Services Marketing

Chapter 2:
Consumer Behavior
in a Services Context

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 1
 Consumer Behavior
Services Marketing
 The behavior that consumers display in searching for,
purchasing, using, evaluating, and disposing of
products and services that they expect will satisfy their
needs.

“I can’t get no satisfaction.” ~ Mick Jagger

“An individual who seeks out the necessary information and

chooses wisely has a better chance of getting satisfaction than
Mick Jagger.” ~ Claes Fornell (University of Michigan)

“All the world’s a stage and all the men and women merely
players; they have their exits and their entrances and one man in
his time plays many parts.” ~ William Shakespeare

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 2
 Overview Of Chapter 2
Services Marketing

Customer Decision Making: Pre-purchase Stage

The Three-Stage Model of
Service Consumption

Service Encounter Stage

Post-encounter Stage

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 3
 Consumer Behavior Is
Interdisciplinary
Services Marketing

Psychology

Economics Sociology

Social
Anthropology
psycholo
gy

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 4
 Pre-purchase Stage - Overview
Services Marketing

Pre-purchase Stage  Customers seek solutions to

aroused needs
 Evaluating a service may be
difficult
 Uncertainty about outcomes
Increases perceived risk
Service Encounter  What risk reduction strategies
Stage can service suppliers develop?
 Understanding customers’
service expectations
 Components of customer
expectations
Post-encounter Stage  Making a service purchase
decision

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 5
 What Would a Pet Owner Need to Know in
Order to Make a Decision About Buying
Pet Insurance? Services Marketing

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 6
 Do I Need It? How Do I Get More
Information?
Services Marketing

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 7
 Maslow’s Hierarchy of Needs
Services Marketing

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 8
 Need Arousal
Services Marketing

 Decision to buy or use a service is triggered by need

arousal

 Triggers of need:
 Unconscious minds (e.g., personal identity and aspirations/goals)
 Physical conditions (e.g., hunger )
 External sources (e.g., a service firm’s marketing activities)

 Consumers are then motivated to find a solution for their

need

Courtesy of Masterfile Corporation

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 9
 Information Search
Services Marketing

 Need arousal leads to attempts to find a solution

 Evoked set (consideration 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

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 10
 Evaluating Alternatives –
Service Attributes Services Marketing

 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

 Credence (acceptance) 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

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 11
 How Product Attributes Affect
Ease of Evaluation
Services Marketing
Most Goods Most Services

Easy Difficult
To To
Evaluate evaluate
Clothing Restaurant Meals
Lawn Fertilizer Computer Repair
Chair
Haircut Education
Motor Vehicle
Entertainment Legal Services
Foods
Complex Surgery
High In High In High In
Search Experien Credenc
Attribute ce e
s Attributes Attributes
Source: Adapted from Valarie A. Zeithaml , “How Consumer Evaluation Processes Differ Between Goods & Services,” in J.H. Donelly and W. R. George, Marketing of
Services (Chicago: American Marketing Association, 1981)
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 12
 Perceived Risks of Purchasing
and Using Services Services Marketing

 Functional – unsatisfactory performance outcomes

 Will this training course give me the skills I need to get better job?
 Financial – monetary loss, unexpected extra costs
 Will repairing my car cost more than the original estimate?
 Temporal – wasted time, delays leading to problems
 Will I have to wait in line before entering the exhibition?
 Physical – personal injury, damage to possessions
 Will I get hurt if I go skiing at this resort?
 Psychological – fears and negative emotions
 How can I be sure this aircraft will not crash?
 Social – how others may think and react
 What will people think?
 Sensory – unwanted impact on any of five senses
 Will my room smell of stale cigarette smoke?
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 13
 How Might Consumers
Handle Perceived Services Marketing
Risk?
 Seek information from respected personal sources

 Compare service offerings and search for independent

reviews and ratings via the Internet

 Relying on a firm with good reputation

 Looking for guarantees and warranties

 Visiting service facilities or going for trials before purchase

and examining tangible cues or other physical evidence

 Asking knowledgeable employees about competing services

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 14
 Strategic Responses to Managing
Customer Perceptions of Risk
Services Marketing

Free trial (for

services with Advertise (helps Display
high experience to visualize) credentia
attributes) ls

Use evidence
Offer Encourage visit
management
guarant to service
(e.g., furnishing,
equipment etc.) ees facilities

Give customers
online access
about order
status

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 15
 Understanding Customers’
Service Expectations Services Marketing

 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, and differently positioned service providers in
same industry

 Expectations change over time

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 16
 Components of Customer
Expectations Services Marketing

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
• Acceptable range of variations in service delivery

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 17
 Purchase Decision
Services Marketing

 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

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 18
 Service Encounter Stage - Overview
Services Marketing

Pre-purchase Stage ● Service encounters range from high-

to low-contact

● Understanding the servuction

system

Service Encounter ● Theater as a metaphor for service

Stage delivery: An integrative perspective

 Service facilities

 Personnel

 Role and script theories

Post-encounter Stage

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 19
 Service Encounter Stage
Services Marketing

 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

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 20
 Moments of Truth
Services Marketing

“[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 firm’s representative
expectations and behavior of client which together will create
andthethe
the service delivery process.”

Richard Normann
Service Management
Consultant
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 21
 Service Encounters Range from
High-Contact to Low-Contact Services Marketing

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 22
 Distinctions between High-Contact
and Low-Contact Services
Services Marketing

 High-Contact Services  Low-Contact Services

 Customers visit service  Little or no physical contact
facility and remain  Contact usually at arm’s
throughout service delivery length through electronic or
 Active contact physical distribution
 Includes most people- channels
processing services  Facilitated by new
technologies

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 23
 The Servuction System
Services Marketing

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 24
 The Servuction System:
Service Production and
Services Marketing
Delivery
 Servuction System: visible front stage and invisible
backstage

 Service Operations
 Technical core and service elements
where inputs are
processed created
 Contact people
 Inanimate environment (spiritless; dead)
 Service Delivery
 Where “final is
assembly” of
service elements
 Includes
takes place customer
and interactions with operations and other customers
service
delivered Services Marketing 7/e
Slide © 2010 by Lovelock & Wirtz Chapter 2 – Page 25
 Theater as a Metaphor for
Service Delivery
Services Marketing

“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

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 26
 Theatrical Metaphor:
an Integrative
Services Marketing
Perspective
Good metaphor as service delivery is a series of events that
customers experience as a performance

Service facilities Personnel

• Stage on which drama • Front stage personnel are
unfolds like members of a cast
• This may change from • Backstage personnel are
one act to another support production team

Roles Scripts
• Like actors, employees • Specifies the sequences
have roles to play and of behavior for customers
behave in specific ways and employees

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 27
 Implications of Customer
Participation in Service
Services Marketing
Delivery
 Greater need for information/training
 Help customers to perform well, get desired results

 Customers should be given a realistic service preview in

advance of service delivery
 This allows them to have a clear idea of their expected role and
their script in this whole experience
 Manages expectations and emotions

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 28
 Post-purchase Stage - Overview
Services Marketing

Pre-purchase Stage

● Evaluation of service
performance
Service Encounter
Stage
● Future intentions

Post-encounter Stage

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 29
 Customer Satisfaction with
Service Experience
Services Marketing

 Satisfaction: attitude-like judgment following a service

purchase or series of service interactions
 Whereby customers have expectations prior to consumption,
observe service performance, compare it to expectations

 Satisfaction judgments are based on this comparison

 Positive disconfirmation (better)
 Disconfirmation (same)
 Negative disconfirmation
(worse)

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 30
 Customer Delight:
Going Beyond
Services Marketing
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)

 Strategic links exist between customer satisfaction and

corporate performance
 By creating more value for customers (increased satisfaction), the
firm creates more value for the owners

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 31
 Customer Delight:
Going Beyond Satisfaction
Services Marketing

 Best Practice in Action 2.1:

Progressive Insurance
Delights Its Customers
 Provided excellent customer
service which allowed them
to lower costs and also
increase customer
satisfaction and retention

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 32
 Summary Services Marketing
• Key Steps • Customers face perceived risks
1. Need arousal which marketers should reduce
Pre-purchase 2. Information search with some strategic responses
Stage 3. Evaluation of alternative
solutions • Zone of tolerance: Adequate to
4. Purchase decision desired. Dissatisfaction if service
level falls below adequate level.

• Moments of Truth: importance of • Servuction model – variations of

Service Encounter effectively managing touchpoints interactions
Stage
• High/low contact service model – • Theater metaphor – “staging”
understanding the extent and service performances
nature of contact points

• In evaluating service performance, • Unexpectedly high levels of

Post-encounter customers can have expectations performance, arousal, and
positively disconfirmed, confirmed, positive affect are likely to
Stage lead or negatively disconfirmed to delight

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 33