2. Consumer Behavior in Service Encounters

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CHAPTER 2



WHERE DOES THE CUSTOMER FIT IN A

SERVICE ORGANIZATION? (FIG. 2.1)

Consumers rarely involved in manufacture of goods but often participate inservice 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 pro cess ing (e.g., motel stay): customer is physically involved

throughout entire process

Possession pro cessin g (e.g. , DVD repair): involvement may be limited to drop

off of physical item/description of problem and subsequent pick up

Mental st imulus proc essing (e.g. , weather forecast): involvement is mental,not physical; here customer simply receives output and acts on it

Info rmat ion p rocessing (e.g. , health insurance): involvement is mental -

specify information upfront and later receive documentation of coverage



HIGH-CONTACT AND LOW-CONTACT SERVICES

High Con tact 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

Emphasizes encounters

with service personnel

Emphasizes encounters

with equipment

High

Low

M a n a g e m e n t C o n s u l t i n g

C a r R e p a i r

I n s u r a n c e M o t e l

F a s t F o o d

N u r s i n g H o m e

A i r l i n e T r a v e l ( E c o n . )

C a b l e T V

T e l e p h o n e B a n k i n g

H a i r C u t

G o o d R e s t a u r a n t

4 - S t a r H o t e l

D r y C l e a n i n g

R e t a i l B a n k i n g

Mail Based Repairs

Internet-based

Services

Movie Theater

• Internet Banking

Subway



MANAGING SERVICE ENCOUNTERS--1

Service encoun ter: A period of time during whichcustomers interact directly with a service

Moments o f t ruth: Defining points in service

delivery where customers interact withemployees or equipment

Crit ical inc idents : specific encounters that result

in especially satisfying/dissatisfying outcomesfor either customers or service employees



MANAGING SERVICE ENCOUNTERS--2

Service success often rests onperformance of junior contact

personnel

Must train, coach, role model desiredbehavior

Thoughtless or badly behaved

customers can cause problems forservice personnel (and other

customers)

Must educate customers, clarify what



THE PURCHASE PROCESS FOR SERVICES

Prepu rchase Stage Awareness of need

Information search

Evaluation of alternative service suppliers

Service Encounter Stage

Request service from chosen supplier

Service delivery

Postpurchase StageEvaluation of service performance

Future intentions



PERCEIVED RISKS IN

PURCHASING AND USING SERVICES

Funct ional – unsatisfactory performanceoutcomes

Financial – monetary loss, unexpected

extra costs

Temporal – wasted time, delays lead toproblems

Physical – personal injury, damage to

possessions

Psycholog ica l – 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

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

Sourc e: Adapted from Zeithaml, Parasuraman & Berry



COMPONENTS OF CUSTOMER EXPECTATIONS

Desired Serv ice Level: wished-for level of service quality

that customer believes can and should be delivered

Adequate Service Level: minimum acceptable level of

servicePredic ted 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 attr ibu tes – Tangible characteristics that allowcustomers to evaluate a product before purchase

Experience attr ibu tes – Characteristics that can beexperienced when actually using the service

Credence attr ibu tes – Characteristics that are difficult toevaluate confidently even after consumption

Goods tend to be higher in search attributes, servicestend 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)

Source: Adapted from Zeithaml

Most Goods

High in searchattributes

High in experienceattributes

High in credence attributes

Difficult to evaluate

Easyto evaluate

Mos t Services

C l o t h i n g

C h a i r

M o t o r v e h i c l e

F o o d s

R e s t a u

r a n t m e a l s

L a w

n f e r t i l i z e r

H a i r c u t

E n t e

r t a i n m e n t

C o m p

u t e r r e p a i r

L e g a l s e r v i c e s

C o m p l e x s u r g e r y



CUSTOMER SATISFACTION IS CENTRAL TO THE

MARKETING 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 factorsResearch shows links between customer satisfaction and a firm’s

financial performance



CUSTOMER DELIGHT:

GOING BEYOND SATISFACTION

Research shows that del ight is a function of 3

components

Unexpectedly high levels of performance

Arousal (e.g., surprise, excitement)

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

Is i t possib le for cu stom ers to be del igh ted by very

mundane services?

Progressive Insu rance has found ways to posi t ively

surpr ise

custom ers wi th custom er-f r iendly innovat ions and

extraord inary cus tomer service



A SERVICE BUSINESS IS A SYSTEM COMPRISING

THREE OVERLAPPING SUBSYSTEMS

Service Operat ions (front stage and backs tage)

Where inputs are processed and service elements created.

Includes facilities, equipment, and personnel

Service Delivery (front s tage)

Where ―final assembly‖ of service elements takes place

and service is delivered to customers

Includes customer interactions with operations and other

customers

Service Marketing (fron t 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

The Customer

Technical Core

Interior & Exterior Facilities Equipment

Service People

Other Customers

Other Customers

Advertising Sales Calls Market Research Surveys Billing / Statements Miscellaneous Mail,

Phone Calls, Faxes, etc. Random Exposure to Facilities / 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

Technical Core

Mail Self Service Equipment Phone, Fax, Web site etc.

The Customer

Service Operations System Service Delivery System Other Contact Points

Backstage (invisible)

Front Stage (visible)

Advertising Market Research Surveys Random Exposures Facilities, Personnel Word of Mouth

Service Marketing System



SERVICE AS THEATER

“ All the world’s a stageand al l the men andwomen merely p layers.

They have their exits andtheir entrances and eachman in h is t ime playsmany parts”

William ShakespeareAs You Like

It



THE DRAMATURGY OF SERVICE DELIVERY

Service dramas unfold on a ―stage‖--settings may changeas 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 throughexperience and communication

Role congruence: In service encounters, employees and

customers must act out defined roles for good

outcomes

Scr ipt : 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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2. Consumer Behavior in Service Encounters