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Service Encounters

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    Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 1

    Consumer Behavior in

    Service Encounters

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    Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 2

    Where Does the Customer Fit in aService Organization? (Fig. 2.1)

    Consumers rarely involved in manufacture of goods butoften participate in service creation and delivery

    Challenge for service marketers is to understand howcustomers interact with service operations

    Flowcharting clarifies how customer involvement in serviceencounters varies with type of process - see Fig. 2-1: People pro cessin g (e.g., motel stay):customer is physically involved

    throughout entire process

    Poss ession p roc essing (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

    Inform at ion pro cessing (e.g. , health insu rance):involvement is mental -specify information upfront and later receive documentation of coverage

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    Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 3

    High-Contact and Low-Contact Services

    High Contact Services

    Customers visit service facility and remain throughoutservice 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 arms length through electronic orphysical distribution channels

    New technologies (e.g. Web) help reduce contact levels

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    Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 4

    Levels of Customer Contact with ServiceOrganizations (Fig. 2.2)

    Emphasizes encounters

    with service personnel

    Emphasizes encounters

    with equipment

    High

    Low

    ManagementConsulting

    CarRepair

    InsuranceMotel

    FastFood

    NursingHome

    AirlineTravel(Econ.)

    CableTV

    TelephoneBanking

    HairCut

    GoodRestaurant

    4-StarHotel

    DryCleaning

    RetailBanking

    Mail Based Repairs

    Internet-basedServices

    Movie Theater

    Internet Banking

    Subway

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    Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 5

    Managing Service Encounters--1

    Service encounter:A period of time during which customersinteract directly with a service

    Moments of truth:Definingpoints in service delivery wherecustomers interact with employees or equipment

    Critical incidents: specific encounters that result inespecially satisfying/dissatisfying outcomes for eithercustomers or service employees

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    Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 6

    Managing Service Encounters--2

    Service success often rests on performance of juniorcontact personnel

    Must train, coach, role model desired behavior

    Thoughtless or badly behaved customers can causeproblems for service personnel (and other customers)

    Must educate customers, clarify what is expected, managebehavior

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    7/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 7

    The Purchase Process for Services(Adapted from Fig. 2-3)

    Prepurchase Stage

    Awareness of need Information search Evaluation of alternative service suppliers

    Service Encounter Stage

    Request service from chosen supplier Service delivery

    Postpurchase Stage

    Evaluation of service performance Future intentions

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    8/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 8

    Perceived Risks inPurchasing and Using Services (Table 2.1)

    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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    9/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 9

    Factors that InfluenceCustomer Expectations of Services (Fig. 2.4)

    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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    10/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 10

    Components of Customer Expectations

    Desired Service Level: wished-for level of service qualitythat customer believes can and should be delivered

    Adequate Service Level: minimum acceptable level ofservice

    Predicted Service Level: service level that customerbelieves firm will actually deliver

    Zone of Tolerance:range within which customers arewilling to accept variations in service delivery

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    11/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 11

    Intangible Attributes, Variability, and QualityControl Problems Make Services Hard to Evaluate

    Search attr ibutesTangible characteristics that allowcustomers to evaluate a product before purchase

    Experience attr ibutesCharacteristics that can beexperienced when actually using the service

    Credence attr ibutesCharacteristics that are difficult toevaluate confidently even after consumption

    Goods tend to be higher in search attributes, services tendto be higher in experience and credence attributes

    Credence attributes force customers to trust that desiredbenefits have been delivered

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    12/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 12

    How Product Attributes AffectEase of Evaluation) (Fig. 2.5)

    Source: Adapted from Zeithaml

    Most Goods

    High in searchattributes

    High in experienceattributes

    High in credenceattributes

    Difficultto evaluate

    Easyto evaluate

    Most Services

    Clothing

    Chair

    Motorvehicle

    Foods

    Restau

    rantmeals

    Law

    nfertilizer

    Haircut

    Ente

    rtainment

    Comp

    uterrepair

    Legalservices

    Complexsurgery

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    13/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 13

    Customer Satisfaction is Central to theMarketing Concept

    Satisfaction defined as attitude-like judgment following aservice purchase or series of service interactions

    Customers have expectations prior to consumption, observeservice 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/qualitytradeoffs, personal and situational factors

    Research shows links between customer satisfaction and afirms financial performance

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    14/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 14

    Customer Delight:Going Beyond Satisfaction

    Research shows that delightis a function of 3 components

    Unexpectedly high levels of performance

    Arousal (e.g., surprise, excitement)

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

    Is it possible for customers to be delighted by verymundane services?

    Progressive Insurance has found ways to positively surprisecustomers with customer-friendly innovations andextraordinary customer service

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    15/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 15

    A Service Business is a System ComprisingThree Overlapping Subsystems

    Service Operations (front stage and backstage)Where inputs are processed and service elements created. Includes facilities, equipment, and personnel

    Service Delivery (front stage)

    Where final assembly of service elements takes placeand service is delivered to customers

    Includes customer interactions with operations and othercustomers

    Service Marketing (front stage)

    Includes service delivery (as above) and all other contactsbetween service firm and customers

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    16/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 16

    Service Marketing System:(1) High Contact Service--e.g., Hotel (Fig. 2.7)

    TheCustomer

    TechnicalCore

    Interior & ExteriorFacilities

    Equipment

    Service People

    Other

    Customers

    Other

    Customers

    Advertising

    Sales Calls

    Market ResearchSurveys

    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

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    17/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 17

    Service Marketing System:(2) Low Contact Service--e.g., Credit Card (Fig. 2.8)

    TechnicalCore

    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 ResearchSurveys

    Random Exposures

    Facilities, Personnel

    Word of Mouth

    Service Marketing System

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    18/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 18

    Service as Theater

    All the worlds a stage and allthe men and women merely

    players. They have their exitsand their entrances and eachman in his time plays many

    parts

    William ShakespeareAs You Like It

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    19/20Slide2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 2 - 19

    The Dramaturgy of Service Delivery

    Service dramas unfold on a stage--settings may change asperformance 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 specialcostumes, speak required lines, behave in specific ways

    Support comes from a backstage production team

    Customers are the audiencedepending on type ofperformance, may be passive or active

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    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

    Script:A sequence of behavior to be followed by employeesand 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 improvedelivery, increase productivity, enhance experiences

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