Mod2

CONSUMER BEHAVIOR

terrible customer service.flv

CONSUMER BEHAVIOR

A typical Con’B template is:NEED RECOGNITIONINFORMATION SEARCHEVALUATION OF ALTERNATIVESPURCHASE AND CONSUMPTIONPOST PURCHASE EVALUATION

Is Con’ B different for Services?

Stages in Consumer Decision Making and Evaluation of Services

04/12/2023 4

CON B

“The consumer’s mind is still closed to us; it’s like a ‘Black Box’ that remains sealed. We can observe inputs to the box and the decisions made as a result, but we can never know how the act of

processing inputs(information) truly happens.”-John E. G. Bateson, CEO, SHL group plc

04/12/2023

Consumer Behavior Model

Cue: Refers to any object or phenomenon in the environment that is capable of eliciting a response.

•Drive: Refers to a motivating force that directs behavior.

•Stimulus: Refers to a cue that is external to the individual or a drive that is internal to the individual.

04/12/2023 6

Consumer Decision ProcessComprises of three stages:

Prepurchase Stage: All consumer activities occurring before and leading up to

the acquisition of the service.

Consumption Stage The stage of the consumer decision process in which the

consumer purchases and uses the product.

Post-purchase Evaluation Stage The stage of the consumer decision making process during

which the consumer determines whether the correct purchase decision was made.

Continued

04/12/2023 7

Categories in Consumer Decision-Making and Evaluation of Services

Information Search Evaluation of Alternatives

Purchase and Consumption

Post-Purchase Evaluation

Use of personal sources Perceived risk

Evoked set Emotion and mood

Service provision as drama Service roles and scripts Compatibility of customers

Attribution of dissatisfaction Innovation diffusion Brand loyalty

04/12/2023 Deepti Shetty 8

Prepurchase StageFirst Phase is about various stimuli, like:

Commercial cues:- Events or motivations that provide stimulus to the consumer and are promotional efforts on the part of the company.

Social cues:- Events or motivations that provide stimulus to the consumer, obtained from the individual’s peer group or from significant others.

Physical cues:- Motivation, such as thirst, hunger, or another biological cue that provides stimulus to the consumer.

Continued


Prepurchase StageSecond Phase is about existence of a need, like:

Problem awareness:- In which the consumer determines whether a need exists for the product.

Shortage:- The need for a product or service as a result of the consumer's not having that particular product or service. Social cues:-

Unfulfilled desire:- The need for a product or service as a result of a consumer's dissatisfaction with a current product or service.

Continued


Prepurchase StageThird Phase is about search for possible alternatives comprising of:

Evoked set:- The limited set of "brands" that comes to the consumer's mind when thinking about a particular product category from which the purchase choice will be made.

Internal search:- A passive approach to gathering information in which the consumer's own memory is the main source of information about a product.

External search:- A proactive approach to gathering information in which the consumer collects new information from sources outside the consumer's own experience.

Continued


Prepurchase StageFourth Phase is evaluation of alternatives in which the consumer places a “value/ rank" on each alternative by way of:

Nonsystematic evaluation:- Choosing in a random fashion or by a "gut-level feeling" approach.

Systematic evaluation:- Opt by using a set of formalized steps to arrive at a decision.

Continued


Prepurchase Stage

Linear compensatory approach:- A model whereby the consumer creates a global score for each brand by multiplying the rating of the brand on each attribute by the importance attached to the attribute and adding the score together.

Lexicographic Approach:- A model whereby the consumer makes a decision by examining each attribute, starting with the most important, to rule out alternatives.

Evaluation Phase

Continued


Consumption Stage Consumption Process Phase - Includes the activities of buying, using, and disposing of a product/service. Here again, there could be alternatives, like:

Store Choice:- The decision to purchase from a particular outlet or store.

Non-store Choice:- The decision to purchase from a catalog, the Inter net, or through mail order.


Postpurchase Evaluation Stage

The stage at which the consumer determines whether the correct purchase decision was made and the result could be either Satisfaction or Dissonance. The dissent could be due to any of the following:

Cognitive Dissonance:- Doubt in the consumer's mind regarding the correctness of the purchase decision.

Continued


The Perceived Behavioral Control Conflicts in the Service Encounter


Consumer Evaluation Processes for Services

Search Qualitiesattributes a consumer can determine prior to

purchase of a product

Experience Qualitiesattributes a consumer can determine after purchase

(or during consumption) of a product

Credence Qualitiescharacteristics that may be impossible to evaluate

even after purchase and consumption

Police Department Voice Mail.flv

Managing Customer Expectation


Managing Expectations

One way to influence customer satisfaction is to effectively manage consumer expectations prior to arrival.

For example, Finland actively attempts to manage visitor expectations. In one attempt to manage tourist expectations about the country and people of Finland, the Helsinki Guide published the following list in its visitor publication:

Continued


Finland-What It Is Not!•Finland is not a small country, nor is it close to the North Pole.•Finland is not awfully cold all the time, and polar bears do not roam the streets of Helsinki.•Finnish is not a Slavic language, and only very few Finns speak Russian, which, of course, is a pity.•Finland did not suffer too badly from any wartime occupation.•Finns and Lapps are not the same thing.•Finland is not, and has never' been, a member of the Eastern Bloc-if there is One any more.•Finns don’t drink as much as the rumors say,•Finns don't eat just fish.•Finland is not the country of limitless sex that it is made out to be.•Finland is not in a very uncomfortable position between East and West.


Continuum of Evaluation for Different Types of Products

Clot

hing

Jew

elry

Furn

iture

Hou

ses

Auto

mob

iles

Rest

aura

nt m

eal s

Vaca

tions

Hai

rcut

s

Child

ca r

e

Tel e

visi

on re

pair

Lega

l ser

v ice

s

Root

can

a ls

Auto

repa

ir

Med

ica l

dia

gnos

is

Difficult to evaluateEasy to evaluate

{High in search

qualities

High in experiencequalities

High in credencequalities

{{Most

GoodsMost

Services

Credence Factor


NEED RECOGNITION

Let’s use Maslow’s Hierarchy modelPhysiologicalSafety & SecuritySocial Ego KicksSelf Actualization

Does not differ drastically for Services


INFORMATION SEARCHPERSONAL SOURCES VS NONPERSONAL

•FOR SERVICES USE OF PERSONAL SOURCES IS FAR HIGHER COMPARED TO GOODS AND THE REASONS ARE:

•Most Service outlets are localized•Less of advertising or Mass Communication•Ban on Advertising and Promotion

PERCEIVED RISKMUCH HIGHER FOR SERVICES

Continued


Different Perceived Risks

Financial Risk: - The possibility of a monetary, loss if the purchase goes wrong or fails to operate correctly.

Performance Risk :- The possibility that the item or service purchased will not perform the task for which it was purchased. correctness of the purchase decision.

Continued


Different Perceived Risks Physical Risk:-

The possibility that if something does go wrong, injury could be inflicted on the purchaser.

Social Risk:- The possibility of a loss in personal social status associated with a particular purchase.

Psychological Risk:- The possibility that a purchase will affect an individual's self-esteem.


EVALUATION OF ALTERNATIVES

EVOKED SETFor Services this tends to be smaller because:

Services are retailed at least not significantlyIn case of non-professional service needs many a times, the consumer may perform the service himselfTechnology:, for example Self Service Alternatives:- ATM, Internet Kiosks, Video/CD, Voicemail et al


PURCHASE AND CONSUMPTION

WHAT DIFFERNTIATES SERVICE FROM GOODS:Moods and EmotionsService provision is multifaceted, more like a Drama

ROLE PLAYSCRIPTCOMPATIBILITY OF CONSUMERS:


POST PURCHASE PHASE

Dissatisfaction:Not communicated often

Innovation DiffusionBrand Loyalty


Categories in Consumer Decision-Making and Evaluation of Services

Information Search Evaluation of Alternatives

Purchase and Consumption

Post-Purchase Evaluation

Use of personal sources Perceived risk

Evoked set Emotion and mood

Service provision as drama Service roles and scripts Compatibility of customers

Attribution of dissatisfaction Innovation diffusion Brand loyalty

Culture Values and attitudes Manners and customs Material culture Aesthetics Educational and social

institutions


ROLE OF CULTURE

•Values and Attitudes•Manners and Customs•Material culture•Aesthetics•Education and Learning


Global Feature: Differences in the Service Experience in the U.S. & Japan

• Authenticity• Caring• Control Courtesy• Formality• Friendliness• Personalization• Promptness

CUSTOMER EXPECTATIONS


Customer Expectations of Service

• Recognize that customers hold different types of expectations for service performance.

• Discuss controllable and uncontrollable sources of customer expectations.

• Distinguish between customers’ global expectations of their relationships and their expectations of the service encounter.

Continued


Customer Expectations of Service

•Acknowledge that expectations are similar for many different types of customers.•Delineate the most important current issues surrounding customer expectations.


CUSTOMER EXPECTATIONS

CE are beliefs about Service Delivery that function as

standard / reference points against which performance is judged


DISCUSSION ON CE

• What type of expectation standards do customers hold?

• What factors influence CE?• What roles do these factors play in

changing the CE?• Should a firm meet/exceed the CE?


POTENTIAL LEVELS OF CE

Normative“should”

Expectations

ExperienceBased Norms

AcceptableExpectations

Ideal Expectations

or Desires

MinimumTolerable

Expectations

“Everyone says this is College Is as good as IIM’s for an MBA and after

all it’s a question of my future!”

HIGH

LOW

“As it boasts of affiliation to VTU and it had be better good!”

“Most of the times all students get placed but in times of recession the

placement can be bad.”

“ I expect sufferance for two years to get my MBA but have

no choice as I failed in CAT.”

“I expect the college to help me in getting an MBA and a job.”

LEVELS OF CE OF AN MBA ASPIRANT


DUAL CUSTOMER EXPECTATION LEVELS

Desired Service

Adequate Service

The level of service the customer hopes to receive, a blend of what the customer believes

can be and should be

The level of service the customer will accept.


Comment on Expectation Levels

• Desired Service levels are more stable than Adequate Service levels:

Desired Service expectations are ideal and do not change frequently because what one hopes for does not change frequently. Adequate Service expectations are constantly in flux, most likely rising incrementally as service is improved in a particular company or industry.


ZONE OF TOLERANCE

Zone of Tolerance

Desired Service

Adequate Service


Most Important Factors Least Important Factors

Level of

Expectation

Zone of

Tolerance

Desired Service

Adequate Service

ZONES OF TOLERANCE FOR DIFFERENT SD’s

Desired Service

Adequate Service

Zone of Tolerance


Comment on Zone of Tolerance

•Intuitively, it would seem that a firm would want its customers to have wide tolerance zones for service. If so, wouldn’t it be more difficult for firms with superior service to earn customer loyalty? •Would superior service firms be better off with narrow customers’ tolerance zones to reduce the competitive appeal of mediocre providers?


Comment on Zone of Tolerance•The wider customers’ zones of tolerance, the more willing they are to accept variations in service—both from the companies they currently patronize and competing companies. •Superior firms might well be better off if they try to narrow customers’ tolerance zones by managing customer expectations, educating customers, or otherwise demonstrating to customers the reasons why they should not tolerate lower levels of service.


FACTORS THAT INFLUENCE DESIRED SERVICE

Enduring ServiceIntensifiers

Personal Needs

Desired Service

Zone of Tolerance

Adequate Service


•These are individual, stable factors that lead the customer to a heightened sensitivity to service. •It comprises of:

Derived service expectationsWhen CE’s are driven by another person or group of persons

Personal service philosophyThe underlying generic attitude about the meaning of service and conduct of SP’s

Enduring Service Intensifiers


•Those states or conditions essential to the physical or psychological well being of the customer•They are Pivotal factors that shape what customers desire in service•These can be Psychological, Physical, Social or Functional

Personal Needs


FACTORS THAT INFLUENCE ADEQUATE SERVICES

Transitory ServiceIntensifiers

Perceived ServiceAlternatives

Desired Service

Zone of Tolerance

Adequate Service

Self-PerceivedService Role

SituationalFactors

PredictedServices


•Consists of temporary, short-term, individual factors that make customers more aware of their need for service•Personal emergencies raises the level of adequate service expectations and in particular the response from the SP’s

Transitory Service Intensifiers


•Other Service Providers from whom the customer can get service•The larger is the set of alternatives the customer’s expectation od Adequate service looms larger•If the service is of the nature where customers can do it themselves then again the Adequate Service level shoots up

Perceived ServiceAlternatives


•It is the degree to which customers believe they can influence the service they receive•In effect it is about active or passive participation of the customers in the SD•The more active a customer is, his expectation of Adequate Service level will be higher compared to other customers

Self-Perceived Service Role


•Service conditions which are viewed by customers as beyond the control of Service Providers•These can reduce or enhance the Adequate Service level expectations:

A general break-down of utility, an earth quake are probably good examples of reduced expectation from customersWhat situations could enhance CE?

Situational Factors


The level of service customers believe they are most likely to getIt implies a sort of an objective calculation of either the probability or estimate of an anticipated service performance levelPredicted service are more individual transaction oriented than other factors, which tend to be general assessments

Predicted Services


FACTORS THAT INFLUENCE DESIRED & PREDICTED SERVICES

Explicit ServicePromises

Implicit ServicePromises

Desired Service

Zone of Tolerance

Adequate Service

Words OfMouth

PastExperiences

PredictedServices


First-Time Service

Outcome

Process

Outcome

Process

Recovery Service

ExpectationsLOW HIGH

Source: Parasuraman, Berry and Zeithaml (1991)

ZONES OF TOLERANCE FORFIRST-TIME & RECOVERY SERVICE

DISCUSSION

How do the technology changes influence CE?

ExamplesInteractive TV versus traditional TVCustomized offerings of service from banks, AirlinesAudiovisual rich teaching versus story telling?

Note: All these need customers to participate in creating their own experiences, which means that CE’s will be shaped by what they do and not by what is presented to them. Passive customers may be disappointed( a la’ the early years of Internet.

: New technologies do raise the CE Levels.

DISCUSSION

Should service marketers delight their customers?

Delighting customers has a definite down side:

Results in the escalation of CE the next time they seek service. Firms can exceed Desired Service—particularly in dimensions other than reliability—while at the same time alerting customers that the elevated service performance cannot be delivered on a routine basis.

DISCUSSION

What service companies have effectively built customer loyalty?

Following firms have a reputation for impeccable service:

Walt Disney theme parks Singapore Airlines Federal Express Marriott Hotels IIT’s/IIM’sTaj Hotels,


Mini Case

Consider a small business preparing to buy a computer system:

•Which of the influences on customer expectations do you believe will be pivotal?•Which factors will have the most influence?•Which factors will have the least importance in this decision?


Business purchase decisions as a category are generally more rational than personal choices and it is likely that company promotional material will be reviewed and that competing brands will be considered.

Mini Case


The factors that may be most important include:

• Perceived Service Alternatives•Explicit Service Promises•Enduring service intensifiers •Word of mouth

Mini Case


The least important influencers in a decision of this type would be:

• Transitory service intensifiers•Personal needsNote: Although one could argue that personal needs are always an important component of business purchase decisions

Mini Case


INFLUENCING STRATEGIESControllable Factors

Possible Influence Strategies

Explicit service

promises Make realistic & accurate promises reflecting the service actually delivered & not on an idealized service version..Get feedback on the accuracy of promises made.Avoid price / Ad wars because they take the focus off customers & escalate service promises.Formalize service promises through a service guarantee.

Implicit service promise

Ensure that tangibles accurately reflect the type and level of service provided.Ensure that price premiums can be justified by higher levels of performance.


INFLUENCING STRATEGIESLess Controllable Factors


Enduring service intensifiers

Use MR to determine sources of derived service expectations and their requirements. Focus advertising and marketing strategy on ways the service allows the focal customer to satisfy the requirements of the influencing customer.Use MR to profile personal service philosophies of customers and use this information in designing and delivering services.

Personal needs Educate customers on ways the service addresses their needs.

Transitory service Intensifiers

Increase service delivery during peak periods or in emergencies.


INFLUENCING STRATEGIES

Less Controllable Factors


Perceived Service alternatives

Be fully aware of competitive offerings and, where possible and appropriate, match them.

Self-perceived role

Educate customers to understand their roles and perform them better.

Word-of-mouth communications

Simulate word of mouth in advertising by using testimonials and opinion leaders. Identify influencers and opinion leaders for the service and concentrate marketing efforts on them.Use incentives with existing customers to encourage them to say positive things about the service.


INFLUENCING STRATEGIES

Less Controllable Factors


Past experience

Use marketing research to profile customers' previous experience with similar services.

Situational factors

Use service guarantees to assure customers about service recovery regardless of the situational factors that occur.

Predicted service

Tell customers when service provision is higher than what can normally be expected so that predictions of future service encounters will not be inflated.


What Customers Want?Type of Customer

Type of Customer

Principal Expectations

Automobile Repair

Consumers Be competent, Explain things, Be respectful .

Automobile Insurance

Consumers Keep the customer informed, Be on their side, Play fair, Protect them from catastrophe, Provide prompt service.

Hotel Consumers Provide a clean room, Provide a secure room, Treat them like a guest, Keep your promise.


What Customers Want?Type of Customer

Type of Customer

Principal Expectations

Property & Insurance

Business customers

Fulfill obligations, Learn their business and work with them, Protect them from catastrophe, Provide prompt service.

Equipment Repair

Business customers

Share their sense of urgency, Be competent, Be prepared.

CV Leasing/ Rental

Business customers

Keep the equipment running, Be flexible, Provide full service.

CUSTOMER PERCEPTIONS


CUSTOMER PERCEPTION OF SERVICE

•Customer Perceptions•Customer Satisfaction•Service Quality•Service Encounters: The Foundations for Satisfaction and Service Quality•Strategies for Influencing Customer Perceptions


CUSTOMER PERCEPTION

•Customers perceive services in terms of the quality of the service and how satisfied they are overall with their experiences.•Be aware that the terms CS & SQ are not same!

Although they have certain things in common, CS is a broader concept, whereas SQ assessment focuses specifically on dimensions of service. Based on this view, perceived SQ is a component of CS.


SQ and CSService Quality say of a Resort is judged on attributes such as whether amenities are available and open at convenient hours, how responsive the staff are to customer needs and whether the facility is well-maintained.

Customer Satisfaction with the Resort is a broader concept, which certainly is influenced by perceptions of service quality but that will also include perceptions of product quality (such as quality of F & B, rooms), price, personal factors such as the consumer’s emotional state, and even uncontrollable situational factors such as weather conditions.


COMMENTS

•Because expectations are dynamic, evaluations may also shift over time-from person to person and from culture to culture. •All discussion of quality and satisfaction is based on Customers Perceptions of the service and not some predetermined objective criteria of what service is or should be.


SERVICE QUALITY (SQ)

•The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected.•Service quality assessments are formed on judgments of:

Outcome QualityProcess QualityPhysical Environment Quality

•04/12/2023 •Deepti Shetty •76

•Explanation

Take the example of a sit-in restaurant, here:•Outcome Quality: It would be the Meal•Process Quality: How it was served•Physical Environment Quality: The ambience, the décor etc.


SERVICE QUALITY DIMENSIONS- THE ERRATa

EMPATHY

RELIABILITY

RESPONSIVENESS

ASSURANCE

TaNGIBLES

SE

RV

E

IC


THE 5 DIMENSIONS OF SQ

Caring, individualized attention the firm provides its customers.

Ability to perform the promised service dependably and accurately.

Willingness to help customers and provide prompt service. Knowledge and courtesy of employees and their ability to convey trust and confidence.

Physical facilities, equipment, and appearance of personnel

Empathy

Reliability

Responsiveness

Assurance

Tangibles


CP OF SQ & CSInteraction

Quality

PEQuality

OutcomeQuality

Price

ProductQuality

ServiceQuality

SituationalFactors

PersonalFactors

CUSTOMERSATISFACTON


What Determines CS?

•Product and Service Features •Consumer Emotions •Attributions for Service Success or Failure •Perceptions of Equity or Fairness •Other Consumers, Family Members, and Coworkers


What Is CS?

•Satisfaction is the consumer’s fulfillment response. •Satisfaction is the customers’ evaluation of a service in terms of whether that service has met their needs and expectations. •It is a judgment that a service feature or the service itself provides a pleasurable level of consumption related fulfillment.


OUTCOMES OF CS

•Increased Customer Retention•Positive Word-Of-Mouth Communications•Increased Revenues

REVENUE


THE SERVICE ENCOUNTER (SE)

•It is where promises are kept or broken and where the proverbial rubber meets the road- some times called “real-time marketing.” •It is from these service encounters that customers build their perceptions.•The foundations for CS and SQ


THE SERVICE ENCOUNTER (SE)

•Is The “Moment Of Truth”•Occurs Any Time The Customer Interacts With The Firm•Can Potentially Be Critical In Determining CS & Loyalty


RELATIONSHIP BETWEEN CS & LOYALTY IN COMPETITIVE INDUSTRIES

Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.


TYPES OF SE

• Remote Encounters• Phone Encounters• Face-to-face Encounters• Group Encounters


SE AS AN OPPORTUNITY

•Build Trust•Reinforce Quality•Build Brand Identity•Increase Loyalty•Enhance CS and CP


Check-In

Request Wake-Up Call

Checkout

Bellboy Takes to Room

Restaurant Meal

AN SE CASCADE FOR A HOTEL VISIT


Sales Call

Ordering Supplies

Billing

Delivery and Installation

Servicing

AN SE CASCADE FOR AN INDUSTRIAL PURCHASE


AN SE CASCADE OF A MBA STUDENT

ENROLL

PEDOGOGICAL -Lectures

-Workshops-Projects

-Presentations-Tests et al

ORIENTATION

PLACEMENT

EXAMINATION I

EXAMINATION II

CONVOCATION

PEDOGOGICAL -Lectures

-Workshops-Projects

-Presentations-Tests et al

SUMMERPROJECT


CRITICAL SE RESEARCH

•GOAL - Understanding Actual Events & Behaviors That Cause CS Or Dissatisfaction In SE•METHOD - Critical Incident Technique (CIT)


CRITICAL SE RESEARCH

•DATA - Stories From Customers & Employees•OUTPUT - Identification Of Themes Underlying Satisfaction & Dissatisfaction With SE’s

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