SERVICES MARKETING

Module II
Dr.Basavaraj Sulibhavi
IBMR Hubballi

Source: Services Marketing Integrating Customer Focus Across the Firm Seventh
Edition by Valarie A. Zeithaml, Mary Jo Bitner & Dwayne D. Gremler
Consumer Behavior in Services
Services Search Vs Experience Vs
Credence Properties

• Search qualities, attributes that consumer can

determine before purchasing a product E.g..
Color, style, price, fit, feel etc.
• Experience qualities, attribute that a
consumer can be discerned only after
purchase or during consumption
• Credence qualities, includes characteristics
that consumer may find impossible to
evaluate even after purchase and
consumption. For e.g. an appendix operations
• Experience and credence qualities dominates
in services
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 Consumer Choice

Consumer Decision Making and Evaluation of

Services:
1. Consumer Choice
2. Consumer Experience
3. Post-experience Evaluation

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 Consumer Choice
Need Recognition

Pre-Purchase Stage
Information Search

Evaluation of Alternatives

Purchase

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 Special Considerations

• Services Pre-Purchase stage

1. Perceived Risk
2. Importance of personal sources of
information
3. Fewer alternatives to consider
4. Self-service as a viable alternative
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 Perceived Risk
• This element is especially relevant for services
that are high in experience or credence
attributes
Risk-reducing strategies:
• Seeking information from respected personal
sources
• Relying on a firm that has a good reputation
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 Consumer Experience
• In services , the experience itself dominates
the evaluation process
• Creating and managing effective processes
and experiences are essential for service
organizations
• Companies try to create memorable
experiences for their consumers
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 Post-experience Evaluation

• Word-of-mouth communication

• Attribution of Dissatisfaction

• Positive or Negative Biases

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Customer Expectations of
Service

Types of expectations customers hold for service

performance

Sources of customer expectations

Possible Levels of Customer
Expectations
 Types of Expectations

Desired Service

Adequate Service

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Dual Customer Expectations Levels
and the Zone of Tolerance
Desired Service

Level of service
that customers
Zone
of Level of service
hopes to receive
Tolerance the customer
will accept

Adequate Service
Factors That Influence Customer
Expectations
Desired Service

Individual, stable
factor which leads
customers to Personal
Personal Needs
Needs
heightened sensitivity
Desired Service
to service
Personal
Personal Service
Service
Philosophy
Philosophy Zone
of
Lasting
Lasting Service
Service Tolerance
Intensifiers
Intensifiers
Derived
Derived Service
Service
Expectations
Expectations Adequate Service
Personal needs, are those states or conditions essential to the
physical or psychological well-being of the customer and are pivotal
factors that shape what customers desire in service. Personal needs
can fall into many categories, including physical, social,
psychological, and functional.
Personal service philosophy, the customer’s underlying generic
attitude about the meaning of service highest expectations and the
proper conduct of service providers.
Derived service expectations, which occur when customer
expectations are driven by another person or group of people.
Factors That Influence Customers
Expectation
Adequate Service

Short term, individual factor that customers

awareness about the need for service

Temporary
Temporary Service
Service
Intensifiers
Intensifiers

Desired Service
Perceived
Perceived Service
Service
Alternatives
Alternatives Zone
of
Tolerance
Self-Perceived
Self-Perceived
Service
Service Role
Role Predicted
Predicted
Adequate Service
Service
Service

Situational
Situational
Factors
Factors
Perceived service alternatives are other providers from whom
customers can, or perceive they can, obtain service. (If customers
believe they have multiple service providers to choose from, or if
they can provide the service for themselves (such as lawn care or
personal grooming), their levels of adequate service are higher
than those of customers who believe it is not possible to get better
service elsewhere.)
Situational factors that are generally considered contemporary in
nature. One type is uncontrollable situational factors, which
include service performance conditions that customers view as
beyond the control of the service provider.
 Self Perceived Role expectations are partly shaped by how

well customers perform their role in service delivery.

Predicted service the level of service that customers

anticipate they are likely to get. This type of service

expectation can be viewed as predictions made by

customers about what is likely to happen during an

impending transaction or exchange.

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Factors That Influence Desired and
Predicted Service
Explicit
Explicit Service
Service
Promises
Promises

Implicit
Implicit Service
Service
Promises
Promises

Desired Service Word-of-Mouth

Word-of-Mouth

Zone Past
Past Experience
Experience
of
Tolerance

Predicted
Adequate Service Service
• Explicit Service Promises:
These are personal and non-personal statements about the service made by
the organization to customers. The statements are personal when they are
communicated by the firm’s salespeople or service personnel; they are
nonpersonal when they come from the company’s web pages, advertising,
brochures, and other written publications.

• Implicit Service Promises:

These are service-related cues, other than explicit promises, that lead to
inferences about what the service should and will be like. These quality
cues are dominated by price and the tangibles associated with the service.
In general, the higher the price and the more impressive the tangibles, the
more a customer will expect from the service.
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• Word-of-Mouth Communication:
These statements made by parties other than the organization such as
those found on social networking websites convey to customers what the
service will be like and influence both predicted and desired service.
Word-of-mouth communication carries particular weight as an
information source because it is perceived as unbiased. Word-of-mouth
communication tends to be very important in services that are difficult for
customers to evaluate before purchase and before having direct
experience of them.

• Past Experience:
The customer’s previous exposure to service that is relevant to the focal
service, is another force in shaping predictions and desires.

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 ISSUES INVOLVING CUSTOMERS’ SERVICE
EXPECTATIONS
The following issues represent topics of particular interest to service
marketers concerning customer expectations. In this section we discuss
frequently asked questions about customer expectations:
• What does a service marketer do if customer expectations are
“unrealistic”?
• Should a company try to delight the customer?
• How does a company exceed customers’ service expectations?
• Do customers’ service expectations continually escalate?
• How does a service company stay ahead of competition in meeting
customer expectations?

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Customer perceptions

Factors which influence consumers’

perceptions
Factors which influence satisfaction
Dimensions of service quality
Service encounters
Customer Perceptions of Quality and
Customer Satisfaction
Factors Influencing Customer
Satisfaction

Product/service quality
Specific product or service features
Consumer emotions
Attributions for service success or failure
Factors Influencing Customer
Satisfaction

Perceptions of equity or fairness

Other consumers, family members, and
coworkers
Price
Personal factors
the customer’s mood or emotional state
situational factors
Outcomes of Customer Satisfaction

Increased customer retention

Positive word-of-mouth communications
Increased revenues
Service Quality
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 quality
interaction quality
physical environment quality
The SERVQUAL dimensions – Perceived Service Quality
(Parasuraman, Zeithaml & Berry 1988)

Reliability (dependability, accurate performance)

Assurance (competence, courtesy, credibility & security)
Tangibles (appearance of physical elements)
Empathy (easy access, good communications & customer understanding)
Responsiveness (promptness & helpfulness)
The Five Dimensions of Service Quality

Reliability Ability to perform the promised service

dependably and accurately.

Knowledge and courtesy of

Assurance employees and their
ability to inspire trust
and confidence.

Tangibles Physical facilities, equipment,

and appearance of
personnel.
Empathy
Caring, individualized attention
the firm provides its
Responsiveness customers.

Willingness to help customers

Exercise to Identify Service
Attributes
In groups of five, choose a services industry and spend 10 minutes
brainstorming specific requirements of customers in each of the five service
quality dimensions. Be certain the requirements reflect the customer’s
point of view.

Reliability:

Assurance:

Tangibles:

Empathy:

Responsiveness
:
 SERVQUAL
RELIABILITY

Attributes
Providing service as promised
 Dependability in handling customers’
service problems
 Performing services right the first time EMPATHY
 Providing services at the promised time
 Giving customers individual attention
 Maintaining error-free records
 Employees who deal with customers in a
caring fashion
 Having the customer’s best interest at heart
RESPONSIVENESS  Employees who understand the needs of
their customers
 Convenient business hours
 Keeping customers informed as to
when services will be performed
 Prompt service to customers TANGIBLES
 Willingness to help customers
 Modern equipment
 Readiness to respond to customers’
 Visually appealing facilities
requests  Employees who have a neat,
professional appearance
 Visually appealing materials
ASSURANCE associated with the service
 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
The Service Encounter
Is the “moment of truth”
Occurs any time the customer interacts with the firm
Can potentially be critical in determining customer satisfaction and
loyalty
Types of encounters:
remote encounters, phone encounters, face-to-face encounters
It is an opportunity to:
build trust
reinforce quality
build brand identity
increase loyalty
A Service Encounter Cascade for a Hotel
Visit

Check-In
Check-In

Bellboy
Bellboy Takes
Takes to
to Room
Room

Restaurant
Restaurant Meal
Meal

Request
Request Wake-Up
Wake-Up Call
Call
Checkout
Checkout
A Service Encounter Cascade for an
Industrial Purchase

Sales
Sales Call
Call

Delivery
Delivery and
and Installation
Installation

Servicing
Servicing

Ordering
Ordering Supplies
Supplies
Billing
Billing
 Critical Service Encounters
Research
• GOAL:
– understanding actual events and behaviors that cause customer
dis/satisfaction in service encounters
• METHOD:
– Critical Incident Technique
• DATA:
– stories from customers and employees
• OUTPUT:
– identification of themes underlying satisfaction and dissatisfaction
with service encounters
Common Themes in Critical Service
Encounters Research

Recovery: Adaptability:
employee response employee response
to service delivery to customer needs
system failure and requests

Coping: Spontaneity:
employee response unprompted and
to problem customers unsolicited employee
actions and attitudes
Recovery

DO DON’T
Acknowledge problem Ignore customer
Explain causes Blame customer
Apologize Leave customer to fend for
Compensate/upgrade him/herself
Lay out options Downgrade
Take responsibility Act as if nothing is wrong
“Pass the buck”
Adaptability

DO DON’T
Recognize the seriousness of Ignore
the need Promise, but fail to follow
Acknowledge through
Anticipate Show unwillingness to try
Attempt to accommodate Embarrass the customer
Adjust the system Laugh at the customer
Explain rules/policies Avoid responsibility
Take responsibility “Pass the buck”
Spontaneity

DO DON’T
Take time Exhibit impatience
Be attentive Ignore
Anticipate needs Yell/laugh/swear
Listen Steal from customers
Provide information Discriminate
Show empathy
Coping

DO DON’T
Listen Take customer’s
Try to accommodate dissatisfaction personally
Explain Let customer’s
Let go of the customer dissatisfaction affect
others
Evidence of Service from the
Customer’s Point of View

 Contact employees
 Customer him/herself
 Operational flow of  Other customers
activities People
 Steps in process
 Flexibility vs.
standard
 Technology vs.
human
Process Physical  Tangible
Evidence communication
 Servicescape
 Guarantees
 Technology
 Website
Source: From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook,
eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.
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