Services Marketing:

People, Technology, Strategy

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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
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
Evaluation of alternatives (solutions and suppliers) Multi-attribute model
Pre- • Review supplier information Search, experience, and credence attributes
(e.g. advertising, brochures, websites) Perceived risk
purcha
• Review information from third parties
se (e.g. published reviews, ratings, comments on web,
Stage blogs, complaints to public agencies, satisfaction
ratings, awards)
• Discuss options with service personnel
• Get advice and feedback from third-party advisors
and other customers
Formation of expectations: desired service level, predicted
Make decisions on service purchase and often service level, adequate service level, zone of tolerance
make reservations
Servic Request service from a chosen supplier or initiate Moments of truth
self-service (payment may be upfront or billed Service encounters
e
later) Servuction system
Encou Theater as a metaphor
nter Service delivery by personnel or self-service Role and script theories
Stage Perceived control theory
Evaluation of service performance Confirmation/ Disconfirmation of expectations
Post- Dissatisfaction, satisfaction and delight
encoun Future intentions Service Quality
ter Word-of-mouth
Repurchase
Stage
Loyalty

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 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

Adequate Service Level

Predicted Service Level

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
Richard Normann
process.

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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 10
 Perceived Control Theory:
The New Dimension

Control is a major driving force of their behavior

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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

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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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The SERVQUAL Scale (2 of 2)

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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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