Consumer behaviour in service marketing

Consumer behaviour in service marketing

1. Chapter 2: Customer Behavior in Service Marketing

2. A Framework for Developing Effective Service Marketing Strategies Understanding Customer Needs, Decision Making, and Behavior in Service Encounters Building the Service Model Managing the Customer Interface Implementing Profitable Service Strategies

3. How consumers seek, choose, purchase, experience and evaluate services Two most important influences- consumers life stage and the generation in which he/she was born Consumer Decision Making: The Three-Stage Buying cycle Pre-purchase Stage Service Encounter Stage Post-purchase Stage Overview

4. Differences among Services Affect Customer Behavior Consumers are rarely involved in the manufacture of goods but often participate in service creation and delivery Challenge for service marketers is to understand how customers interact with service operations Based on differences in nature of service act (tangible/intangible) and who or what is direct recipient of service (people/possessions), there are four categories of services: People processing Possession processing Mental stimulus processing Information processing

5. People Processing Possession processing Mental stimulus processing Information processing 4 Categories of Service

6. Four Categories Of Services Information processing (services directed at intangible assets): Accounting Banking Nature of the Service Act People Possessions Tangible Actions People processing (services directed at people ’ s bodies): Barbers Health care Who or What Is the Direct Recipient of the Service? Possession processing (services directed at physical possessions): Refueling Repair / maintenance Mental stimulus processing (services directed at people ’ s minds): Education Advertising Intangible Actions

7. Customer must be physically enter the service system. Health care Beauty saloon Barber Restaurant/bars People Processing

8. People Processing Customers must: Physically enter the service factory Co-operate actively with the service operation Managers should think about process and output from customer’s perspective To identify benefits created and non-financial costs: Time, mental, physical effort People Processing

9. Customer ask to provide tangible treatment Repair/ maintenance Refueling Laundry Gardening Possession Processing

10. Possession Processing Possession Processing Customers are less physically involved compared to people processing services Involvement is limited Production and consumption are separable

11. Directed at people’s mind or anything that touches people mind and influence behavior Education News/information Music concert religion Mental Stimulus Processing

12. Mental Stimulus Processing Mental Stimulus Processing Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers Physical presence of recipients not required Core content of services is information-based Can be “inventoried”

13. Accounting Banking Legal services Securities investment Information processing

14. Information Processing Information Processing Information is the most intangible form of service output But may be transformed into enduring forms of service output

15. The 3 Stage Model

16. The decision to buy and use a service is made in the pre purchase stage. Pre-purchase Stage

17. Pre Purchase Stage Awareness of Need Information Search Evaluation of Alternatives Service attributes, Perceived risk, Service expectations Purchase Decision

18. Seek solution to aroused needs A service purchase is triggered by an underlying need (need arousal) Needs may be due to: People’s unconscious minds ( e.g., aspirations) Physical conditions (e.g., chronic back pain) External sources (e.g., marketing activities) When a need is recognized, people are likely take action to resolve it Pre Purchase Stage Awareness of Need

19. When a need is recognized, people will search for solutions. Information may be collected from Internal sources or External sources. Internal sources include information retrieved by the customer from his memory, related to his previous experience of buying of services. External sources include personal and nonpersonal sources. Personal sources- Family, neighbor, Friends etc. Nonpersonal sources - Advertising, Dealers, Television, Newspapers, radio etc. Clarifying between the 2 options Pre Purchase Stage Information search or

20. Service Attributes The ‘Search’, ‘Experience’ and ‘Credence’ are some of the factors which create difference between service and goods. Search attribute - Attributes which can be evaluated before purchase are called Search attributes & it help customers evaluate a product (Physical Goods) before purchase like- style, color, texture, taste, sound are feature. Experience attribute - Consumer can determine or evaluated only after the purchase—must “experience” the service to know what they are getting. Like- Holidays, sporting events, medical procedure. Credence attribute- Attributes that customers find impossible to evaluate confidently even after purchase and consumption. Like- hygiene of a kitchen in a restaurant, Quality of repair and maintenance work Pre Purchase Stage Evaluation of Alternatives

21. Goods / Services Characteristics Goods High on Search Attributes Services High on Experience & Credence Attributes Search, Experience & Credence Attributes

22. Aditya Global Business School(Marketing Team) Pre-purchase Stage – Evaluation of Alternatives Perceived Risks A perceived risk is the uncertainty faced by consumers when they can’t asses the post purchase consequences before purchasing the product & it is involved in all customer decision. Functional Risk – Risk faced by customer that product which customer purchased may fail to function according to his expectations or unsatisfactory performance outcomes. Financial Risk – Risk faced by consumers when he needs to pay for the service like- monetary loss, unexpected extra costs Physical Risk – It involve the risk to the physical safety of the customer by using the products/ services. personal injury etc. Psychological Risk – It is the risk of causing harm to one’s self image by making a poor service. Like- fears and negative emotions Social Risk – This is the risk of having to face social embarrassment as a result of make a poor service choice. Time Risk- This is the risk that time spent to search and locate a service prior to purchase may have been wasted, if service does not confirm to the customer’s expectations.

23. Aditya Global Business School(Marketing Team) Pre-purchase Stage – Purchase Decision When possible alternatives have been compared and evaluated, the best option is selected Can be quite simple if perceived risks are low and alternatives are clear Price is often a key factor in the purchase decision

24. Service encounter Stage

25. A service encounter is a period of time during which you as a customer interact directly with the service provider. It begins with submitting an application, requesting a reservation, or placing an order. Service Encounter Stage

26. High Contact Service Customer’s exposure takes on a physical and tangible nature Eg . Hotels, Restaurants, Healthcare, public transportation etc. Low Contact Service Little, if any physical contact between customer and service provider Ex. Telephone based service delivery etc. Service Encounter Stage

27. Post Encounter Stage Customers evaluate service quality & their satisfaction/ Dissatisfaction with the service experience. The outcome of this process will affect their future intentions, such as whether or not to remain loyal to the provider that deliver service.

28. Negative disconfirmation- Service worse than expected Positive confirmation- service better than expected Post Encounter Stage Satisfaction: attitude like judgment following a purchase act

29. Customer evaluate service quality by comparing what they expected with what they received. If their expectations are met or exceeded, they believe they have received high quality service and customer is satisfied. If the service experience does not meet customers’ expectations, they may complain about poor service quality, suffer in silence, or switch providers in the futures. Evaluation of service performance

30. After purchasing a service, the customer evaluates it by comparing its performance with his expectation. A satisfied customer becomes brand loyal, gives positive feedback to others about the service. Cont.… Brand Switcher Brand Loyal Post- Purchase Evaluation - ve + ve

31. Delight - The product’s performance is exceeds the buyer’s expectations. Satisfaction - The product’s performance matches the buyer’s expectation. Dissatisfaction - The product’s is performance does not match the buyer’s expectation. Cognitive Dissonance (Post- purchase Doubt) - The buyer is unsure of the product performance relative to his or her expectations. In the post purchase stage, buyers will experience any four outcomes-

32. Thank you