The document discusses service quality and consumer behavior in services. It covers: 1) The three stages of consumer decision making in services - the pre-purchase, service encounter, and post-purchase stages. It examines factors like customer expectations, perceived risks, and satisfaction levels. 2) Key aspects of improving service quality like the five dimensions of service quality and reducing service gaps. 3) The importance of understanding consumer behavior to better manage customer touchpoints and deliver quality service.

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. TWO chapters to cover in this lecture
2
 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. 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

4. Pre-purchase Stage: Overview
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5. Pre-purchase Stage - Overview
5
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. Pre-purchase Stage
Overview
• Need awareness
• Information search
• Evaluation of alternatives
 Multi-attribute model
 Service attributes
 Perceived risk
 Service expectations
• Purchase decision
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7. Pre-purchase Stage – Need Awareness
7
 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. Pre-purchase Stage – Information Search
8
 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. Pre-purchase Stage : Evaluation of Alternatives
 Multi-attribute Model
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10. Service Attributes
10

11. Pre-purchase Stage – Evaluation of Alternatives
11
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. Credence attributes
12

13. Pre-purchase Stage – Evaluation of Alternatives
13
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

15. Pre-purchase Stage – Evaluation of Alternatives
15
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. Pre-purchase Stage – Evaluation of Alternatives
16
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. Advertising can be used to reduce
customer perceived risks
17

18. Pre-purchase Stage – Evaluation of Alternatives
18
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. Pre-purchase Stage – Evaluation of Alternatives
19
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. Failing to meet customer expectations
20

21. Pre-purchase Stage – Evaluation of Alternatives
Service Expectations – Factors Influencing Consumer
Expectations of Service (Fig. 2.14)
21

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 delivery
22

23. Advertising
creates high
levels of
customer
expectations
23

24. Pre-purchase Stage – Purchase Decision
24
 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. Service Encounter Stage - Overview
25
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 theories
25

26. Service Encounter Stage : Overview
26

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. 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

29. Distinctions between High-contact
and Low-contact Services
29
 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. Service Encounters Range from
High-contact to Low-contact (Fig 2.19)
30
30

31. The Servuction System (Fig 2.21)
31
31

32. Servuction System:
Service Production and Delivery
32
 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. Backstage operations…
… but they are nevertheless important!
33

34. The service marketing system for a high-contact service

35. The service marketing system for a low-contact service

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. 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
37

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 employees
38

39. The service performance
39

40. Scripts
40

41. Post-encounter Stage - Overview
41
Pre-purchase Stage
 Evaluation of service
performance
Service Encounter Stage
 Future intentions
C
Post-purchase Stage
41

42. Post-purchase Stage : Overview
4
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2

43. Post-purchase Stage : Expectancy-disconfirmation Model
of Satisfaction (Fig. 2.26)
4
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3

44. Customer Satisfaction Is Central to the
Marketing Concept
44
 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. Customer Delight: Going Beyond Satisfaction
45
 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. 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
46

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 delight
47

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. 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
49

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 improvement
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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. The Five Dimensions of Service Quality
52
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

54. The GAP Model ― A Conceptual Tool to Identify and Correct Service
Quality Problems - Six Service Quality Gaps (Fig. 14.3)
54

55. Summary of the 6 Service Quality Gaps
55
 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. 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. The GAP Model ― A Conceptual Tool to Identify and Correct Service
Quality Problems Suggestions for Closing the 6 Service Quality Gaps (2)
(Table 14.2)
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58. 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)
58

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. Suggestions for Closing the
6 Service Quality Gaps (1) (Table 14.2)
60
60