consumer decision making

5/28/2018 Consumer Decision Making

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Unit :2

Consumer Decis ion Making


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Customer Decision Making

Three-Stage Model of Service Consumption

Pre-pur chase Stage:

Search, evaluation of

alternatives, decision

Service Enco un ter Stage:

Role in high-contact vs.

low-contact delivery

Post-Encounter Stage:Evaluation against

expectations, future

intentions


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The Purchase Process for Services

Pre-pu rch ase Stage

Awareness of need

Information search

Evaluation of alternative service suppliers

Service Encounter Stage

Request service from chosen supplier

Service delivery

Post-purch ase Stage

Evaluation of service performance

Future intentions


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Stages in Consumer Decision Making andEvaluation of Services


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1. Pre-purchase Stage

Customers seek solutions to unsatisfied needs

Evaluation of alternatives are more difficult when a service involvesexperience and credence attributes

Customers face a variety of perceived risks in selecting,purchasing and using services

Steps are taken to reduce customers risk perceptions

Understanding customers service expectations


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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

Credence Qualities

characteristics that may be impossible to evaluate even afterpurchase and consumption


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Continuum of Evaluation for Different Types ofProducts


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Perceived Risks in Purchasing and UsingServices

Funct ionalunsatisfactory performance outcomes

Financialmonetary loss, unexpected extra costs

Temporalwasted time, delays lead to problems

Physicalpersonal injury, damage to possessions

Psychologicalfears and negative emotions

Socialhow others may think and react

Sensoryunwanted impacts to any of five senses


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Perceived Risks in Purchasing & Using Services

Examples of Customer Concerns

Will this training course give me the skill I need

to get a better job?

Will this credit card be accepted wherever and

whenever I want to make a purchase?

Will I lose money if I make the investmentrecommended by my stockbroker?

Will repairing my car cost more than the

original estimate?

Functional risk

(Unsatisfactory

PerformanceOutcomes)

Financial risk

(monetary loss,

unexpected costs)


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Temporal risk (wasting

time, consequence of

delays)

Physical risk

(personal injuryor damage to

possessions)


Will I have to wait in a long line before I

complete the transaction?

Will service at this restaurant be so slow that Iwill be late for my meeting?

Will the contents of this package get damaged

in the mail?Will I become sick eating at this restaurant?)


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Psychological risk

(personal fears & emotions)

Social risk

(how others think and react)


How can I be sure this aircraft won't

crash?

Will the doctor's diagnosis upset me?

What will my friends think of me if they

learned that I stayed at this cheap hotel?

What will my relatives think of me if they

knew that my child is studying at this

institution


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Will the hotel bed be uncomfortable?

Will the coffee at breakfast tastedisgusting?

Sensory risk

(Impact on the

senses)


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How might customers handle perceived risk?

Seeking information from respected personal sources (family, friends,

peers)

Relying on a firm that has good reputation

Looking for guarantees & warranties

Visiting service facilities or trying aspects of service before purchasing

Examining the tangible cues or other physical evidence

Using the Internet to compare service offerings & to search for

independent reviews & ratings


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Risk reduction strategies developed by servicesuppliers

Offering performance warranties

Money-back guarantees

Enabling prospective customers to preview the service throughbrouchers, videos etc.

Training staff members to be respectful & empathetic in their dealings

with customers

Providing 24/7 access by toll-free telephone call to a customer service

center

Giving customers access to online information about the status of an

order or procedure


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Components of Customer Expectations

Desired Servic e 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


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Factors that Influence Customer Expectations ofServices

Predicted Service

Explicit & ImplicitService Promises

Word-of-Mouth

Past ExperienceDesired Service

ZONEOF

TOLERANCE

Adequate Service

Personal Needs

Beliefs aboutWhat Is Possible

Perceived ServiceAlterations

Situational Factors

Source: Adapted from Zeithaml, Parasuraman & Berry


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The Zone of Tolerance

Adequate Service

Desired Service

Zone ofTolerance

Delights

Desirables

Musts


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2. Service encounter stage

Service encounters as Moments of Truth

occurs any time the customer interacts with the firm

can potentially be critical in determining customer satisfactionand loyalty

types of encounters: remote encounters, phone encounters,face-to-face encounters

is an opportunity to:

build trust

reinforce quality

build brand identity

increase loyalty


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The Service Encounter

Service encounters range from high contact to low contact

High-contact services: Most parts of operations, servicedelivery, and marketing systems are exposed to customers

Low-contact services: Some parts of systems are invisible tocustomers


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Levels of Customer Contact with ServiceOrganizations

Emphasizes encounters

with service personnel

Emphasizes encounters

with equipment

High

Low

ManagementConsulting

CarRepair

InsuranceMotel

FastFood

NursingHome

AirlineTravel(Econ.)

CableTV

Telephone Bank ing

HairCut

GoodRestaurant

4-StarHotel

DryCleaning

Reta il Bank ing

Mail Based Repairs

Internet-basedServices

Movie Theater

Internet Banking

Subway


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Moments of truth:Definingpoints in service delivery where customers

interact with employees or equipment

Crit ical incidents : specific encounters that result in especially

satisfying/dissatisfying outcomes for either customers or service

employees


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A Service Encounter Cascade for a Hotel Visit


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Sales Call

Ordering Supplies

Billing

Delivery and Installation

Servicing

A Service Encounter Cascade for an IndustrialPurchase


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Service Encounters: An Opportunity to BuildSatisfaction and Quality


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Customer involvement in service encounter

A service encounter is a period of time during which customers interact

directly with a service.

It is difficult to improve service quality & productivity without full

understanding of the customers involvement in a given serviceenvironment.

A key question for managers is whether customers expectations

change during the course of service delivery in light of sequential steps in

the process.


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Managing Service Encounters

Service success often rests on performance of junior

contact personnel

Must train, coach employees to exhibit 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


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3. Post encounter stage

In evaluating service performance, customers can haveexpectations positively disconfirmed, confirmed, ornegatively disconfirmed

Unexpectedly high levels of performance and positiveaffect are likely to lead to delight


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Customer Satisfaction is Central to theMarketing Concept

Satisfaction defined as attitude-like judgment following a servicepurchase 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 firms

financial performance


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Customer Delight: Going Beyond Satisfaction

Research shows that delight is a function of 2 components

Unexpectedly high levels of performance

Positive affect (e.g., pleasure, joy, or happiness)

Is it possible for customers to be delighted by very

mundane services?

consumer decision making

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