Services Marketing:

People, Technology, Strategy

CHAPTER 2
Understanding Service Consumers

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 Learning Objectives (1 of 2)
By the end of this chapter, the reader should be able to:
• Understand the three-stage model of service consumption.
• Use the multi-attribute model to understand how consumers
evaluate and choose between alternative service offerings.
• Learn why consumers often have difficulties evaluating
services, especially those with many experience and credence
attributes.
• Know the perceived risks customers face in purchasing
services and the strategies firms can use to reduce consumer
risk perceptions.
• Understand how customers form service expectations and
the components of these expectations.
• Know the moment-of-truth metaphor.
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 Learning Objectives (2 of 2)
• Contrast how customers experience and evaluate high- versus
low-contact services.
• Be familiar with the servuction model and understand the
interactions that together create the service experience.
• Obtain insights from viewing the service encounter as a form
of theater.
• Know how role, script and perceived control theories
contribute to a better understanding of service encounters.
• Describe how customers evaluate services and what
determines their satisfaction.
• Understand service quality, its dimensions and measurement,
and how quality relates to customer loyalty.

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Three Stage Model

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 Trước khi đi giải phẫu
thẩm mỹ, bạn sẽ làm gì?
What do you want before you
decide to do cosmetic surgery?
 Stages of Service Consumption Key Concepts

Awareness of need Need arousal

• Information search Evoked set
• Clarify needs Consideration set
• Explore solutions
• Identify alternative service products and
suppliers
Multi-attribute model
Evaluation of alternatives (solutions and Search, experience, and
suppliers) credence attributes
Pre- • Review supplier information Perceived risk
purchase (e.g. advertising, brochures, websites)
Stage • Review information from third parties
(e.g. published reviews, ratings, comments on
web, blogs, complaints to public agencies,
satisfaction ratings, awards)
• Discuss options with service personnel
• Get advice and feedback from third-party Formation of expectations:
advisors and other customers desired service level,
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predicted service level,
Make decisions on service purchase and adequate service level, zone
often make reservations of tolerance
Trong khi đi giải phẫu thẩm
mỹ, bạn muốn điều gì?
What do you want during
cosmetic surgery?
 Stages of Service
Key Concepts
Consumption
Request service from a Moments of truth
chosen supplier or initiate Service encounters
self-service (payment may Servuction system
Service be upfront or billed later) Theater as a metaphor
Encount Role and script theories
er Stage Service delivery by Perceived control theory
personnel or self-service

Evaluation of service Confirmation/ Disconfirmation of

performance expectations
Dissatisfaction, satisfaction and
Post- Future intentions delight
encount Service Quality
er Stage Word-of-mouth
Repurchase
Loyalty
Sau khi đi giải phẫu thẩm
mỹ, bạn muốn điều gì?
After cosmetic surgery, what do
you want?
10
 How Might Consumers Handle
Perceived Risk?
• Seeking information from trusted and respected personal sources
such as family, friends and peers.
• Using the Internet to compare service offerings, to search for
independent reviews and ratings, and to explore discussions on
social media.
• Relying on a firm that has a good reputation.
• Looking for guarantees and warranties.
• Visiting service facilities or trying aspects of the service before
purchasing, and examining tangible cues or other physical evidence.
• Asking knowledgeable employees about competing services to
learn about what to look out for when making this decision.

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 Strategic Responses to Managing
Customer Perceptions of Risk (1 of 2)
• Encourage prospective customers to preview the
service through their company websites and videos.
• Encourage prospective customers to visit the service
facilities before purchase.
• Offer free trials suitable for services with high
experience attributes.
• For services with high credence qualities and high
customer involvement, advertising helps to
communicate the benefits, usage and how
consumers can enjoy the best results.
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 Strategic Responses to Managing
Customer Perceptions of Risk (2 of 2)
• Display credentials
• Use evidence management, an organized approach where
customers are presented with coherent evidence of the
company’s targeted image and its value proposition
• Have visible safety procedures that build confidence and
trust
• Give customers access to online information about the
status of an order or procedure.
• Offer service guarantees such as money-back guarantees
and performance warranties

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Components of Customer 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
• Acceptable range of variations in service delivery

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 Moments of Truth
[We 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 and the
expectations and behavior of the client which
together will create the service delivery process.

Richard Normann

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 Moments of Truth

4. Brussels Airlines

www.themegallery.com
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 Distinctions between High-Contact
and Low-Contact Services
• High-Contact Services
– Customers visit service facility and remain
throughout service delivery
– Active contact
– Includes most people-processing services
• Low-Contact Services
– Little or no physical contact
– Contact usually at arm’s length through electronic or
physical distribution channels
– Facilitated by new technologies 18
 Perceived Control Theory:
The New Dimension

Control is a major driving force of their behavior

and satisfaction

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 Customer Satisfaction
In the post-encounter stage, customers evaluate
the service performance they have
experienced and compare it with their prior
expectations.
The Expectancy-Disconfirmation Model of
Satisfaction
– Satisfaction is a judgment following a series
of consumer product interactions.

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 How is Customer Delight Different
from 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)
• Achieving a customer’s delight requires focusing on
what is currently unexpected.
• Once a customer is delighted, it has a strong impact
on a customer’s loyalty

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 Service Quality
Excellent service quality is a high standard
of performance that consistently meets or
exceeds customer expectations.

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 Customer Satisfaction
versus
Service Quality
• Customer satisfaction is an evaluation of a
single consumption experience, a fleeting
judgment, and a direct and immediate
response to that experience.
• Service quality refers to relatively stable
attitudes and beliefs about a firm, which can
differ significantly from satisfaction.

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Dimensions of Service Quality
Measuring Service Quality
By SERVQUAL scales

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Dimensions of
Definition Sample illustrations
service quality

1. Tangibles Appearance of - Are the hotel’s facilities attractive?

physical facilities, - Is my account dressed appropriately?
equipment, - Is my bank statement easy to understand?
personel, &
communication
materials.

2. Reliability Ability to perform the - Does my lawyer call me back when

promised service promised?
dependably and - Is my telephone bill free of errors?
accurately - Is my TV repaired right the first time?

3. Wilingness to help - When there is a problem does the firm

Responsivene customers and resolve it quickly?
ss provide prompt - Is my stockbroker willing to answer my
service questions?
- Is the cable TV company willing to give me a
specific time when the installer will show up?
Dimensions of
Definition Sample illustrations
service quality
4. Assurance Trustworthiness, - Does the hospital have a good reputation?
Credibility believability, honesty - Does my stockbroker refrain from pressuring me to
of the service provider trade?
- Does the repair firm guarantee its work?

Security Freedom from - Is it safe for me to use the bank’s ATMs at night?
danger, risk, or doubt - Is my credit card protected against unauthorized use?
- Can I be sure that my insurance policy provides
complete coverage?

Competence Possession of the - Can the bank teller process my transaction without
skills and knowledge fumbling around?
required to perform - Is my health insurance able to obtain the information I
the service need when I call?
- Does the dentist appear to be competent?

Courtesy Politeness, respect, - Does the flight attendant have a pleasant demeanor?
consideration, and - Are the phone operators consistently polite when
friendliness of contact answering my calls?
personel - Does the gardener take off his muddy shoes before
stepping on my carpet?
 Dimensions of
Definition Sample illustrations
service quality

5. Empathy Approachability and ease - How easy is it for me to talk to supervisor when I
Access of contact have a problem?
- Does the airline have a 24-hour, toll-free phone
number?
Is the hotel conveniently located?

Communication Listening to customers - When I have a complaint, is the manager willing to

and keeping them listen to me?
informed in the language - Does my doctor avoid using technical jargon?
they can understand - Does the electrician call when he or she is unable to
keep a scheduled appointment?

Understanding the Making the effort to know - Does someone in the hotel recognize me as a
customer customers and their regular guest?
needs - Does my stockbroker try to determine my specific
financial objectives?
- Is the moving company willing to accommodate my
schedule?
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 Measuring Service Quality
• Valarie Zeithaml and her colleagues developed a
survey instrument called SERVQUAL
• SERVQUAL is seen as a generic measurement tool
that can be applied across a broad spectrum of
service industries.
• Respondents answer 21 questions measuring their
expectations of companies in a particular industry on
a wide array of specific service characteristics
• Can be customized to suit different service
situations
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 The SERVQUAL Scale (1 of 2)
• The SERVQUAL scale includes five dimensions -- Tangibles, Reliability,
Responsiveness, Assurance and Empathy.
Within each dimension, several items are measured. There are many
different formats in use, and we show the most basic 21 items for ideal
perceptions below. The statements are accompanied by a seven-point
scale, ranging from “strongly disagree = 1” to “strongly agree = 7”.
• The firm’s performance is measured by rewording the same items (e.g.,
for item 1 in the table below: “XYZ firm has modern-looking
equipment”). The difference between the scores for each item,
dimension and for overall service quality is the computed and used as
an indicator of a firm’s level of service quality.
• If measuring both ideal (or expected) and actual performance
perceptions is not possible due to time constraints during the
interview, both measures can also be combined by using the same 21
items (e.g., “modern looking equipment”) and scale anchors “Lower
than my desired service level”, “The same as my desired service level”,
and “Higher than my desired service level”.
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 Customer Loyalty
• Loyalty is a customer’s willingness to continue
patronizing a firm over the long-term
• Customer loyalty extends beyond behavior and
includes preference, liking, and future intentions.
• Loyalty is an important outcome of satisfied
customers who believe that the firm delivers great
service.
• The opposite of loyalty is defection, which is used to
describe customers who drop off a company's radar
screen and transfer their loyalty to another supplier

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 Winning service! – Winning sales!

see
you!