Services Marketing

1. SERVICES
MARKETING
CHAPTER 3: CUSTOMER DECISION PROCESS
& ETHICS

2. OUTCOME
Understand services decision making process
Know the importance of ethics in services
marketing

3. CONSIDER THIS….
4 out of 7 people said that it is harder to decide
on a service than it is on a product
In the U.S, there’s more reported ethical breach
in services than it is for manufacturing sector

4. OVERVIEW OF DECISION
MAKING PROCESS
Understand thought process
3-phase: Pre-purchase, Consumption & Post-purchase
ConsumptionPre-
purchase
Post-purchase

5. OVERVIEW OF DECISION
MAKING PROCESS
1. Pre-purchase
Stimulus
Problem awareness
Information search
Evaluation of alternatives
2. Consumption
Choice
3. Post-purchase
Post-purchase evaluation

6. PRE-PURCHASE:
STIMULUS
Inciting a person to consider a purchase, cue(s)
Commercial cue: event or motivation to the
customers, promotional effort for firms
Social cue: motivation through peer groups or
significant other
Physical cue: motivation through biological
triggers like thirst & hunger

7. PRE-PURCHASE: PROBLEM
AWARENESS
Customers determine whether a need exists for
the service
Expressed as shortage or unfulfilled desire
Shortage: the need for a service
Ex: the need to obtain a college diploma
Unfulfilled desire: need for service due to
customer’s dissatisfaction
Ex: need to change phone/line provider to get
better rates

8. PRE-PURCHASE:
INFORMATION SEARCH
Customers collect information on possible
alternatives
Alternatives usually based on limited list of
services within customer’s mind, evoked set
Internal search: passive approach limited only to
what is in customer’s mind
External search: proactive approach where
customers collect information from sources
outside of customer’s experience

9. PRE-PURCHASE:
EVALUATION OF
ALTERNATIVES
Customers place a value or “rank” on each
alternative
Non-systematic evaluation: choose alternatives
in a random fashion
Systematic evaluation: choose using a set of
formalized steps

10. CONSUMPTION: CHOICE
Activities of buying, using & disposing of a
product

11. POSTPURCHASE:
EVALUATION/COGNITIVE
DISSONANCE
Customers experience varying degree of
cognitive dissonance
Cognitive dissonance: doubt in the customer’s
mind regarding the correctness of decision
Lead to satisfaction or dissatisfaction

12. SPECIAL CONSIDERATION
PERTAINING TO SERVICES
Attributed to intangibility, inseparability,
heterogeneity & perishability
Pre-purchase, consumption & post-purchase
considerations

13. PRE-PURCHASE
CONSIDERATIONS:
PERCEIVED RISK
Derived from the interrelationship between
consequence & uncertainty
Financial risk, performance risk, physical risk,
social risk & psychological risk

14. PRE-PURCHASE
CONSIDERATIONS:
PERCEIVED RISK
Financial risk: risk of monetary loss
Performance risk: risk of task non-performance
Physical risk: risk of injury
Social risk: risk of loss in personal status
Psychological risk: affect customer’s self-esteem

15. HOW TO REDUCE RISK?
1. Standardization
2. Co-producer involvement
3. Information sharing/personal source of
information
4. Brand loyalty
5. Reduction of alternatives
6. Self-service

16. CONSUMPTION STAGE
CONSIDERATIONS
Human error
“Act of God”
Service delivery delay

17. POST-PURCHASE
CONSIDERATIONS
Expectancy disconfirmation: comparing expectations
with perception
Perceived control: evaluate service by the amount of
customer’s control
Role congruence: property of actual behaviors by
customers & staff being consistent with expected role
Script theory: rules exist to facilitate interactions

18. WHAT ARE ETHICS?
A branch of philosophy dealing with what is good
& bad and with moral duty & obligation
Principles of moral conduct governing an
individual or group

19. WHAT IS BUSINESS
ETHICS?
Principles of moral conduct that guide behavior in
the business world

20. OPPORTUNITIES FOR
ETHICAL MISCONDUCT
1. Few search attributes
2. Technical & specialized services
3. Time lapse between performance & evaluation
4. Services sold without guarantees & warranties
5. Boundary-spanning personnel

21. OPPORTUNITIES FOR
ETHICAL MISCONDUCT
6. Accepted variability in performance
7. Outcome based reward systems
8. Consumer participation in production

22. METHODS FOR ETHICAL
DECISION-MAKING
Teleology: decision-making based on result
Consequentialism: asses the morality of decision
Egoist: benefit self-interest
Utilitarianist: maximizes total utility, “greater good
for the greatest number of people”

23. METHODS FOR ETHICAL
DECISION-MAKING
Deontology: ethical decision-making where the
inherent rightness or wrongness of an act guides
behavior
Moral standards are permanent, categorical
imperative

24. METHODS FOR ETHICAL
DECISION-MAKING
Relativism: the correctness of ethical decisions is
thought to change overtime
Case-to-case basis

25. FACTORS THAT INFLUENCE
ETHICAL DECISION-MAKING
1. Cognitive moral development
2. Personal values
3. Corporate culture
4. Cultural differences
5. Organizational structure
6. Opportunity

26. FACTORS THAT INFLUENCE
ETHICAL DECISION-MAKING
7. Reward system
8. Significant others
9. Competitive environment
10. Changes in technology

27. CONTROLLING ETHICAL
DECISION MAKING
Employee socialization
Standards of conduct
Corrective control
Leadership training
Service knowledge
Monitoring employee performance
Long-term customer relationship

28. CONCLUSION
Decision-making process of services mirrors that
of goods marketing
But, there are special considerations that are
exclusively for services
Ethics is an important component in shaping
customers’ perception on services

29. THANK YOU