Differences among Services

Affect Customer Behavior

! Consumers are rarely
involved in the
manufacture of goods
but often participate in
service creation and
delivery
! Challenge for service
marketers is to
understand how
customers interact with
service operations
! Based on dierences in nature of
service act (tangible/intangible)
and who or what is direct
recipient of service (people/
possessions) there are four
categories of services:
4 Broad Categories Of Services
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! CusLomers musL:
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facLory - locauon where
people or machlnes dellver
servlce
! Co-operaLe acuvely wlLh Lhe
servlce operauon - ex.
Massage

! Managers should think
about process and output
from customers
perspective
! To identify benefits
created and non-
financial costs:
! Time, mental, physical
effort, fear and pain
! Customers are less
physically involved
compared to people
processing services
! Involvement is limited
! Compare Flight and Parcel
! Production and
consumption are separable
! Ex: cleaning, maintaining,
storing, improving, storing
Mental stimuli processing
! Touches peoples minds shape
attitude and influence behavior
! Consulting, professional advice,
psychotherapy, entertainment
! Physical presence of recipients
may or may not be required
! Core content of services is
information-based
! Can be inventoried
Information Processing
! Information is the most intangible
form of service output
! But may be transformed into
enduring forms of service output
! Line between information
processing and mental stimulus
processing may be blurred.
Implications
! Not to over generalize services
! Nature of involvement varies
! Information based service can be
stored greater convenience
! Why do customers still go to
service factory even there is no
need?
! Habit and Tradition
Purchase Process for Services
Prepurchase Stage
Service Encounter Stage
Post-Encounter Stage
! Customers seek solutions
to aroused needs
! Evaluating a service may
be difficult
! Uncertainty about
outcomes increases
perceived risk
! What risk reduction
strategies can service
suppliers develop?
! Understanding
customers service
expectations
! Components of
customer expectations
! Making a service
purchase decision
! Decision to buy or use a service is
triggered by need arousal
! Triggers of need:
! Unconscious minds (
e.g., personal identity and
aspirations)
! Physical conditions (e.g., hunger )
! External sources
(e.g. marketing activities)
! Consumers are then motivated to
find a solution for their need
Information search
! Need arousal leads to
attempts to find a solution
! Evoked set a set of products
and brands that a consumer
considers during the decision-
making process that is
derived from past experiences
or external sources
! Alternatives then need to be
evaluated before a final
decision is made
Evaluating Service
Is Difficult
! Search attributes help
customers evaluate a product
before purchase
! E.g., type of food, location, type
of restaurant and price
! Experience attributes cannot
be evaluated before purchase
! The consumer will not know how
much s/he will enjoy the food,
the service, and the atmosphere
until the actual experience
Evaluating Service Is Difficult
! Credence attributes are those that
customers find impossible to
evaluate confidently even after
purchase and consumption
! E.g., hygiene conditions of the
kitchen and the healthiness of the
cooking ingredients
! Quality of repair of car, doctors
How product attributes Affect ease of
evaluation
Source:
Adapted from Zeithaml
Most Goods
High in search
attributes
High in experience
attributes
High in credence
attributes
Difficult
to evaluate*
Easy
to evaluate
Most Services

Clothing

Chair

Motor vehicle

Foods

Restaurant meals

Lawn fertilizer

Haircut

Entertainment

Computer repair

Education

Legal services

Complex surgery
*NOTE: Difficulty of evaluation tends to decrease with broad exposure
to a service category and frequency of use of a specific supplier
Perceived Risk
! Functionalunsatisfactory
performance outcomes
! Financial monetary loss,
unexpected extra costs
! Temporal wasted time,
delays leading to problems
! Physical personal injury,
damage to possessions
Perceived Risk
! Psychological fears
and negative emotions
! Social how others may
think and react
! Sensory unwanted
impact on any of five
senses
Consumers Handling Perceived
Risk?
! Seeking information from respected personal
sources
! 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
! Examining tangible cues or other physical
evidence
! Using the Internet to compare service
offerings and search for independent
reviews and ratings
Responses to managing customer
perception of risk
! Offer performance warranties,
guarantees to protect against
fears of monetary loss
! For products where customers
worry about performance,
sensory risks:
! Offer previews, free trials
(provides experience)
! Advertising (helps to visualize)
Responses to managing customer
perception of risk
! For products where customers
perceive physical or psychological
risks:
! Institute visible safety procedures
! Deliver automated messages about
anticipated problems
! Websites offering FAQs and more
detailed background
! Train staff members to be
respectful and empathetic
! Doctor Certificates

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
! Veterinarian and Accounting
Services
! Dog Grooming and Salon

Service Expectations
! Expectations of good
service vary among
differently positioned
service providers in the
same industry
! Cebu Pacific vs. PAL
! SM vs Rustans
! Expectations change over
time
Components of 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:
! Range within which customers are willing
to accept variations in service delivery
Factors affecting Expectations
Predicted Service
Explicit & Implicit
Service Promises
Word-of-Mouth
Past Experience
Desired Service


ZONE
OF
TOLERANCE



Adequate Service
Personal Needs



Beliefs about
What Is Possible



Perceived Service
Alterations



Situational Factors
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Important Notes About Zone of Tolerance
! Not a single level of expectation as
seen in the diagram
! Adequate service expectation can
expand or contract within a customer
! Type of Customer Airlines
! Price
! Vary on Service Attributes or Dimensions
! More important, narrower the zone of
tolerance
Factors that Affect Desired Service
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! States or conditions essential to the
physical or psychological well being
of the customer
! Hotel and Social Needs

Lasting Service Intensifiers
! Individual, stable factors that lead the
customer to a heightened sensitivity to
service
! Derived service expectations customer
expectation are driven by another person or
group of people
! Example: Wedding Coordinators, B2B services
! Personal Service Philosophy
! customers underlying generic attitude about the
meaning of service and the proper conduct of service
providers.
! Having such will intensify the expectations of service
Factors that Influence
Adequate Service

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Factors that Influence Adequate Service

! Temporary/Transitory Service Intensifier
short-term individual factors that make a
customer more aware of the need of the
service
! Example emergency situations
! Problems with initial service can lead to
heightened expectations .
! Fixing the problem the first time is important
but fixing it the second time around is more
critical
Factors that Influence Adequate Service

! Perceived Service Alternatives
other providers from whom the
customer can obtain service
! Presence of alternatives and if service
can be performed by customer
heightens adequate service
! Evaluation of possible alternatives -
substitutes
Factors that Influence Adequate Service

! Customers self-perceived service role
exert an influence on the level of
service they receive
! Specify the level of service restaurant
! Active participation allergic shots
! Assuming the responsibility for
complaining when the service is poor
! Zone of tolerance expands when they
are not fulfilling roles
Factors that Influence Adequate Service

! Situational Factors service
performance conditions that customers
view as beyond the control of the
service provider
! catastrophe
! Customers who recognize factors that are
outside the control of the firm may
accept lower level of service, widening
zone of tolerance
Factors that Influence Adequate Service

! Predicted Service the level of
service the believe they are likely to
get.
! If customers predict good service, their
levels of adequate service are likely to
be higher than poor service.
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Factors that Affect Desired and Predicted Service

Factors that Affect Desired and Predicted Service
! Consumers seek out information from
several different sources call, ask, look
at media
! Explicit service promises (PERSONAL)
personal (from employees) and non
personal statements (advertising) about
the service made by the organization on
the customers.
! Overpromising
! Banking, Restaurants, Hotels (Ads) , Door to
Door
Factors that Affect Desired and Predicted Service
! Implicit Service Promises service-
related cues other than explicit
promises
! Price and tangibles
! Word-Of-Mouth Communication
other persons
! Experts, consumer reports, friends,
family

Factors that Affect Desired and Predicted Service
! Past Experiences consumers
previous exposure to the service
! Compare with similar companies,
related companies
Making the purchase decision
! Purchase Decision: Possible
alternatives are compared and
evaluated, whereby the best
option is selected
! Simple if perceived risks are low
and alternatives are clear
! Complex when trade-offs increase
! Trade-offs are often involved
! After making a decision, the
consumer moves into the
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:
1. Moments of Truth importance of
managing touchpoints
2. High/low contact model extent and
nature of contact points
3. Servuction model variations of
interactions
4. Theater metaphor staging service
performances
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 rms
representative and the
expectations and behavior of the
client which together will create
the service delivery process.
! Richard Normann
High vs low contact
! 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 arms length
through electronic or physical
distribution channels
! New technologies (e.g. the Web) help
reduce contact levels
! Medium-Contact Services Lie in
between These Two
High vs low contact
Servuction system
! Service Operations (front stage and
backstage)
! 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
! Service Marketing (front stage)
! Includes service delivery (as above) and
all other contacts between service firm
and customers

Service Marketing System for a High-Contact
The
Customer
Technical
Core
Interior & Exterior
Facilities
Equipment
Service People
Other
Customers
Advertising

Sales Calls

Market Research Surveys

Billing/Statements

Misc. Mail, Phone Calls,
E-mails, Faxes, etc.

Website

Random Exposure to
Facilities/Vehicles

Chance Encounters with
Service Personnel

Word of Mouth
Service Delivery System Other Contact Points
Service Operations System
Backstage
(invisible)
Front Stage
(visible)
Other
Customers
Service Marketing System for a LOw-Contact
The
Customer
Backstage
(invisible)
Front Stage
(visible)
Advertising

Market Research
Surveys

Billing/Statements

Random Exposure
to Facilities/
Vehicles

Word of Mouth
Phone,
Fax, Web-
site, etc.
Self
Service
Equipment
Mail
Technical
Core
Other Contact Points
Service Delivery System
Service Operations
System
Roles
! Employees and customers
play roles
! Set of behavior patterns
learned through experience
and communication to be
performed by an individual
in a social interaction
! Satisfaction = role congruity
extent to which each
person acts out his/her
prescribed role
Scripts
! Sequence of behavior from
employees and customers
are expected to learn and
follow during the service
delivery
! Employees formal training
! Customers previous
experience
! Deviations frustration to
dissatisfaction
! Scripted vs. Unscripted

Theatrical Metaphor
! Service dramas unfold on a
stagesettings may change as
performance unfolds
! Many service dramas are tightly
scripted, others improvised
! Front-stage personnel are like
members of a cast
! Like actors, employees have roles,
may wear special costumes, speak
required lines, behave in specific
ways
! Support comes from a backstage
production team
! Customers are the audience
depending on type of performance,
may be passive or active
participants
Implications
! Greater need for
information/training to
help customers to perform
well, get desired results
! Customers should be given
a realistic service preview
in advance of service
delivery, so they have a
clear picture of their
expected role
Customer Satisfaction
! 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

Customer Satisfaction
! Satisfaction reflects
perceived service quality,
price/quality tradeoffs,
personal and situational
factors
! Research shows links
between customer
satisfaction and a firms
financial performance
Customer Delight: Beyond
satisfaction
! Strategic links exist
between customer
satisfaction and corporate
performance.
! Getting feedback during
service delivery help to
boost customer loyalty
Customer Delight: Beyond
satisfaction
! Research shows that delight is
a function of three
components:
! Unexpectedly high levels of
performance
! Arousal (e.g., surprise,
excitement)
! Positive affect (e.g., pleasure,
joy, or happiness)
! Is it possible for customers to
be delighted by very mundane
services?
The Five Dimensions of
Service Quality
Ability to perform the promised
service dependably and
accurately.
Knowledge and courtesy of
employees and their ability to
convey 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
! Providing service as promised
! Dependability in handling customers
service problems
! Performing services right the first time
! Providing services at the promised time
! Maintaining error-free records
! Keeping customers informed as to
when services will be performed
! Prompt service to customers
! Willingness to help customers
! Readiness to respond to customers
requests
RELIABILITY
RESPONSIVENESS
! Employees who instill confidence in
customers
! Making customers feel safe in their
transactions
! Employees who are consistently courteous
! Employees who have the knowledge to
answer customer questions
ASSURANCE
! Giving customers individual attention
! Employees who deal with customers in a
caring fashion
! Having the customers best interest at heart
! Employees who understand the needs of
their customers
! Convenient business hours
EMPATHY
! Modern equipment
! Visually appealing facilities
! Employees who have a
neat, professional
appearance
! Visually appealing materials
associated with the service
TANGIBLES
SERVQUAL Attributes

Exercise 1
Identify Service Attributes
Pick a services industry below and brainstorm 3 specific requirements of
customers in each of the five service quality dimensions. Be certain the
requirements reflect the customers point of view.
Sample: Airline, Fast Food, Upscale Restaurant, Auto Repair, UNM,
Exterminator

Reliability:

Assurance:

Tangibles:

Empathy:

Responsiveness:
Assignment 1
! Paper
! 1. Avail of any service this weekend. Take note
of the following:
! What was your service expectations? What for you
was adequate? What for you was/were desired?
! Take note of any factor/s that may have affected
your service expectation.
! How was your service experience? Did the service
exceed your expectation? Were you dissatisfied?
Why?
! 1 Page single space Arial font 12


Assignment 2
! ONLINE
! Read Case 1. Susan Monro pages 492 -493
! Answer the study questions
1. Identify each of the services that Susan Munro has used or is
planning to use. Categorize them according to the nature of
the underlying process.
2. What needs is she attempting to satisfy in each instance?
3. What proportion of these services: (a) involve self-service,
(b) some degree of customer involvement with the
production process, and/or (c) dependence on the service
provider? Where do you see more potential for self-service
and what would be the implications for customer and
supplier?
4. What similarities and differences are there between the
dry-cleaning store and the hair salon? What could each
learn from studying the other?