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Chapter 2

Transcript of Love Lock 02

Chapter 2

Consumer Behavior in Service Encounters

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2- 1

Where Does the Customer Fit in a Service Organization? (Fig. 2.1)

Consumers rarely involved in manufacture of goods butoften participate in service creation and delivery customers interact with service operations

Challenge for service marketers is to understand how Flowcharting clarifies how customer involvement in serviceencounters varies with type of process - see Fig. 2-1: People processing (e.g., motel stay): customer is physically involved

throughout entire process Possession processing (e.g., DVD repair): involvement may be limited to drop off of physical item/description of problem and subsequent pick up Mental stimulus processing (e.g., weather forecast): involvement is mental, not physical; here customer simply receives output and acts on it Information processing (e.g., health insurance): involvement is mental specify information upfront and later receive documentation of coverageSlide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

2- 2

High-Contact and Low-Contact ServicesHigh Contact Services

Customers visit service facility and remain throughoutservice delivery

Active contact between customers and service personnel Includes most people-processing servicesLow Contact Services

Little or no physical contact with service personnel Contact usually at arms length through electronic orphysical distribution channels

New technologies (e.g. Web) help reduce contact levelsSlide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

2- 3

Levels of Customer Contact with Service Organizations (Fig. 2.2)Emphasizes encounters with service personnelManagement Consulting T elephone Banking

HighNursing Home

HairCut4-Star Hotel Good R estaurant Airline T ravel (Econ.)

R etail Banking Motel Dry Cleaning F ast Food Movie Theater

Car Repair Insurance

Cable TV

Subway Internet Banking Mail Based Repairs

Emphasizes encounters with equipmentSlide 2004 by Christopher Lovelock and Jochen Wirtz

Internet-based Services

Low2- 4

Services Marketing 5/E

Managing Service Encounters--1

Service encounter: A period of time during which customersinteract directly with a service

Moments of truth: Defining points in service delivery wherecustomers interact with employees or equipment

Critical incidents: specific encounters that result in

especially satisfying/dissatisfying outcomes for either customers or service employees

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2- 5

Managing Service Encounters--2

Service success often rests on performance of juniorcontact personnel

Must train, coach, role model desired behavior Thoughtless or badly behaved customers can causebehavior

problems for service personnel (and other customers)

Must educate customers, clarify what is expected, manage

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2- 6

The Purchase Process for Services(Adapted from Fig. 2-3)

Prepurchase Stage Awareness of need Information search Evaluation of alternative service suppliers Service Encounter Stage Request service from chosen supplier Service delivery Postpurchase Stage Evaluation of service performance Future intentions

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2- 7

Perceived Risks in Purchasing and Using Services (Table 2.1) Functional unsatisfactory performance outcomes Financial monetary loss, unexpected extra costs Temporal wasted time, delays lead to problems Physical personal injury, damage to possessions Psychological fears and negative emotions Social how others may think and react Sensory unwanted impacts to any of five senses

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2- 8

Factors that Influence Customer Expectations of Services (Fig. 2.4)Explicit & Implicit Service Promises Word-of-Mouth Past Experience

Personal Needs Desired Service Beliefs about What Is Possible ZONE OF TOLERANCE

Perceived Service Alterations Adequate Service Situational Factors Predicted Service

Source: Adapted from Zeithaml, Parasuraman & Berry Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

2- 9

Components of Customer Expectations

Desired Service Level: wished-for level of service qualitythat customer believes can and should be delivered service

Adequate Service Level: minimum acceptable level of Predicted Service Level: service level that customerbelieves firm will actually deliver

Zone of Tolerance: range within which customers arewilling to accept variations in service delivery

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2 - 10

Intangible Attributes, Variability, and Quality Control Problems Make Services Hard to Evaluate

Search attributes Tangible characteristics that allowcustomers to evaluate a product before purchase experienced when actually using the service evaluate confidently even after consumption

Experience attributes Characteristics that can be Credence attributes Characteristics that are difficult to Goods tend to be higher in search attributes, services tendto be higher in experience and credence attributes benefits have been delivered

Credence attributes force customers to trust that desired

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2 - 11

How Product Attributes Affect Ease of Evaluation) (Fig. 2.5)Most Goods Most Services

Restaurant meals

Clothing

Computer repair

High in search attributes

High in experience High in credence attributes attributesSource: Adapted from Zeithaml

Complex surgery

Legal services

Motor vehicle

Lawn fertilizer

Haircut

Foods

Chair

Entertainment

Education

Easy to evaluate

Difficult to evaluate

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2 - 12

Customer Satisfaction is Central to the Marketing Concept

Satisfaction defined as attitude-like judgment following aservice purchase or series of service interactions service performance, compare it to expectations Positive disconfirmation if better than expected Confirmation if same as expected Negative disconfirmation if worse than expected

Customers have expectations prior to consumption, observe Satisfaction judgments are based on this comparison

Satisfaction reflects perceived service quality, price/qualitytradeoffs, personal and situational factors firms financial performance

Research shows links between customer satisfaction and aSlide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

2 - 13

Customer Delight: Going Beyond Satisfaction

Research shows that delight is a function of 3 components Unexpectedly high levels of performance Arousal (e.g., surprise, excitement) Positive affect (e.g., pleasure, joy, or happiness)

Is it possible for customers to be delighted by verymundane services?

Progressive Insurance has found ways to positively surprisecustomers with customer-friendly innovations and extraordinary customer service

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2 - 14

A Service Business is a System Comprising Three Overlapping SubsystemsService Operations (front stage and backstage)

Where inputs are processed and service elements created. Includes facilities, equipment, and personnelService Delivery (front stage) Where final assembly of service elements takes place and service is delivered to customers Includes customer interactions with operations and other customers Service Marketing (front stage)

Includes service delivery (as above) and all other contactsbetween service firm and customersServices Marketing 5/E Slide 2004 by Christopher Lovelock and Jochen Wirtz

2 - 15

Service Marketing System: (1) High Contact Service--e.g., Hotel (Fig. 2.7)Service Marketing SystemService Delivery System Service Operations SystemInterior & Exterior Facilities Other Customers

Other Contact PointsAdvertising Sales Calls Market Research Surveys Billing / Statements Miscellaneous Mail, Phone Calls, Faxes, etc. Random Exposure to Facilities / Vehicles Chance Encounters with Service Personnel Word of Mouth

Technical Core

Equipment

The Customer

Service People

Backstage (invisible)

Front Stage (visible)

Other Customers

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2 - 16

Service Marketing System: (2) Low Contact Service--e.g., Credit Card (Fig. 2.8) Service Marketing SystemService Delivery System Service Operations System Other Contact Points

Advertising Mail Technical Core Self Service Equipment Phone, Fax, Web site etc.Backstage (invisible) Front Stage (visible)

The Customer

Market Research SurveysRandom Exposures Facilities, Personnel

Word of Mouth

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

2 - 17

Service as Theater

All the worlds a stage and all the men and women m