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Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 1

Chapter 2

Consumer Behavior in Service Encounters


Where Does the Customer Fit in aService Organization? (Fig. 2.1)

Consumers rarely involved in manufacture of goods but often participate in service creation and delivery

Challenge for service marketers is to understand how customers interact with service operations

Flowcharting clarifies how customer involvement in service encounters varies with type of process - see Fig. 2-1: 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


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


Levels of Customer Contact with Service Organizations (Fig. 2.2)

Emphasizes encounters with service personnel

Emphasizes encounters with equipment

High

Low

Management Consulting

Car Repair

InsuranceMotel

Fast Food

Nursing Home

Airline Travel (Econ.)

Cable TV

Telephone Banking

HairCut

Good Restaurant

4-Star Hotel

Dry Cleaning

Retail Banking

Mail Based Repairs

Internet-basedServices

Movie Theater

• Internet Banking

Subway


Managing Service Encounters--1

Service encounter: A period of time during which customers interact directly with a service

Moments of truth: Defining points in service delivery where customers interact with employees or equipment

Critical incidents: specific encounters that result in especially satisfying/dissatisfying outcomes for either customers or service employees


Managing Service Encounters--2

Service success often rests on performance of junior contact personnel

Must train, coach, role model desired behavior

Thoughtless or badly behaved customers can cause problems for service personnel (and other customers)

Must educate customers, clarify what is expected, manage behavior


The Purchase Process for Services(Adapted from Fig. 2-3)

Prepurchase Stage

Awareness of need Information search Evaluation of alternative service suppliers

Service Encounter Stage

Request service from chosen supplier Service delivery

Postpurchase Stage

Evaluation of service performance Future intentions


Perceived Risks in Purchasing and Using Services (Table 2.1)

Functional – unsatisfactory performance outcomes

Financial – monetary loss, unexpected extra costs

Temporal – wasted time, delays lead to problems

Physical – personal injury, damage to possessions

Psychological – fears and negative emotions

Social – how others may think and react

Sensory – unwanted impacts to any of five senses


Factors that Influence Customer Expectations of Services (Fig. 2.4)

Predicted Service

Explicit & Implicit Service Promises Word-of-Mouth Past ExperienceDesired Service

ZONE OF

TOLERANCE

Adequate Service

Personal Needs

Beliefs about What Is Possible

Perceived Service Alterations

Situational Factors

Source: Adapted from Zeithaml, Parasuraman & Berry


Components of Customer Expectations

Desired Service Level: wished-for level of service quality that customer believes can and should be delivered

Adequate Service Level: minimum acceptable level of service

Predicted Service Level: service level that customer believes firm will actually deliver

Zone of Tolerance: range within which customers are willing to accept variations in service delivery


Intangible Attributes, Variability, and Quality Control Problems Make Services Hard to Evaluate

Search attributes – Tangible characteristics that allow customers to evaluate a product before purchase

Experience attributes – Characteristics that can be experienced when actually using the service

Credence attributes – Characteristics that are difficult to evaluate confidently even after consumption

Goods tend to be higher in search attributes, services tend to be higher in experience and credence attributes

Credence attributes force customers to trust that desired benefits have been delivered


How Product Attributes Affect Ease of Evaluation) (Fig. 2.5)

Source: Adapted from Zeithaml

Most Goods

High in search attributes

High in experience attributes

High in credence attributes

Difficult to evaluate

Easy to evaluate

Most Services

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Customer Satisfaction is Central to the Marketing Concept

Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions

Customers have expectations prior to consumption, observe service performance, compare it to expectations

Satisfaction judgments are based on this comparison Positive disconfirmation if better than expected Confirmation if same as expected Negative disconfirmation if worse than expected

Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and situational factors

Research shows links between customer satisfaction and a firm’s financial performance


Customer Delight:Going Beyond Satisfaction

Research shows that delight is a function of 3 components

Unexpectedly high levels of performanceArousal (e.g., surprise, excitement)Positive affect (e.g., pleasure, joy, or happiness)

Is it possible for customers to be delighted by very mundane services?

Progressive Insurance has found ways to positively surprise customers with customer-friendly innovations and extraordinary customer service


A Service Business is a System Comprising Three Overlapping Subsystems

Service Operations (front stage and backstage)

Where inputs are processed and service elements created. Includes facilities, equipment, and personnel

Service Delivery (front stage)

Where “final assembly” of service elements takes place and service is delivered to customers Includes customer interactions with operations and other

customers

Service Marketing (front stage)

Includes service delivery (as above) and all other contacts between service firm and customers


Service Marketing System: (1) High Contact Service--e.g., Hotel (Fig. 2.7)

TheCustomer

TechnicalCore

Interior & ExteriorFacilities

Equipment

Service People

OtherCustomers

OtherCustomers

Advertising

Sales Calls

Market Research Surveys

Billing / Statements

Miscellaneous Mail, Phone Calls, Faxes, etc.

Random Exposure toFacilities / Vehicles

Chance Encounters with Service Personnel

Word of Mouth

Service Operations System

Backstage(invisible)

Front Stage(visible)

Service Delivery System Other Contact Points

Service Marketing System


Service Marketing System: (2) Low Contact Service--e.g., Credit Card (Fig. 2.8)

TechnicalCore

Mail

Self ServiceEquipment

Phone, Fax, Web site etc.

TheCustomer

Service Operations SystemService Delivery System Other Contact Points

Backstage(invisible)

Front Stage(visible)

Advertising

Market Research Surveys

Random ExposuresFacilities, Personnel

Word of Mouth

Service Marketing System


Service as Theater

“ All the world’s a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts”

William Shakespeare

As You Like It


The Dramaturgy of Service Delivery

Service dramas unfold on a “stage”--settings may change as performance unfolds

Many service dramas are tightly scripted, others improvised

Front-stage personnel are like members of a cast

Like actors, employees have roles, may wear special costumes, speak required lines, behave in specific ways

Support comes from a backstage production team

Customers are the audience—depending on type of performance, may be passive or active


Role and Script Theories

Role: A set of behavior patterns learned through experience and communication

Role congruence: In service encounters, employees and customers must act out defined roles for good outcomes

Script: A sequence of behavior to be followed by employees and customers during service delivery

Some scripts (e.g. teeth cleaning) are routinized, others flexible Technology change may require a revised script Managers should reexamine existing scripts to find ways to improve

delivery, increase productivity, enhance experiences

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