Consumer Behaviour in Services

CONSUMER PROBLEM

TIME DEFICIENCY REASONS: dual career couples, single

parent families IT LEADS TO: demand for different

services

SEARCH, EXPERIENCE & CREDENCE PROPERTIES

SEARCH QUALITIES: attributes that a consumer can determine before the purchase

EXPERIENCE QUALITIES : attributes that a consumer can determine only after the purchase

CREDENCE QUALITIES : attributes that consumer may find impossible to evaluate even after purchase & consumption

Continuum of Evaluation forDifferent Types of Products/services

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{High in search

qualitiesHigh in experience

qualitiesHigh in credence

qualities

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ServicesServices

SERVICES - DECISION MAKING PROCESS

Need awareness

Evaluation of service suppliers

Request service

Service delivery

Future Intentions

MemoryMemory

UNDERSTANDING DIFFERENCES AMONG

CONSUMERS GLOBAL DIFFERENCES ROLE OF CULTURE DIFFERENT VALUES, ATTITUTEDS DIFFERENT CUSTOMS

CUSTOMER EXPECTATION OF SERVICE

Customer expectations are the beliefs about service delivery that serve as standards or reference points against which performance is judged.

LEVELS OF EXPECTATION

DUAL CUSTOMER EXPECTATIONS

Adequate Service

Desired Service

THE ZONE OF TOLERANCE

Adequate Service

Desired Service

Zone ofTolerance

ZONES OF TOLERANCE FOR DIFFERENTSERVICE DIMENSIONS

Reliability

Adequate ServiceAdequate Service

Desired ServiceDesired Service

Desired Service

Adequate Service

Zone of

Tolerance

Zoneof

Tolerance

Tangibles

FACTORS THAT INFLUENCE DESIRED SERVICE

Lasting ServiceIntensifiers

Lasting ServiceIntensifiers

Personal NeedsPersonal Needs Zone of

Tolerance

Desired Service

Adequate Service

Lasting Service Intensifiers are individual, stable factors that lead the customer to a heightened sensitivity to service.

FACTORS THAT INFLUENCE ADEQUATE SERVICE

Self-PerceivedService Role

Self-PerceivedService Role

Situational Factors

Situational Factors

Perceived ServiceAlternatives

Perceived ServiceAlternatives

Temporary ServiceIntensifiers

Temporary ServiceIntensifiers

Zone of

Tolerance

Desired Service

Adequate Service PredictedService

PredictedService

FACTORS THAT INFLUENCE DESIRED AND PREDICTED SERVICE

Predicted Service

Explicit ServicePromises

Explicit ServicePromises

Implicit ServicePromises

Implicit ServicePromises

Word-of-MouthWord-of-Mouth

Past ExperiencePast ExperienceZone of

Tolerance

Desired Service

Adequate Service

CUSTOMER PERCEPTION OF SERVICE

Customers perceive services in terms of quality of service & how satisfied they are overall with their experiences.

CUSTOMER PERCEPTIONS OF QUALITY AND CUSTOMER SATISFACTION

BUILDERS OF CUSTOMER PERCEPTION

SINGLE TRANSACTION SPECIFIC ENCOUNTER: how the customer has been treated in a particular encounter with a particular employee.

CUMULATIVE PERCEPTION: customer’s overall experience with the company.

CUSTOMER SATISFACTION

It is a judgment that a product or service feature or the product or service itself provides a pleasurable level of consumption related fulfillment.

It is the customer’s evaluation of a product or service in terms of whether it has met the customer’s needs & expectations. Its failure leads to dissatisfaction.

DETERMINANTS OF CUSTOMER SATISFACTION

PRODUCT & SERVICE FEATURES CUSTOMER EMOTIONS- your mood ATTRIBUTION FOR SERVICE SUCCESS OR

FAILURE: how much the customer blames or credits the failure or success of a service on the service provider

PERCEPTION OF EQUITY OR FAIRNESS: have I been treated fairly compared to other customers?

PERCEPTION OF FAMILY MEMBERS, FRIENDS, PEERS ETC

OUTCOMES OF CUSTOMER SATISFACTION

Increased customer retention

Positive word-of-mouth communications

Increased revenues

RELATIONSHIP BETWEEN CUSTOMER SATISFACTION AND LOYALTY IN

COMPETITIVE INDUSTRIES

Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

SERVICE QUALITY

The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected.

Service quality assessments are formed on judgments of: outcome quality interaction quality physical environment quality

THE FIVE DIMENSIONS OF SERVICE QUALITY

Ability to perform the promised service dependably and accurately.

Knowledge and courtesy of employees and their ability to inspire trust and confidence.

Physical facilities, equipment, and appearance of personnel.

Caring, individualized attention the firm provides its customers.

Willingness to help customers and provide prompt service.

Tangibles

Reliability

Responsiveness

Assurance

Empathy

THE SERVICE ENCOUNTER

is the “moment of truth” occurs any time the customer interacts with the firm can potentially be critical in determining customer

satisfaction and loyalty types of encounters:

remote encounters, phone encounters, face-to-face encounters

is an opportunity to: build trust reinforce quality build brand identity increase loyalty

Common Themes in CriticalService Encounters Research

Recovery: Adaptability:

Spontaneity:Coping:

employee responseto service delivery

system failure

employee responseto customer needs

and requests

employee responseto problem customers

unprompted andunsolicited employeeactions and attitudes

UNDERSTANDING CUSTOMER EXPECTATION AND

PERCEPTION THROUGH MARKETING RESEARCH

Company Perceptions of

Consumer Expectations

Expected Service

CUSTOMER

COMPANY

GAP 1

(Customer Gap)

Customer

Company

Perceived Service

WHY DO SERVICE RESEARCH?

To identify dissatisfied customers To discover customer requirements or expectations To monitor and track service performance To assess overall company performance compared to

competition To assess gaps between customer expectations and

perceptions To gauge effectiveness of changes in service To appraise performance of individuals/teams for

rewards To determine expectations for a new service To monitor changing expectations in an industry To forecast future expectations

CRITERIA FOR AN EFFECTIVESERVICE RESEARCH

PROGRAM Includes both qualitative and quantitative

research Includes both expectations and perceptions of

customers Balances the cost of the research and the value

of the information Includes statistical validity when necessary Measures priorities or importance of attributes Occurs with appropriate frequency Includes measures of loyalty, behavioral

intentions, or actual behavior

STAGES IN THE RESEARCH PROCESS

Stage 1 : Define Problem

Stage 2 : Develop Measurement Strategy

Stage 3 : Implement Research Program

Stage 4 : Collect and Tabulate Data

Stage 5 : Interpret and Analyze Findings

Stage 6 : Report Findings

PORTFOLIO OF SERVICES RESEARCH

Customer Complaint Solicitation

“Relationship” Surveys

Post-Transaction Surveys

Customer Focus Groups

“Mystery Shopping” of Service Providers

Employee Surveys

Identify dissatisfied customers to attempt recovery; identify most common categories of service failure for remedial action

Obtain customer feedback while service experience is fresh; act on feedback quickly if negative patterns develop

Use as input for quantitative surveys; provide a forum for customers to suggest service-improvement ideas

Assess company’s service performance compared to competitors; identify service-improvement priorities; track service improvement over time

Measure individual employee service behaviors for use in coaching, training, performance evaluation, recognition and rewards; identify systemic strengths and weaknesses in service

Measure internal service quality; identify employee-perceived obstacles to improve service; track employee morale and attitudes

Determine the reasons why customers defect

Research Objective Type of Research

Lost Customer Research

Future Expectations ResearchForecast future expectations of customers; develop and test new service ideas