Mod2

CONSUMER BEHAVIOR
A typical Con’B template is:
NEED RECOGNITION
INFORMATION SEARCH
EVALUATION OF ALTERNATIVES
PURCHASE AND CONSUMPTION
POST PURCHASE EVALUATION
Is Con’ B different for Services?

Stages in Consumer Decision Making
and Evaluation of Services

4/3/2014
4
CON B
“The consumer’s mind is still closed to us;
it’s like a ‘Black Box’ that remains sealed. We can
observe inputs to the box and the decisions made
as a result, but we can never know how the act of
processing inputs(information) truly happens.”
-John E. G. Bateson, CEO, SHL group plc

4/3/2014
Consumer Behavior Model
Cue: Refers to any object or phenomenon in the
environment that is capable of eliciting a response.
•Drive: Refers to a motivating force that directs
behavior.
•Stimulus: Refers to a cue that is external to the
individual or a drive that is internal to the individual.

4/3/2014 6
Consumer Decision Process
Comprises of three stages:
Prepurchase Stage:
All consumer activities occurring before and leading up to
the acquisition of the service.
Consumption Stage
The stage of the consumer decision process in which the
consumer purchases and uses the product.
Post-purchase Evaluation Stage
The stage of the consumer decision- making process during
which the consumer determines whether the correct
purchase decision was made.
Continued

4/3/2014
7
Categories in Consumer Decision-Making
Information Search Evaluation of
Alternatives
Purchase and
Consumption
Post-Purchase
Evaluation
 Use of personal sources
 Perceived risk
 Evoked set
 Emotion and mood
 Service provision as drama
 Service roles and scripts
 Compatibility of customers
 Attribution of dissatisfaction
 Innovation diffusion
 Brand loyalty

4/3/2014 Deepti Shetty
8
Prepurchase Stage
First Phase is about various stimuli, like:
Commercial cues:-
Events or motivations that provide stimulus to the
consumer and are promotional efforts on the part of the
company.
Social cues:-
Events or motivations that provide stimulus to the
consumer, obtained from the individual’s peer group or
from significant others.
Physical cues:-
Motivation, such as thirst, hunger, or another biological
cue that provides stimulus to the consumer.
Continued

9
Prepurchase Stage
Second Phase is about existence of a need, like:
Problem awareness:-
In which the consumer determines whether a need exists
for the product.
Shortage:-
The need for a product or service as a result of the
consumer's not having that particular product or service.
Social cues:-
Unfulfilled desire:-
The need for a product or service as a result of a
consumer's dissatisfaction with a current product or
service.
Continued

10
Prepurchase Stage
Third Phase is about search for possible alternatives
comprising of:
Evoked set:-
The limited set of "brands" that comes to the consumer's mind when
thinking about a particular product category from which the purchase
choice will be made.
Internal search:-
A passive approach to gathering information in which the consumer's
own memory is the main source of information about a product.
External search:-
A proactive approach to gathering information in which the consumer
collects new information from sources outside the consumer's own
experience.
Continued

11
Prepurchase Stage
Fourth Phase is evaluation of alternatives in which the
consumer places a “value/ rank" on each alternative by
way of:
Nonsystematic evaluation:-
Choosing in a random fashion or by a "gut-level feeling"
approach.
Systematic evaluation:-
Opt by using a set of formalized steps to arrive at a
decision.
Continued

12
Prepurchase Stage
Linear compensatory approach:-
A model whereby the consumer creates a global score for
each brand by multiplying the rating of the brand on each
attribute by the importance attached to the attribute and
adding the score together.
Lexicographic Approach:-
A model whereby the consumer makes a decision by
examining each attribute, starting with the most
important, to rule out alternatives.
Evaluation Phase
Continued

13
Consumption Stage
Consumption Process Phase - Includes the
activities of buying, using, and disposing of a
product/service. Here again, there could be
alternatives, like:
Store Choice:-
The decision to purchase from a particular outlet or store.
Non-store Choice:-
The decision to purchase from a catalog, the Inter-net, or
through mail order.

14
Postpurchase Evaluation Stage
The stage at which the consumer determines
whether the correct purchase decision was made
and the result could be either Satisfaction or
Dissonance. The dissent could be due to any of
the following:
Cognitive Dissonance:-
Doubt in the consumer's mind regarding the correctness
of the purchase decision.
Continued

15
The Perceived Behavioral Control Conflicts
in the Service Encounter

16
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

18
Managing Expectations
One way to influence customer satisfaction is to
effectively manage consumer expectations prior
to arrival.
For example, Finland actively attempts to manage
visitor expectations. In one attempt to manage tourist
expectations about the country and people of
Finland, the Helsinki Guide published the following list
in its visitor publication:
Continued

19
Finland-What It Is Not!
•Finland is not a small country, nor is it close to the North Pole.
•Finland is not awfully cold all the time, and polar bears do not
roam the streets of Helsinki.
•Finnish is not a Slavic language, and only very few Finns speak
Russian, which, of course, is a pity.
•Finland did not suffer too badly from any wartime occupation.
•Finns and Lapps are not the same thing.
•Finland is not, and has never' been, a member of the Eastern
Bloc-if there is One any more.
•Finns don’t drink as much as the rumors say,
•Finns don't eat just fish.
•Finland is not the country of limitless sex that it is made out to be.
•Finland is not in a very uncomfortable position between East and
West.

20
Continuum of Evaluation for Different Types of Products
Difficult to evaluate
Easy to evaluate
High in search
qualities
High in experience
qualities
High in credence
qualities
Most
Goods
Most
Services
Credence Factor

21
NEED RECOGNITION
Let’s use Maslow’s Hierarchy model
Physiological
Safety & Security
Social
Ego Kicks
Self Actualization
Does not differ drastically for Services

22
INFORMATION SEARCH
PERSONAL SOURCES VS NONPERSONAL
•FOR SERVICES USE OF PERSONAL SOURCES IS FAR
HIGHER COMPARED TO GOODS AND THE REASONS
ARE:
•Most Service outlets are localized
•Less of advertising or Mass Communication
•Ban on Advertising and Promotion
PERCEIVED RISK
MUCH HIGHER FOR SERVICES
Continued

23
Different Perceived Risks
Financial Risk: -
The possibility of a monetary, loss if the purchase
goes wrong or fails to operate correctly.
Performance Risk :-
The possibility that the item or service purchased
will not perform the task for which it was
purchased. correctness of the purchase decision.
Continued

24
Different Perceived Risks
Physical Risk:-
The possibility that if something does go wrong, injury
could be inflicted on the purchaser.
Social Risk:-
The possibility of a loss in personal social status
associated with a particular purchase.
Psychological Risk:-
The possibility that a purchase will affect an individual's
self-esteem.

25
EVALUATION OF ALTERNATIVES
EVOKED SET
For Services this tends to be smaller because:
Services are retailed at least not significantly
In case of non-professional service needs many a times, the
consumer may perform the service himself
Technology:, for example Self Service Alternatives:-
ATM, Internet Kiosks, Video/CD, Voicemail et al

26
PURCHASE AND CONSUMPTION
WHAT DIFFERNTIATES SERVICE FROM GOODS:
Moods and Emotions
Service provision is multifaceted, more like a Drama
ROLE PLAY
SCRIPT
COMPATIBILITY OF CONSUMERS:

27
POST PURCHASE PHASE
Dissatisfaction:
Not communicated often
Innovation Diffusion
Brand Loyalty

28
Categories in Consumer Decision-Making
Information Search Evaluation of
Alternatives
Purchase and
Consumption
Post-Purchase
Evaluation
 Use of personal sources
 Perceived risk
 Evoked set
 Emotion and mood
 Service provision as drama
 Service roles and scripts
 Compatibility of customers
 Attribution of dissatisfaction
 Innovation diffusion
 Brand loyalty
Culture
 Values and attitudes
 Manners and customs
 Material culture
 Aesthetics
 Educational and social
institutions

29
ROLE OF CULTURE
•Values and Attitudes
•Manners and Customs
•Material culture
•Aesthetics
•Education and Learning

30
Global Feature: Differences in the Service
Experience in the U.S. & Japan
• Authenticity
• Caring
• Control Courtesy
• Formality
• Friendliness
• Personalization
• Promptness

32
Customer Expectations of Service
• Recognize that customers hold different types
of expectations for service performance.
• Discuss controllable and uncontrollable
sources of customer expectations.
• Distinguish between customers’ global
expectations of their relationships and their
expectations of the service encounter.
Continued

33
Customer Expectations of Service
•Acknowledge that expectations are
similar for many different types of
customers.
•Delineate the most important current
issues surrounding customer
expectations.

34
CUSTOMER EXPECTATIONS
CE are beliefs about Service
Delivery that function as standard
/ reference points against which
performance is judged

35
DISCUSSION ON CE
• What type of expectation standards do
customers hold?
• What factors influence CE?
• What roles do these factors play in
changing the CE?
• Should a firm meet/exceed the CE?

36
POTENTIAL LEVELS OF CE
Normative
“should”
Expectations
Experience
Based Norms
Acceptable
Expectations
Ideal
Expectations
or Desires
Minimum
Tolerable
Expectations
“Everyone says this is College
Is as good as IIM’s for an MBA and after
all it’s a question of my future!”
HIGH
LOW
“As it boasts of affiliation to VTU and
it had be better good!”
“Most of the times all students
get placed but in times of recession the
placement can be bad.”
“ I expect sufferance for two
years to get my MBA but have
no choice as I failed in CAT.”
“I expect the college to help me
in getting an MBA and a job.”
LEVELS OF CE OF AN MBA ASPIRANT

37
DUAL CUSTOMER EXPECTATION LEVELS
Desired Service
Adequate Service
The level of service the customer
hopes to receive, a blend of
what the customer believes
can be and should be
The level of service the
customer will accept.

38
Comment on Expectation Levels
• Desired Service levels are more stable than
Adequate Service levels:
Desired Service expectations are ideal and do not
change frequently because what one hopes for does
not change frequently.
Adequate Service expectations are constantly in
flux, most likely rising incrementally as service is
improved in a particular company or industry.

39
ZONE OF TOLERANCE
Zone of Tolerance
Desired Service
Adequate Service

40
Most Important Factors Least Important Factors
Level
of
Expectation
Zone
of
Tolerance
Desired Service
Adequate Service
ZONES OF TOLERANCE FOR DIFFERENT SD’s
Desired Service
Adequate Service
Zone of
Tolerance

41
Comment on Zone of Tolerance
•Intuitively, it would seem that a firm would want
its customers to have wide tolerance zones for
service. If so, wouldn’t it be more difficult for
firms with superior service to earn customer
loyalty?
•Would superior service firms be better off with
narrow customers’ tolerance zones to reduce the
competitive appeal of mediocre providers?

42
Comment on Zone of Tolerance
•The wider customers’ zones of tolerance, the more
willing they are to accept variations in service—both
from the companies they currently patronize and
competing companies.
•Superior firms might well be better off if they try to
narrow customers’ tolerance zones by managing
customer expectations, educating customers, or
otherwise demonstrating to customers the reasons why
they should not tolerate lower levels of service.

43
FACTORS THAT INFLUENCE DESIRED SERVICE
Enduring Service
Intensifiers
Personal Needs
Desired Service
Zone of Tolerance
Adequate Service

44
•These are individual, stable factors that lead the
customer to a heightened sensitivity to service.
•It comprises of:
Derived service expectations
When CE’s are driven by another person or group of
persons
Personal service philosophy
The underlying generic attitude about the meaning of
service and conduct of SP’s
Enduring Service Intensifiers

45
•Those states or conditions essential to the
physical or psychological well being of the
customer
•They are Pivotal factors that shape what
customers desire in service
•These can be Psychological, Physical, Social or
Functional
Personal Needs

46
FACTORS THAT INFLUENCE ADEQUATE
SERVICES
Transitory Service
Intensifiers
Perceived Service
Alternatives
Desired
Service
Zone of
Tolerance
Adequate
Service
Self-Perceived
Service Role
Situational
Factors
Predicted
Services

47
•Consists of temporary, short-term,
individual factors that make customers
more aware of their need for service
•Personal emergencies raises the level of
adequate service expectations and in
particular the response from the SP’s
Transitory Service Intensifiers

48
•Other Service Providers from whom the customer
can get service
•The larger is the set of alternatives the customer’s
expectation od Adequate service looms larger
•If the service is of the nature where customers
can do it themselves then again the Adequate
Service level shoots up
Perceived Service
Alternatives

49
•It is the degree to which customers believe they
can influence the service they receive
•In effect it is about active or passive participation
of the customers in the SD
•The more active a customer is, his expectation of
Adequate Service level will be higher compared to
other customers
Self-Perceived Service Role

50
•Service conditions which are viewed by
customers as beyond the control of Service
Providers
•These can reduce or enhance the Adequate
Service level expectations:
A general break-down of utility, an earth quake are
probably good examples of reduced expectation from
customers
What situations could enhance CE?
Situational Factors

51
The level of service customers believe they are
most likely to get
It implies a sort of an objective calculation of
either the probability or estimate of an
anticipated service performance level
Predicted service are more individual
transaction oriented than other factors, which
tend to be general assessments
Predicted Services

52
FACTORS THAT INFLUENCE DESIRED &
PREDICTED SERVICES
Explicit Service
Promises
Implicit Service
Promises
Desired
Service
Zone of
Tolerance
Adequate
Service
Words Of
Mouth
Past
Experiences
Predicted
Services

53
First-Time Service
Outcome
Process
Outcome
Process
Recovery Service
ExpectationsLOW HIGH
Source: Parasuraman, Berry and Zeithaml (1991)
ZONES OF TOLERANCE FOR
FIRST-TIME & RECOVERY SERVICE

DISCUSSION
How do the technology changes influence CE?

Examples
Interactive TV versus traditional TV
Customized offerings of service from banks, Airlines
Audiovisual rich teaching versus story telling?
Note: All these need customers to participate in
creating their own experiences, which means that CE’s
will be shaped by what they do and not by what is
presented to them. Passive customers may be
disappointed( a la’ the early years of Internet.
: New technologies do raise the CE Levels.

DISCUSSION
Should service marketers delight their
customers?

Delighting customers has a definite down side:
 Results in the escalation of CE the next time they
seek service.
 Firms can exceed Desired Service—particularly in
dimensions other than reliability—while at the same
time alerting customers that the elevated service
performance cannot be delivered on a routine basis.

DISCUSSION
What service companies have effectively
built customer loyalty?

Following firms have a reputation for impeccable
service:
Walt Disney theme parks
Singapore Airlines
Federal Express
Marriott Hotels
IIT’s/IIM’s
Taj Hotels,

60
Mini Case
Consider a small business preparing to
buy a computer system:
•Which of the influences on customer
expectations do you believe will be pivotal?
•Which factors will have the most influence?
•Which factors will have the least importance in
this decision?

61
Business purchase decisions as a
category are generally more rational
than personal choices and it is likely
that company promotional material will
be reviewed and that competing brands
will be considered.
Mini Case

62
The factors that may be most
important include:
• Perceived Service Alternatives
•Explicit Service Promises
•Enduring service intensifiers
•Word of mouth
Mini Case

63
The least important influencers in a
decision of this type would be:
• Transitory service intensifiers
•Personal needs
Note: Although one could argue that personal needs
are always an important component of business
purchase decisions
Mini Case

64
INFLUENCING STRATEGIES
Controllable
Factors
Possible Influence Strategies
Explicit service
promises
Make realistic & accurate promises reflecting the
service actually delivered & not on an idealized
service version..
Get feedback on the accuracy of promises made.
Avoid price / Ad wars because they take the focus off
customers & escalate service promises.
Formalize service promises through a service
guarantee.
Implicit service
promise
Ensure that tangibles accurately reflect the type and
level of service provided.
Ensure that price premiums can be justified by higher
levels of performance.

65
Less
Controllable
Factors
Enduring
service
intensifiers
Use MR to determine sources of derived service
expectations and their requirements. Focus
advertising and marketing strategy on ways the
service allows the focal customer to satisfy the
requirements of the influencing customer.
Use MR to profile personal service philosophies of
customers and use this information in designing and
delivering services.
Personal needs Educate customers on ways the service addresses
their needs.
Transitory
service
Intensifiers
Increase service delivery during peak periods or in
emergencies.

66
Less
Controllabl
e Factors
Perceived
Service
alternatives
Be fully aware of competitive offerings and, where possible
and appropriate, match them.
Self-
perceived
role
Educate customers to understand their roles and perform
them better.
Word-of-
mouth
communica
tions
Simulate word of mouth in advertising by using testimonials
and opinion leaders.
Identify influencers and opinion leaders for the service and
concentrate marketing efforts on them.
Use incentives with existing customers to encourage them
to say positive things about the service.

67
Less
Controlla
ble
Factors
Past
experience
Use marketing research to profile customers' previous
experience with similar services.
Situational
factors
Use service guarantees to assure customers about service
recovery regardless of the situational factors that occur.
Predicted
service
Tell customers when service provision is higher than what
can normally be expected so that predictions of future
service encounters will not be inflated.

68
What Customers Want?
Type of
Customer
Type of
Customer
Principal Expectations
Automobile
Repair
Consumers Be competent, Explain things, Be
respectful .
Automobile
Insurance
Consumers Keep the customer informed, Be on
their side, Play fair, Protect them
from catastrophe, Provide prompt
service.
Hotel Consumers Provide a clean room, Provide a
secure room, Treat them like a
guest, Keep your promise.

69
What Customers Want?
Type of
Customer
Type of
Custom
er
Principal Expectations
Property &
Insurance
Business
customers
Fulfill obligations, Learn their business
and work with them, Protect them from
catastrophe, Provide prompt service.
Equipment
Repair
Business
customers
Share their sense of urgency, Be
competent, Be prepared.
CV Leasing/
Rental
Business
customers
Keep the equipment running, Be flexible,
Provide full service.

71
CUSTOMER PERCEPTION OF
SERVICE
•Customer Perceptions
•Customer Satisfaction
•Service Quality
•Service Encounters: The Foundations for
Satisfaction and Service Quality
•Strategies for Influencing Customer Perceptions

72
CUSTOMER PERCEPTION
•Customers perceive services in terms of the
quality of the service and how satisfied they are
overall with their experiences.
•Be aware that the terms CS & SQ are not same!
Although they have certain things in common, CS is
a broader concept, whereas SQ assessment focuses
specifically on dimensions of service.
Based on this view, perceived SQ is a component of
CS.

73
SQ and CS
Service Quality say of a Resort is judged on attributes
such as whether amenities are available and open at
convenient hours, how responsive the staff are to
customer needs and whether the facility is well-
maintained.
Customer Satisfaction with the Resort is a broader
concept, which certainly is influenced by perceptions of
service quality but that will also include perceptions of
product quality (such as quality of F & B, rooms), price,
personal factors such as the consumer’s emotional state,
and even uncontrollable situational factors such as
weather conditions.

74
COMMENTS
•Because expectations are dynamic, evaluations
may also shift over time-from person to person
and from culture to culture.
•All discussion of quality and satisfaction is based
on Customers Perceptions of the service and not
some predetermined objective criteria of what
service is or should be.

75
SERVICE QUALITY (SQ)
•The customer’s judgment of overall excellence of
the service provided in relation to the quality that
was expected.
•Service quality assessments are formed on
judgments of:
Outcome Quality
Process Quality
Physical Environment Quality

•4/3/2014 •Deepti Shetty
•76
•Explanation
Take the example of a sit-in restaurant, here:
•Outcome Quality: It would be the Meal
•Process Quality: How it was served
•Physical Environment Quality: The ambience,
the décor etc.

77
SERVICE QUALITY DIMENSIONS- THE ERRATa
EMPATHY
RELIABILITY
RESPONSIVENESS
ASSURANCE
TaNGIBLES
S
E
R
V
E
I
C

78
THE 5 DIMENSIONS OF SQ
Caring, individualized attention the firm provides its
customers.
Ability to perform the promised service dependably
and accurately.
Willingness to help customers and provide prompt
service.
Knowledge and courtesy of employees and their
ability to convey trust and confidence.
Physical facilities, equipment, and appearance of
personnel
Empathy
Reliability
Responsiveness
Assurance
Tangibles

79
CP OF SQ & CS
Interaction
Quality
PE
Quality
Outcome
Quality
Price
Product
Quality
Service
Quality
Situational
Factors
Personal
Factors
CUSTOMER
SATISFACTON

80
What Determines CS?
•Product and Service Features
•Consumer Emotions
•Attributions for Service Success or Failure
•Perceptions of Equity or Fairness
•Other Consumers, Family Members, and
Coworkers

81
What Is CS?
•Satisfaction is the consumer’s fulfillment
response.
•Satisfaction is the customers’ evaluation of a
service in terms of whether that service has met
their needs and expectations.
•It is a judgment that a service feature or the
service itself provides a pleasurable level of
consumption related fulfillment.

82
OUTCOMES OF CS
•Increased Customer Retention
•Positive Word-Of-Mouth Communications
•Increased Revenues
REVENUE

83
THE SERVICE ENCOUNTER (SE)
•It is where promises are kept or broken and
where the proverbial rubber meets the road-
some times called “real-time marketing.”
•It is from these service encounters that
customers build their perceptions.
•The foundations for CS and SQ

84
THE SERVICE ENCOUNTER (SE)
•Is The “Moment Of Truth”
•Occurs Any Time The Customer
Interacts With The Firm
•Can Potentially Be Critical In
Determining CS & Loyalty

85
RELATIONSHIP BETWEEN CS & LOYALTY IN COMPETITIVE
INDUSTRIES
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.

86
TYPES OF SE
• Remote Encounters
• Phone Encounters
• Face-to-face Encounters
• Group Encounters

87
SE AS AN OPPORTUNITY
•Build Trust
•Reinforce Quality
•Build Brand Identity
•Increase Loyalty
•Enhance CS and CP

88
Check-In
Request Wake-Up Call
Checkout
Bellboy Takes to Room
Restaurant Meal
AN SE CASCADE FOR A HOTEL VISIT

89
Sales Call
Ordering Supplies
Billing
Delivery and Installation
Servicing
AN SE CASCADE FOR AN INDUSTRIAL
PURCHASE

90
AN SE CASCADE OF A MBA STUDENT
ENROLL
PEDOGOGICAL
-Lectures
-Workshops
-Projects
-Presentations
-Tests et al
ORIENTATION
PLACEMENT
EXAMINATION I
EXAMINATION II
CONVOCATION
PEDOGOGICAL
-Lectures
-Workshops
-Projects
-Presentations
-Tests et al
SUMMER
PROJECT

91
CRITICAL SE RESEARCH
•GOAL - Understanding Actual Events
& Behaviors That Cause CS Or
Dissatisfaction In SE
•METHOD - Critical Incident Technique
(CIT)

92
CRITICAL SE RESEARCH
•DATA - Stories From Customers &
Employees
•OUTPUT - Identification Of Themes
Underlying Satisfaction &
Dissatisfaction With SE’s

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