MRKT 55030: SERVICES MARKETING

WEEK 4: Customer Expectations and

Perceptions of Service Offerings

Dr. Okey Peter ONYIA

TODAYS OUTLINE:

The Customer (Service Consumer) Defined Service Consumer Behavior Customer Expectations of Service Types of Customer Expectations:

Desired Service
Adequate Service Zone of Tolerance

Customer Perceptions:

Perception of Risks Associated with Service Perception of Service Performance and Service Quality

Customer Satisfaction
Next lecture pre-work.

Intended Learning Outcomes (ILOs):

At the end of this session, you should be able to:
Demonstration a good understanding of Service Consumers Behavior.

Discuss the three main types of customer service expectations

Evaluate customer perceptions of the risks associated with service purchase. Analyze customers perceptions of service performance and service quality.

Assess and discuss customer satisfaction and factors that influence customer satisfaction.

The customer
The Service Customer/Consumer
is . . .

anyone who receives, buys, or uses a companys services, including:

External customers service buyers/users from outside the organization; business customers, suppliers, partners, end consumers.
Internal customers service buyers/users inside the organization; e.g., other departments, fellow employees, etc.

Service Consumer Behavior

Need Arousal Service Encounter

Information Search

(of performance/quality)

Customer Perception

Alternatives Evaluation

Customer Satisfaction

Customer Expectations
(of the Service)

Customer Loyalty

Customer Expectations of Services

Customer expectations
are customers desires and beliefs about what the standards of service delivered by the marketer should be. serve as the standards and reference points against which the service performance is judged. must be well-known by service marketers as their first and most critical step in delivering quality service. are discovered through research of existing and potential customers.

Levels of Customer Expectations

The levels of customer expectations can vary widely depending on the reference point held by the customer at a given point in time; i.e., depending on the customers prevalent circumstance at a given time.

Based on his/her situation, a customers expectation may be high or low for a specific service or for a specific service provider. Also, customers hold different types of performance expectations for different types of service marketers.

Possible Levels of Customer Expectations

Source: Zeithaml et al. (2013)

Types of Customer Expectations

Delights

The Gaps Model of Service Quality Desirables

Musts

Source: Zeithaml et al. (2013)

Types of Customer Expectations

1. Desired Service Expectation is

the highest level of service the customer desires and hopes to receive. the customers wished for level of service performance.

a blend of what the customer believes the service performance can be and should be.
satisfied if the service performance meets or surpasses this level of expectation.

The customer will be delighted and most

Types of Customer Expectations

2. Zone of Tolerance Expectation

is

the customers recognition that services are heterogeneous, i.e., that performance may vary across providers; across employees of the same provider; and even with the same service employee at different times. the extent to which customers recognize and are willing to accept this variation in service performance. customer will be satisfied if the service performance meets any level within the zone.

Any level within this zone is desirable and the

Types of Customer Expectations

3. Adequate Service Expectation

is

the lowest level of service the customer will be willing to receive with little or no complaint. the customers lowest level of tolerance. The most minimum of what the customer believes the service performance should be. performed at this level of expectation.

The customer will be barely satisfied if the service is Below this level, the customer will be dissatisfied or
reject the service and seek alternative service elsewhere.

The Zone of Tolerance

The various types of expectations
between the range of desired and adequate service can be wide or narrow in range can change over time can vary among individuals may vary with the type of product/service being offered

Factors That Influence Desired Service

Source: Zeithaml et al. (2013)

Factors That Influence Adequate Service

Source: Zeithaml et al. (2013)

Factors That Influence Desired and Predicted Service

Source: Zeithaml et al. (2013)

Group Discussions:
In your small groups, read and discuss the following articles in the textbook: Global Feature: Global Outsourcing of Personal Services. What are customers expectations (Pages 54-55). Technology Spotlight: Customer Expectations of Airport Services Using Technology (Pages 60-61). assess how the company deals with its customerexpectations by answering the following questions: What does this service marketer do if its customers expectations are unrealistic? Should the company try to delight its customers? Why/how? How can this company exceed its customers service expectations? Do customers service expectations continually escalate? How can the company stay ahead of competition in meeting customer expectations? (20 minutes)

Then, select a real service company of your choice, and

Customer Perceptions of Services

Perception is the identification,

configuration, and interpretation of sensory information from an experience, in order to show understanding and form an opinion about the experience.

In the case of Customer Perception, it

enables and reflects customers feelings, observations, and view-points about the risks associated with a service or the service they have just encountered or experienced.

Risks Perceived in Purchasing and Using Services

Functional unsatisfactory performance outcomes
Financial monetary loss; unexpected extra costs Temporal wasted time and delays leading to
other problems.

Physical personal injury; damage to possessions Psychological fears and negative emotions Social how others may think and react to outcome Sensory unwanted impact on any of the five
senses

How Consumers Might Handle Perceived Risks in Service Encounters

Seek information from respected personal sources Compare alternative service offerings and search for independent reviews and ratings via the Internet

Rely and patronize only firms with good reputation

Seek and ask for guarantees and warranties

Visit service facilities, go for trials, and examine tangible cues or other physical evidence before purchase. Ask knowledgeable employees about competing services

Strategic Management of (and Responses to) Customer Perceptions of Risk

Free trial (for services with high experience attributes) Use evidence management (e.g., furnishing, equipment, etc.) Advertise (It helps to visualize offer) Offer guarantees Encourage visit to service facilities Display credentials

Give customers online access to order status

Customer Perceptions of Service Quality and Customer Satisfaction

Source: Zeithaml et al. (2013)

Customer Satisfaction with Service Experience

Satisfaction is
A customer's judgmental attitude and state of mind about a service encounter or series of service interactions that he or she has just experienced.

Customers usually have expectations of products and

services prior to consumption; encounter the product/service performance; and then compare it to their expectations.

The state of mind that results from the outcome of a

customers comparison of service performance to his/her expectations is his/her satisfaction or dissatisfaction with the service.

Customer Satisfaction with Service Experience

Satisfaction judgments
are based on the comparison of service performance and customer expectation after the service encounter.

There are 3 judgmental states of mind that may result

from the comparison: Positive service disconfirmation - when the service performance is better than the customers expectation. Service confirmation - when the service performance is the same as the customers expectation. Negative service disconfirmation - when the service performance is worse than the customers expectation.

Factors Influencing Customer Satisfaction

Product quality Service quality Price Specific product or service features Consumer emotions Attributions for service success or failure Perceptions of equity or fairness Other consumers, family members, friends, and co-workers Personal factors Situational factors

Case Study & Group Discussions:

In your small groups, read and discuss

Case 1 in the textbook, titled:
Zappos.com 2009: Clothing, Customer Service, and Company Culture (Pages 495 - 514).

Discuss the case and generate 1 customerexpectation and 1 customer-satisfaction question from the case for the other groups.

Also, be ready to answer the 2 questions from the

other groups too.
(25 minutes)

American Customer Satisfaction Index (ACSI) and Market Value Added

http://www.theacsi.org/acsi-results/benchmarks-by-industry

Outcomes of Customer Satisfaction and Dissatisfaction

Satisfaction: Increased customer loyalty Positive word-ofmouth communication Increased market share Higher revenues Increased returns on investments Dissatisfaction: Lower customer loyalty Negative word-ofmouth communication Lower market share Lower revenues Lower returns on investments.

Competitive Industries Customer Satisfaction and Loyalty Relationship:

Source: Zeithaml et al. (2013)

Next class pre-work:

Topic: Delivering and Performing Service the Roles of the additional 3Ps of Marketing (People, Process and Physical Evidence) in Service Offerings. Read up all of: chapters 9, 10, and 13 of the textbook.