Services Marketing

CONSUMER BEHAVIOR IN SERVICES Unit 2

Who is a Consumer ?
Any individual who purchases goods and services from the market for his/her enduse is called a consumer. In simpler words a consumer is one who consumes goods and services available in the market.

What is consumer Interest ?

Every customer shows inclination towards particular products and services. Consumer interest is nothing but willingness of consumers to purchase products and services as per their taste, need and of course pocket.

Behaviour
The way in which an animal or person behaves in response to a particular situation or stimulus

What is Consumer Behaviour ?

Consumer Behaviour is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use.

Why do you think an individual buys a product ?

Need Social Status Gifting Purpose The main catalyst which triggers the buying decision of an individual is need for a particular product/service.

Why do you think an individual does not buy a product ?

No requirement Income/Budget/Financial constraints Taste

When do you think consumers purchase products ?

Festive season Birthday/ Anniversary/ Marriage Other occasions Consumers purchase products and services as and when need arises.

Factors which influence buying decision of a consumer

Psychological Social Economic, etc

Why study consumer behaviour?

Explains as to: Why and why not a consumer buys a product? When a consumer buys a product? How a consumer buys a product? In a laymans language consumer behaviour deals with the buying behaviour of individuals.

Consumers evaluation process for services

Search Qualities

attributes a customer can determine prior to purchase of a

product Experience Qualities attributes a customer can determine after purchase (or during consumption) of a product

Credence Qualities
characteristics that may be impossible to evaluate even after purchase and consumption

Continuum of Evaluation for Different Types of Products

Decision making process

Use of personal sources Perceived risk Evoked set

Information search

Evaluation of alternatives

Emotion & mood Service provision as drama Service roles and scripts Compatibility of

Purchase and consumption

Post purchase evaluation

Attribution of dissatisfaction Innovation diffusion Brand loyalty

Information search
Use of personal sources
Mass communication can convey messages about
search qualities but little about experience qualities. Asking friends or experts allows for obtaining information that is more trusted. Non-personal sources may not be available Can discover few attributes before purchase

Information search
Perceived risk
Intangible
Nonstandard

Usually come without any guarantees or warranty

Evaluation of alternatives
Evoked set
That group of products a consumer considers acceptable options in a given product category

Service purchase and consumption

Emotion and mood Service provision as drama Service personnel- actors Customers- audience

Physical evidence- setting

Process- performance

Service roles and scripts

The compatibility of service customers

Post purchase evaluation

Attribution of dissatisfaction

Innovation diffusion
Relative advantage Compatibility Communicability Divisibility

Complexity

Brand loyalty

Role of culture in services

Culture-

The arts, customs, ideas, etc, of a nation,

people, or group.

Cultural factors affect the

Evaluation

Purchase
Use of services

Elements of culture
Language (both verbal and non verbal)

Values and attitudes

Manners and customs

Material culture
Aesthetics

Education and social institutions

Elements of culture
Values and attitudes
Values and attitudes help to determine what members of a culture think is right, important, and/ or desirable

Manners and customs

Manners and customs represent a cultures views of

appropriate ways of behaving

Elements of culture
Material culture
What people own and how they use and display
material possessions varies around the world

Aesthetics
Aesthetics refers to cultural ideas about beauty and good taste. These are reflected in music, art, drama, and dance, as the appreciation of color and form

Elements of culture
Education and social institutions
Both kinds of culture are affected by, and are transmission agents of culture.

Education includes the process of transmitting skills

and knowledge

Culture manifests itself most dramatically in the

people-to-people contact of our social institution

Service Quality Management

Service Quality
Degree of excellence in service performance
Consumers perceive the quality of a service by
experiencing the consumption process and by

comparing the experience with their expectations.

Service delivery- Customers are co producersparticipation effects service quality= but firms cannot blame customers

Service Quality
Quality is one of the most influencing factors in a consumers purchase decision process Quality is related to
Costs Profitability Customer satisfaction Customer relation Behavioral intention Positive word of mouth

Servicescape
Servicescape is a part of physical evidence The environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service

Determinants of service quality

According to Alfrecht and Zemke:

Care and concern- How devoted employees

and operational systems of a service are in

solving the problems of customers

Spontaneity- How employees demonstrate

willingness and readiness to serve.

Determinants of service quality

According to Alfrecht and Zemke:

Problem solving- The expertise and skill of

contact employees in performing services.

Recovery- The special efforts of a service

provider in handling a situation when

something goes wrong or something

unexpected happens.

Determinants of service quality

According to Parasuruman, Zeithaml and Berry
Reliability- involves consistency of performance

and dependability
Responsiveness- concerns the willingness or readiness of employees to provide service Competence- means possession of the required skills and knowledge Access- involves approachability and ease of contact

Determinants of service quality

According to Parasuruman, Zeithaml and Berry
Courtesy- involves politeness, respect,

consideration and friendliness of contact personnel

Communication- means keeping customers

informed in a language they can understand, and

listening to them Credibility- involves trustworthiness, believability, honesty and having the customers best interest at heart.

Determinants of service quality

According to Parasuruman, Zeithaml and Berry
Security- is freedom from danger, risk or doubt.

Understanding/ knowing the customer- involves

making the effort to understand the customers

needs.
Tangibles- includes physical evidence of the

service.

New quality determinants

Also known as the SERVQUAL scales Tangibles

Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service

Reliability

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

New quality determinants

Also known as the SERVQUAL scales Responsiveness

Keeping customers informed as to when services will be performed Prompt service to customers Willingness to help customers Readiness to respond to customers requests

Assurance

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

New quality determinants

Also known as the SERVQUAL scales Empathy

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

MODELS OF SERVICE QUALITY

Service Quality Model of Gronroos GAPS model of Service quality

Service Quality Model of Grnroos

Firms need to understand how services are evaluated by customers in terms of quality

 Technical quality- what is offered to the customers from the organization and what customers receive in their interactions with the service firm is called the technical product
Technical quality of blueprinting and its execution Technical quality moulds the first impression of the

customers

 Functional quality- customers are also influenced by how they receive the service and how they experience the service process in which they also played a part
The way service processes are handled in a service

encounter is called functional quality

 Image- customers will evaluate a firm by taking into consideration its resources, history and ways of operating service activities
Customers use a firms image as a filter or a net while

perceiving quality

Total perceived quality Expected quality= perceived / experienced quality-> satisfied

The Gaps Model of Service Quality

Introduce a framework, called the gaps model of service quality. Demonstrate that the most critical service quality gap to close is the customer gap, the difference between

customer expectations and perceptions.

Show that four gaps that occur in companies, which we call provider gaps, are responsible for the customer gap. Identify the factors responsible for each of the four provider gaps.

The Gaps Model of Service Quality

Customer Gap: Difference between customer expectations and perceptions Provider Gap 1 (The Knowledge Gap):

Not knowing what customers expect

Provider Gap 2 (The Service Design & Standards Gap): Not having the right service designs and standards

The Gaps Model of Service Quality

Provider Gap 3 (The Service Performance Gap): Not delivering to service standards Provider Gap 4 (The Communication Gap):

Not matching performance to promises

The Customer Gap

Expected service Customer Gap

Perceived service

Key Factors Leading to the Customer Gap

Customer Gap Customer Expectations
Not knowing what customers expect Not selecting the right service designs and Not delivering to service standards Not matching performance to promises

Provider Gap 1: Provider Gap 2: standards Provider Gap 3: Provider Gap 4:

Customer Perceptions

Key Factors Leading to Provider Gap 1

Customer Expectations

Gap 1

Inadequate marketing research orientation

Insufficient marketing research Research not focused on service quality Inadequate use of market research

Lack of upward communication

Insufficient relationship focus

Lack of interaction between management and customers Insufficient communication between contact employees and managers Too many layers between contact personnel and top management 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
Company Perceptions of Customer Expectations

Key Factors Leading to Provider Gap 2

Customer-Driven Service Designs and Standards

Gap 2

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 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
Management Perceptions of Customer Expectations

Key Factors Leading to Provider Gap 3

Customer-Driven Service Designs and Standards

Gap 3

Deficiencies in human resource policies

Ineffective recruitment Role ambiguity and role conflict Inappropriate evaluation and compensation systems Lack of empowerment, perceived control, and teamwork Customers who lack knowledge of their roles and responsibilities Customers who negatively impact each other Channel conflict over objectives and performance Difficulty controlling quality and consistency Tension between empowerment and control Failure to smooth peaks and valleys of demand

Customers who do not fulfill roles

Problems with service intermediaries

Failure to match supply and demand

Service Delivery

Key Factors Leading to Provider Gap 4

Service Delivery
Lack of integrated services marketing communications Tendency to view each external communication as independent 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

Gap 4

External Communications to Customers

MEASURING AND IMPROVING SERVICE QUALITY

Customer defined standards and measures
can be grouped into-

Soft measures
Hard measures

Soft measures
Are those that cannot be observed and must be collected by talking to customers, employees, or others.
Total market surveys Transactional surveys, etc

Examples of Measures (Soft)

Safety Convenience Cleanliness Availability Consistency Hospitality Credibility

Examples of Measures (Soft)

Waiting Time, Transaction Time Accuracy of Transaction Friendly Personnel Knowledgeable Personnel Helpful Personnel Costs Value Received

Hard measures
Relate to those characteristics and activities that can be counted, timed, or measured through audits
Service response time Failure rates, etc

Examples of Measures (Hard)

Time in Line, Transaction Time Number of Errors (Mistakes) per Transaction Counts of Smiles, Using Customer Name, Using Protocol. Violation of Dress Code Availability of Systems (Phone Lines, Power)

Examples of Measures (Hard)

Number of Complaints Received Number of Warranty Claims Number or Dollar Value of Sales Number of Repeat Customers Number of Infections per Surgery Number of Law Suits Filed Return on assets

Examples of Measures (Hard)

Competitive Data Accuracy of Order Back orders Parts Availability Exceptions to Procedures Violations of Regulatory Codes

Customer Expectations of Service

Zone of Tolerance
Difference between the desired service and the adequate service
Desired Service

Zone of Tolerance

Adequate Service

Zone of Tolerance for Different Service Dimensions

Desired Service

Level of Expectation

Zone of Tolerance

Desired Service

Adequate Service

Zone of Tolerance

Adequate Service

Reliability

Empathy

Factors that influence customer expectations

Personal Needs Lasting Service Intensifiers Temporary Service Intensifiers Perceived Service Alternatives
Desired Service

Explicit Service Promises Implicit Service Promises Word of Mouth Communication Past Experience
Adequate Service

Zone of Tolerance

Self- Perceived Service Role

Situational Factors

Perceived Service

Designing and Managing

Service Processes

Types of new service

Major or radical innovations
New services for markets as yet undefined Internet based technologies (online marketing- ebay)

Start-up businesses
New services for a market that is already served by existing products that meet the same generic needs. Taxi for sure, Carzonrent

New services for the currently served market

Attempt to offer existing customers of the organization a service not previously available from the company VLCC offering nutrition classes

Types of new service

Service line extensions
Augmentation of the existing service line BMTC Volvo, new items on menu

Service improvements
(Most common type of service innovation) changes in features of services that are already offered Faster delivery, extended working hours, wifi in hotels/ malls

Style changes
(Most modest service innovations)often highly visible & can have significant effects on customer perceptions, emotions, and attitudes Changing the color scheme, logo, redesigning the website

New Service Development Process

Business strategy development or review New service strategy development Idea generation

Front-end Planning

Offerings
Existing services New services Implementation
Development

Current customers New customers Concept development and evaluation

Test concept with customers and employees Share building Market development

Screen ideas against new service strategy

Markets

Service development

Business analysis

Test for profitability and feasibility Conduct service prototype test

Diversification

Service development and testing Market testing Test service and other marketing-mix elements Commercialization Post introduction evaluation

Execution

 Biggest challenge in service innovation & development Difficulty of describing & depicting the service at the concept development, service development, & market testing stages.

 Key is to match service specifications to customer expectations But HOW??

By being able to describe critical service process characteristics objectively & to depict them so that employees, customers, & managers alike know what the service is, can see their roles, & can understand all the steps & flows involved in the service process.

Blue print
Reproduction of a technical drawing, documenting an architecture or an engineering design

What is a Service Blueprint??

Is a picture or map that portrays the service system so that the different people involved in providing it can understand & deal with it objectively, regardless of their roles or their individual points of view. Particularly useful at the design stage of service development.

Process

Service Blueprint

Points of contact Evidence

A technique for simultaneously depicting the service process, the points of customer contact, & the evidence of service from the customers point of view.

Blueprint components

Line of interaction

Line of visibility

Line of internal interaction

Key Components of a Service Blueprint

Define standards for front-stage activities Specify physical evidence Identify principal customer actions Line of interaction (customers and front-stage personnel) Front-stage actions by customer-contact personnel

 Line of visibility (between front stage and backstage) Backstage actions by customer contact personnel Support processes involving other service personnel Support processes involving IT

Building a Blueprint
Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

Identify the process to be blueprinted

Identify the customer or customer segment

Map the process from the customers point of view

Map contact employee actions and/ or technology actions

Link contact activities to needed support functions

Add evidence of service at each customer action step