt,
pricing, new tech, service innovations, social trends, increased
access to info through various media Eg Parents involvement in
medical care for child

Customer expectations
Customer expectations are beliefs about
service delivery that serve as a standards or
reference points against which performance is
judged.
Because customers compare their perceptions
of performance with these reference points
when evaluating service quality, knowledge
about customer expectations is important
Knowing what customers expect is the fist
step in assuring service quality

Possible Levels of Customer Expectations

Components of service expectations

Desired service
Adequate service
Predicted service
Zone of tolerance

Desired and adequate service levels

Desired service: Type of service which customers
hope to receive
Wished for level: - a combination of what
customers believe can and should be delivered in the
context of personal needs
A blend of what customers believes can be and
should be
Adequate Service : Minimum level of service which
customers will accept without being dissatisfied.
Customers are realistic- they have threshold level of
expectations Eg fast food service restaurant vs an
expensive gourmet meal restaurant

Factors influencing Customers

expectation about service
Personal
needs
Beliefs abt
what is
possible
Perceived
service
alterations
Situational
factors

Desired
Service
Zone of
Toleran
ce
Adequate
Service

Explicit and
Implicit service
promises, word
of mouth, past
experience

Predicted
Service

Predicted service level

The level of service which customers
actually anticipate receiving
Directly affects how they define
adequate service at that level
Customer prediction will be situation
specific
Eg long queues for tickets for
amusement park on a holiday

Zone of tolerance
Diff for firms to achieve consistent delivery by all
employees in same company and even by same
service employee from one time of day to another.
The extent to which customers are willing to accept
this variation is called as zone of tolerance
Too low performance: frustration and dissatisfaction
amongst customers, exceeding: pleases and delights
customers
Other words: The range of service within which
customers dont pay explicit attention to service
performance. When service falls outside this range
customers either react positively/negatively

Zone of tolerance
Size of ZOT will be large or small depending
upon factors such as competition, price,
importance of specific service attributes which
can influence the level of adequate service Eg
waiting time at checkout at grocery store 9 eg
2-3 m vs 15 mins)
Diff customers possess diff zones of tolerance.
Eg customers who work/vs at home for repairing
Also varies for service dimensions: less tolerant
for unreliable service than for service
deficiencies

Consumer choice
Need recognition: Begins with the recognition that a need or want
exists.
Maslow's hierarchy to characterize needs.
Physiological needs: Biological needs such as food, water and
sleep. Recognition of needs is fairly easy.
Safety and security needs: incl shelter, protection and security.
Consumers seek to provide for their own and their loved ones
shelter, safety and security through many types of services. For eg
parents looking for child care, education etc
Social needs: need for affection, friendship and acceptance Eg
internet services social connections
Ego needs: for prestige,success,accomplishment and self esteem
eg spa services, plastic surgery etc
Self actualization needs: self fulfillment and enriching experiences.
Eg sky diving etc

FACTORS THAT INFLUENCE CUSTOMER

EXPECTATIONS OF SERVICE

Sources of desired service

expectation
Personal needs: Needs which are essential to
physical/psychological well being of customer are pivotal
to customers desire in service. Eg physical,
social,functional and psychological . Eg sports fan.
Lasting service intensifiers: individual, stable factors
which lead the customer to a heightened sensitivity to
service- one most imp factors is derived service
expectation- occur when customer expectation is driven
by another person or group. Eg birthday party organized
by mother for her kid
Personal service philosophy : the customers underlying
generic attitude about meaning of service and proper
conduct of service providers. Eg delivery within 30 mins

Sources of adequate service

expectation
Temporary service intensifiers

Sources of adequate service

expectation
Situational factors

Sources of both desired and

predicted service expectations
Interested consumers- likely to seek or take in
information from various sources. Eg call a store,
ask a friend, track ads in newspapers. They may
also receive service info by watching TV, surfthus search actively as well as passively.
Factors which influence both desired as well as
predicted service expectations are
1. Explicit service promises
2. Implicit service promises
3. Word of mouth communications
4. past experience

Factors which influence both desired

and predicted service expectations
Explicit service promise

Factors which influence both desired

and predicted service expectations
Past experience

Customer Decision Making

THE THREE STAGE MODEL

OF SERVICE
CONSUMPTION

Three stage model

1. Prepurchase stage
2. Service Encounter stage
3. Post encounter stage

The Pre Purchase stage

Begins with the need arousal- the prospective
customers awareness of need and continues through
information search and evaluation of alternatives on
whether to make a service purchase
Needs are unconscious and may concern with personal
identity and aspirations. Some needs may be overt Eg
back pain hunger etc.
External sources eg mktg activities may also
stimulate awareness of a need. Eg insurance cos using
advt to urge people to start about thinking about
retirement plans- then visit a website
When people are aware of needs more motivated to
resolve it- and search for alternatives

The service encounter stage

Experience of purchasing and
consuming a service typically takes
form of a series of encounters
A service encounter is a period of
time during which you as a customer
interacts directly with service
provider
Eg leisurely meals, taxi rides, one
day at amusement park etc

Service Encounters as Moments of

Truth
Shows the importance of contact points with the
customers
Eg bull fighting with bull and matador. The moment
of truth is the point where matador slays the bull.
Importance of relationship mktg which states that
to prevent the mis encounter to potentially destroy
what is already or potential of becoming a long term
relationship
Basic service challenge is defining and managing
the moments of truth the customer will encounter in
that particular industry

Service Encounters- high contact

services
Using this service entails interactions through service delivery
between customers and the organization.
The customers exposure to service provider takes a physical and
tangible nature.
When customers visit the facility where service is being
delivered , they enter a service factory. Eg hotel- is a lodging
factory, hospital is a health treatment factory.
These industries focus on processing people challenge is to
make experience appealing one for customers in terms of
service environment and their interaction with service personnel
During course of service delivery customers are exposed to
many physical clues abt the org- interior/exterior of building,
equipment and furnishings, appearance and behavior of service
personnel and even other customers

Low contact services

Involve little physical contact between
customers and providers.
Instead the contact takes place through
physical distribution channels/electronically
Many high contact services are being
converted to low contact services as
customers undertake more self serviceconduct their insurance/banking
transactions by mail, telephone,internet
and do purchasing online

Levels of customer contact in

service organizations
Emphasizes encounters
with service personnel

Haircut

High

Nursing
home

Four
star
hotel

Mgt
consulting

Telebankin
g

Airline
travel

Car Repair

Insurance

Drycleani
ng
Movie
theater

Emphasizes encounters
with equipment

Netbankin
g
Internet
based
services

Low

SERVUCTION SYSTEM

Pierre Eiglier and Eric

Langeard
Conceptualized service business as a
system that integrated marketing,
operations and customers themselves
Servuction system- is that part of service
organizations physical environment that is
visible to customers, contact personnel,
other customers and customer in person
Comprises of Service operations , Service
delivery and other contact points

Service operations
Where inputs are processed and elements of service product are
created
Visible components of service operations can be divided to those
relating to service personnel and to those relating to physical
facilities/tangibles/equipment
Customers evaluate the product on those elements which they actually
experience during their encounter and perceived service outcome
If back office fails to perform the task efficiently, the front office image
will suffer. For eg unavailability of any item on menu
The proportion of overall service visible to customers varies according
to level of contact
High contact services- physical customer- visible component has to be
higher
Low contact services- minimize customer contact with service providermost of the service element is located remotely and front end- mail and
telecon

Service Delivery
Where final assembly of elements takes place and
product is delivered to customers often in presence of
other customers
Includes the visible elements of the service (personnel,
buildings, equipment) but also exposure to other
customers
Customers of low contact services normally never see
the factory- will talk to rep. Make judgments on ease of
tel access, followed by voice and responsiveness of tel
based customer service rep
If service is delivered electronically such as self service
machines, IVR, web etc- firms compensate by adding
color, music, drama

Other contact points

Includes all points of customer
contact- advt, billing,and market
research
Communication, participation news
stories, word of mouth etc

Service Marketing system for High and

low contact services
The visible part of service operations ,service
delivery and other contact points service
marketing system
Represents all diff ways customer may learn
and encounter about the organization in
questions
Service is experiential, each of these many
elements offers clues about the nature and
quality of service product
Inconsistency amongst the various elements
weakens the credibility in the customers eyes

Service Marketing system for High

contact services
SERVICE DELIVERY SYSTEM

SERVICE OPERATIONS SYSTEM

TECHNIC
AL CORE

BACK STAGE
INVISIBLE

INTERIOR
&
EXTERIOR
FACILITIES
EQUIPMEN
T
SERVICE
PEOPLE

OTHER
CUSTOME
RS

THE
CUST
OMER

FRONT STAGE
VISIBLE

OTHER
CUSTOME
RS

OTHER CONTACT POINTS

ADVT
SALES CALLS
MKT RESEARCH
SURVEYS
BILLING/STATEMENTS
MISC MAIL,PHONE,FAX
WEBSITES
RANDOME EXPOSURE
TO FACILITIES/VEHICLES
CHANCE ENCOUNTERS
WITH SERVICE
PERSONNEL
WORD OF MOUTH

Service Marketing system for LOW

contact services
SERVICE
OPERATIO
NS
SYSTEM
TECHNIC
AL CORE

SERVICE DELIVERY SYSTEM

MAIL
SELF
SERVICE
EQUIPMENT
PHONE,FAX,
WEBSITE

THE
CUST
OMER

BACK STAGE
INVISIBLE
FRONT STAGE
VISIBLE

OTHER CONTACT POINTS

ADVT
MKT RESEARCH
SURVEYS
BILLING/STATEMENTS
RANDOME EXPOSURE
TO FACILITIES/VEHICLES
WORD OF MOUTH

Role and script theories

Servuction model- static and describes a
single service encounter or moment of
truth
Service processes series of encounters
Eg flight booking, travel, arrival, retrieving
luggage etc
Knowledge of role and script theorieshelps us to understand, design, manage
both customer and employee behaviour in
these encounters

Roles
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
As combination of social cues or expectations that guide
behavior in specific setting or context
In service encounters both employees and customers have roles
to play
The satisfaction or productivity depends on extent to which each
person acts out his/her prescribed role during a service encounter
Employees must perform their roles wrt customer expectations
or else dissatisfy/lose customers
Customers must also play by rules or risk problems to
firm/employees and other customers

Scripts
Specifies the sequences of behaviour that employees and
customers are expected to learn and follow during service
delivery
Employees receive formal training
Customers learn scripts through experience, education
and communication. More experience- more familiarity
with the script
Unwillingness to learn a new script may be a barrier to
switch to competition
Any deviation- employee and customer dissatisfaction
If co decides to change service script (technology),
customers and employees should be educated about the
new approach and benefits it provides

Scripts
Some scripts are highly structured and allow
employees to move through their scripts quickly and
efficiently Eg flight attendants- helps to overcome two
challenges- variability reduction and ensuring uniform
quality. But frequent repetition leads to mindless
service delivery without bothering about the customer
needs
Scripts tend to be more flexible for providers of highly
customized services- designers, educators,stylists etc .
Some customers if they are new to service they may
be fearful of behaving incorrectly- org need to educate
them about their service delivery

Script for a dental exam

Patient

Service scripts for..

Visit to a salon for a haircut

Lecture delivery
Flight travel
Restaurant meal

Customer participation in service

delivery
More work customer does as a co producer
in service delivery-greater info he requires
to perform the task correctly
Advt for new services, brochures,websites
all provide info. Eg phone besides an ATM
Customers look towards employees and
other asisstants for help and are frustrated
if they cant find it
Some service providers give a realistic
service preview- video experience

The post encounter stage

Customers have certain service standards in mind
before consumption (their expectations),observe
service performance, compare it to stds, and then
form satisfaction judgments based on this
comparison
Negative disconfirmation- if service is worse than
expected, positive disconfirmation- if it is better
than expected and simple confirmation if it is as
expected
If substantial positive disconfirmation, plus an
element of pleasure and surprise- customer is likely
to be delighted

Feedback during service

delivery
Service personnel can be trained to
be more observant so that they can
identify customers who appear
having difficulties ,look frustrated or
ill at ease if they need assistance .
If experience shows that customers
are perpetually discomforted by a
particular aspect of service
encounter- indicates a need for
redesign and improvement