SQ Lecture Two : Consumer Behaviour and Service Quality


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SQ Lecture Two : Consumer Behaviour and Service Quality

  1. 1. 1 Service Quality MKTG 1268 Lecture Two • Consumer Behavior in a Service Context • Improving Service Quality and Productivity (brief overview only)JAN 2013 Semester GEOFFREY DA SILVA
  2. 2. TWO chapters to cover in this lecture2  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
  3. 3. Chapter Two: Consumer Behavior in a Service Context3  Consumer Decision Making: The Three-Stage Model  Pre-purchase Stage  Service Encounter Stage  Post-purchase Stage
  4. 4. Pre-purchase Stage: Overview4 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  5. 5. Pre-purchase Stage - Overview5 A Pre-purchase Stage  Customers seek solutions to aroused needs  Evaluating a service may be difficult  Uncertainty about outcomes Increases perceived risk Service Encounter Stage  What risk reduction strategies can service suppliers develop?  Understanding customers’ service expectations  Components of customer expectations Post-purchase Stage  Making a service purchase decision
  6. 6. Pre-purchase Stage Overview • Need awareness • Information search • Evaluation of alternatives  Multi-attribute model  Service attributes  Perceived risk  Service expectations • Purchase decision6 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  7. 7. Pre-purchase Stage – Need Awareness7  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
  8. 8. Pre-purchase Stage – Information Search8  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
  9. 9. Pre-purchase Stage : Evaluation of Alternatives Multi-attribute Model9 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  10. 10. Service Attributes10
  11. 11. Pre-purchase Stage – Evaluation of Alternatives11 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
  12. 12. Credence attributes12
  13. 13. Pre-purchase Stage – Evaluation of Alternatives13 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
  14. 14. 14
  15. 15. Pre-purchase Stage – Evaluation of Alternatives15 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
  16. 16. Pre-purchase Stage – Evaluation of Alternatives16 Perceived Risks – Strategies for Firms to Manage Consume Perceptions of Risk  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)
  17. 17. Advertising can be used to reduce customer perceived risks17
  18. 18. Pre-purchase Stage – Evaluation of Alternatives18 Perceived Risks – Strategies for Firms to Manage Consume Perceptions of Risk •Display credentials •Use evidence management (e.g., furnishing, equipment etc.) •Give customers online access to information about order status •Offer guarantees
  19. 19. Pre-purchase Stage – Evaluation of Alternatives19 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
  20. 20. Failing to meet customer expectations20
  21. 21. Pre-purchase Stage – Evaluation of Alternatives Service Expectations – Factors Influencing Consumer Expectations of Service (Fig. 2.14)21
  22. 22. Pre-purchase Stage – Evaluation of Alternatives Service Expectations – Components of Custom 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 • Acceptable range of variations in service delivery22
  23. 23. Advertising creates high levels of customer expectations23
  24. 24. Pre-purchase Stage – Purchase Decision24  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
  25. 25. Service Encounter Stage - Overview25 Pre-purchase Stage ● Service encounters range from high- to low-contact B ● Understanding the servuction system Service Encounter Stage ● Theater as a metaphor for service delivery: An integrative perspective  Service facilities  Personnel Post-purchase Stage  Role and script theories25
  26. 26. Service Encounter Stage : Overview26
  27. 27. Service Encounter Stage 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
  28. 28. Moments of Truth“[W]e could say that the perceived quality is realized at the momentof truth, when the service provider and the service customerconfront one another in the arena. At that moment they are verymuch on their own… It is the skill, the motivation, and the toolsemployed by the firm’s representative and the expectations andbehavior of the client which together will create the service deliveryprocess.” Richard Normann
  29. 29. Distinctions between High-contact and Low-contact Services29  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
  30. 30. Service Encounters Range from High-contact to Low-contact (Fig 2.19)3030
  31. 31. The Servuction System (Fig 2.21)3131
  32. 32. Servuction System: Service Production and Delivery32  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
  33. 33. Backstage operations… … but they are nevertheless important!33
  34. 34. The service marketing system for a high-contact service
  35. 35. The service marketing system for a low-contact service
  36. 36. Importance of this Model:36  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?
  37. 37. 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 It37
  38. 38. Theatrical Metaphor: An Integrative Perspective  Good metaphor as service delivery is a series of events that customers experience as a performance Service facilities Personnel • Stage on which drama • Front stage personnel are unfolds like members of a cast • This may change from • Backstage personnel are one act to another support production team Roles Scripts • Like actors, employees • Specifies the sequences have roles to play and of behavior for customers behave in specific ways and employees38
  39. 39. The service performance39
  40. 40. Scripts40
  41. 41. Post-encounter Stage - Overview41 Pre-purchase Stage  Evaluation of service performance Service Encounter Stage  Future intentions C Post-purchase Stage41
  42. 42. Post-purchase Stage : Overview4 © Pearson Education South Asia Pte Ltd 2013. All rights reserved2
  43. 43. Post-purchase Stage : Expectancy-disconfirmation Model of Satisfaction (Fig. 2.26)4 © Pearson Education South Asia Pte Ltd 2013. All rights reserved3
  44. 44. Customer Satisfaction Is Central to the Marketing Concept44  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
  45. 45. Customer Delight: Going Beyond Satisfaction45  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
  46. 46. 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 made46
  47. 47. 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 delight47
  48. 48. Sample Practice Exam Question:48  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)
  49. 49. 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 gaps49
  50. 50. 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 improvement50 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  51. 51. 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.51
  52. 52. The Five Dimensions of Service Quality52 Tangibles: Appearance of physical elements Reliability: Dependable and accurate performance Responsiveness: Promptness; helpfulness Assurance: Competence, courtesy, credibility, security Empathy: Easy access, good communication, understanding of customer 52
  53. 53. 53
  54. 54. The GAP Model ― A Conceptual Tool to Identify and Correct Service Quality Problems - Six Service Quality Gaps (Fig. 14.3)54
  55. 55. Summary of the 6 Service Quality Gaps55  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.
  56. 56. 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)56
  57. 57. The GAP Model ― A Conceptual Tool to Identify and Correct ServiceQuality Problems Suggestions for Closing the 6 Service Quality Gaps (2)(Table 14.2)57 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  58. 58. The GAP Model ― A Conceptual Tool to Identify and Correct ServiceQuality Problems - Suggestions for Closing the 6 Service Quality Gaps(3) (Table 14.2)58
  59. 59. The GAP Model ― A Conceptual Tool to Identify and Correct Service Quality Problems Suggestions for Closing the 6 Service Quality Gaps (4) (Table 14.2)59 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  60. 60. Suggestions for Closing the 6 Service Quality Gaps (1) (Table 14.2)60 60