Module 2

Consumer Behavior in services

 Content
• Introduction

• Stages of Service Consumption

• Concluding remarks
 Introduction
• We must understand the process of how customers purchase and
consume services
• Customers purchase and consume services in five stages as follows:
 Stages of Service Consumption

1. Awareness of need

2. Search for information

3. Evaluation of alternative services

4. Making the purchase decision

5. Experiencing the service and

6. Post‐experience evaluation of the service

 Stages of Service Consumption
• You may note that unlike products, customers cannot “return” a
service if they are dissatisfied with it. However, they can complain
about the service and seek redressal in some form.
• At that time, service personnel and service managers will have the
opportunity to recover the service,
 Awareness of need

• As customers grow older, or even otherwise, customers may need help in

performing certain chores.
• They might need help in handling their finances, transporting themselves from
home to their workplace and back, preparing their tiffin for consumption at
their workplace, payment of electricity bill at the electricity office, etc.
• As you know well by now, customers can get the above help in the form of
services.
• Thus customers can become aware of their need from within and seek the
help of a service.
 Awareness of need

• At times customers may not have a real need,

• However, they may become aware of a service and feel like availing
the service in order to make their life more hassle‐free and save time
for leisure of for doing more important work.
• This phenomenon underlines the use of marketing communications
like advertising, promotions, word‐of‐mouth publicity, service
sampling or trial experiences, catalogues and other forms of direct
marketing, etc.
• Once customers are aware of their need they will start searching for
services. We call this stage as the stage of search for alternatives
 Search for Alternatives

• Who can help me with paying my electricity bills or who can deliver
cooked food to my office at lunch time?
• These are some of the questions a customer would be asking to
him/herself while searching for alternative service providers.
• While some customers may begin asking family members and friends
• Some customers would quickly sit down with his/her copy of the
“Yellow pages” that lists various professional services.
 Search for Alternatives

• How can service professional service firms attract the customer while
he/she is at this stage?
• You must have thought that these firms can advertise and endeavour
to bring their name and a description of their service in front of the
customers’ eyes.
• For instance, service firms can advertised their services like tourism or
spa facilities in large billboards erected at prominent locations in city.
 Evaluation of Alternatives

• In this stage, customer compares the alternatives that he has listed.

• The customers would perform a cost‐benefit analysis of the services.
• Besides the costs and benefits accruing out a particular service, the
customer may worry about the risks associated with each service.
• Professors Christopher Lovelock, Jochen Wirtz and Jayanta Chatterjee
have listed seven types of risks in their book entitled Services
Marketing: People Technology and Strategy published in 2010. These
risks are listed in the table below:
Risks customers perceive while purchasing a
service
Types of Risk Explanation Example of customer concerns
Functional Unsatisfactory performance Will I get what I wanted?
outcomes
Financial Monetary loss and unexpected Would my money be stolen if I
costs make a credit card transaction?
Temporal Wastage of time, delays How long do I have to wait at the
doctor’s clinic and what will
happen to the household chores?
Physical Injury to person or possessions What will happen if I fall sick
during the tour?
Pschological Personal fears and emotions Is there a chance that the aircraft I
am travelling in crashes?
Social How others think and react What will my friends say if I buy
this cheap service?
Sensory Unwanted effects of any of the five Will the hotel room be clean
senses enough?
 Risks customers perceive while purchasing
a service
• People who face the above risks would usually do something to
assure themselves that their fears are unfounded.
• Customers can take several actions and service providers can help
customers with their actions.
• This set of customer and service provider actions are listed in the
table below:
 Customer and Service Provider actions
to Mitigate customer risk and fear
Customer actions Service provider actions
Seek information from respected personal sources Advertise company credibility
like friends, family and peers. Rely on a company Generate good word-of-mouth
with good reputation about its credibility
Look for guarantees and warrantees Provide unconditional service guarantees
Visit the service facility to check various aspects of Invite customers to tour the service facility.
the service Keep the service facility sparkling and tidy.
Keep the facility safe.
Ask knowledgeable employees about competing Inform employees about the value being provided by
services the service. Train employees in selling skills
Examining tangible cues or other physical evidence Keep facilities and merchandise sparkling and
attractive
Use the Internet to compare service offerings and Create own comparative website and list competitor’s
search for reviews and ratings features on the website truthfully
 Customer and Service Provider
actions to Mitigate customer risk
and fear
• Evaluating service is difficult due to its intangibility and simultaneity.
• Intangible services may be high on search, experience or credence
attributes.
• What are search, experience or credence attributes and how do those
affect service evaluation?
• Search attributes: Search attributes are features like style, colour,
texture, taste, sound etc. Which customers can sample before purchase.
• A hotel room price, an airline schedule, television reception, and the
quality of a home entertainment system can all be evaluated before a
purchase is made.
 Customer and Service Provider
actions to Mitigate customer risk
and fear
• Experience attributes: When attributes of a service cannot be experienced before
a purchase, the customer has to rely on experience attributes.
• When buying anew product or service,new restaurant
• For instance, a customer can see the menu at a restaurant, but he/she has to taste
the food and beverages before making a purchase.
• Some restaurants are able to provide customers a free dish which they can
sample or experience before taking the decision to purchase the services of the
restaurant.
• Many customers would rely on the experience of other people like family
members and friends to form an opinion about the service and experience the
same.
 Customer and Service Provider
actions to Mitigate customer risk
and fear
• Credence attributes:
• These attributes of the service cannot be tested even after the consumption
of the service.
• Take the case of hospital surgery. There is no way a patient can know
whether the surgery was done properly.
• In such cases the customer has no choice but to rely on the reputation of the
surgeon who has performed the surgery.
• This makes it imperative for service businesses to enhance the reputation of
their business
• And rely on the word-of-mouth that customers would spread once they have
experienced uneventful services from the service provider.
 Making the Purchase Decision

• As discussed earlier, a customer can make a purchase decision among

various alternatives using a cost-benefit comparison.
• Once he/she has decided to purchase a service, he/she will be ready
to experience the service.
 Experiencing the Service

• The service purchased by the customer may be a high touch or a low

touch service. High touch services are like hair styling service where
the customer has substantial contact with the service provider.
• On the other hand, low touch service is like the automatic teller
machine (ATM) service where there is little contact with service
employees.
 Experiencing the Service
• All services are delivered during the moments of truth, i.e. the
moments when a customer comes in contact with service personnel.
• The customer must be satisfied or delighted by the service personnel
during these moments of truth.
• Service personnel must be able to understand the needs of the
customers and be able to meet them promptly if they are to satisfy
their customers at the moment of truth.
 Post-Experience Evaluation of the Service

• Once the service has been experienced, a customer might think about
the service he/she received.
• They would feel satisfied if the service met their expectations,
• They would feed dissatisfied if the service failed to meet their
expectations
• They would be delighted if the service exceeded their expectations
 Post-Experience Evaluation of the Service

• In case customers are dissatisfied with their service they are likely to tell fifteen
other people about how dissatisfying the service was.
• On the other hand if the service was satisfactory or delightful they would tell at
least five other people about the service.
• Once satisfied or delighted, customers may decide to repurchase the service in
the future or recommend other people to purchase the service.
• Moreover, satisfied customers would not mind slight future increases in the price
of the service and continue to purchase their services from the same company.
• Service marketers can seek to strike a relationship with customers at this stage.
• They can signify to the customers that they would be providing the best services
to the customers in future and request customers to shop from them in future.
 Concluding remarks

• In this lesson we have discussed the stages through which customers

purchase and experience the service.
• The stages are need recognition,
• Search for alternative services.
• Evaluation of the alternatives,
• Decision to purchase a service,
• Experiencing the purchased service and attitude formation after the
service has been experienced.