Chapter 2:

Customer Behavior in Service Encounters

Services projects M1.ppt

Services Projects M2 .ppt

09-I-101 09-I-102 09-I-103 09-I-104 09-I-105 09-I-106 09-I-107 09-I-108 09-I-110 09-I-111 09-I-112 09-I-113 09-I-114 09-I-115 09-I-116 09-I-117 09-I-118 09-I-119 09-I-120 09-I-121 09-I-122 09-I-123 09-I-124 09-I-125 09-I-126

Ms. Aastha Sharma Mr. Abhey Verma Mr. Abhishek Sharma Roll No 1-5 Group 1 Ms. Adiya Shah Ms. Anjali Bisaria Mr. Ankit Dua Roll No 6 -10 Mr. Ankit Kapur Group 2 Mr. Ankit Narang Mr. Arun Satyan Mr. Ashutosh Sharma Ms. Avantika Mathur Mr. Benny Singh Ms. Bhavna Chawla Ms. Divya Sharma Mr. Gaurav Sharma Mr. Gaurav Singh Mr. Gurdeep Singh Mr. Harsh Bhatia Mr. Hitesh Malhotra Mr. Ishan Chopra Mr. Jasvinder Singh Ms. Kirti Sharma Ms. Maneka Khosla Mr. Manhar Bhasin Ms. Manju Bindra

Presentation on September 3. 2010

Presentation on September 10, 2010

Roll No 11 -15 Group 3

Presentation on September 17, 2010

Roll No 16 -20 Group 4

Presentation on September 24, 2010

Roll No 21 -25 Group 5

Presentation on October 1 2010

09-I-127 09-I-128 09-I-129 09-I-130 09-I-131 09-I-132 09-I-133 09-I-134 09-I-135 09-I-136 09-I-137 09-I-138 09-I-139 09-I-140 09-I-141 09-I-142 09-I-143 09-I-144 09-I-145 09-I-146 09-I-148 09-I-149 09-I-150 09-I-151 09-I-152

Ms. Mekhla Sharma Ms. Neha Jaiswal Ms. Neha Saxena Ms. Niyati Seth Mr. Pankaj Mr. Pankaj Chaturvedi Mr. Pankaj Taneja Ms. Parul Chopra Mr. Parush Gupta Mr. Pawan Gera Ms. Pragya Mr. Pranab Nath Mr. Pranshur Aggarwal Mr. Praveen Kumar Ms. Rachan Singh Mr. Ravi Shanker Pandey Mr. Ravin A. Verma Ms. Reema Samui Ms. Richa Pathania Ms. Ritika Khanwani Ms. Saanya Malik Mr. Sahil Bansal Ms. Sandhya Yadav Mr. Saurabh Garg Ms. Shriya Sharma

Roll No 26 -30 Group 6

Presentation on October 8

Roll No 31-35 Group 7

Presentation on October 22

Roll No 36 -40 Group 8

Presentation on October 29

Roll No 41 -45 Group 9

Presentation on November 12

Roll No 46 -50 Group 10

Presentation on November 19

09-I-153 09-I-155 09-I-156 09-I-157 09-I-158

Ms. Shweta Gupta Mr. Siddharth Puri Ms. Soumya Roy Mr. Abhishek Sharma Mr. Tarun Sood
Roll No 51 -55 Presentation on November 26 Group 11

09-I-159 09-I-160

Dr. Vinita Vashist Mr. Vivek Madan

Roll No 56-60 Group 12 Presentation on December 3

09-II-217 Mr. Gaurav Tyagi 09-II-235 Mr. Paryag Dabas

WORK TO DO ACTIVITY Make a continuum

1.

2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29.

Blue Jeans Business Suit Appendix Operation Car Casual Clothing Car Brake Relining Dental Examination Condo Dress Shoes Meal at Nice Restaurant Couch Eyeglasses Golf Lessons Day Care Furniture Haircut Dishwasher Greeting Card Dry Cleaning Health Club Membership Houseplant Fast Food Legal Representation Ice Cream Cone Flu Shot Novel Jewelry House Cleaner Psychotherapy

30.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

Lean Cuisine Dinner Plumbing Repairs Soft Drink Running Shoes Poster Framing Tailored Clothing TV Repair Socks Typing Service Vacation Package Tax Consultant Xeroxing/Copying Entertainment parks Jewellery costume Cds Inflight food Books on line Glasses Car Ac repair Bank accounts Laptops Cellphone Visa assistance Loans from friend Education Institutes IT consultants Laundry Detergent Life Insurance Rental Car

The Goods-Services Continuum

Canned Ready- AutoDraperies, Rest- Repairs: Air Insurance, foods made mobiles Carpets aurant auto, house, travel Consulting, clothes meals landscaping Teaching

MOSTLY GOODS

MOSTLY SERVICES

Value Added by Physical, Intangible Elements Helps Distinguish Goods and Services (Fig 1.6)
Physical Elements High
Salt Detergents CD Player Wine Golf Clubs New Car Tailored clothing Fast-Food Restaurant

Plumbing Repair Health Club Airline Flight Landscape Maintenance Consulting Life Insurance Internet Banking

Low

Source; Adapted from Lynn Shostack

Intangible Elements

High

How Product Attributes Affect Ease of Evaluation

Most Goods Most Services

Easy to evaluate
Clothing Chair Motor vehicle Foods Restaurant meals Lawn fertilizer Haircut Entertainment Education Legal services

Difficult to evaluate*
Computer repair

Complex surgery

High in search attributes

High in experience attributes

High in credence attributes

Source: Adapted from Zeithaml

*NOTE: Difficulty of evaluation tends to decrease with broad exposure

to a service category and frequency of use of a specific supplier

Chapter 2:

Customer Behavior in Service Encounters

Overview Of Chapter 2
w iffere e a C t er Behavi r C t er e i i el f ervi e C a i ervi e ffe t

: The Three ta e pti

rep r ha e ta e ervi e ter ta e tter ta e

A Framework for Developing Effective Service Marketing Strategies

Understanding Customer Needs, Decision Making, and ehavior in Service Encounters
Chapter 2

uilding the Service Model

Part II: Chapters 3-7

Managing the Customer Interface

Part III: Chapters 8-11

Implementing Profitable Service Strategies

Part IV: Chapters 12-15

A Framework for Developing Effective Service Marketing Strategies

wo Key hemes in Part I of the Services Marketing Strategy Framework:

1.
1.

Differences among Services Affect Customer Behavior Three-Stage Model of Service Consumption
Service Encounter Stage: Role in high-contact vs. lowcontact delivery

Prepurchase Stage: Search, evaluation of alternatives, decision Post-Encounter Stage: Evaluation against expectations, future intentions

How Differences among Services Affect Customer Behavior

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 ased on differences in nature of service act (tangible/intangible) and who or what is direct recipient of service (people/possessions), there are four categories of services:
People processing Possession processing Mental stimulus processing Information processing

Four Categories Of Services (Fig 2.1)

Who or What Is the Direct Recipient of the Service? Nature of the Service Act Tangible Actions People Possessions Possession processing (services directed at physical possessions):  Refueling  Disposal/recycling

People processing
(services directed at peoples bodies):  Barbers  Health care

Intangible Actions

Mental stimulus processing (services directed at peoples minds):  Education  Advertising/PR

Information processing (services directed at intangible assets):  Accounting  anking

Four Categories Of Services

People Processing Customers must:
Physically enter the service factory Co-operate actively with the service operation

Managers should think about process and output from customers perspective
o identify benefits created and non-financial costs:
ime, mental, physical effort

People Processing

Eg Barbers/ beautitions/ Health Care Education ourisim Experiences/

Possession Processing
Possession Processing
 Customers are less physically involved compared to people processing services  Involvement is limited  Production and consumption are separable

Mental Stimulus Processing

Mental Stimulus Processing
 Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers  Physical presence of recipients not required  Core content of services is information-based
 Can be inventoried

Information Processing
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.

Customer Decision Making: Three-Stage Model of Service Consumption

The Purchase Process for Services

Pre purchase Stage

Service Encounter Stage

Post-Encounter Stage

Prepurchase Stage

Prepurchase Stage: Overview

Prepurchase Stage usto ers see solutions to arouse nee s Evaluating a service ifficult a e

ncertaint a out outco es increases perceive ris Service Encounter Stage What ris re uction strategies can service suppliers evelop? n erstan ing custo ers service e pectations o ponents of custo er e pectations Post-Encounter Stage a ing a service purchase ecision

Customers Seek Solutions to Aroused Needs

People buy goods and services to meet specific needs/wants External sources may stimulate the awareness of a need Companies may seek opportunities by monitoring consumer attitudes and behavior
r ti l Fi i l t i ki rti i t r tir Fi r .4 ti l t t
Court y of M t rfil Corpor tion

Evaluating a Service May Be Difficult

Search attributes help customers evaluate a product before purchase
Style, color, texture, taste, sound

Experience attributes cannot be evaluated before purchasemust 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 & consumption
Quality of repair and maintenance wor

How Product Attributes Affect Ease of Evaluation

Most Goods Most Services

Easy to evaluate
Clothing Chair Motor vehicle Foods Restaurant meals Lawn fertilizer Haircut Entertainment Education Legal services

Difficult to evaluate*
Computer repair

Complex surgery

High in search attributes

High in experience attributes

High in credence attributes

Source: Adapted from Zeithaml

*NOTE: Difficulty of evaluation tends to decrease with broad exposure

to a service category and frequency of use of a specific supplier

Perceived Risks in Purchasing and Using Services

Functionalunsatisfactory performance outcomes Financialmonetary loss, unexpected extra costs Temporalwasted time, delays leading to problems Physicalpersonal injury, damage to possessions Psychologicalfears and negative emotions Socialhow others may think and react Sensoryunwanted impact on any of five senses

How Might Consumers Handle 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

Strategic Responses to Managing Customer Perceptions 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)

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 bac ground Train staff members to be respectful and empathetic

AOL Offers Free Trial Software to Attract Prospective Customers (Fig 2.6)

Understanding Customers 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 among differently positioned service providers in the same industry Expectations change over time Example: Service Perspectives 2.1
Parents wish to participate in decisions relating to their childrens medical treatment for heart problems Media coverage, education, the Internet has made this possible

Factors Influencing Customer Expectations Service

(Fig 2.8) Explicit & Implicit Service Promises ord-of-Mouth Desired Service Beliefs about hat Is Possible Past Experience Personal Needs

ZONE OF OLERANCE

Perceived Service Alterations Adequate Service Situational Factors Predicted Service

Source: Adapted from Valarie A. Zeithaml, Leonard A. Berry, and A. Parasuraman, The Nature and Determinants of Customer Expectations of Service, Journal of the Academy of Marketing Science 21, no. 1 (1993): pp 112.

Components of Customer 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 olerance:
Range within which customers are willing to accept variations in service delivery

Service Encounter Stage

Service Encounter Stage: Overview

 Service encounters range from high- to low-contact Prepurchase Stage  Understanding the servuction system  Service marketing systems: highcontact and low-contact Service Encounter Stage  Role and script theories  Theater as a metaphor for service delivery: An integrative perspective  Implications for customer participation in service creation and delivery

Post-Encounter Stage

Service Encounters Range from High-Contact to Low-Contact

Figure 2.9 Levels of Customer Contact with Service Organizations

Distinctions :High-Contact &Low-Contact Services

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

The Servuction System: Service Production and Delivery

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 ta es 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 Srvc

(Fig 2.10)

SERVICE MARKETING SYSTEM

Service Delivery System Service Operations System
Interior & Exterior Facilities Other Customers

Other Contact Points 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

Technical Core

Equipment

The Customer

Service People

Backstage (invisible)

Front Stage (visible)

Other Customers

Service Marketing System for Low-Contact Srvice

2.11)

(Fig

Service Operations System

SERVICE MARKETING SYSTEM Service Delivery System Mail Other Contact Points Advertising

Technical Core

Self Service Equipment Phone, Fax, Web- site, etc.

The Customer

Market Research Surveys Billing/Statements Random Exposure to Facilities/Vehicles Word of Mouth

Backstage (invisible)

Front Stage (visible)

Theater as a Metaphor for Service Delivery

All the worlds 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

Theatrical Metaphor: An Integrative Perspective

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 audiencedepending on type of performance, may be passive or active participants

Implications of Customer Participation in Service Delivery

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

Figure 2.13: Tourists Appreciate Easy-toUnderstand Instructions When Traveling

Post-Encounter Stage

Post-Encounter Stage: Overview

Prepurchase Stage

Service Encounter Stage

 Evaluation of service performance  Future intentions

Post-Encounter Stage

Customer Satisfaction Is Central to the Marketing Concept

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

Satisfaction reflects perceived service quality, price/quality tradeoffs, personal & situational factors Research shows links between customer satisfaction and a firms financial performance

Customer Delight: Going 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 Strategic links exist between customer satisfaction and corporate performance. Getting feedback during service delivery help to boost customer loyalty Progressive Insurance seeks to delight customers through exceptional customer service (Best Practice in Action 2.1)
Other examples

Summary of Chapter 2: Customer Behavior in Service Encounters (1)

Four broad categories of services

1. 2. 3. 4.

People processing, Possession processing, Mental stimulus processing Information processing Categories based on differences in: Nature of Service Act (tangible or intangible), & ho is direct recipient of service(people or possessions) Each poses distinctive service management challenges

Three-Stage Model of Service Consumption

helps us to understand and better manage customer behavior

Summary of Chapter 2:

Customer Behavior in Service Encounters (2) Prepurchase Stage

Customers seek solutions to aroused needs Evaluation alternatives are more difficult when a service involves experience and credence attributes Customers face a variety of perceived risks in selecting, purchasing and using services Steps taken to reduce customers risk perceptions, include: (1) guarantees and warranties, (2) previews of service and visits to service facilities, (3) employee training, (4) instituting visible safety procedures, (5) easy access to information, and (6) advance notice of problems or delays 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

Summary of Chapter 2:

Customer Behavior in Service Encounters (3)

Service encounter stage
Service encounters range from high contact to low contact Servuction system differs by level of contact:
High-contact services: Most parts of operations, service delivery, and marketing systems are exposed to customers Low-contact services: Some parts of systems are invisible to customers

Role and script theories help us understand and manage customer behavior during encounters Theatrical view of service delivery offers insights for design, stagemanaging performances, and relationships with customer audience

Post-encounter 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

WORK TO DO ACTIVITY Make a continuum

1.

2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29.

Blue Jeans Business Suit Appendix Operation Car Casual Clothing Car Brake Relining Dental Examination Condo Dress Shoes Meal at Nice Restaurant Couch Eyeglasses Golf Lessons Day Care Furniture Haircut Dishwasher Greeting Card Dry Cleaning Health Club Membership Houseplant Fast Food Legal Representation Ice Cream Cone Flu Shot Novel Jewelry House Cleaner Psychotherapy

30.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

Lean Cuisine Dinner Plumbing Repairs Soft Drink Running Shoes Poster Framing Tailored Clothing TV Repair Socks Typing Service Vacation Package Tax Consultant Xeroxing/Copying Entertainment parks Jewellery costume Cds Inflight food Books on line Glasses Car Ac repair Bank accounts Laptops Cellphone Visa assistance Loans from friend Education Institutes IT consultants Laundry Detergent Life Insurance Rental Car