Chapter 2 consumer behavior in a service context

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Chapter 2 consumer behavior in a service context

  1. 1. 7/28/2010 Chapter Objectives CHAPTER 2 Consumer Behavior in a Understand the three-stage model of Services Context service consumption. Know how customers evaluate services and what determines their satisfaction. Consumer Decision Making Pre-purchase Stage Overview (1) Pre-purchase Stage • Customers seek solutions to aroused needs• The Three-Stage Model of Service • Evaluating a service may be difficultConsumption • Uncertainty about outcomes Increases perceived risk Pre-purchase Stage Service Encounter • What risk reduction strategies can Stage service suppliers develop? Service Encounter Stage • Understanding customers’ service expectations Post-purchase Stage • Components of customer expectations Post-purchase Stage • Making a service purchase decision Pre-purchase Stage Overview (2) Pre-purchase Stage – Need Awareness Need awareness • A service purchase is triggered by an Information search underlying need (need arousal) Evaluation of alternatives Service attributes • Needs may be due to: Perceived risk – People’s unconscious minds (e.g., aspirations) Service expectations – Physical conditions (e.g., chronic back pain) Purchase decision – External sources (e.g., marketing activities) • When a need is recognized, people are likely take action to resolve it 1
  2. 2. 7/28/2010 Pre-purchase Stage – Evaluation of Pre-purchase Stage – Information Search Alternatives (1)• When a need is recognized, people will Service Attributessearch for solutions. • Search attributes help customers evaluate a product before purchase• Several alternatives may come to mind and – Style, color, texture, taste, soundthese form the evoked set. • Experience attributes cannot be evaluated before purchase— Evoked set = set of possible services or brands must “experience” product to know it that a customer may consider in the decision – Vacations, sporting events, medical procedures process• When there is an evoked set, the different • Credence attributes are product characteristics that customers find impossible to evaluate confidently even afteralternatives need to be evaluated before a purchase and consumptionfinal choice is made. – Quality of repair and maintenance work Pre-purchase Stage – Evaluation of Pre-purchase Stage – Evaluation of Alternatives (2) Alternatives (3) Perceived Risks Perceived Risks - How Do Consumers Handle Them? • Functional – unsatisfactory performance outcomes • Seeking information from respected personal sources • Financial – monetary loss, unexpected extra costs • Using Internet to compare service offerings and search for • Temporal – wasted time, delays leading to problems independent reviews and ratings • Physical – personal injury, damage to possessions • Relying on a firm that has a good reputation • Psychological – fears and negative emotions • Looking for guarantees and warranties • Social – how others may think and react • Visiting service facilities or trying aspects of service before • Sensory – unwanted impact on any of five senses purchasing • Asking knowledgeable employees about competing services Perceived Risks – Strategies for Firms to Service Expectations Manage Consume Perceptions of Risk • Customers evaluate service quality by comparing what they expect against what they perceive Free trial (for services with high experience attributes) Advertise (helps to visualize) – Situational and personal factors also considered Display credentials • Expectations of good service vary from one Use evidence management (e.g., furnishing, equipment etc.) business to another, and differently Offer guarantees positioned service providers in same industry Encourage visit to service facilities • Expectations change over time Give customers online access to information about order status • Example: – Parents wish to participate in decisions relating to their children’s medical treatment for heart problems – Media coverage, education, Internet has made this possible 2
  3. 3. 7/28/2010 Service Expectations – Factors Influencing Service Expectations – Components of Consumer Expectations of Service Custom Expectations (Fig. 2.15) • 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 deliverySource:Adapted from Valarie A. Zeithaml, Leonard A. Berry, and A. Parasuraman, “The Nature and Determinants ofCustomer Expectations of Service,” Journal of the Academy of Marketing Science 21, no. 1 (1993): 1-12 Service Encounter Stage – Overview (1) Pre-purchase Stage – Purchase Decision Pre-purchase Stage • Service encounters range from• When possible alternatives have been compared and high- to low-contact evaluated, the best option is selected • Understanding the servuction• Can be quite simple if perceived risks are low and alternatives system are clear Service Encounter • Theater as a metaphor for Stage service delivery: An integrative• Very often, trade-offs are involved. The more complex the perspective decision, the more trade-offs need to be made Service facilities• Price is often a key factor in the purchase decision Personnel Post-purchase Stage Role and script theories Service Encounters Range from • High-contact Services High-contact to Low-contact (Fig 2.20) –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 3
  4. 4. 7/28/2010 The Servuction System (Fig 2.22) 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 Theater as a Metaphor for • Good metaphor as service delivery is a series of events that customers experience Service Delivery as a performance • Service facilities – Stage on which drama unfolds – This may change from one act to another “All the world’s a stage and all the • Personnel men and women merely players. They have their exits and their – Front stage personnel are like members of a cast entrances and each man in his time – Backstage personnel are support production team plays many parts” • Roles – Like actors, employees have roles to play and behave in specific ways William Shakespeare • Scripts As You Like It – Specifies the sequences of behavior for customers and employees Post-encounter Stage - Overview • Satisfaction defined as attitude-like judgment following a service purchase or series of service interactionsPre-purchase Stage • Customers have expectations prior to Evaluation of service consumption, observe service performance,Service Encounter performance compare it to expectationsStage Future intentions • Satisfaction judgments are based on this comparison Positive disconfirmation if better than expectedPost-purchase Stage Confirmation if same as expected Negative disconfirmation if worse than expected 4
  5. 5. 7/28/2010 Customer Delight: Going Beyond Satisfaction Summary of Chapter 2: • Research shows that delight is a function • Three-stage Model of service consumption helps us to understand and better manage of 3 components customer behavior • Pre-purchase stage – Unexpectedly high levels of – Customers seek solutions to arouse (stimulate) needs performance – Evaluation alternatives is more difficult when a service involves experience and – Arousal (e.g., surprise, credence attributes excitement) – Customers face perceived a variety of perceived risks in selecting, purchasing and using services – Positive affect (e.g., pleasure, – Customers can use a variety of ways to reduce perceived risk and firms can also manage joy, or happiness) risk perceptions • Once customers are delighted, their – Customer expectations of service range from “desired” to “adequate” with a zone of expectations are raised tolerance in between; if actual service is perceived as less than adequate, customers will be dissatisfied • If service levels return to previous levels, – A purchase decision has to be made this may lead to dissatisfaction and it will be more difficult to “delight” customers in future Summary of Chapter 2 (cont.):• 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 5

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