sq lecture two : consumer behaviour and service quality

Lecture Two

• Consumer Behavior in a

Service Context

• Improving Service

Quality and Productivity (brief overview only)

Service Quality MKTG 1268

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JAN 2013 Semester

GEOFFREY DA SILVA

TWO chapters to cover in this lecture

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Chapter Two is the main topic

But we should start to read some parts of Chapter Fourteen

Why?

Because our course is called Service Quality

And we need to understand the concept of service gaps

In order to have a framework to start our Group Project

However we will return to Chapter 14 at a later lecture

Chapter Two: Consumer Behavior in a Service

Context 3

Consumer Decision Making: The Three-Stage Model

Pre-purchase Stage

Service Encounter Stage

Post-purchase Stage

© Pearson Education South Asia Pte Ltd 2013. All rights reserved 4

Pre-purchase Stage: Overview

Pre-purchase Stage


Post-purchase Stage

Pre-purchase Stage - Overview

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

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Pre-purchase Stage

Overview

• Need awareness

• Information search

• Evaluation of alternatives Multi-attribute model

Service attributes

Perceived risk

Service expectations

• Purchase decision

Pre-purchase Stage – Need Awareness

A service purchase is triggered by an underlying need (need arousal)

Needs may be due to:

People’s unconscious minds (e.g., aspirations)

Physical conditions (e.g., chronic back pain)

External sources (e.g., marketing activities)

When a need is recognized, people are likely take action to resolve it

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Pre-purchase Stage – Information Search

When a need is recognized, people will search for solutions.

Several alternatives may come to mind and these form the evoked set

Evoked set – set of possible services or brands that a customer may consider in the decision process

When there is an evoked set, the different alternatives need to be evaluated before a final choice is made

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Pre-purchase Stage : Evaluation of Alternatives

Multi-attribute Model

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Service Attributes

Pre-purchase Stage – Evaluation of Alternatives

Service Attributes

Search attributes help customers evaluate a product before purchase Style, color, texture, taste, sound

Experience attributes cannot be evaluated before purchase—must ―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

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Credence attributes


Perceived Risks

Functional – unsatisfactory performance outcomes

Financial – monetary loss, unexpected extra costs

Temporal – wasted time, delays leading to problems

Physical – personal injury, damage to possessions

Psychological – fears and negative emotions

Social – how others may think and react

Sensory – unwanted impact on any of five senses

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Perceived Risks - How Do Consumers Handle Them?

Seeking information from respected personal sources

Using Internet to compare service offerings and search for independent reviews and ratings

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

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Perceived Risks – Strategies for Firms to Manage Consume

Perceptions of Risk

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Preview service through brochures, websites, videos

Encourage visit to service facilities before purchase

Free trial (for services with high experience

attributes)

Advertise (helps to visualize)

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Advertising can be used to reduce

customer perceived risks


Perceived Risks – Strategies for Firms to Manage Consume

Perceptions of Risk

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•Display credentials

•Use evidence management (e.g., furnishing, equipment

etc.)

•Give customers online access to information about order

status

•Offer guarantees


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 differently positioned service providers in same industry

Expectations change over time

Example: Service Insights 2.1

Parents wish to participate in decisions relating to their children’s medical treatment for heart problems

Media coverage, education, Internet has made this possible

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Failing to meet customer expectations


Service Expectations – Factors Influencing Consumer

Expectations of Service (Fig. 2.14)

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Service Expectations – Components of Custom Expectations

• wished-for level of service quality that customer believes can and should be delivered

Desired Service Level

• minimum acceptable level of service

Adequate Service Level

• service level that customer believes firm will actually deliver

Predicted Service Level

• Acceptable range of variations in service delivery

Zone of Tolerance

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Advertising

creates high

levels of

customer

expectations

Pre-purchase Stage – Purchase Decision

When possible alternatives have been compared

and evaluated, the best option is selected

Can be quite simple if perceived risks are low and

alternatives are clear

Very often, trade-offs are involved. The more

complex the decision, the more trade-offs need to

be made

Price is often a key factor in the purchase decision

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Service Encounter Stage - Overview

Pre-purchase Stage


Post-purchase Stage

● Service encounters range from high-

to low-contact

● Understanding the servuction system

● Theater as a metaphor for service

delivery: An integrative perspective

Service facilities

Personnel

Role and script theories

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B

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Service Encounter Stage : Overview


Service encounter – a period of time during which a

customer interacts directly with the service provider

Might be brief or extend over a period of time (e.g., a phone

call or visit to the hospital)

Models and frameworks:

―Moments of Truth” – importance of managing touchpoints

High/low contact model – extent and nature of contact points

Servuction model – variations of interactions

Theater metaphor – “staging” service performances

Moments of Truth

“[W]e could say that the perceived quality is realized at the moment

of truth, when the service provider and the service customer

confront one another in the arena. At that moment they are very

much on their own… It is the skill, the motivation, and the tools

employed by the firm’s representative and the expectations and

behavior of the client which together will create the service delivery

process.”

Richard Normann

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 arm’s length through electronic or physical distribution channels

New technologies (e.g. Web) help reduce contact levels

Medium-contact Services Lie in between These Two

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Service Encounters Range from

High-contact to Low-contact (Fig 2.19)

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The Servuction System (Fig 2.21)

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Servuction System:

Service Production and Delivery

Servuction System – visible front stage and invisible backstage

Service Operations (front stage and backstage)

Technical core where inputs are processed and service elements created

Includes facilities, equipment, and personnel

Service Delivery (front stage)

Where ―final assembly‖ of service elements takes place and service is delivered to customers

Includes customer interactions with operations and other customers

Other contact points

Includes customer contacts with other customers

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Backstage operations…

… but they are nevertheless important!

The service marketing system for a high-contact service

The service marketing system for a low-contact service

Importance of this Model:

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You must use this to study the nature of the companies that you have selected for your group project and..

Analyze the different elements of the front end and back end operations

Which are more critical? From the customer point of view? From the operations and economics (cost efficiency) perspective?

Which areas can cause potential lapses in service quality or create bottlenecks?

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Service Encounter Stage Theater as a Metaphor for Service Delivery

“All the world’s a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts”

William Shakespeare

As You Like It

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Theatrical Metaphor: An Integrative Perspective

Good metaphor as service delivery is a series of events that customers experience as a performance

Service facilities

• Stage on which drama unfolds

• This may change from one act to another

Personnel

• Front stage personnel are like members of a cast

• Backstage personnel are support production team

Roles

• Like actors, employees have roles to play and behave in specific ways

Scripts

• Specifies the sequences of behavior for customers and employees

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The service performance

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Scripts

Post-encounter Stage - Overview

Pre-purchase Stage


Post-purchase Stage

Evaluation of service performance

Future intentions

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C


Post-purchase Stage : Overview


Post-purchase Stage : Expectancy-disconfirmation Model

of Satisfaction (Fig. 2.26)

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

Confirmation if same as expected

Negative disconfirmation if worse than expected

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Customer Delight: Going Beyond Satisfaction

Research shows that delight is a function of 3 components

Unexpectedly high levels of performance

Arousal (e.g., surprise, excitement)

Positive affect (e.g., pleasure, joy, or happiness)

Once customers are delighted, their expectations are raised

If service levels return to previous levels, this may lead to dissatisfaction and it will be more difficult to ―delight‖ customers in future

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Summary of Chapter 2:

Customer Behavior in a Services Context (1)

Three-stage Model of service consumption helps us to understand and better manage customer behavior

Pre-purchase stage

Customers seek solutions to aroused needs

Evaluation alternatives is more difficult when a service involves experience and credence attributes

Customers face perceived a variety of perceived risks in selecting, purchasing and using services

Customers can use a variety of ways to reduce perceived risk and firms can also manage risk perceptions

Customer expectations of service range from ―desired‖ to ―adequate‖ with a zone of tolerance in between; if actual service is perceived as less than adequate, customers will be dissatisfied

A purchase decision has to be made

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Summary of Chapter 2:

Customer Behavior in a Services Context (2)

Service encounter stage

Service encounters range from high contact to low contact

Servuction system consists of two parts:

Service operations system

Service delivery system

Role and script theories help us understand, manage customer behavior during encounters

Theatrical view of service delivery offers insights for design, stage-managing performances, and relationships with customer ―audience‖

Post-purchase stage

In evaluating service performance, customers can have expectations positively disconfirmed, confirmed, or negatively disconfirmed

Unexpectedly high levels of performance, arousal and positive affect are likely to lead to delight

Sample Practice Exam Question:

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Explain each of the following:

Search, experience and credence

attributes (6 marks)

At least four out of the seven types of

perceived risks involved in the purchase

and/or use of services (4 marks)

Chapter 14 : Service Quality

We want you to read Chapter 14 ONLY from pages 432 to 437

Understand what are the DIMENSIONS of Service Quality

What is meant by the concept of SERVICE GAPS

And what marketers can do to reduce service gaps

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Service Quality and Productivity Strategies

• Quality and productivity are twin paths to creating value for both customers and companies

• Quality focuses on the benefits created for customers; productivity addresses financial costs incurred by firm – If service processes are more efficient and increase

productivity, this may not result in better quality experience for customers

– Getting service employees to work faster to increase productivity may sometimes be welcomed by customers, but at other times feel rushed and unwanted

• Marketing, operations and human resource managers need to

work together for quality and productivity improvement

Why you need to read this early…

• When you pick a service company and study its products and

services you will need to articulate what are the dimensions of

its service

• From here you will start to observe, measure and clarify what

you think are some of the gaps or areas for improvements’

• These will give you some tentative ideas as to what kinds of

recommended strategies you will propose as part of your

service marketing plan.

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The Five Dimensions of Service Quality

Responsiveness: Promptness; helpfulness

Tangibles: Appearance of physical elements

Reliability: Dependable and accurate performance

Assurance: Competence, courtesy, credibility, security

Empathy: Easy access, good communication,

understanding of customer

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The GAP Model ― A Conceptual Tool to Identify and Correct Service Quality Problems - Six Service Quality Gaps (Fig. 14.3)

Summary of the 6 Service Quality Gaps

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Gap 1, the Knowledge Gap relates to a lack of management understanding of

what customers expect.

Gap 2, the Standards Gap is a failure to translate managers’ perceptions of

customer expectations into the quality standards established for service delivery.

Gap 3, the Delivery Gap is the difference between specified delivery standards

and the firm’s actual performance.

Gap 4, the Communications Gap is the difference between what the company

communicates and what is actually delivered to the customer.

Gap 5, the Perceptions Gap is the difference between what the company has

actually delivered and what the customer perceives s/he has received (note this

perception may be wrong due to difficulty in evaluating the service).

Gap 6 (the overall gap) or the Service Gap is the difference between what the

customer perceives and his/her original expectations.

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The GAP Model ― A Conceptual Tool to Identify and Correct Service Quality Problems Suggestions for Closing the 6 Service Quality Gaps (1) (Table 14.2)

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The GAP Model ― A Conceptual Tool to Identify and Correct Service Quality Problems - Suggestions for Closing the 6 Service Quality Gaps (3) (Table 14.2)

Suggestions for Closing the

6 Service Quality Gaps (1) (Table 14.2)

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sq lecture two : consumer behaviour and service quality

Documents

purchase stage customers

service purchase decision

prepurchase stageoverview

service facilities

purchase style

service offerings

aspects of service

service insights