1

SM
Chapter 2
CONSUMER BEHAVIOR IN SERVICES: Search,
experience and credence property, Customer expectation
of services, two levels of expectation, Zone of tolerance,
factors influencing customer expectation of services.

Customers perception of service- Factors that

influence customer of service, services encounters
satisfaction, Strategies for influencing customers
perception.

McGraw-Hill
McGraw-Hill Dr. Saleem G Sonnekhan – SDMCET- DHW © 2000 TheThe
© 2000 McGraw-Hill Companies
McGraw-Hill Companies
 2

SM Search, Experience , and

Credence properties

• Search Qualities
– attributes a consumer can determine prior to
purchase of a product
• Experience Qualities
– attributes a consumer can determine after
purchase (or during consumption) of a product
• Credence Qualities
– characteristics that may be impossible to evaluate
even after purchase and consumption

McGraw-Hill © 2000 The McGraw-Hill Companies

 3

SM Consumer Evaluation
Processes for Services
• Search Qualities
– attributes a consumer can determine prior to
purchase of a product
• Experience Qualities
– attributes a consumer can determine after
purchase (or during consumption) of a product
• Credence Qualities
– characteristics that may be impossible to evaluate
even after purchase and consumption
Dr. Saleem G Sonnekhan – SDMCET- DHW
McGraw-Hill © 2000 The McGraw-Hill Companies
 4
Figure 2-1
SM Continuum of Evaluation for
Different Types of Products

Most Most
Goods Services

Easy to evaluate
Difficult to evaluate

High in search High in experience High in credence

qualities qualities qualities
McGraw-Hill Dr. Saleem G Sonnekhan – SDMCET- DHW © 2000 The McGraw-Hill Companies
 5

SM
Consumer Choice
• Need Recognition – Although there are many
different ways to characterize needs, the most
widely know is Maslow’s hierarchy, which
specifies five need categories arranged in a
sequence from basic lower- level needs.
• Physiological needs – biological needs such as food , water
sleep.
• Safety and security needs- include shelter, protection and
security.
• Social needs- affection, friendship, and acceptance.
McGraw-Hill © 2000 The McGraw-Hill Companies
 6

SM

• Ego needs- prestige, success,

accomplishment, and self esteem.
• Self –actualization- self fulfillment and
enrichmentexperience.

McGraw-Hill © 2000 The McGraw-Hill Companies

 Figure 2-2 7
Categories in Consumer
SM Decision-Making and Evaluation of
Services
Information Evaluation of
Search Alternatives
 Use of personal sources  Evoked set
 Perceived risk  Emotion and mood

Purchase and Post-Purchase

Consumption Evaluation
 Service provision as drama  Attribution of dissatisfaction
 Service roles and scripts  Innovation diffusion
 Compatibility of customers  Brand loyalty

McGraw-Hill Dr. Saleem G Sonnekhan – SDMCET- DHW © 2000 The McGraw-Hill Companies
 8
Figure 2-3
SM Categories in Consumer Decision-
Making and Evaluation of Services

Information Evaluation of
Search Alternatives
 Use of personal sources  Evoked set
 Perceived risk  Emotion and mood

Culture
 Values and attitudes
 Manners and customs
 Material culture
 Aesthetics
 Educational and social
institutions

Purchase and Post-Purchase

Consumption Evaluation
 Service provision as  Attribution of dissatisfaction
drama
 Service roles and scripts  Innovation diffusion
 Compatibility of customers  Brand loyalty

McGraw-Hill Dr. Saleem G Sonnekhan – SDMCET- DHW © 2000 The McGraw-Hill Companies
 9

SM Information search

• In buying services consumers rely more on

personal sources. WHY? Refer p32
• Personal influence becomes pivotal as
product complexity increases
• Word of mouth important in delivery of
services
• With service most evaluation follows
purchase
Dr. Saleem G Sonnekhan – SDMCET- DHW
McGraw-Hill © 2000 The McGraw-Hill Companies
 10

SM

Perceived Risk
• More risk would appear to be involved with
purchase of services (no guarantees)
• Many services so specialized and difficult to
evaluate (How do you know whether the plumber
has done a good job?)
• Therefore a firm needs to develop strategies to
reduce this risk, e.g, training of employees,
standardization of offerings
Dr. Saleem G Sonnekhan – SDMCET- DHW
McGraw-Hill © 2000 The McGraw-Hill Companies
 11

SM Evaluation of Alternatives

Evoked Set
• The evoked set of alternatives likely to be smaller
with services than goods
• If you would go to a shopping centre you may
only find one dry cleaner or “single brand”
• It is also difficult to obtain adequate prepurchase
information about service
• The Internet may widen this potential
• Consumer may choose to do it themselves, e.g.
garden services
Dr. Saleem G Sonnekhan – SDMCET- DHW
McGraw-Hill © 2000 The McGraw-Hill Companies
 12

SM

Emotion and Mood

• Emotion and mood are feeling states that influence
people’s perception and evaluation of their
experiences
• Moods are transient
• Emotions more intense, stable and pervasive
• May have a negative or positive influence
Dr. Saleem G Sonnekhan – SDMCET- DHW
McGraw-Hill © 2000 The McGraw-Hill Companies
 13

SM Consumer Experience

Purchase and Consumption

Service as processes.
• Its actions or performance done for and with customers, they
typically involve a sequence of steps, actions, and activities.
Service Provision as Drama
• Need to maintain a desirable impression
• Service “actors” need to perform certain routines
• Physical setting important, smell, music, use of space,
temperature, cleanliness, etc.

Dr. Saleem G Sonnekhan – SDMCET- DHW

McGraw-Hill © 2000 The McGraw-Hill Companies
 14

SM

Service Roles and Scripts

• Roles are combinations of social cues that guide and direct
behaviour in a given setting.
The Compatibility of Service Customers
Emotion and Mood
• Emotion and mood are feeling states that influence
people’s perception and evaluation of their experiences
• Moods are transient
• Emotions more intense, stable and pervasive
• May have a negative or positive influence.
McGraw-Hill © 2000 The McGraw-Hill Companies
 15

SM Post experience Evolution

• Word of mouth Communication

• Attribution of Dissatisfaction
• Positive or Negative Biases
• Brand Loyalty

McGraw-Hill © 2000 The McGraw-Hill Companies

 16

SM Global Differences: The

Role of Culture

 Values and attitudes

 Manners and customs
 Material culture
 Aesthetics
 Educational and social institutions

McGraw-Hill © 2000 The McGraw-Hill Companies

 17
Global Feature:
SM Differences in the Service
Experience in the U.S. and Indian

 Authenticity
 Caring
 Control Courtesy
 Formality
 Friendliness
 Personalization
 Promptness
Dr. Saleem G Sonnekhan – SDMCET- DHW
McGraw-Hill © 2000 The McGraw-Hill Companies
 18

SM CUSTOMER EXPECTATIONS OF
SERVICES

• Customers have different expectations re

services – or expected service
• Desired service – customer hopes to receive
• Adequate service – the level of service the
customer may accept
• DO YOUR EXPECTATIONS DIFFER RE
SPUR and CAPTAIN DOREGO?

McGraw-Hill © 2000 The McGraw-Hill Companies

 High 19
“Everyone says this

SM
Ideal restaurant is as good as one
Expectations or in city and I want to go
Desires somewhere very special for
my anniversary”

Normative “As expensive as this

“should “ restaurant is, it ought to have
expectations excellent food and service”

“Most times this restaurant

Experience –
is very good, but when it
based Norms gets busy the service is
slow”

“I except this restaurant to

Acceptable serve me in an adequate
Expectations manner.”

Minimum “I expect terrible service

tolerable from this restaurant but
Expectations more because the price is
Low low.”
McGraw-Hill © 2000 The McGraw-Hill Companies
 20
Figure 3-1
SM Dual Customer
Expectation Levels
(Two levels of expectations)
Desired Service

Zone of
Tolerance

Adequate Service

McGraw-Hill © 2000 The McGraw-Hill Companies

 21

SM Figure 3-2
The Zone of Tolerance

Desired Service

Zone of
Tolerance

Adequate Service

The extent to which customers recognize and are willing

to accept this variation is called the zone of tolerance as above.
McGraw-Hill © 2000 The McGraw-Hill Companies
 Figure 3-3 22

SM Zones of Tolerance VARY for

Different Service Dimensions
Desired Service

Level
of Zone of
Expectation Desired
Tolerance Desired Service
Service
Adequate Service
Zone
of
Tolerance

Adequate
Adequate Service
Service

Most Important Factors Least Important Factors

Source: Berry, Parasuraman, and Zeithaml (1993)
McGraw-Hill © 2000 The McGraw-Hill Companies
 Figure 3-4 23

SM Zones of Tolerance VARY for

First-Time and Recovery Service

First-Time Service

Outcome

Process

Recovery Service

Outcome

Process

LOW HIGH
Expectations

McGraw-Hill © 2000 The McGraw-Hill Companies

 Figure 3-5 24

SM Factors that Influence

Desired Service

Enduring Service
Intensifiers

Desired
Service
Personal Needs
Zone
of
Tolerance

Adequate
Service

McGraw-Hill © 2000 The McGraw-Hill Companies

 25

SM

• Personal needs include physical, social,

psychological categories

• Enduring service intensifiers are individual, stable

factors that lead to heightened sensitivity to
service
This can further divided into Derived Service
Expectations and Personal service Philosophies

McGraw-Hill © 2000 The McGraw-Hill Companies

 26
Figure 3-6
SM Factors that Influence
Adequate Service
Temporary service
intensifiers

Desired
Perceived Service Service
Alternatives
Zone
of
Tolerance
Self-Perceived
Service Role Adequate
Service

Situational
Factors
McGraw-Hill © 2000 The McGraw-Hill Companies
 27

SM

• Temporary service intensifiers, consists of short term,

individual factors that make needed raise the level of
adequate service expectations, particularly in terms of the
level of responsiveness required and considered
acceptable.
• Perceived service alternatives are other providers from
whom the customer can obtain service.
• Customer’s self – perceived service role. Customer
perceptions of the degree to which customers exert an
influence on the level of service they receive.
McGraw-Hill © 2000 The McGraw-Hill Companies
 28

SM

• Situational factors, Defined as service

performance conditions that customers view
as beyond the control of the service
provider.

McGraw-Hill © 2000 The McGraw-Hill Companies

 29

SM

• Transitory service intensifiers – temporary –

a computer breakdown will be less tolerated
at financial year-ends
• Perceived service alternatives
• Perceived service role of customer
• Situational factors

McGraw-Hill © 2000 The McGraw-Hill Companies

 Figure 3-7 30

SM Factors that Influence

Desired and Predicted Service
Explicit Service
Promises

Implicit Service
Promises

Desired Word-of-Mouth
Service

Zone
Past Experience
of
Tolerance

Adequate Predicted
Service Service
McGraw-Hill © 2000 The McGraw-Hill Companies
 31

SM Predicted service;

The level of service that customers believe

they are likely to get. This type of service
expectation can be viewed as predictions
made by customers about what is likely to
happen during an impending transaction or
exchange. Predicated service performance
implies some objective calculation of the
probability of performance or estimate of
anticipated service performance level.
McGraw-Hill © 2000 The McGraw-Hill Companies
 Figure 4-1 32

SM Customer Perceptions of
Service Quality and
Customer Satisfaction
Reliability Situational
Factors
Responsiveness Service
Quality

Assurance
Customer
Empathy Satisfaction
Product
Quality
Tangibles

Personal
Price Factors
McGraw-Hill © 2000 The McGraw-Hill Companies
 33

SM Factors Influencing
Customer Satisfaction

• Product/service quality
• Product/service attributes or features
• Consumer Emotions
• Attributions for product/service success or
failure
• Equity or fairness evaluations

McGraw-Hill © 2000 The McGraw-Hill Companies

 34

SM Outcomes of
Customer Satisfaction

• Increased customer retention

• Positive word-of-mouth communications
• Increased revenues

McGraw-Hill © 2000 The McGraw-Hill Companies

 Figure 4-3 35

SM Relationship between Customer

Satisfaction and Loyalty in
Competitive Industries
100%
Loyalty (retention)

80%

60%

40%

20%

0%
Very Dissatisfied Neither Satisfied Very
dissatisfied satisfied nor satisfied
dissatisfied

Satisfaction measure

Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

McGraw-Hill © 2000 The McGraw-Hill Companies

 36

SM Service Quality

• The customer’s judgment of overall

excellence of the service provided in
relation to the quality that was expected.
• Process and outcome quality are both
important.

McGraw-Hill © 2000 The McGraw-Hill Companies

 37

SM The Five Dimensions of

Service Quality

Reliability Ability to perform the promised

service dependably and accurately.
Knowledge and courtesy of
Assurance employees and their ability to
convey trust and confidence.
Tangibles Physical facilities, equipment, and
appearance of personnel.
Empathy Caring, individualized attention the
firm provides its customers.
Responsiveness Willingness to help customers and
provide prompt service.
McGraw-Hill © 2000 The McGraw-Hill Companies
 38

SM Exercise to
Identify Service Attributes
In groups of five, choose a services industry and spend 10 minutes
brainstorming specific requirements of customers in each of the five
service quality dimensions. Be certain the requirements reflect the
customer’s point of view.
Reliability:

Assurance:

Tangibles:

Empathy:

Responsiveness:

McGraw-Hill © 2000 The McGraw-Hill Companies

 39
SERVQUAL Attributes
SM ASSURANCE
 Employees who instill confidence in
customers
 Making customers feel safe in their
transactions
RELIABILITY  Employees who are consistently courteous
 Employees who have the knowledge to
 Providing service as promised answer customer questions
 Dependability in handling customers’
service problems EMPATHY
 Performing services right the first time  Giving customers individual attention
 Providing services at the promised time  Employees who deal with customers in a
 Maintaining error-free records caring fashion
 Having the customer’s best interest at heart
 Employees who understand the needs of
RESPONSIVENESS their customers
 Keeping customers informed as to  Convenient business hours
when services will be performed TANGIBLES
 Prompt service to customers  Modern equipment
 Willingness to help customers  Visually appealing facilities
 Readiness to respond to customers’  Employees who have a neat,
requests professional appearance
 Visually appealing materials
associated with the service
McGraw-Hill © 2000 The McGraw-Hill Companies
 40

SM The Service Encounter

• is the “moment of truth”

• occurs any time the customer interacts with the firm
• can potentially be critical in determining customer satisfaction and
loyalty
• types of encounters:
– remote encounters
– phone encounters
– face-to-face encounters
• is an opportunity to:
– build trust
– reinforce quality
– build brand identity
McGraw-Hill – increase loyalty © 2000 The McGraw-Hill Companies
 41
Figure 4-4

SM A Service Encounter
Cascade for a Hotel Visit

Check-In

Bellboy Takes to Room

Restaurant Meal

Request Wake-Up Call

Checkout

McGraw-Hill © 2000 The McGraw-Hill Companies

 Figure 4-5 42

SM A Service Encounter
Cascade for an Industrial
Purchase

Sales Call

Delivery and Installation

Servicing

Ordering Supplies
Billing

McGraw-Hill © 2000 The McGraw-Hill Companies

 43

SM Critical Service Encounters

Research

• GOAL - understanding actual events and

behaviors that cause customer dis/satisfaction
in service encounters
• METHOD - Critical Incident Technique
• DATA - stories from customers and employees
• OUTPUT - identification of themes underlying
satisfaction and dissatisfaction with service
encounters

McGraw-Hill © 2000 The McGraw-Hill Companies

 44

SM Sample Questions for Critical

Incidents Technique Study

• Think of a time when, as a customer, you had a

particularly satisfying (dissatisfying) interaction
with an employee of .
• When did the incident happen?
• What specific circumstances led up to this
situation?
• Exactly what was said and done?
• What resulted that made you feel the interaction
was satisfying (dissatisfying)?
McGraw-Hill © 2000 The McGraw-Hill Companies
 45

SM Common Themes in Critical

Service Encounters Research

Recovery: Adaptability:
Employee Response Employee Response
to Service Delivery to Customer Needs
System Failure and Requests

Coping: Spontaneity:
Employee Response Unprompted and
to Problem Customers Unsolicited Employee
Actions and Attitudes

McGraw-Hill © 2000 The McGraw-Hill Companies

 46

SM Recovery

DO DON’T
• Acknowledge • Ignore customer
problem • Blame customer
• Explain causes • Leave customer to
• Apologize fend for him/herself
• Compensate/upgrade • Downgrade
• Lay out options • Act as if nothing is
• Take responsibility wrong

McGraw-Hill © 2000 The McGraw-Hill Companies

 47

SM Adaptability

DO DON’T
• Recognize the • Promise, then fail to
seriousness of the need follow through
• Acknowledge • Ignore
• Anticipate • Show unwillingness to
• Attempt to try
accommodate • Embarrass the customer
• Explain rules/policies • Laugh at the customer
• Take responsibility • Avoid responsibility
• Exert effort to
accommodate
McGraw-Hill © 2000 The McGraw-Hill Companies
 48

SM Spontaneity

DO DON’T
• Take time • Exhibit impatience
• Be attentive
• Ignore
• Anticipate needs
• Yell/laugh/swear
• Listen
• Provide information • Steal from or cheat a
(even if not asked) customer
• Treat customers fairly • Discriminate
• Show empathy • Treat impersonally
• Acknowledge by name
McGraw-Hill © 2000 The McGraw-Hill Companies
 49

SM Coping

DO DON’T

• Listen • Take customer’s

• Try to accommodate dissatisfaction
• Explain personally
• Let go of the • Let customer’s
customer dissatisfaction affect
others

McGraw-Hill © 2000 The McGraw-Hill Companies

 50
Figure 4-6
SM Evidence of Service from the
Customer’s Point of View
 Contact employees
 Customer him/herself
 Operational flow of  Other customers
activities
People
 Steps in process
 Flexibility vs.
standard
 Technology vs. Physical  Tangible
human Process
Evidence communication
 Servicescape
 Guarantees
 Technology

McGraw-Hill © 2000 The McGraw-Hill Companies

 51

SM

McGraw-Hill © 2000 The McGraw-Hill Companies

 52

SM

McGraw-Hill © 2000 The McGraw-Hill Companies