Tuesday, September 8, 2015

SM: Session 4 Consumer Behaviour in a Service Context

In daily life, a consumer use number of services. Some are chosen with lot of planning, some at random and some as compulsion. Service consumption may vary as services may be more or less tangible (or intangible). However, it can be categorized as three different stages:

Stage I: Pre-purchase Stage

This is the stage where the customer is making up his/her mind about a service purchase. It involves all the groundwork and research before going to the service factory. This stage is similar to consumer decision making process for goods where the production is already completed. It comprises of the following:

1. Need Arousal

A person may feel need for a service due to several factors. Some services are necessary, for example, basic education and health. Service can fulfil personal needs like massage or spa. Some services cater to aspirations, so we have coaching, tuitions and specialized courses. Someone aspiring to become a cricketer will need the services of a cricket coach. An aspiring model may need services of a beautician, or may be a cosmetic surgeon!
Consumers use number of services as a part of their routine, like banking, laundry and retail services. Some services are needed to socialize. Restaurants and holidays are largely catering to such needs. Need for experience is related to adventure trips and very popular among young generation. 
Sometimes consumers act on marketing activities, i.e., promotions, offers and discounts. The need to avail service is related to the attractiveness of the marketing activity.

2. Information Search

Once a need is recognized, customers are motivated to search for services (providers) to satisfy the need. The consumer may search on internet or may visit service provider to know more about the need fulfilment process. The desired need may be fulfilled by number of service options. Depending upon the need, when a customer search for the information,  all of them may not be consider all of them. Consumer will search for only few select one for which they have positive feelings. These options form the evoked set or consideration set.
For example, when a consumer wants to go out to a restaurant for dinner, he/she will consider only few restaurants and not all of them. Similarly, there are several movies running, but not all are considered.

3. Evaluating Alternatives

After searching for more information regarding few services options, few are evaluated for final decision. The evaluation approaches may contains be different for different services as services vary in terms of their attributes, perceived risk and expectations.

Service Attributes

Due to inseparability of services, it is difficult to evaluate service before purchase. Hence following service attributes provides an important distinction:
(a) Search Attributes: Service attributes are the tangible characteristics of the product that a customer can evaluate before a purchase. Search attributes are applicable to most products and the services where some amount of tangibility is present. In such cases, customers can minimize the risk by physical inspection of the service factory. For example, in restaurants and hotels, the customer can relate the quality of food with the ambience.
(b) Experience Attributes: In such services experiencing the service is a must to assess the attributes like ease of use, reliability and customer service. The customers can rely on their own past experience or recommendations from friends. 
Service providers may provide the experiences by putting up testimonials, reviews and videos on their website.
(c) Credence Attributes: Consumer may find it very difficult to evaluate some services even after receiving them. They have to simply trust the skills of the service provider. For example, it will be complex to understand quality of repair for a car service. 

Perceived Risk

Services that are highly intangible and the performance are likely to be evaluated on experience or credence attributes, customer perceives a high amount of risk entering the service.  The risks are;
  • Functional: The service may not be performed to satisfaction
  • Financial: The service may prove to be costly or may result in monetary loss.
  • Temporal: The time given for the service may go waste or service may not fulfil time criteria.
  • Physical: The service may cause in some health issues.
  • Psychological: The fear of entering into an unknown service environment.
  • Social: The brand image of the service provider.
  • Sensory: Services effect of any of five senses.

Perceived Risk is a problem for both, service providers as well as customers. Customers may go to reputed service providers, use available information and reviews, examine the facility physically or look for guarantees and warranties to minimize the risk.
Services providers may include the practice of previews through websites or brochures, providing physical inspection and trials, advertise the value, display credentials, and provide evidences, informing about order status and service guarantees to hell the customer minimize risk.

Service Expectations

Customer expectation of a service outcome is formed during information search or due to past experiences or also because of marketing efforts. Customer expects the different service quality from different providers. It can change due to situations.
A customer may go with different expectations to different restaurant. Consider this: A group of friends decided to go out for dinner. There were different preferences of food amongst them and they wanted quality of service. Thus, they decided to go to a multi-cuisine restaurant, which is known for its service and ambiance. It was a Saturday and there was no reservation. The desired level of expectations was the quality of service and ambiance. They were also looking forward to restaurant’s happy hours offer on select drinks. Hence they predicted that they might avail that offer fruitfully if there is no rush. So within the circumstances, they were ready to wait.  
There expectations from the services were defined as:
Desired Service: Usually consumers have an expectation of desired level of service with a service provider. These expectations are formed due to personal needs and beliefs about a service provider. Group of friends desired to have a nice time with other and they also wanted to enjoy food and drinks.
Adequate Service: This level of service expectation is the customer’s alterations to service expectations due to situational factors. Expecting some waiting due to weekend or because of no prior reservations is what the customer is okay with even though it is not desired.
Predicted Service: The definition of service quality expectation that generate due to promises made by service providers.
Zone of tolerance: The gap between desired service and adequate service is known as zone of tolerance. Since adequate service is defined by predicted level of service, zone of tolerance is large if service provider promises reasonably. If service provider increase level of predicted service expectations, zone of tolerance will be a very less.

4. Purchase Decision

After the evaluation of alternatives, the consumer is ready to avail the service. At this point the consumer may decide:
  • Whether or not to avail service – In the situations where no service provider is expected to provide adequate service, the consumer may postpone the service purchase.
  • Which service provider – the decision is easy if there are less number of service providers, each one is significant different in terms of expectation and purchase is frequent.
  • When to avail service – the customer may require deciding on time- price-quality trade off.

Stage II: Service Encounter Stage

The important point of discussion here are:
  • Moments of Truth
  • High contact Vs Low Contact Services
  • The Service-Production or Servuction System


Service encounter stage is the stage where the customer moves on avail the service. To avail the service, customer enters the service factory and interacts with the service providers. In this very interaction customer carry its expectations from the service provider. Service encounter is a period of time during which customer interacts directly with a service provider.
Each such number of encounter are moment of truths. A Swedish management consultant Richard Normann, relates the concept of moment of truth to bullfighting. According to him, "Moment of Truth" is " .....when the service provider and 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 behaviour of the client which together will create the service delivery process."
Services also vary in terms to contact with the customer. There are services that last few seconds (a phone call) to several numbers of years (enrolment in a university for a four year course).  High contact services are the services have long committed customer-employee interactions. All the elements of services work together in production of services and most of these services are people processing services.
Low contact services are majorly possession processing. There is little or no contact between customer and provider. Most of the internet services are low contact services.

The Servuction system or service- production system is the whole service process. It is made of three subsystems, the Service Delivery System, Service Operating System and Service Marketing System. The Service Delivery System or the service factory is the part of the system where the customer contacts the provider.  It consists of the people, equipment, interior and exterior facility and other customers. The service operating system or the technical core is the backend operations of the service provider. The service marketing system is the promotional activities of the company.

Stage III: Post Encounter Stage

After the service delivery customers evaluate the service and compare it with their expectations. There is a possibility of three outcomes:
  • Services were lower than expectations – negative disconfirmation in case expectations were low and dissatisfaction to the extent of feeling of being cheated.
  • Services were same as expectations – in case of low expectations the customers are contended with low quality and less price, whereas in case of high expectations same level of performance confirms brand loyalty
  • Services were better than expectation – positive disconfirmation as the performance is more than what is expected. In case of low expectation customer feel valued for the money that they pay and in case of high expectation customers are delighted are they spread good word of mouth about the service firm.


Expectations
Performance
Low
Same
High
Low
Negative Disconfirmation – Economy Services
Confirmation – Low quality
Positive Disconfirmation -  Value for money
High
Dissatisfaction – Feels cheated
Confirmation – Brand Loyalty
Positive Disconfirmation – Customer Delight

Reference: Services Marketing: People, Technology, Strategy - Lovelock, Wirtz & Chatterjee & Service Marketing - Zeithmal, Bitner, Gremler & Pandit

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