industrial - unext.in 5th session cons beh.pdf · segmentation, targeting, and positioning . ......
TRANSCRIPT
Segmentation
Industrial
Definition
• Market Segmentation: – Dividing a market into distinct groups
with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.
Steps in Market Segmentation, Targeting,
and Positioning
Market Segmentation
• Segmenting Consumer Markets
• Segmenting Business Markets
• Segmenting International Markets
• Requirements for Effective Segmentation
• Geographical segmentation – Marketing mixes are
customized geographically
• Demographic segmentation
• Psychographic segmentation
• Behavioral segmentation
• Using multiple segmentation variables
Key Topics
Market Segmentation
Geographic Segmentation Variables
City or
Metro Size
Neighborhood
Density
Climate
World Region
or Country
Country
Region
City
Market Segmentation
• Segmenting Consumer Markets
• Segmenting Business Markets
• Segmenting International Markets
• Requirements for Effective Segmentation
• Geographical segments
• Demographic segmentation – Most popular type
– Demographics are closely related to needs, wants and usage rates
• Psychographic segmentation
• Behavioral segmentation
• Using multiple segmentation variables
Key Topics
Market Segmentation
Demographic Segmentation Variables
• Age
• Gender
• Family size
• Family life cycle
• Income
• Ethnicity
Occupation
Education
Religion
Generation
Nationality
Market Segmentation
• Segmenting Consumer Markets
• Segmenting Business Markets
• Segmenting International Markets
• Requirements for Effective Segmentation
• Geographic segments
• Demographic segmentation
• Psychographic segmentation – Lifestyle, social class, and
personality-based segmentation
• Behavioral segmentation
• Using multiple segmentation variables
Key Topics
Market Segmentation
• Segmenting Consumer Markets
• Segmenting Business Markets
• Segmenting International Markets
• Requirements for Effective Segmentation
• Geographic segments
• Demographic segmentation
• Psychographic segmentation
• Behavioral segmentation – Typically done first
• Using multiple segmentation variables
Key Topics
Market Segmentation
Behavioral Segmentation Variables
• Occasions
• Benefits
• User Status
• User Rates
Loyalty Status
Readiness Stage
Attitude Toward
the Product
Market Segmentation
• Segmenting Consumer Markets
• Segmenting Business Markets
• Segmenting International Markets
• Requirements for Effective Segmentation
• Geographic segments
• Demographic segmentation
• Psychographic segmentation
• Behavioral segmentation
• Using multiple segmentation variables
Key Topics
Market Segmentation
• Segmenting Consumer Markets
• Segmenting Business Markets
• Segmenting International Markets
• Requirements for Effective Segmentation
• Demographic segmentation
– Industry, company size, location
• Operating variables
– Technology, usage status, customer capabilities
• Purchasing approaches
• Situational factors
– Urgency, specific application, size of order
• Personal characteristics
– Buyer-seller similarity, attitudes toward risk, loyalty
Key Topics
Market Segmentation
• Segmenting Consumer Markets
• Segmenting Business Markets
• Segmenting International Markets
• Requirements for Effective Segmentation
• Geographic segmentation
– Location or region
• Economic factors
– Population income or level of economic development
• Political and legal factors
– Type / stability of government, monetary regulations, amount of bureaucracy, etc.
• Cultural factors
– Language, religion, values, attitudes, customs, behavioral patterns
Key Topics
Market Segmentation
• Segmenting Consumer Markets
• Segmenting Business Markets
• Segmenting International Markets
• Requirements for Effective Segmentation
• Measurable
– Size, purchasing power, and profile of segment
• Accessible
– Can be reached and served
• Substantial
– Large and profitable enough to serve
• Differentiable
– Respond differently
• Actionable
– Effective programs can be developed
Key Topics
Agenda
What are the Unique Aspects of Business
Market Segmentation?
What are the Models of Industrial Market
Segmentation?
How Business Market Segmentation Should
be Done?
How to Select Market Segments to Serve?
• A business firm must define the market in which it wishes to operate.
• In defining the market, business market managers choose descriptors (bases) that characterize and define a market.
What are the Unique Aspects of Business Market Segmentation?
What are the Unique Aspects of
Business Market Segmentation?
• The difference between consumer and industrial market segmentation is generally seen in the specific bases of segmentation.
• Consumer markets are typically segmented on the basis demographic or psychographic variables.
• As the industrial customer is not an individual but a number of interacting individuals in a decision making unit (DMU) of a formal organization, the bases of segmentation are different.
Prof. A. K. Biswas 18
Organizational demographics:
Industry/ Company size/ Location
Operating variables:
Technology/User status/Customer
capabilities (financial)
Purchasing approaches
Organization of DMU/Purchasing
policies/Purchasing criteria
Situational factors
Urgency/Applications/Order size
Personal characteristics:
Motivation/Buyer-seller /
Risk perceptions
General, observable
(Macro)
Specific, subtle
(Micro)
(Intermediate)
Bonoma And Shapiro Model Of Business Market Segmentation
• A marketer can begin at the outside nest and work inward because data are more available and definitions clearer in outer nests.
• On the other hand, situational and personal variables of the inner nests are often the most useful.
Bonoma And Shapiro Model Of Business Market Segmentation
• The outer-nest criteria are generally inadequate when used by themselves in all but simple or homogeneous markets because they ignore buying differences among customers.
• Over emphasis on the inner-nest factors, however, can be too expensive and time-consuming for small markets.
• A balance is to be achieved between the two nests.
Bonoma And Shapiro Model Of Business Market Segmentation
• The models help us in profiling the business firms – their details, and their behavioral characteristics.
• However, they do not answer the question what these customers want.
• The problem is that customers don’t conform their requirements to match with those of the average customer in their behavioral segment.
What is the Problem with these Market Segmentation Models?
How Market Segmentation
Should be Done?
The structure of a market, seen from the customers’ point of view, whether a individual or business firm, is very simple:
They just need to get things done.
When people find themselves needing to get a job done, they essentially buy products to do that job for them.
When choosing between competing offers, customers select the offer that meets their needs (to get things done) better than any other at the price they are willing to pay.
Value or benefits (the ability of getting the job done) that people seek in products are the basic reasons for the heterogeneity in their choice behaviour, and benefits of the product are thus the most relevant bases for segmentation.
How Market Segmentation
Should be Done?
Earlier marketers used to succeed by providing superior products and other distinctive functional benefits.
Today this is no longer enough, for such benefits can readily be imitated.
The solution is to emphasize process benefits (which make transactions between buyers and sellers easier, quicker, cheaper, and more pleasant) and relationship benefits (which reward the willingness of consumers to identify themselves and to reveal their purchasing behavior).
How Market Segmentation
Should be Done?
However, it is no doubt more difficult for
managers to implement the benefits-oriented
approach of market segmentation.
One possible solution to this problem is to
provide opportunities to individual customers
to design their own products and services by
choosing from a menu of attributes,
components, prices, and delivery options.
How Market Segmentation
Should be Done?
• This facility can be provided through a choiceboard - an interactive on-line system.
• Cisco Marketplace is an on-line configurator that allows corporate customers to create the precise combination of data networking gear they need.
• Dell’s choiceboard allows individual as well as corporate customers to exercise their options in the personal computer realm.
How Market Segmentation
Should be Done?
• A choice board model of doing business with individual customers becomes possible in any industry when a system of accessible, integrateable components is available from which customers can select and combine options based on their own priorities.
• The choiceboard enables customer self-segmentation, which is fast, cost-efficient, and far more precise than traditional manufacturer-imposed segmentation.
How Market Segmentation
Should be Done?
Segmentation in business markets should, in fact, be increasingly thought of as a negotiable and bilateral ‘fit-seeking process’ where suppliers frame tentative segments (based on initial research) subject to exploration with well-placed key managers in those customer firms.
How Market Segmentation
Should be Done?
This would encourage the development of
evolutionary segmentation that focuses not
only on customer needs, but also on supplier
needs.
The process would also help to develop the sort
of long-term relationships between supplier
and customer that help to ensure that suppler
offerings are developed in line with customer
expectations and needs.
How Market Segmentation
Should be Done?
There are also instances where customers
select suppliers that meet particular criteria
(e.g., quality, financial stability, delivery
reputation, collaborative product development
strategies, etc.).
By implication, a supplier able to exhibit
appropriate ‘reverse segmentation’ criteria to
a customer can become significantly more
attractive.
How Market Segmentation
Should be Done?
• Selection of market segment to serve has to be on the basis of the fit between: • the attractiveness of the segment, • the key success factors for operating in the
segment, and • the company’s relative ability to compete in
the segment. • The company also needs to consider the
competitive reactions it might face if it decides to compete for a segment.
How to Select Market
Segments To Serve?
• Segment attractiveness depends on: – Size and Growth of the segment – Structural Characteristics of the segment
such as competition, segment saturation, profitability, protectability, environmental risk etc.
How to Select Market
Segments To Serve?
• Key Success Factors (KSF) for a segment could be
• Product Quality • Brand Reputation • Technology Requirement • Cost Structure • Distribution System • Quality of Service • Financial Capacity
How to Select Market
Segments To Serve?
• Company Objectives – Compatibility with company goals – Relationships with other segments – Profitability
• Resources and Capabilities of the Company and Competitors – Ability to conceive and design
• R & D Capability • Existing Patents and Copyrights • Access to new technologies through third
parties
How to Select Market
Segments To Serve?
– Ability to Produce (Quality & Quantity) • Production Technology • Production Capacity • Flexibility in Production • Cost Competitiveness
– Ability to Market
• Brand Reputation • Distribution Strength • Service Strength
How to Select Market
Segments To Serve?
– Ability to Finance • Access to Capital from Operations • Ability to Use Debt & Equity Finance • Parent’s Willingness to Finance
– Ability to Manage/Execute
• Quality of Management • Quality of Decision Making • Innovativeness • Organization Culture
How to Select Market
Segments To Serve?
Consumer Behaviour
Introduction
Consumer Buying Behavior refers to the buying behavior of final consumers (individuals & households) who buy goods and services for personal consumption.
Consumer Behavior
Based on concepts from
• Psychology
• Sociology
• Anthropology
• Marketing
• Economics
Why do we need to study Consumer Behaviour?
Because no longer can we take the customer/consumer for granted.
Failure rates of new products introduced
• Out of 11000 new products introduced by 77 companies, only 56% are present 5 years later.
• Only 8% of new product concepts offered by 112 leading companies reached the market. Out of that 83% failed to meet marketing objectives.
Can Marketing be standardised?
No.
Because cross - cultural styles, habits, tastes, prevents such standardisation.
Buyer Behaviour
Consumer
4Ps Marketing
Environment
Buyer
Characteristics
Buyer
Decision Process
Buyer
Decision
Marketing Stimuli
4 Ps
Product Price Place Promotion
Other Stimuli
Marketing
Environment
Economic Technological Political Cultural
Marketing and Other Stimuli
Buyer’s Black Box
Buyer’s Response
Product
Price
Place
Promotion
Economic
Technological
Political
Cultural
Characteristics Affecting Consumer Behavior
Buyer’s Decision Process
Product Choice
Brand Choice
Dealer Choice
Purchase Timing
Purchase Amount
Model of Consumer Behavior
Complex
Buying
Behavior
Dissonance-
Reducing Buying
Behavior
Variety-
Seeking
Behavior
Habitual
Buying
Behavior
High Involvement
Significant differences
between brands
Few differences
between brands
Low Involvement
Types of Buying Decisions
Hierarchy
Of Needs
MASLOW’S
Safety Needs
Belongingness & Love
Needs
Physiological Needs
Esteem Needs
Self-
Actualization
The hierarchy has five levels:
• Physiological Needs: oxygen, water, protein, salt, sugar, calcium and other minerals and vitamins, shelter and sleep etc.
• Safety Needs: security, stability, protection from physical and emotional harm
• Belongingness & Love Needs: affection, belonging, acceptance, friendship, community
• Esteem Needs: (Internal ones are need for self-respect, confidence, autonomy, and achievement. External ones are need for respect of others, status, fame, glory, recognition and attention.) Maslow feels these are the roots to many, if not most of our psychological problems.
• Self-actualization: (doing that which maximizes one’s potential and fulfills one’s innate aspirations)
Hierarchy of Needs
Buyer characteristics
• Cultural
• Social
• Personal
• Psychological
Buyer
Psychological
Personal
Social
Culture
Characteristics Affecting Consumer Behavior
Intentions
Buyer’s Decision Process
• Problem Recognition
• Information Search
• Evaluation of Alternatives
• Purchase Decision
• Consumption
• Postpurchase behaviour
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Behavior
The Buyer Decision Process
External Stimuli
• TV advertising
• Magazine ad
• Radio slogan
•Stimuli in the
environment
Internal Stimuli • Hunger • Thirst • A person’s normal
needs
Need Recognition Difference between an actual state and a desired state
The Buyer Decision Process
Step 1. Need Recognition
•Family, friends, neighbors •Most influential source of information
•Advertising, salespeople •Receives most information
from these sources
•Mass Media •Consumer-rating groups
•Handling the product •Examining the product •Using the product
Personal Sources
Commercial Sources
Public Sources
Experiential Sources
The Buyer Decision Process
Step 2. Information Search
Product Attributes Evaluation of Quality, Price, & Features
Degree of Importance Which attributes matter most to me?
Brand Beliefs What do I believe about each available brand?
Total Product Satisfaction Based on what I’m looking for, how satisfied
would I be with each product?
Evaluation Procedures Choosing a product (and brand) based on one
or more attributes.
The Buyer Decision Process
Step 3.Evaluation of Alternatives
Purchase Intention Desire to buy the most preferred brand
Purchase Decision
Attitudes
of others
Unexpected
situational
factors
The Buyer Decision Process
Step 4. Purchase Decision
Buyer’s Decision
• Product Choice
• Brand Choice
• Dealer Choice
• Purchase Timing
• Purchase Amount
Awareness
Interest
Evaluation
Trial
Adoption
Stages in the Adoption Process
Adoption of Innovations P
erc
en
tag
e o
f A
do
pte
rs
Time of Adoption
Early Late
Inn
ovato
rs
Early Adopters
Early Majority
2.5%
13.5%
34% 34%
16%
Laggards
Late Majority
Influences on the Rate of Adoption of New Products
Divisibility Can the innovation
be used on a trial basis?
Compatibility Does the innovation
fit the values and experience of the
target market? Complexity Is the innovation
difficult to understand or use?
Relative Advantage Is the innovation
superior to existing products?
Communicability Can results be easily
observed or described to others?
Product Characteristics
Cultural factors
• Culture
• Sub - culture
• Social Class
Factors Affecting Consumer Behavior: Culture
• Most basic cause of a person's wants and behavior.
• Values • Perceptions
Social Class
• People within a social class tend to exhibit similar buying behavior.
• Occupation
• Income
• Education
• Wealth
Subculture
• Groups of people with shared value systems based on common life experiences.
• Hispanic Consumers
• African American Consumers
• Asian American Consumers
• Mature Consumers
Social factors
• Reference Groups
• Family
• Roles and Status
Factors Affecting Consumer Behavior: Social
Groups
•Membership
•Reference
Family
•Husband, wife, kids
•Influencer, buyer, user
Roles and Status
Social Factors
Personal Factors
• Family Life Cycle
• Occupation and Economic circumstances
• Lifestyle
• Personality and self - concept
Factors Affecting Consumer Behavior: Personal
Personal Influences
Age and Family Life Cycle Stage
Occupation
Economic Situation
Lifestyle Identification
Activities Opinions
Interests
Personality & Self-Concept
The Family Life Cycle
Psychological Factors
• Motivation
• Perception
• Learning
• Beliefs and Attitudes
Buying Roles
• Initiator
• Influencer
• Decider
• Buyer
• User
Buying Behaviour
• Complex
• Dissonance - Reducing
• Habitual
• Variety seeking
Buying Process
• Problem Recognition
• Information Search
• Evaluation Alternatives
• Purchase Decision
Post - Purchase Behaviour
• Satisfaction
• Actions
• Use and Disposal
The Buyer Decision Process Step 5. Postpurchase Behavior
Consumer’s Expectations of
Product’s Performance
Dissatisfied
Customer Satisfied
Customer!
Product’s Perceived
Performance
Cognitive Dissonance
Consumer Behavior - II
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Behavior
The Buyer Decision Process
B2B Defined
• The management process responsible for the facilitation of exchange between producers of goods and services and their organisational customers.
• B2B marketing and purchasing is a complex and risky business involving a number of different parties.
Flows within a B2B market
B2B customers
• Commercial enterprises - profit making organisations that produce and/or resell goods and services for a profit. Can be subdivided into users, original equipment manufacturers (OEMs), resellers.
• Government bodies.
• Institutions - largely non-profit making organisations, e.g. universities, churches, etc.
Characteristics of B2B markets
• Nature of demand - derived, joint, inelastic.
• Structure of demand - industrial and geographic concentration.
• Buying process complexity.
• Buyer-seller relationships.
Influences on a B2B purchasing chain
Roles in the buying process
• Purchasing - handle relationships with suppliers.
• Production/operations - meeting targets for the end product in both quantity and quality terms.
• Engineering - the specification and design.
• R&D.
• Finance - devolve budgets to appropriate managers.
• Marketing - outputs of the production process.
Consumer vs. Organizational buying behavior
• Decisions made by consumers are quite simple
• Organizational buying processes are more complicated, there are several phases and steps
• Different buying behavior for different products and target groups
• Simple consumer goods like food and beverages are bought very spontaneously – influenced by advertising and product presentation
• For premium consumer goods (expensive clothes, computers) – buying behavior is getting more rational – comparison
• Private investment goods – price bargaining
84
B2B products – organizational procurement starts
• More than one person involved
• Buying process follows certain rules
• Price comparison, standardisation, tenders, qoutations etc)
B2B systems
• involve more capabilities and greater workloads
• From the buyer‘s and the supplier‘s side decision has more extensive consequences
B2B facilities
• Industrial plants
• Manufacturing installations
• Office buildings
Main types of buying situations in B2B
• Straigtht rebuy – routine decision, repetitive process (energy, office supplies, raw materials, wood), component suppliers for the automotive industry – little or no new information
• Modified rebuy – more complicated but less sophisticated: cars, trucks, computers, consulting – modified rebuys are often treated too uncautious
• New task – calls for thorough research – industrial plant – highest level of uncertainty. Strategic new tasks are of extreme strategic and financial importance (aircrafts, military equipment, infrastructure) – re-evaluation of alternatives and search for new information and new alternatives
Buying phases
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order routine specification
• Performance review
Stages of decision in B2B procurement
• Backhaus developed a widely usable model to distinguish between 5 phases of procurement
• Preliminary application (initiation phase)
• Tender proposal
• Negotiation
• Processing of order
• Warranty and services
Preliminary application
• Recognition of a problem (need) and a general solution
• Released by top management = operating department or external consultants
• Result request for an offer addressed to a number of potential suppliers
Tender preparation phase
• Determination of characteristics and quantity of needed items
• Search for and qualification of potential sources
• Supplier has to provide an offer
• Tries to be incomparable with his competitors
• Customer tries to make the offer best comparable
Negotiation phase
• = core selling process
• Comprises acquisition and analysis of proposals, evaluation of proposals and selection of suppliers
Processing phase/warranty/ service phase
• Contains selection of an order routine
• Realisation of the transaction along with the fixation of after sales service tasks
Roles in B2B procurement – buying center concept
• Group of people involved in the buying process – buying center
• This causes problem in identifying and targeting the right people within the decision process
Buying center
• Role keepers have different tasks – not mandatory
• Buyer
• User
• Initiator
• Gatekeeper
• Influencer
Buyer
• Formal authority to sign contracts
• Member of purchasing department
• Influences the vendor selection
• Not in technical details
• Main criteria: price + terms and conditions of the contract
User
• Person working with the product
• Interested in benefits and unobstructed function of the product to buy
• Large knowhow and preconceived opinion
Influencer
• A person with high technical knowledge and practical experience
definition of minimum requirements on technical or company standards
Gatekeeper
• Controls the flow of information within the buying center
• Assistant of decision maker
• Influence by preparing the decision and the relevant documents
Decider
• Right to say yes or no
• Mightiest person
Initiator
• Person who brings new ideas and solutions into the company
Specific marketing considerations in the industrial facilities business
• Long decision taking process
• High risk
• Complex buying center
• The specific competitive situation
Product policy
• Focuses on innovation
• Has to care for high flexibility in research and development
• And manufacturing and assembling
Price
• Strict bid and tender rules
• High transparency
• Add value with service offering to achieve a differentiating position
• Another aspect: financing and sourcing models
Distribution policy
• Focus on negotiation phase
• Provide excellent people in the selling center
• High technical knowledge
Communication
• Problem solver!
• Proving success with comparable tasks
• Reference projects!
Consumer Behavior in a
Services Context
• Consumer Decision Making:
The Three-Stage Model
– Pre-purchase Stage
– Service Encounter Stage
– Post-purchase Stage
Pre-purchase Stage
Pre-purchase Stage
Service Encounter Stage
Post-purchase Stage
Pre-purchase Stage - Overview
• Customers seek solutions to aroused needs
• Evaluating a service may be difficult
• Uncertainty about outcomes Increases perceived risk
• What risk reduction strategies can service suppliers develop?
• Understanding customers’ service expectations
• Components of customer expectations
• Making a service purchase decision
Pre-purchase Stage Overview
• Need awareness • Information search • Evaluation of alternatives
– Service attributes – Perceived risk – Service expectations
• Purchase decision
Pre-purchase Stage – Need Awareness
• A service purchase is triggered by an underlying need
• Needs may be due to:
– People’s unconscious minds (e.g., aspirations) – Physical conditions (e.g., chronic back pain) – External sources (e.g., marketing activities)
• When a need is recognized, people are likely take action to resolve it
Pre-purchase Stage – Information Search
• When a need is recognized, people will search for solutions.
• Several alternatives may come to mind and these form the evoked set
– Evoked set – set of possible services or brands that a customer may consider in the decision process
• When there is an evoked set, the different alternatives need to be evaluated before a final choice is made
Pre-purchase Stage – Evaluation of Alternatives
• Search attributes help customers evaluate a product before purchase – Style, color, texture, taste, sound
• Experience attributes cannot be evaluated before purchase—must “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 and consumption – Quality of repair and maintenance work
Pre-purchase Stage – Evaluation of Alternatives
Perceived Risks • Functional – unsatisfactory performance
outcomes • Financial – monetary loss, unexpected extra
costs • Temporal – wasted time, delays leading to
problems • Physical – personal injury, damage to possessions • Psychological – fears and negative emotions • Social – how others may think and react • Sensory – unwanted impact on any of five senses
Pre-purchase Stage – Evaluation of Alternatives
Perceived Risks - How Do Consumers Handle Them? • Seeking information from respected personal
sources • Using Internet to compare service offerings and
search for independent reviews and ratings • 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
Pre-purchase Stage – Evaluation of Alternatives
• Free trial (for services with high experience attributes)
• Advertise (helps to visualize) • Display credentials • Use evidence management (e.g., furnishing,
equipment etc.) • Offer guarantees • Encourage visit to service facilities • Give customers online access to information about
order status
Perceived Risks – Strategies for Firms to Manage
Consume Perceptions of Risk
Pre-purchase Stage – Evaluation of Alternatives
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 differently positioned service providers in same industry
• Expectations change over time – Example
• Parents wish to participate in decisions relating to their children’s education medium and method
• Media coverage, education, Internet has made this possible
Pre-purchase Stage – Evaluation of Alternatives
Factors Influencing Consumer Expectations of 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): 1-12
Pre-purchase Stage – Evaluation of Alternatives
• 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 Tolerance:
– Range within which customers are willing to accept variations in service delivery
Service Expectations – Components of Custom Expectations
Pre-purchase Stage – Purchase Decision
• When possible alternatives have been compared and evaluated, the best option is selected
• Can be quite simple if perceived risks are low and alternatives are clear
• Very often, trade-offs are involved. The more complex the decision, the more trade-offs need to be made
• Price is often a key factor in the purchase decision
Service Encounter Stage
Service Encounter Stage - Overview
Pre-purchase Stage
Service Encounter Stage
Post-purchase Stage
● Service encounters range from
high- to low-contact
● Understanding the servuction
system
● Theater as a metaphor for
service delivery: An integrative
perspective
Service facilities
Personnel
Role and script theories
Service Encounters Range from High-contact to Low-contact (Fig 2.20)
Distinctions between High-contact and 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 arm’s length through electronic or
physical distribution channels –New technologies (e.g. Web) help reduce contact
levels • Medium-contact Services Lie in between These
Two
Post-purchase Stage
Post-encounter Stage - Overview
Pre-purchase Stage
Service Encounter Stage
Post-purchase Stage
Evaluation of service performance
Future intentions
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
Customer Delight: Going Beyond Satisfaction
• Research shows that delight is a function of 3 components – Unexpectedly high levels of performance – Arousal (e.g., surprise, excitement) – Positive affect (e.g., pleasure, joy, or happiness)
• Once customers are delighted, their expectations are raised
• If service levels return to previous levels, this may lead to dissatisfaction and it will be more difficult to “delight” customers in future
• Progressive Insurance seeks to delight customers through exceptional customer service