! 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 dierences in nature of service act (tangible/intangible) and who or what is direct recipient of service (people/ possessions) there are four categories of services: 4 Broad Categories Of Services !"#$%&'($" *%$+,--."/ (servlces dlrecLed aL lnLanglble asseLs): ! Accounung ! 8anklng 012345 67 285 954:!;5 1;2 eople ossesslons 1anglble Acuons <56<=5 <46;599!0> (servlces dlrecLed aL people's bodles): ! 8arbers ! PealLh care ?86 64 ?812 !9 285 @!45;2 45;!<!502 67 285 954:!;5A <699599!60 <46;599!0> (servlces dlrecLed aL physlcal possesslons): ! 8efuellng, ulsposal/ recycllng B5021= 92!B3=39 <46;599!0> (servlces dlrecLed aL people's mlnds): ! Lducauon ! Adveruslng/8 lnLanglble Acuons ! CusLomers musL: ! hyslcally enLer Lhe servlce facLory - locauon where people or machlnes dellver servlce ! Co-operaLe acuvely wlLh Lhe servlce operauon - ex. Massage
! Managers should think about process and output from customers perspective ! To identify benefits created and non- financial costs: ! Time, mental, physical effort, fear and pain ! Customers are less physically involved compared to people processing services ! Involvement is limited ! Compare Flight and Parcel ! Production and consumption are separable ! Ex: cleaning, maintaining, storing, improving, storing Mental stimuli processing ! Touches peoples minds shape attitude and influence behavior ! Consulting, professional advice, psychotherapy, entertainment ! Physical presence of recipients may or may not be required ! Core content of services is information-based ! Can be inventoried Information Processing ! Information is the most intangible form of service output ! But may be transformed into enduring forms of service output ! Line between information processing and mental stimulus processing may be blurred. Implications ! Not to over generalize services ! Nature of involvement varies ! Information based service can be stored greater convenience ! Why do customers still go to service factory even there is no need? ! Habit and Tradition Purchase Process for Services Prepurchase Stage Service Encounter Stage Post-Encounter Stage ! Customers seek solutions to aroused needs ! Evaluating a service may be difficult ! Uncertainty about outcomes increases perceived risk ! What risk reduction strategies can service suppliers develop? ! Understanding customers service expectations ! Components of customer expectations ! Making a service purchase decision ! Decision to buy or use a service is triggered by need arousal ! Triggers of need: ! Unconscious minds ( e.g., personal identity and aspirations) ! Physical conditions (e.g., hunger ) ! External sources (e.g. marketing activities) ! Consumers are then motivated to find a solution for their need Information search ! Need arousal leads to attempts to find a solution ! Evoked set a set of products and brands that a consumer considers during the decision- making process that is derived from past experiences or external sources ! Alternatives then need to be evaluated before a final decision is made Evaluating Service Is Difficult ! Search attributes help customers evaluate a product before purchase ! E.g., type of food, location, type of restaurant and price ! Experience attributes cannot be evaluated before purchase ! The consumer will not know how much s/he will enjoy the food, the service, and the atmosphere until the actual experience Evaluating Service Is Difficult ! Credence attributes are those that customers find impossible to evaluate confidently even after purchase and consumption ! E.g., hygiene conditions of the kitchen and the healthiness of the cooking ingredients ! Quality of repair of car, doctors How product attributes Affect ease of evaluation Source: Adapted from Zeithaml Most Goods High in search attributes High in experience attributes High in credence attributes Difficult to evaluate* Easy to evaluate Most Services
Clothing
Chair
Motor vehicle
Foods
Restaurant meals
Lawn fertilizer
Haircut
Entertainment
Computer repair
Education
Legal services
Complex surgery *NOTE: Difficulty of evaluation tends to decrease with broad exposure to a service category and frequency of use of a specific supplier Perceived Risk ! Functionalunsatisfactory performance outcomes ! Financial monetary loss, unexpected extra costs ! Temporal wasted time, delays leading to problems ! Physical personal injury, damage to possessions Perceived Risk ! Psychological fears and negative emotions ! Social how others may think and react ! Sensory unwanted impact on any of five senses Consumers Handling Perceived Risk? ! Seeking information from respected personal sources ! Relying on a firm that has a good reputation ! Looking for guarantees and warranties ! Visiting service facilities or trying aspects of service before purchasing ! Asking knowledgeable employees about competing services ! Examining tangible cues or other physical evidence ! Using the Internet to compare service offerings and search for independent reviews and ratings Responses to managing customer perception of risk ! Offer performance warranties, guarantees to protect against fears of monetary loss ! For products where customers worry about performance, sensory risks: ! Offer previews, free trials (provides experience) ! Advertising (helps to visualize) Responses to managing customer perception of risk ! For products where customers perceive physical or psychological risks: ! Institute visible safety procedures ! Deliver automated messages about anticipated problems ! Websites offering FAQs and more detailed background ! Train staff members to be respectful and empathetic ! Doctor Certificates
Service Expectations ! Customers evaluate service quality by comparing what they expect against what they perceive ! Situational and personal factors also considered ! Expectations of good service vary from one business to another ! Veterinarian and Accounting Services ! Dog Grooming and Salon
Service Expectations ! Expectations of good service vary among differently positioned service providers in the same industry ! Cebu Pacific vs. PAL ! SM vs Rustans ! Expectations change over time Components of expectations ! Desired Service Level: ! Wished-for level of service quality that customer believes can and should be delivered ! Adequate Service Level: ! Minimum acceptable level of service ! Predicted 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 Factors affecting Expectations Predicted Service Explicit & Implicit Service Promises Word-of-Mouth Past Experience Desired Service
ZONE OF TOLERANCE
Adequate Service Personal Needs
Beliefs about What Is Possible
Perceived Service Alterations
Situational Factors lrusLrauon Sausfacuon and uellghL A11Ln1lCn Important Notes About Zone of Tolerance ! Not a single level of expectation as seen in the diagram ! Adequate service expectation can expand or contract within a customer ! Type of Customer Airlines ! Price ! Vary on Service Attributes or Dimensions ! More important, narrower the zone of tolerance Factors that Affect Desired Service 5"CD%."/ 9,%E.+, !"F,"-.G,%- <,%-$"'H 0,,C- I$", $# 2$H,%'"+, @,-.%,C 9,%E.+, 1C,JD'F, 9,%E.+, ! States or conditions essential to the physical or psychological well being of the customer ! Hotel and Social Needs
Lasting Service Intensifiers ! Individual, stable factors that lead the customer to a heightened sensitivity to service ! Derived service expectations customer expectation are driven by another person or group of people ! Example: Wedding Coordinators, B2B services ! Personal Service Philosophy ! customers underlying generic attitude about the meaning of service and the proper conduct of service providers. ! Having such will intensify the expectations of service Factors that Influence Adequate Service
! Temporary/Transitory Service Intensifier short-term individual factors that make a customer more aware of the need of the service ! Example emergency situations ! Problems with initial service can lead to heightened expectations . ! Fixing the problem the first time is important but fixing it the second time around is more critical Factors that Influence Adequate Service
! Perceived Service Alternatives other providers from whom the customer can obtain service ! Presence of alternatives and if service can be performed by customer heightens adequate service ! Evaluation of possible alternatives - substitutes Factors that Influence Adequate Service
! Customers self-perceived service role exert an influence on the level of service they receive ! Specify the level of service restaurant ! Active participation allergic shots ! Assuming the responsibility for complaining when the service is poor ! Zone of tolerance expands when they are not fulfilling roles Factors that Influence Adequate Service
! Situational Factors service performance conditions that customers view as beyond the control of the service provider ! catastrophe ! Customers who recognize factors that are outside the control of the firm may accept lower level of service, widening zone of tolerance Factors that Influence Adequate Service
! Predicted Service the level of service the believe they are likely to get. ! If customers predict good service, their levels of adequate service are likely to be higher than poor service. @,-.%,C 9,%E.+, 1C,JD'F, 9,%E.+, I$", $# 2$H,%'"+, <%,C.+F,C 9,%E.+, 5M*H.+.F 9,%E.+, <%$&.-,- !&*H.+.F 9,%E.+, <%$&.-,- ?$%CK$#KB$DFN <'-F 5M*,%.,"+, Factors that Affect Desired and Predicted Service
Factors that Affect Desired and Predicted Service ! Consumers seek out information from several different sources call, ask, look at media ! Explicit service promises (PERSONAL) personal (from employees) and non personal statements (advertising) about the service made by the organization on the customers. ! Overpromising ! Banking, Restaurants, Hotels (Ads) , Door to Door Factors that Affect Desired and Predicted Service ! Implicit Service Promises service- related cues other than explicit promises ! Price and tangibles ! Word-Of-Mouth Communication other persons ! Experts, consumer reports, friends, family
Factors that Affect Desired and Predicted Service ! Past Experiences consumers previous exposure to the service ! Compare with similar companies, related companies Making the purchase decision ! Purchase Decision: Possible alternatives are compared and evaluated, whereby the best option is selected ! Simple if perceived risks are low and alternatives are clear ! Complex when trade-offs increase ! Trade-offs are often involved ! After making a decision, the consumer moves into the service encounter stage ! Service encounter a period of time during which a customer interacts directly with the service provider ! Might be brief or extend over a period of time (e.g., a phone call or visit to the hospital) ! Models and frameworks: 1. Moments of Truth importance of managing touchpoints 2. High/low contact model extent and nature of contact points 3. Servuction model variations of interactions 4. Theater metaphor staging service performances Moments of truth ! [W]e could say that the perceived quality is realized at the moment of truth, when the service provider and the service customer confront one another in the arena. At that moment they are very much on their own It is the skill, the motivation, and the tools employed by the rms representative and the expectations and behavior of the client which together will create the service delivery process. ! Richard Normann High vs low contact ! High-Contact 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 arms length through electronic or physical distribution channels ! New technologies (e.g. the Web) help reduce contact levels ! Medium-Contact Services Lie in between These Two High vs low contact Servuction system ! 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 place and service is delivered to customers ! Includes customer interactions with operations and other customers ! Service Marketing (front stage) ! Includes service delivery (as above) and all other contacts between service firm and customers
Service Marketing System for a High-Contact The Customer Technical Core Interior & Exterior Facilities Equipment Service People Other Customers Advertising
Sales Calls
Market Research Surveys
Billing/Statements
Misc. Mail, Phone Calls, E-mails, Faxes, etc.
Website
Random Exposure to Facilities/Vehicles
Chance Encounters with Service Personnel
Word of Mouth Service Delivery System Other Contact Points Service Operations System Backstage (invisible) Front Stage (visible) Other Customers Service Marketing System for a LOw-Contact The Customer Backstage (invisible) Front Stage (visible) Advertising
Market Research Surveys
Billing/Statements
Random Exposure to Facilities/ Vehicles
Word of Mouth Phone, Fax, Web- site, etc. Self Service Equipment Mail Technical Core Other Contact Points Service Delivery System Service Operations System Roles ! Employees and customers play roles ! Set of behavior patterns learned through experience and communication to be performed by an individual in a social interaction ! Satisfaction = role congruity extent to which each person acts out his/her prescribed role Scripts ! Sequence of behavior from employees and customers are expected to learn and follow during the service delivery ! Employees formal training ! Customers previous experience ! Deviations frustration to dissatisfaction ! Scripted vs. Unscripted
Theatrical Metaphor ! Service dramas unfold on a stagesettings may change as 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 participants Implications ! Greater need for information/training to help customers to perform well, get desired results ! Customers should be given a realistic service preview in advance of service delivery, so they have a clear picture of their expected role Customer Satisfaction ! Satisfaction defined as attitude- like judgment following a service purchase 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
Customer Satisfaction ! Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and situational factors ! Research shows links between customer satisfaction and a firms financial performance Customer Delight: Beyond satisfaction ! Strategic links exist between customer satisfaction and corporate performance. ! Getting feedback during service delivery help to boost customer loyalty Customer Delight: Beyond satisfaction ! Research shows that delight is a function of three 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 very mundane services? The Five Dimensions of Service Quality Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to convey trust and confidence. Physical facilities, equipment, and appearance of personnel. Caring, individualized attention the firm provides its customers. Willingness to help customers and provide prompt service. Tangibles Reliability Responsiveness Assurance Empathy ! Providing service as promised ! Dependability in handling customers service problems ! Performing services right the first time ! Providing services at the promised time ! Maintaining error-free records ! Keeping customers informed as to when services will be performed ! Prompt service to customers ! Willingness to help customers ! Readiness to respond to customers requests RELIABILITY RESPONSIVENESS ! Employees who instill confidence in customers ! Making customers feel safe in their transactions ! Employees who are consistently courteous ! Employees who have the knowledge to answer customer questions ASSURANCE ! Giving customers individual attention ! Employees who deal with customers in a caring fashion ! Having the customers best interest at heart ! Employees who understand the needs of their customers ! Convenient business hours EMPATHY ! Modern equipment ! Visually appealing facilities ! Employees who have a neat, professional appearance ! Visually appealing materials associated with the service TANGIBLES SERVQUAL Attributes
Exercise 1 Identify Service Attributes Pick a services industry below and brainstorm 3 specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customers point of view. Sample: Airline, Fast Food, Upscale Restaurant, Auto Repair, UNM, Exterminator
Reliability:
Assurance:
Tangibles:
Empathy:
Responsiveness: Assignment 1 ! Paper ! 1. Avail of any service this weekend. Take note of the following: ! What was your service expectations? What for you was adequate? What for you was/were desired? ! Take note of any factor/s that may have affected your service expectation. ! How was your service experience? Did the service exceed your expectation? Were you dissatisfied? Why? ! 1 Page single space Arial font 12
Assignment 2 ! ONLINE ! Read Case 1. Susan Monro pages 492 -493 ! Answer the study questions 1. Identify each of the services that Susan Munro has used or is planning to use. Categorize them according to the nature of the underlying process. 2. What needs is she attempting to satisfy in each instance? 3. What proportion of these services: (a) involve self-service, (b) some degree of customer involvement with the production process, and/or (c) dependence on the service provider? Where do you see more potential for self-service and what would be the implications for customer and supplier? 4. What similarities and differences are there between the dry-cleaning store and the hair salon? What could each learn from studying the other?