Amity Business School

Marketing of Service
 Amity Business School

Consumer Behaviour in
Services
 Consumer Behaviour Amity Business School

• Initiator: Person identifying a specific need and purpose to buy a

particular service

• Influencer:
Influencer Person or group-advising

• Gatekeeper: Person / organization / material—acting as a filter for

decision choice net

• Decider: Taking the buying decision—may or may not execute the

purchase

• Buyer: Makes actual purchase

• User: Person actually consuming

 Consumer Decision Making Amity Business School

Process Output
Need recognition Service encounter
| |
Information search Usage evaluation
| |
Evaluation Repeat
| |
Decision to buy Acts as W.O.M. to input to
process
Input to process is controlled by
Commercial marketing, Socio-
Cultural & W.O.M.
 Influencing Factors Amity Business School

Socio-cultural characters Psychological Characters

-Culture– Set of belief, values -Perception—process by which
and customs that goes deep an individual buyers , organize
as a person grows select & interpret information
-Reference groups -Attitude—learned disposition
-Family to respond in a consistent
Situational characters manner to stimulus
-Time, -Stores’ atmosphere -Motivation—Driving force
-Buyer’s perception of trust on within one that compels him to
service provider action
-Marketing stimuli Personal Characters
-Personality, life style,
demographic
 Qualities which influence consumers’
evaluation of services:
Amity Business School

• Consistency
• Concern
• Competence
• Contact
• Courtesy
• Communications
• Credibility
• Confidentiality
Quality is the foundation of consumer evaluation of
services
 Awareness of need Amity Business School

Customers may need help for performing

certain chores. They may need help in
managing their finances, travelling from
home to their workplace and back, getting
their lunch for consumption at their
workplace, getting a ticket booked for
travelling, customers can get the above
help in the form of services. This is
awareness of the need
 Search for Alternatives Amity Business School

Once customers are aware of their need

they will start searching for services.
– Who can deliver cooked food to my office at
lunch time?
– Who can Pick and Drop me from Home to
Office and vice versa.
Customer would be asking to him/herself
while searching for alternative service
providers.
 Evaluation of Alternatives Amity Business School

At this stage the customer compares the

alternatives that he/she has listed.
Needless to say, 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 every service.
 Amity Business School

Evaluating a service can be difficult due to

its intangibility and simultaneity. Intangible
services may be high on search,
experience or credence attributes.
 Amity Business School
Qualities which influence consumers’
evaluation of services:

• Consistency
• Concern
• Competence
• Contact
• Courtesy
• Communications
• Credibility
• Confidentiality
Quality is the foundation of consumer evaluation of
services
 Discussion Amity Business School

What are Search, Experience or Credence

attributes and how do those affect service
evaluation?
 Search Attributes Amity Business School

Search attributes are features like style,

colour, texture, taste, sound etc. Which
customers can sample before purchase.
For instance, customers can visit a hotel
room, or check out the restaurant menu
before deciding to purchase the service.
 Experience attributes Amity Business School

• When attributes of a service cannot be

experienced before a purchase, the customer
has to rely on experience attributes. For
instance, a customer can see the menu at a
restaurant, buy he/she has to taste the food
and beverages before making a purchase.
• Customers many a times depend on the
experience of other people like family
members and friends to form an opinion about
the service.
 Credence attributes Amity Business School

• 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 by to rely on the reputation of the surgeon
who has performed the surgery.
• The reputation of the business relies on the word-of-mouth
that customers would spread once they have experienced
services from the service provider.
 Amity Business School

Influencing Factors
Socio-Cultural Characters Psychological Characters
• Culture: Set of belief, values • Perception: Process by which
and customs that goes deep an individual, buyers ,
as a person grows organize
• Reference groups select & interpret information
• Family • Attitude: Learned disposition
to respond in a consistent
Situational characters manner to stimulus
• Time, • Motivation: Driving force
within one that compels him
• Stores’ atmosphere to action
• Buyer’s perception of trust on
service provider
Personal Characters
• Marketing stimuli
• Personality, life style,
demographic
 Service Delivery Triangle Amity Business School

Internal Marketing
Company External Marketing

Transactional Marketing

Employee Customer
Personal Needs Personal Needs
Life Path Image
Image Word of Mouth
Role Conflict and Ambiguity Previous Experience
 Internal Marketing Amity Business School

Engagement of every single individual in marketing a service

-Recruitment
-HR Policies
-Compensation structure & incentives
-Training
a. Product knowledge
b. Product Handling
c. Customer knowledge
d. Selling
e. Motivation

-Empowerment
-Matrix Responsibility Structure
 External Marketing Amity Business School

Creation of promise, corresponding with personal

need & aspirations of target customers:

-Tangible concept of total promise

-Creating expectations by
promises
-Value of the promise
-Non-personal communications
 Transactional Marketing Amity Business School

Management of Customer Elements of Success

Contact
• Contact Person
• Buyer-seller interaction • System & physical
• Moment of truth with resources
support from Managers • Customers and fellow
• Supporting functions customers
• Management support
• Investment in • Support personnel
technology • Technology support
• Operations • Price
• Admin. systems • Corporate & local image
 Amity Business School

External Marketing Internal & Transactional

Marketing
• Giving promises:
A process of creating • Fulfilling Promises
managed expectations Ability and motivation to
from service provider meet expectations of
customers created by
external marketing effort
 Creating the Service Product Amity Business School

Core Product
a) What is the buyer really purchasing?
b) What business are we in?

Supplementary Services
These service elements augment the core product, both
facilitating its use and enhancing its value and appeal.

Core Product + Supplementary Product=Augmented

Product
Facilitating & Enhancing Amity Business School

Supplementary services
Information

Payment Consultation

Order
Billing Core
Taking

Exceptions Hospitality

Safe Keeping
 Preparing for Service marketing
Communication Amity Business School

Who Target
What To communicate and achieve
How To communicate
Where Should we communicate
When Communications need to take
place

Target audiences

Prospects
Users
Employees
 Word of Mouth Amity Business School

Recommendations from a user are more acceptable to

buyer than company’s claims. Higher the perceived risk
and lesser the knowledge of the customer, more
important is WOM. Few methods of creating favorable
WOM:
a. Reference list
b. Create promotions so others talk
c. Develop referral Incentive scheme
d. Trial use
e. Publicize testimonials for WOM
f. Brochures may contain positive
comments from satisfied customers
 Marketing Communication Mix
Amity Business School

• Personal communication
• Advertising
• Sales promotion
• Public relations
• Instructional materials
• Corporate design
 Four Rs of Service Marketing
Amity Business School

• Retention
• Referrals
• Relationships
• Recovery
 Differentiation in Services
Amity Business School

• Offering
• Faster and better delivery
• Image
 Determinants of Service Amity
Quality
Business School

• Reliability – delivering on promises

• Responsiveness – willing to help
• Assurance – inspiring trust and confidence
• Empathy – individualising customers
• Tangibles- physical representation
 Amity Business School

Customer Service Expectations

• Desired Service – the ‘wished for’ service

• Adequate Service – the service that would
be acceptable
 Amity Business School

Zone of Tolerance

• Difference between the desired service

and the adequate service
 Service Quality Management Amity Business School

• Quality management refers to systematic

policies, methods, and procedures used to
ensure that goods and services are
produced with appropriate levels of quality
to meet the needs of customers.
• Organizations today integrate quality
principles into their management systems
using tools such as Total Quality
Management (TQM), Six Sigma, and Lean
Operating Systems
 A Brief History of Quality Management
Amity Business School

• Historical uses of quality management include

the precision involved in building of Egyptian
pyramids, interchangeable parts during
Industrial Revolution, and statistical tools used
for quality control during World War II.
• Dr. Joseph Juran and Dr. W. Edwards Deming
were pioneers in the field.
• The Japanese integrated quality ideas and
methods throughout their organizations and
developed a culture of continuous
improvement.
 Understanding Quality Amity Business School

• Quality can be a confusing concept, partly

because people view quality in relation to
differing criteria based on their individual
roles in the value chain, such as:
perfection,
delighting or pleasing the customer,
eliminating waste,
doing it right the first time, and/or
consistency.
 Understanding Quality Amity Business School

• Fitness for use is the ability of a good or

service to meet customer needs.
• Quality of conformance is the extent to
which a process is able to deliver output
that confirms to design specifications.
• Specifications are targets and tolerances
determined by designers of goods and
services.
 Understanding Quality Amity Business School

• Quality Control means ensuring

consistency in processes to achieve
conformance.
• Service Quality is consistently meeting or
exceeding customer expectations
(external focus) and service delivery
system performance criteria (internal
focus) during all service encounters.
 Principles of Total QualityAmity Business School

• A focus on customers and stakeholders,

• A process focus supported by continuous

improvement and learning, and

• Participation and teamwork by everyone

in the organization.
The Deming Cycle Amity Business School

Plan: study current situation

Do: implement plan on trial basis
Study: determine if trial is working
correctly
Act: standardize improvements
Quality Management include Amity Business School

– Quality means conformance to requirements, not

elegance.
– There is no such thing as a quality problem.
– There is no such thing as the economics of quality;
doing the job right the first time is always cheaper.
– The only performance measurement is the cost of
quality, which is the expense of nonconformance.
– The only performance standard is Zero Defects (ZD).
 Amity Business School

Customer Expectations

• A customer simply wants…..

You to Greet HIM

……… Value HIM
………. Help HIM
……. Listen to HIM
…… Invite HIM Back
 When customers visit a service Amity Business School

establishment
Their satisfaction will be influenced by
• Encounters with service personnel
• Appearance and features of service
facilities – exterior and interior
• Interactions with self service equipment
• Characteristics and behaviour of other
customers
 Types of complainers
Amity Business School

• Passives
• Voicers
• Irates
• Activists
 Amity Business School

• Passive complainers : they will complain

to everyone but the actual business. Since
the business is left unaware of their error
they cannot correct it and the only thing a
passive complainer succeeds in doing is
depriving the company of potential
business.
 Amity Business School

• Voicers : These customers actively

complain to the service provider but they
are less likely to spread negetive word of
mouth to switch or to go to the third parties
with their complaints. These customers
are the Service providers best friend.
 Amity Business School

• Irates : These consumers are more likely

to engage in negative word of mouth to
friends and relatives and to switch
providers than are others. They are
unlikely to complain to 3rd party. Though
they are angry with the service provider,
but still believe that complaining would
have some social benefits. They usually
switch the provider.
 Amity Business School

• Activists : These consumers complain in

an above average way in all dimensions.
They will complain to the provider. They
will tell others and they are more likely to
complain to the third parties
 Level of customer participation Amity Business School

Low customer Moderate customer High customer co-

Presence inputs rqrd for service produces the service
prod

(Consumer Services) (Consumer Services) (Consumer Services)

Bus travel, Motel stay, Hair cut, annual physical Marriage counsel,
Movie theater check up personal Training,
Weight reduction

(Business to business (Business to business (Business to business

services) services) services)

Uniform cleaning service, ADV. Agency, Payroll Management consultant,

Pest control Seminar, Super market
 The Problem of Customer Amity Business School

Misbehavior
Customers form an important element in many services’ encounters.
Firms that fail to deal effectively with customer misbehaviors, risks
damaging their relationships with all the other customers that they
would like to keep. Following are the problems (P) & solutions (S)

P—the thief ( Shop lifter, Towel, Linen theft, “E’ crime )

S---a) Find the route of theft and try to plug it, and if necessary
prosecute.
b) But take care that honest customers do not suffer.
Genuine mistakes are to be ignored.
c) be sensitive and handle carefully.
 Amity Business School

P)---the rule breaker ( Carrying gun in airlines, No shoe, No shirt

in clubs etc. Jump the ‘Q” )
S)---Rules should be properly conveyed, may be on a billboard.
---Take help of other customers.
---Too many rules and control reduces the pleasure of
service.
---The fewer the rules, the more explicit,the important ones
can be.

P)---the vandals ( Breaking of Nursing Homes,Burning of

buses,etc.)
S)---The best cure for vandalism is prevention.
--- Improved security, better lighting, design with grills etc.
 Amity Business School

P)--- the dead beat (Those who fail to

pay)

S)---Prevention is better than cure.

---Ask for credit card before order.
---Present the bill immediately after
the service.
---Handle softly and tactfully.
 Understanding the Customer Amity Business School

Relationship
1. Transactional marketing –is exchange of values
between two
parties. Repeated transactions not necessarily creates
relationship, may be it creates relationship between
customer and intermediaries.
2. Data base marketing uses technology
-to create data base for present and future
customers
-gives segment wise customer’s
preferences and characteristics
-track each relationship to monitor the cost
of acquiring and / or maintaining the customer
 Amity Business School

3. Interaction marketing –may include

negotiations and sharing of insights in both
directions. Good organizations effectively
combine data base and interaction marketing.
4. Network marketing –this type of marketing
occurs primarily in business to business context,
where firms commit resources to develop
relationships with customers, distributors,
suppliers, media, Govt. agencies etc.
 Conti… Amity Business School

5. Creating “Memberships” Relationships – is a

formalized relationship between the firm and an
identifiable customer.
Many elements are involved in gaining
market share and profit. The process starts by
identifying and targeting the right customers, and
then learning about their needs and preferred
service delivery. Translating this knowledge into
service delivery, tiered service levels, and
customer relationship strategies are the key
steps toward achieving customer loyalty.
 Management of Employees. Amity Business School

Frontline work is Difficult and Stressful

Frontline staff may perform triple roles: Producing service
quality, productivity, and sales. The multiplicity of
roles in service jobs often leads to conflict role stress
among employees.
Sources of Conflict
1. Person / Role conflict—service staff feels
conflicts between what their jobs require and their own
personalities, self perceptions and beliefs.
e.g. The job may require staff to smile and be
friendly even to rude customers.
 Conti.. Amity Business School

2. Organization / Client conflict---should

the staff follow the company rule or satisfy
the customer?
 Amity Business School

3.Inter Client conflict

It becomes the responsibility of the frontline staff.
4. Emotional labour –The term emotional labour means
the emotion that arises from the discrepancy between the way
frontline staff feel inside, and the emotions they are expected to
portray in front of customers.
Successful company in service firms have: Leadership that
-Focuses the entire organization on the frontline to support the
frontline
-Fosters a strong service culture with passion for service and
productivity
-Drives values that inspire, energize, and guide service providers
Managing Relationships & Building Amity Business School

Loyalty
Why relationship & loyalty?
How much is loyal customer worth in terms of
profit?
Research shows:
a) Profit derived from increased purchases---
over time business customers often grow larger and so
purchases in greater quantities.
b) Profit from reduced operating costs---as
customers become more experienced they make fewer
demands on the supplier and makes fewer operational
mistakes.( less need for information and operational
training )
Managing Relationships & Building Amity Business School

Loyalty
c) Profits from referrals to other customers—positive word of mouth
recommendations are like free sales and advertising. (firms save
money in such activities )

d) Profit from price premium -----new customers are lured by

introductory discounts, where as normal customers are more likely
to pay normal price.
Understanding the customer / firm Relationship
1. Transactional marketing –is exchange of values between
two
parties. Repeated transactions not necessarily creates relationship,
may be it creates relationship between customer and intermediaries.
 Amity Business School

2. Data base marketing uses technology

-to create data base for present
and future customers
-gives segment wise customer’s
preferences and characteristics
-track each relationship to
monitor the cost of acquiring and / or
maintaining the customer
Understanding the Customer / Firm Amity Business School

Relationship
3. Interaction marketing –may include
negotiations and sharing of insights in both
directions. Good organizations effectively
combine data base and interaction marketing.
4. Network marketing –this type of
marketing occurs primarily in business to
business context, where firms commit resources
to develop relationships with customers,
distributors, suppliers, media, Govt. agencies
etc.
 Amity Business School

5. Creating “Memberships” Relationships – is a

formalized relationship between the firm and an
identifiable customer.
Many elements are involved in gaining
market share and profit. The process starts by
identifying and targeting the right customers, and
then learning about their needs and preferred
service delivery. Translating this knowledge into
service delivery, tiered service levels, and
customer relationship strategies are the key
steps toward achieving customer loyalty.
 Strategic Product Amity Business School

Implications
• the core service can be enhanced through
the addition of supplementary services,
thereby creating added value
• the life cycle of services has to be
managed
• the branding of a service can be difficult as
the customer often has nothing tangible to
show
 Continued… Amity Business School

• Quality is hard to define, measure, control,

and communicate
• Quality is defined by the consumer
• It’s important to measure customer
satisfaction with an organization’s service
quality.
Degree of Customization and Customer
Amity Business School

Involvement
 Amity Business School

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