Consumer Behaviour for

Services
By Monal Deshmukh
Who is a customer..
The customer is both an organisation or an
individual. Although both might buy the same
service offer, but the marketing to acquire the
customers will be different.
Features For individual For organisation
Communication

Mass media Personal selling
Decision maker

Initiator: Influencer;
decider; buyer; user

Manager
Emotional vs.
social needs

Emotional rational
Consumer Behaviour
Consumer behaviour study is based on consumer buying
behaviour, with the customer playing the three distinct roles
of user, payer and buyer.
The primary objective of service producers is to develop and
provide offerings that satisfy consumer needs and
expectations.
Service providers need to understand how consumers
choose, experience and evaluate their offerings.
Other people often influence a consumers purchase
decision. The marketer needs to know which people are
involved in the buying decision and what role each person
plays, so that marketing strategies can also be aimed at these
people. (Kotler et al, 1994).

Initiator: the person who first suggests or thinks of the idea of buying a particular product or
service.
Influencer: a person whose views or advice carry weight in making the final buying decision
Decider: the person who ultimately makes the final buying decision or any part of it
Buyer: the person who makes the actual purchase
User: the person who consumes the product or service
Consumer behavior is the study of how people buy, (who,
what, where, why, when) they buy.
It attempts to understand the buyer decision making process,
both individually and in groups.
It studies characteristics of individual consumers such as
demographics, psychographics, and behavioural variables in an
attempt to understand people's wants
ENVIRONMENTAL
FACTORS
BUYER'S BLACK BOX
BUYER'S
RESPONSE
Marketing
Stimuli
Environmental
Stimuli
Buyer
Characteristics
Decision Process
Product
Price
Place
Promotion
Physical
Evidence
People
Process
Economic
Technological
Political
Cultural
Demographic
Natural
Attitudes
Motivation
Perceptions
Personality
Lifestyle
Knowledge
Problem recognition
Information search
Alternative
evaluation
Purchase decision
Post-purchase
behaviour
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount
Black box model

Overall Model of Consumer Behaviour
Self-Concept
&
Learning
Decision Processes
External Influences
Internal Influences
Culture
Subculture
Demographics
Social status
Reference groups
Family
Marketing Activities
Perception
Learning
Memory
Motives
Personality
Emotions
Attitudes
Problem Recognition
Information Search
Selection
Outlet select & Purchase
Postpurchase
Processes
Consumer Behaviour Differences in Service
1Intangibility problem

1Consumer involvement

1Perceived Risk

1Sources of Information
High involvement
Low involvement/impulse offers

HIGH INVOLVEMENT
-COMPLEXITY OF FEATURES
-HIGH PRICE
-HIGH RISK
-LARGER DIFFERENCE IN SERVICES
-LARGE NUMBER OF USER
LOW INVOLVEMENT
-LOW PRICE
-LESS DIFFERENCE IN FEATURES
-DOESNT REFLECT CONSUMERS PERSONALITY
-LOW BRAND LOYALTY
IMPULSE OFFER: WITHOUT PREMEDITATED PLANS: VAKOG
VISUAL;AURAL;KINESTHENICS;OLFACTORY=SMELL;GASTRONO
MIC=TASTE
Perceived Risk
1Buyer involvement
1Personal risk tolerance
1Situational factors
1Legal safeguards

Continuum of Evaluation for Different Types of
Products & Services
Difficult to evaluate
Easy to evaluate
High in search
qualities
High in experience
qualities
High in credence
qualities
Most
Goods
Most
Services
Consumer Evaluation Processes for
Services
Search Qualities
attributes a consumer can determine prior to purchase
of a product
Experience Qualities
attributes a consumer can determine after purchase (or
during consumption) of a product/service
Credence Qualities
characteristics that may be impossible to evaluate
even after purchase and consumption

Consumer Behavior in Services
(DMP= decision making process)
The aspects of consumer behavior that a marketer must
understand in five categories of consumer behavior:
Need Recognition
Information search
Evaluation of service alternatives
Service purchase and consumption
Postpurchase evaluation
Role of culture
Complete model of consumer behavior
Stimuli
(marketer
dominated,
other)
External
search




Memory




Internal
search
Exposure
Attention
Comprehension
Acceptance
Retention
Search
Need
recognition
Alternative
evaluation
Purchase
Outcomes
Dissatisfaction Satisfaction
Individual
differences
resources
motivation &
involvement
knowledge
attitudes
personality,
values, lifestyle
Influences
culture
social class
family
situation
Start
Consumer Categories in Decision-Making
and Evaluation of Services
Information Search Evaluation of
Alternatives
Purchase and
Consumption
Post - Purchase
Evaluation
Use of personal sources
Perceived risk
Evoked set
Emotion and mood
Service provision as drama
Service roles and scripts
Compatibility of customers
Attribution of dissatisfaction
Innovation diffusion
Brand loyalty
Culture
Values and attitudes
Manners and customs
Material culture
Aesthetics
Educational and social
institutions
1. NEED RECOGNITION
Difference between the desired state and the actual
condition.

Example:
+ By seeing a commercial for a new pair of shoes, stimulates
your recognition that you need a new pair of shoes.
+ Hunger stimulates your need to eat.
Maslows Hierarchy of Needs
Need Recognition
Self-
actualisation
Esteem
Love
Safety
Physiological
E.g -Meals
Experiment with
ethnic cuisine
A meal at the best
restaurant in town
Social meal with
friends and family
Safe food from a
reputable source
Food from any
uncontaminated
source
Internal Satisfaction
The respect of others
Action for and
from others
Survival
Satisfaction of
basic hunger
2. INFORMATION SEARCH
Internal Search:
--- Memory (Previous personal experience)
External Search:
--- Friends and Relatives
--- Word of Mouth recommendation(WOM)
--- Media communications
--- Internet sources
A successful information search leaves a buyer with possible
alternatives, the evoked set.

Example:
Hungry, want to go out and eat, evoked set is
Chinese food or Indian food or Burger king






3. EVALUATION OF ALTERNATIVES
Need to establish criteria for evaluation, features the buyer
wants or does not want.
Rank/weight alternatives.
A process of choice reduction.
Rules based approaches used.
Critical attributes, average score of all attributes, or weighted
attributes.
Example:
If you want to eat something spicy, then Indian
food gets the highest rank etc
4. PURCHASE DECISION
With respect to available alternatives ((product, package, store,
method of purchase etc), consumers make the purchase
decision.
Due to difference of tangibility among goods and services, it
becomes tough for consumers to see or try a service before
purchase and to finalise the exact service

5. PURCHASE
May differ from decision, time lapse between purchase
decision and the actual purchase, product availability.
6. POST-PURCHASE EVALUATION :
It is the outcome Satisfaction or Dissatisfaction. This
can be reduced by warranties, after sales
communication etc. As choice process of services is
risky, thus the experience always dominates the
evaluation process
Services are high in experience and credence
qualities relative to goods
The elements of consumer behavior that are relevant
to understand service experiences are:
Example:
After eating an Indian meal, you may think that really
you wanted a Chinese meal instead.
CONSUMER
EXPERIENCE
a. Service as process
Service are actions or performance done for and with
customers, which typically involve sequence of steps, actions
and activities.
Example Medical services: some steps are done by specialist
like operations, some has to be done by the customer/patient
like medication, some steps has to be done by third party like
blood test.
These steps as a whole constitutes a process , a service
experience is evaluated by the customer

b. The compatibility of service customers
c. Customer co production


D. Service provision as drama
The metaphor of a theatre is a useful framework for analysing
or describing services.
Like a theater, manager of a service organisation aims to create
and maintain desirable impression by managing the actors and
physical setting of behavior.

E. Service Roles and scripts
F. Emotion and Moods
Emotion and mood are feeling states that influence peoples
perception and evaluation of their experiences
Moods are transient
Emotions more intense, stable and pervasive
May have a negative or positive influence

TYPES OF CONSUMER BUYING
BEHAVIOR :
There are four types of consumer buying behavior:
Routine Response/Programmed Behavior
Limited Decision Making
Extensive Decision Making
Impulse buying
1. ROUTINE RESPONSE/
PROGRAMMED BEHAVIOR
Buying low involvement,
frequently purchased,
low cost items.
Examples : Soft drinks, snack foods, milk etc.

2. LIMITED DECISION MAKING
Buying product occasionally.
That is when you need to obtain information about
unfamiliar brand in a familiar product category.
Example: Clothes--know product class but not the
brand.
3.EXTENSIVE DECISION
MAKING :
Complex
high involvement, unfamiliar, expensive
infrequently bought products.
Spend a lot of time seeking information and
deciding.
High degree of risk.

Example:
Cars, homes, computers, education.

4. IMPULSE BUYING :
No conscious planning.
The purchase of the same product does not always elicit the
same Buying Behavior. Product can shift from one category to
the next.
For example:
Going out for dinner for one person may be extensive decision
making (for someone that does not go out often at all), but
limited decision making for someone else. The reason for the
dinner, whether it is an anniversary celebration, or a meal with
a couple of friends will also determine the extent of the
decision making.
CUSTOMER
EXPECTATION
OF SERVICES
Customers expectation
Pre-trial beliefs about a service that
function as standards against which
performance is judged.
Knowing what the customer expects is the
first and possibly most critical step in
delivering good quality service.
Customer expectations act as reference
points against which performance is
judged. Types:


service expectations includes
(1) Desired service, which reflects what customers want;
(2) Adequate service, or what customers are willing to accept; and
(3) Predicted service, or what customers believe they are likely to
get.

Customer Expectation Levels
Adequate Service
Desired Service
Zone of
Tolerance
For example, an online travel-planning and flight-
booking site such as Expedia, book a short holiday to
Venice at Easter. However, demand at Easter may
constrain the availability of airline seats and hotel
rooms. In this situation and in general, customers
hope to achieve their service desires but recognize
that this is not always possible.
Level of acceptable service i.e adequate service
the level of service the customer will accept. So the
customer may put up with a flight at a less than ideal
time and stay at a hotel further away from the key
Venetian sites, if he or she really wants to travel at
Easter.

Meaning and type of service expectation
Six Common Customer Expectations are
Promptness Being impatient, customers do not want to wait for service
Professionalis
m
Customers want a customer service representative that is knowledgeable about
products and services, skilled at dealing with people, and responsible in performing
duties. Customers want to deal with a professional customer service representative.
Accuracy Customers expect the PROVIDER to get information and orders correct the first time.
They do not want to have to deal with mistakes or correct the errors.
Friendliness Customers expect to be treated respectfully and politely. Customers want to be liked
and to be treated in a friendly manner.
Honesty Customers want honest, straightforward information and responses. Most customers
appreciate a service provider who admit mistakes and work to correct them. A
customer that believes he or she has been misled will stop doing business with the
company and will likely complain. Broken promises anger customers. Customers
expect to be informed if a promise cannot be fulfilled as stated.
Empathy Customers expect understanding. They want a representative who is willing to see
their side of a situation, especially when there is a problem. They want service
provider must takes time to listen to them and hear them out.
Desired service
The level of service the customer hopes to
receive the wished for level of performance.
Desired service is a blend of what the customer
believes can be and should be.

Adequate Services
Adequate service represents the minimum tolerable
expectation.
It is the bottom level of performance which is acceptable to the
customer shows adequate services
It portrays the idea that customers access service performance
on the basis of two standard boundaries: what they desire and
what they deem acceptable
Their is a different set of determinants which affects adequate
service.
In general, these influences are short term and tend to fluctuate
more than the factors that influence desired service.
The five factors that influence adequate service: (1) temporary
service intensifiers, (2) perceived service alternatives, (3)
self-perceived service role, (4) situational factors, and (5)
predicted service.

The zone of tolerance
Services are heterogeneous. In that, performance may
vary. The extent to which customers recognize and are
willing to accept this variation is called the zone of
tolerance.
If service performance is below adequate service,
customers will be frustrated and their satisfaction with
the company will be undetermined.
If service performance is higher than the zone of
tolerance at the top end where performance exceeds
desired service customers will be very pleased and
probably quite surprised as well.

As an example, consider the service at a checkout queue in a
grocery store. Most customers hold a range of acceptable times
for this service counter probably somewhere between five
and 10 minutes.
If service is provided in that period of time, customers probably
do not pay much attention to the wait.
If a customer enters the line and finds sufficient checkout
personnel to serve him or her in the first two or three minutes,
he or she may notice the service and judge it as excellent.
On the other hand, if a customer has to wait in line for 15
minutes, he or she may begin to grumble and look at his or her
watch.
The longer the wait is below the zone of tolerance, the more
frustrated the customer becomes.

Factors that
influence
customers
expectation of
services
Factors that Influence
Desired Service
Desired
Service
Adequate
Service
Zone
of
Tolerance
Enduring Service
Intensifiers
Personal Needs
Enduring service intensifiers are individual, stable factors that
increases sensitivity towards service
This can further divided into
Derived Service Expectations : which occur when customer
expectations are driven by another person or group of
people.
A niece from a big family who is planning a ninetieth birthday
party for a favourite aunt is representing the entire family in
selecting a restaurant for a successful celebration. Her needs
are driven in part by the derived expectations from the other
family members.
A parent choosing a vacation for the family, a spouse selecting
a home-cleaning service, an employee choosing an office for
the firm all these customers individual expectations are
intensified because they represent and must answer to other
parties who will receive the service.
Personal service Philosophies business-to-
business service, customer expectations are
driven by the expectations of their own
customers.
The head of an information technology department
in an insurance company, has expectations based
on those of the insurance customers he or she
serves: when the computer equipment is down, his
or her customers complain. The need to keep the
system up and running is not just his or her own
expectation but is derived from the pressure of
customers

Personal needs include physical, social,
psychological categories
A cinema-goer who regularly goes to See films
straight from work, and is Therefore thirsty and
hungry, hopes And desires that the food and
drink Counters at the cinema will have short
Queues and attentive staff, whereas a Cinema-
goer who regularly has Dinner elsewhere has a
low or zero Level of desired service from the food
And drink counters. A customer with High social
and dependency needs

Factors that Influence Adequate Service
Desired
Service
Adequate
Service
Zone
of
Tolerance
Self-Perceived
Service Role
Situational
Factors
Perceived Service
Alternatives
Temporary Service
Intensifiers
Temporary service intensifiers, consists of short-term,
individual factors that make a customer more aware of
the need for service.
Personal emergency situations in which service is urgently
needed (such as an accident and the need for car insurance or
a breakdown in office equipment during a busy period) raise the
level of adequate service expectation, particularly the level of
responsiveness required and Considered acceptable.
A mail-order company that depends on free phone numbers for
receiving all customer orders will tend to be more demanding of
the telephone service during peak periods of the week, month
and year. Any system breakdown or lack of clarity on the lines
will be tolerated less during these intense periods than at other
times.

Perceived service alternatives are other providers from whom
the customer can obtain service.
If customers have multiple service providers to choose from, or
if they can provide the service for themselves (such as lawn
care or personal grooming), their levels of adequate service are
higher than those of customers who believe it is not possible to
get better service elsewhere.
The customers perception that service alternatives exist raises
the level of adequate service and narrows the zone of
tolerance. It is important that service marketers fully understand
the complete set of options that customers view as perceived
alternatives
An airline customer who lives in a provincial town with a small airport, has a
reduced set of options in airline travel. This customer will be more tolerant of
the service performance of the carriers in the town because few alternatives
exist. He or she will accept the scheduling and lower levels of service more
than will the customer in a big city.

Self Perceived Service Role
It is customer perceptions of the degree to which customers
exert an influence on the level of service they receive.
Customers expectations are partly shaped by how well they
believe they are performing their own roles in service delivery.
One role of the customer is to specify the level of service
expected.
A customer who is very explicit with a waiter about how rare he or she wants
his or her steak cooked in a restaurant will probably be more dissatisfied if the
meat comes to the table overcooked than a customer who does not articulate
the degree of cooking expected.
The customers active participation in the service also affects
this factor.
A customer who does not get his or her car serviced regularly is likely to be
more lenient on the car manufacturer when he or she experiences problems
than one who conscientiously follows the manufacturers service schedules.

Levels of adequate service are also influenced by situational
factors,
It is defined as service performance conditions that
customers view as beyond the control of the service provider.
For example, floods or storms that affect a large number of
people at one time may lower service expectations because
customers recognize that insurers are inundated with demands
for their services. Customers who recognize that situational
factors may accept lower levels of adequate service.
Situational factors temporarily lower the level of adequate
service, widening the zone of tolerance.

FACTORS THAT INFLUENCE DESIRED AND
PREDICTED SERVICES
Predicted Services
The level of service that customers believe they are
likely to get.
This type of service expectation can be viewed as
predictions made by customers about what is likely to
happen during an impending transaction or exchange.
Predicted service performance implies some objective
calculation of the probability of performance or
estimate of anticipated service performance level.
If customers predict good service, their levels of
adequate service are likely to be higher than if they
predict poor service.

For example, travellers may expect poorer service from some
of the no-frills airlines such as Ryanair or easyJet in
comparison to some of the full-cost airlines (British Airways,
KLM, Air France). This prediction will mean that higher
standards for adequate service will exist in the full-cost airlines.

On the other hand, customers of mobile phone companies may
know that the companies call centre operations will provide
poor service around Christmas time when myriad people are
setting up the mobiles that they have received as gifts. In this
case, levels of adequate service decrease and zones of
tolerance widen.
Explicit Services
personal and non-personal communication
about services

Controlled by service provider.

Logical and appropriate way to manage customer expectations
and ensure that it fits the promises.

They shape what customers desire



Explicit Services
Explicit service promises are personal and
non-personal statements about the service
made by the organization to customers.
The statements are personal when they are communicated by salespeople
or service or repair personnel; they are non-personal when they come from
advertising, brochures and other written publications.
Explicit service promises are completely in the control of the
service provider.
Promising exactly what will ultimately be delivered would seem
a logical and appropriate way to manage customer
expectations and ensure that reality fits the promises.
They shape what customers desire in general as well as what
they predict will happen in the next service encounter from a
particular service provider or in a certain service encounter.



Explicit Services Strategies
Make realistic and accurate promises that reflect
the service actually delivered rather than an idealized
version of the service.
Ask contact people for feedback on the accuracy of
promises made in advertising and personal selling.
Avoid engaging in price or advertising wars with
competitors because they take the focus off customers
and escalate promises beyond the level at which they
can be met.
Formalize service promises through a service
guarantee that focuses company employees on the
promise and that provides feedback on the number of
times promises are not fulfilled.
Implicit Services
Implicit service promises are service-related cues other than
explicit promises that lead to inferences about what the service
should and will be like.
These quality cues are dominated by price and the tangibles
associated with the service.
Higher the price and the more impressive the tangibles, the
more a customer will expect from the service.
Consider a customer who shops for insurance, finding two firms
charging radically different prices. He or she may infer that the
firm with the higher price should and will provide higher-quality
service and better coverage. Similarly, a customer who stays at
a five-star hotel is likely to desire and predict a higher standard
of service than from a hotel with less impressive facilities.

Implicit service strategies
Ensure that service tangibles accurately reflect
the type and level of service provided.
Ensure that price premiums can be justified by
higher levels of performance by the company
on important customer attributes.
Word of Mouth
These personal and sometimes non-personal
statements made by parties other than the
organization convey to customers what the service will
be like and influence both predicted and desired
service.
Word-of-mouth communication carries particular
weight as an information source because it is
perceived as unbiased.
Word of mouth tends to be very important in services
that are difficult to evaluate before purchase and
before direct experience of them.

Word of Mouth strategies
Simulate word of mouth in advertising by using
testimonials and opinion leaders.
Identify influencers and opinion leaders for the
service and concentrate marketing efforts on
them.
Use incentives with existing customers to
encourage them to say positive things about the
service.
Past Experience
Past experience, the customers previous exposure to service
that is relevant to the focal service, is another force in shaping
predictions and desires.
For example, we compare each stay in a particular hotel with all
previous stays in that hotel. But past experience with the focal
hotel is likely to be a very limited view of your past experience.
You may also compare each stay with your experiences in
other hotels and hotel chains.
Past experience may incorporate previous experience with the
focal brand, typical performance of a favourite brand,
experience with the brand last purchased or the top selling
brand, and the average performance a customer believes
represents a group of similar brands.
Stretegies: Use marketing research to profile customers
previous experience with similar services.


Customers
Perception of
Services
Perception is a way of regarding, understanding, or
interpreting something; a mental impression.
Perception plays a large role in customer service.
Perceptions are always considered relative to
expectations
Perception is the way in which an individual gathers,
processes, and interprets information from the
environment.
.Perception is an understanding between three elements:
a. Service quality
b. Service encounter
c. Customer satisfaction


Strategies for influencing perception
Measure customer satisfaction/service quality
Every service encounter counts
Plan for Recovery
Facilitate Adaptability/Flexibility
Encourage Spontaneity
Help employees cope with problem customers

Customer Perceptions of Quality and
Customer Satisfaction
Perceptions of Product/Service
Quality
Perceived quality a perceptual outcome generated
from processing product or service features (benefits
delivered) that leads the consumer to make inferences
about the quality of that product or service
Dimensions of perceived quality for durable goods:
ease of use, versatility, durability, serviceability,
performance, and prestige
Perceived high quality product satisfaction
Risk Perception/Risk Reduction
It refers to a perceptual process and behavior
outcomes generated from the perception of risk in the
purchase or a product or service
Components of risk:
Severity of consequences (how bad will it be)
Uncertainty related to those consequences (what are the
chances the consequence will occur)
Risk reduction strategies: behaviors to reduce their
perception of risk in purchase situations

Price Perception
Consumers perceive a price as either high or
low on the basis of a comparison with an
internal price (or referent price).
Price perceptions and the social judgment
theory regions
Assimilation (acceptable)
and contrast (too high or low)
O The trade-off between product benefits and product costs.
Perceived value = perceived benefits / perceived costs
PERCEIVED RISKS IN PURCHASING AND USING SERVICES
Perceived Value

O Functional unsatisfactory performance outcomes
O Financial monetary loss, unexpected extra costs
O Temporal wasted time, delays lead to problems
O Physical personal injury, damage to possessions
O Psychological fears and negative emotions
O Social how others may think and react
O Sensory unwanted impacts to any of five senses

Service Quality
The customers judgment of overall excellence
of the service provided in relation to the quality
that was expected.
Process and outcome quality are both
important.
Service quality assessments are formed on
judgments of:
Outcome quality
Process quality
Physical environment quality

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
SERVQUAL Attributes
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
Perceived
Service
Expected Service
CUSTOMER
COMPANY
Customer
Gap
GAP 1
GAP 2
Gaps Model of Service Quality
GAP 3
External
Communications to
Customers GAP 4
Service Delivery
Customer-Driven Service
Designs and Standards
Company Perceptions of
Consumer Expectations
Part 1 Opener
GAPS MODEL OF SERVICE QUALITY
O Customer Gap:
difference between expectations and perceptions
O Provider Gap 1:
not knowing what customers expect
O Provider Gap 2:
not having the right service designs and standards
O Provider Gap 3:
not delivering to service standards
O Provider Gap 4:
not matching performance to promises
KEY FACTORS LEADING TO THE CUSTOMER GAP

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Provider Gap 1: Not knowing what customers expect
Provider Gap 2: Not selecting the right service designs and standards
Provider Gap 3: Not delivering to service standards
Provider Gap 4: Not matching performance to promises
Customer
Expectations
Customer
Perceptions

Customer
Gap

PROVIDER GAP 1

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Company
Perceptions of
Consumer
Expectations
Expected
Service
CUSTOMER
COMPANY
GAP 1
KEY FACTORS LEADING TO PROVIDER GAP 1

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Customer Expectations
Company Perceptions of
Customer Expectations
Inadequate marketing research orientation
Insufficient marketing research
Research not focused on service quality
Inadequate use of market research
Lack of upward communication
Lack of interaction between management and customers
Insufficient communication between contact employees and managers
Too many layers between contact personnel and top management
Insufficient relationship focus
Lack of market segmentation
Focus on transactions rather than relationships
Focus on new customers rather than relationship customers
Inadequate service recovery
Lack of encouragement to listen to customer complaints
Failure to make amends when things go wrong
No appropriate recovery mechanisms in place for service failures
Gap
1
Figure 2.2
PROVIDER GAP 2

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CUSTOMER
COMPANY
GAP 2
Customer-Driven
Service Designs and
Standards
Company
Perceptions of
Consumer
Expectations
KEY FACTORS LEADING TO PROVIDER GAP 2

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Customer-Driven Service
Designs and Standards
Management Perceptions of
Customer Expectations
Poor service design
Unsystematic new service development process
Vague, undefined service designs
Failure to connect service design to service positioning
Absence of customer-driven standards
Lack of customer-driven service standards
Absence of process management to focus on customer
requirements
Absence of formal process for setting service quality goals
Inappropriate physical evidence and servicescape
Failure to develop tangibles in line with customer expectations
Servicescape design that does not meet customer and
employee needs
Inadequate maintenance and updating of the servicescape
Gap
2
Figure 2.3
PROVIDER GAP 3

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CUSTOMER
COMPANY
Service Delivery
GAP 3
Customer-Driven
Service Designs and
Standards
KEY FACTORS LEADING TO PROVIDER GAP 3

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Service Delivery
Customer-Driven Service
Designs and Standards
Deficiencies in human resource policies
Ineffective recruitment
Role ambiguity and role conflict
Poor employee-technology job fit
Inappropriate evaluation and compensation systems
Lack of empowerment, perceived control, and teamwork
Customers who do not fulfill roles
Customers who lack knowledge of their roles and responsibilities
Customers who negatively impact each other
Problems with service intermediaries
Channel conflict over objectives and performance
Difficulty controlling quality and consistency
Tension between empowerment and control
Failure to match supply and demand
Failure to smooth peaks and valleys of demand
Inappropriate customer mix
Overreliance on price to smooth demand
Gap
3
Figure 2.4
PROVIDER GAP 4

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CUSTOMER
COMPANY
External
Communications
to Customers
GAP 4
Service Delivery
KEY FACTORS LEADING TO PROVIDER GAP 4

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Service Delivery
Lack of integrated services marketing communications
Tendency to view each external communication as independent
Not including interactive marketing in communications plan
Absence of strong internal marketing program
Ineffective management of customer expectations
Absence of customer expectation management through all forms of
communication
Lack of adequate education for customers
Overpromising
Overpromising in advertising
Overpromising in personal selling
Overpromising through physical evidence cues
Inadequate horizontal communications
Insufficient communication between sales and operations
Insufficient communication between advertising and operations
Differences in policies and procedures across branches or units
External Communications to
Customers
Gap
4
Figure 2.5
The Customer Gap
Expected
Service
Perceived
Service
GAP
Part 1 Opener

The Zone of Tolerance
Adequate Service
Desired Service
Zone of
Tolerance
Zones of Tolerance VARY for
Different Service Dimensions

Most Important Factors Least Important Factors
Level
of
Expectation
Adequate Service
Desired Service
Zone of
Tolerance
Desired
Service
Adequate
Service
Zone
of
Tolerance
Desired Service
Adequate Service
Zones of Tolerance VARY for
First-Time and Recovery Service

First-Time Service
Outcome
Process
Outcome
Process
Recovery Service
Expectations
LOW HIGH
Source: Parasuraman, Berry and Zeithaml (1991)
WHAT DO DISSATISFIED CUSTOMERS DO?

O Take no action
Forget the experience
O Private action
Boycott the store
Warn others about the store
O Public action
Register complaint
Legal action
FACTORS INFLUENCING CUSTOMER SATISFACTION
O Product/service quality
O Product/service attributes or features
O Consumer Emotions
O Attributions for product/service success or failure
O Equity or fairness evaluations
OUTCOMES OF
CUSTOMER SATISFACTION
O Increased customer retention
O Positive word-of-mouth communications
O Increased revenues
THE SERVICE ENCOUNTER
O is the moment of truth
O occurs any time the customer interacts with the firm
O can potentially be critical in determining customer satisfaction
and loyalty
O types of encounters:
remote encounters
phone encounters
face-to-face encounters
O is an opportunity to:
build trust
reinforce quality
build brand identity
increase loyalty
Check-In
Request Wake-Up Call
Checkout
Bellboy Takes to Room
Restaurant Meal

A SERVICE ENCOUNTER
CASCADE FOR A HOTEL VISIT
Sales Call
Ordering Supplies
Billing
Delivery and Installation
Servicing
A Service Encounter
Cascade for an Industrial Purchase
CRITICAL SERVICE ENCOUNTERS RESEARCH
OGOAL - understanding actual events and behaviors
that cause customer dis/satisfaction in service
encounters
OMETHOD - Critical Incident Technique
ODATA - stories from customers and employees
OOUTPUT - identification of themes underlying
satisfaction and dissatisfaction with service
encounters
Customer involvement in service encounters
varies with type of process
People processing (e.g., motel stay): customer is
physically involved throughout entire process
Possession processing (e.g., DVD repair): involvement
may be limited to drop off of physical item/description of
problem and subsequent pick up
Mental stimulus processing (e.g., weather forecast):
involvement is mental, not physical; here customer simply
receives output and acts on it
Information processing (e.g., health insurance):
involvement is mental - specify information upfront and
later receive documentation of coverage

COMMON THEMES IN CRITICAL
SERVICE ENCOUNTERS RESEARCH
Recovery: Adaptability:
Spontaneity: Coping:
Employee Response
to Service Delivery
System Failure
Employee Response
to Customer Needs
and Requests
Employee Response
to Problem Customers
Unprompted and
Unsolicited Employee
Actions and Attitudes
RECOVERY
O Acknowledge problem
O Explain causes
O Apologize
O Compensate/upgrade
O Lay out options
O Take responsibility
O Ignore customer
O Blame customer
O Leave customer to fend
for him/herself
O Downgrade
O Act as if nothing is
wrong
DO
DONT
ADAPTABILITY
O Recognize the seriousness
of the need
O Acknowledge
O Anticipate
O Attempt to accommodate
O Explain rules/policies
O Take responsibility
O Exert effort to
accommodate
O Promise, then fail to follow
through
O Ignore
O Show unwillingness to try
O Embarrass the customer
O Laugh at the customer
O Avoid responsibility
DO DONT
SPONTANEITY
O Take time
O Be attentive
O Anticipate needs
O Listen
O Provide information (even
if not asked)
O Treat customers fairly
O Show empathy
O Acknowledge by name
O Exhibit impatience
O Ignore
O Yell/laugh/swear
O Steal from or cheat a customer
O Discriminate
O Treat impersonally
DO DONT
COPING
O Listen
O Try to accommodate
O Explain
O Let go of the customer
O Take customers dissatisfaction
personally
O Let customers dissatisfaction
affect others
DO
DONT
MANAGING SERVICE ENCOUNTERS--1

O Service encounter: A period of time during which customers
interact directly with a service
O Moments of truth: Defining points in service delivery where
customers interact with employees or equipment
O Critical incidents: specific encounters that result in especially
satisfying/dissatisfying outcomes for either customers or
service employees
MANAGING SERVICE ENCOUNTERS--2

O Service success often rests on performance of junior contact
personnel
O Must train, coach, role model desired behavior
O Thoughtless or badly behaved customers can cause problems
for service personnel (and other customers)
O Must educate customers, clarify what is expected, manage
behavior

TECHNOLOGY BASED SERVICE ENCOUNTER
O Self-Service Technologies (SSTs)
Internet based services, ATM
Drivers of satisfaction
OSolved an intensified need
OBetter than alternative
ODid its job
Drivers of dissatisfaction
OTechnology failure
OProcess failure
OPoor design
OCustomer-driven failure