Download - 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)
Examples of Customer Concerns
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)
Examples of Customer Concerns
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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Examples of Customer Concerns
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?