Services Marketing

Chapter 2:
Consumer Behavior
in a Services Context

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 1
 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 2
 Services Marketing

Pre-purchase Stage

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 3
 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
Service Encounter perceived risk
Stage  What risk reduction
strategies can service
suppliers develop?
 Understanding customers’
service expectations
 Components of customer
Post-encounter expectations
Stage  Making a service purchase
decision

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 4
 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)
 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 5
 Information Search
Services Marketing

 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

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 6
 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 attributes are those that customers find

impossible to evaluate confidently even after purchase
and consumption
 E.g., hygiene conditions of the kitchen and the
Services Marketing 7/e
Slide © 2010 by Lovelock & Wirtz Chapter 2 – Page 7
 How Product Attributes Affect
Ease of Evaluation
Services Marketing
Most Goods Most
Services

Easy Difficult
To To
Evaluate evaluate
Clothing Restaurant Computer

Chair Meals Repair

Motor Lawn Fertilizer Education

Vehicle Haircut Legal Services

Foods Entertainment Complex

High In High In High In
Surgery
Search Experien Credence
Attributes ce Attribute
Attribute s
Source: Adapted from Valarie A. Zeithaml , “How Consumer Evaluation s
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 8
 Perceived Risks of Purchasing
and Using Services
Services Marketing

 Functional – unsatisfactory performance outcomes

 Financial – monetary loss, unexpected extra costs

 Temporal – wasted time, delays leading to problems

 Physical – personal injury, damage to possessions

 Psychological – fears and negative emotions

 Social – how others may think and react

 Sensory – unwanted impact on any of five senses

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 9
 How Might Consumers Handle
Perceived Risk?
Services Marketing

 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 10
 Strategic Responses to
Managing Customer
Perceptions of Risk Services Marketing

Free trial (for

Advertise (helps
services with high
experience attributes) to visualize)

Display Use evidence

management (e.g.,

credentials furnishing, equipment etc.)

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 11
 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 12
 Factors Influencing Customer
Expectations of Service
Services Marketing

Source: Adapted from Valarie A. Zeithaml, Leonard A. Berry, and A. Parasuraman, “The Nature and Determinants of Customer Expectations
of Service,” Journal of the Academy of Marketing Science 21, no. 1 (1993): 1-12
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 13
 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 14
 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 15
 Services Marketing

Service Encounter Stage

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

Stage service delivery: An
integrative perspective
 Service facilities

 Personnel
Post-encounter  Role and script theories
Stage

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 17
 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 18
 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 and the
expectations and behavior of the client which
together will create the service delivery process.”
Richard Normann

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 19
 Service Encounters Range from

High-Contact to Low-Contact Services Marketing

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 20
 Distinctions between High-
Contact and Low-Contact
Services Services Marketing

 High-Contact Services  Low-Contact Services

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

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 21
 The Servuction System
Services Marketing

Source: Adapted and expanded from an original concept by Eric Langeard and Pierre Eiglier

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 22
 The Servuction System:
Service Production and
Delivery Services Marketing

 Servuction System: visible front stage and invisible

backstage

 Service Operations
 Technical core where inputs are processed and service
elements created
 Contact people
 Inanimate environment

 Service Delivery
 Where “final assembly” of service elements takes place and
service is delivered
 Includes customer interactions with operations and other
customers
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 23
 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 24
 Theatrical Metaphor:
an Integrative Perspective
Services Marketing
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 like
unfolds members of a cast
• Backstage personnel are
• This may change from
support production team
one act to another

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 25
 Implications of Customer
Participation in Service
Delivery Services Marketing

 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 26
 Services Marketing

Post-Encounter Stage

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 27
 Post-purchase Stage - Overview
Services Marketing

Pre-purchase Stage

● Evaluation of
service
Service Encounter performance
Stage
● Future intentions

Post-encounter
Stage

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 28
 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)
 Confirmation (same)
 Negative disconfirmation (worse)

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 29
 Customer Delight:
Going Beyond Satisfaction
Services Marketing

 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 30
 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 31
 Summary
Services Marketing

• Key Steps risks which marketers should

1. Need arousal reduce with some strategic
Pre-purchase 2. Information search responses
Stage 3. Evaluation of alternative
solutions • Zone of tolerance: Adequate
4. Purchase decision to desired. Dissatisfaction if
service level falls below
adequate level.

Service •• Moments
Customers offace
Truth: importance
perceived
of effectively managing • Servuction model – variations
Encounter touchpoints of interactions
Stage
• High/low contact service • Theater metaphor – “staging”
model – understanding the service performances
extent and nature of contact
points
• In evaluating service • Unexpectedly high levels of
Post-encounter performance, customers can performance, arousal, and
have expectations positively positive affect are likely to
Stage disconfirmed, confirmed, or lead to delight
negatively disconfirmed

Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 2 – Page 32