MKT 346: Marketing of Services Dr. Houston Chapter 2: Consumer Behavior In 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 Need AwarenessInformation SearchEvaluation of AlternativesPurchase Decision

Pre-Purchase Stage: Need Awareness ●We recognize that we have a need ●Possible sources of needs:  People’s unconscious minds  Physical conditions  External 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 Strategies Used 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 delivery  Service facilities  Personnel  Role 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 System  Visible front stage  Invisible backstage ●Service Operations  Technical core  Includes facilities, equipment, and personnel ●Service Delivery  Final assembly of service  Delivery 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 employees  Actors/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 performance  Arousal (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