MKT 346: Marketing of ServicesDr. Houston

Chapter 2:Consumer BehaviorIn a Services Context

Consumer Decision Making: The Three Stage Model

Pre-

Purchase

Stage

Service

Encounter

Stage

Post-Purchase

Stage

Pre-Purchase Stage

Service Encounter Stage

Post-Purchase Stage

Pre-Purchase Stage

● Customers seek solutions to needs

● Uncertainty increases perceived risk

● Service providers must: Develop risk reduction

strategies

Understand service expectations

Service purchase decision process

Pre-Purchase Stage

Pre-Purchase Stage:Need Awareness

●We recognize that we have a need

●Possible sources of needs:

People’s unconscious mindsPhysical conditionsExternal sources

●Need triggers search for a service solution

Pre-Purchase Stage:Information Search

●A need triggers a search for a solution

●Search ends with selection of evoked set

Pre-Purchase Stage:Evaluation of Alternatives

●Consumer evaluates alternatives based upon:

Service attributes

Perceived risks

Service expectations

Pre-Purchase Phase:Evaluation of Alternatives

Service Attributes

● Search attributes

● Experience attributes

● Credence attributes

Pre-Purchase Stage:Evaluation of Alternatives

Perceived Risks

● Functional

● Financial

● Temporal

● Physical

● Psychological

● Social

● Sensory

Risk Reduction Strategies Used By Consumers

● Patronize firms with good service

● Visit service locations before purchase

● Look for guarantees and warranties

● Seek personal sources of information

● Seek impersonal sources of information

Risk Reduction StrategiesUsed By Service Providers

● Certification● Quality control standards● Safety standards● Marketing communications● Branding● Trial purchases and sampling● Promotional incentives● Guarantees● Instruction

Pre-Purchase Stage Evaluation of Alternatives

Service Expectations – Factors Influencing Consumer Expectations of Service (Fig. 2.15)

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

●Consumer evaluates alternatives based upon:

Service attributes

Perceived risks

Service expectations

●Consumer makes trade-offs and selects best alternative for purchase

Service Encounter Stage

Pre-Purchase Stage

Service Encounter Stage

Post-Purchase Stage

● High- to low-contact service encounters

● The servuction system

● Theater as a metaphor for service deliveryService facilitiesPersonnelRole and script theories

High-Contact to Low-Contact Service Encounters (Fig 2.20)

The Servuction System (Fig 2.22)

Servuction System:Service Production and Delivery

● Servuction SystemVisible front stage Invisible backstage

● Service OperationsTechnical core Includes facilities, equipment, and personnel

● Service DeliveryFinal assembly of serviceDelivery of service

● Other contact points

Theater as a Metaphor for Service Delivery

“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”

Theater as a Metaphor

● Service delivery is a performance

● Service facilities are the stage

● Service employeesActors/cast (front stage)Production team (back stage)

● Roles

● Scripts

Post-Purchase Stage

Pre-Purchase Stage

Service Encounter Stage

Post-Purchase Stage

Evaluation of service performance

Future intentions

Customer Satisfaction Is Central to the Marketing Concept

● Customer satisfaction is complex

expectations prior to consumption

observe/experience service performance

compare it to prior expectations

Customer Satisfaction Is Central to the Marketing Concept

● Comparison results in satisfaction judgments

Positive disconfirmation (better than expected)

Confirmation (same as expected)

Negative disconfirmation (worse than expected)

Customer Delight:Going Beyond Satisfaction

● Customer delight has three components:

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

● Customer delight raises expectations

● Difficult to “delight” customers in future

● Example: Progressive Insurance

Post-Purchase Stage:Future Intentions

● Satisfied Customers Repeat purchases Firm loyalty Positive word-of-mouth communications (1:3)

● Dissatisfied Customers Only 1 out of 25 complain Firm-switching behavior Negative word-of-mouth communications (1:10) High cost to service organization

MKT 346 Key Concepts: Chapter 2

● Consumer decision making: pre-purchase stage, service encounter stage, post-purchase stage

● Pre-purchase stage: need awareness, information search, evaluation of alternatives, purchase decision

● Evaluation of alternatives: service attributes, perceived risks, service expectations

● Service encounter stage: servuction system, theater as a metaphor

● Post-purchase stage: customer satisfaction, future intentions