Download EXPLAINING CONSUMER SELECTION OF A SERVICE

EXPLAINING CONSUMER SELECTION OF A SERVICE PROVIDER
Guilherme D. Pires and John Stanton
Marketing and Enterprise Group
University of Newcastle
Abstract
The process by which a consumer selects a service provider and its bearing on the service
selected is unclear from the marketing literature. The loose terminology of many decision-making
process models may encompass service providers and their services, but the characteristics of
services may also give rise to more complex or extended problem solving procedures compared
to more tangible products. An integrated model of the decision-making process is developed that
commences from the "traditional" flow chart decision process diagrams for "products" and is then
extended to cover the evaluation process for services. This integration reveals that the implicit
treatment of decision process models as covering any "object" is unsatisfactory. The case of
selecting a service provider is used to illustrate that procedures in decision making may vary
depending on the object of the decision.
Purpose
The consumer decision process is commonly depicted in the marketing literature as a flow chart
linking problem recognition to post-purchase evaluation. The object of this decision may be loosely
specified, given that there is ambiguity in terminology arising from an indiscriminate use of product,
service, brand, retail outlet, service outlet, and service provider as substitutes for each other (Hawkins
et al. 1994; McGuire, 1999). Differences between goods and services, for example, are widely
recognised (Shostack 1977; Berry 1980; Langford and Cosenza 1998). Service products are high in
credence (in relation to service providers) qualities (Darby and Karni 1973) and service providers
may provide utilitarian, temporal and spatial dimensions to their product, which can be augmented
with social, emotional and other forms of value (Sheth, Newman and Gross 1991). Because of this
value, the process of selecting a service provider may occur before, after or simultaneously with the
selection of a service (e.g. the selection of a university may well precede the decision on the course).
Can a problem solving process to select particular products be applied to any object, including a
service provider? This paper develops a model (represented in Figure 1) that integrates decision
process models with service selection models and, in so doing, illustrates that the selection of a
service provider may be an important prior element in the decision to select a service.
The paper proceeds by explaining the limitations of widely used decision process models in
addressing service provider selection. Why services should complicate this process is then addressed.
The summary draws the two strands of literature together, showing through the integrated decision
process model how service supplier selection needs to be distinguished for its role in the purchasing
decision.
Models of the Decision-Making Process.
The models following vary in their interpretation of the decision object. In the Nicosia model (1966) a
supplier tries to influence consumer brand choice by means of a message that is then adjusted based
on consumer feedback. Predisposition towards the firm's offerings influences the interpretation by
consumers of the message and creates an attitude that may induce a search for further information and
evaluation of the firm's brand. Positive evaluation results in the motivation to purchase the brand from
a specific supplier. Given its reliance on a supplier's communication initiative, the Nicosia model is
narrow. In contrast, the Howard and Sheth model (1969) reflects the difficulty in reducing consumer
behaviour to a cause-consequence relationship and is too general. A consumer's level of active search
for information about a brand and respective alternatives is seen as a function of existing knowledge,
beliefs about and established preference for that brand. While devised as a general decision-making
process a brand is not distinguished from a service provider.
Figure 1: Integrated Model of Decision-Making Process.
FEEL NEED / PROBLEM
RECOGNITION
SITUATIONAL CONSTRAINTS
(financial, social, religious, time, etc.)
INFORMATION SEARCH
(Function of problem
complexity and consumer
involvement)
INTERNAL
EVOKED SET
PRIMARY: Ask Questions
(peers, family, other)
EXTERNAL
CHOOSE BETWEEN
CONSUMPTION &
HOME PRODUCTION
HOME
PRODUCTION
PRECONSUMPTION
STAGE
CONSUMPTION
IDENTIFY POSSIBLE
SUPPLIERS
EVOKED
SET
CHOOSE BETWEEN
SUPPLIERS
DEVELOP EXPECTATION
ABOUT SERVICE
DELIVERY & OUTCOME
SECONDARY: Advertising,
Hearsay, and consumer reports
EVALUATE
SERVICE
QUALITY,
DELIVERY &
OUTCOME
EVALUATION
CRITERIA
Tangibles, Reliability,
Empathy, Assurance and
Responsiveness
(conditioned by past
experiences, values,
attitudes, convenience,
price, etc..)
CONSUMPTION STAGE
CONSUME THE SERVICE
DECIDE WHETHER TO CHANGE SUPPLIER
THE NEXT TIME THE PROBLEM ARISES
POSTCONSUMPTION STAGE
UPDATE EVOKED SET
The EKB (Engel, Kollat and Blackwell or Miniard) model (1968; -86) identifies decision process
stages (problem recognition, internal and external search, alternative evaluation, purchase and
outcome). The degree of involvement for each stage varies with specific purchase decisions
(Schiffman et al 1997). In each case the decision process is influenced by a consumer's personal
characteristics, social and situational influences and retained memory from exposure to
communications. Consumer choice follows the stages of search and evaluation of alternatives,
resulting in dissonance or satisfaction / dissatisfaction. Similar to Nicosia, the selection of a service
provider is not explicitly addressed.
EKB proposes a typology of pre-purchase shopping intentions based on the degree of planning
existing prior to the exposure to a store environment. Intentions may relate to the product and brand;
the product only; the product class only; recognition of a problem prior to entering a store; and not
recognising a problem until entering a store (1968, p.448). Although the model applies to services, the
typology fails to recognise that the choice of service provider may occur before, after, or
simultaneously with service selection.
In the Sheth, Newman and Gross model (1991) market choice is a function of multiple independent
types of value (functional, social, emotional, epistemic and conditional) that contribute differentially
in a choice situation. This process is influenced by a consumer's personal values, culture, personality,
lifestyle, family, reference groups, economic situation and level of object knowledge. However, the
decision process does not provide sufficient detail to allow a prediction of a particular purchase or
brand choice even with adequate information on all the variables in the model (Hawkins et al. 1994).
There is no reason why this same observation should not equally apply to the selection of service
providers.
Various researchers have focused on developing a theory of consumer choice sets (Narayana and
Markin 1975; Shocker et al. 1991) dealing with selecting one specific brand from a set of competing
brands. If service suppliers are substituted for brands, the theory can be applied to selecting one
service supplier from a set. However, similar to the previous decision-making process models, evoked
sets and sequential choice theory focus is on the choice process, presented as applying equally to
goods and services, brands, service providers or the retail outlets (Spiggle and Sewall 1987; Brand
and Cronin 1997).
Hawkins et al conceptualises a retail outlet as "any source of products or services for consumers'" and
posits that "selecting a retail outlet involves the same process as selecting a brand. … a comparison of
the alternative outlets on the basis of the consumer's evaluative criteria" (1994, p.127). These criteria
involve considerations about image (of both the outlet and shopping area), retail advertising, outlet
location and size. Outlet image, for example, results from a mix of functional and psychological
attributes, arguably applicable to merchandise retail and service retail outlets (Berkman et al 1996).
Included are considerations about merchandise, service, clientele, physical facilities, convenience,
promotion, atmosphere, institutional factors and post-transaction satisfaction (Lindquist 1974-75).
While outlets may attempt to influence these considerations by means of point of purchase displays,
price concessions, outlet layout, etc., this influence is complicated by consumer evaluative criteria
that may vary with customer characteristics (Hawkins et al, 1994). Hence, there is not a single recipe
for outlet choice.
Bringing together models of consumer decision-making, sequential choice theory of evoked sets and
retail outlet selection provides a clearer but still incomplete, understanding of consumer behaviour in
relation to the selection of service providers.
Consumer Evaluation Processes For Services.
The unique characteristics of services determine the need for understanding that consumer evaluation
processes for services are different from those applicable when assessing goods (Zeithaml 1981).
The Fisk Model (1981) addresses this matter by identifying a consumption/evaluation process for
services in three stages: preconsumption, consumption and postconsumption. These three stages are
identified in Figure 1, separated by two broken lines. The pre-consumption stage involves problem
recognition, information search and selection of alternatives, all with influence in the evaluation that
ensues. Information search and alternatives selection involve a circular process of gathering and
evaluating information using some undetermined criteria (e.g. satisfactory performance) that
culminates in a choice. Expectations are formed about the chosen service, marking the transition to
the consumption stage (depicted in Figure 1 by the first broken line). Fisk proposes that service
evaluation follows, or occurs with, purchase and consumption. Perishability then integrates service
disposition with use, the last step in the consumption stage. Overall service evaluation occurs in the
postconsumption stage and takes all preceding evaluations into account. If the result is satisfaction
"the consumer will experience repurchase motivation which feeds back into the preconsumption
stage" (p.192). This corresponds to the 'update evoked set' step in Figure 1. Subsequent research on
the process of the consumption decision and evaluation applicable to services to date has added little
to the representation of the Fisk model, as illustrated by Hoffman and Bateson (1997), Lovelock et al,
(1998) and McGuire (1999).
The Fisk and Hoffman and Bateson 3-step models differ in terminology and in the variable treatment
given to the distinction between purchase and consumption. This is also the case of the 4-step model
proposed by Lovelock et al (1998) which breaks down the consumption stage into 'purchase' and
'consumption'. McGuire (1999, p.90) identifies a consumer decision process "usually seen to involve"
five stages: but there is no real departure from the Hoffman and Bateson model because stages 1 to 3
correspond to the prepurchase stage. On these grounds, the same general process of decision-making
is applicable to product, brand, outlet, service and service provider. However, there is ample support
in the literature for the need to recognise that consumers' decisions are different for services.
Information search, perceived risk, size, composition of the evoked set, adoption of innovation, brand
loyalty, attribution of dissatisfaction and evaluative criteria may lead to evaluation processes for
services unlike those for goods (Zeithaml 1981). Intangibility, heterogeneity and limited information
may increase the consumers' perceived risk in service selection. Perceived risk may be reduced by
relying on word-of-mouth from credible sources, or by opting for home production or self-service.
The offer of fewer brands by individual service suppliers (Hoffman and Bateson 1997) and fewer
information sources will produce fewer alternatives for consumers to consider. The evoked set has
been found to be smaller for services (Davis et al, 1979; Brand and Cronin 1997). Consumers tend to
be loyal because switching providers reestablishes risk and can be costly. The characteristics of
services lead to greater difficulty in assessing quality, satisfaction and, ultimately, establishing
reliable evaluative criteria (Zeithaml 1981). The experiential nature of services, coproduction and the
influence of direct service encounters on service quality evaluation, affect information acquisition
about alternatives and the criteria used by consumers to choose between suppliers and to evaluate
associated benefits (McGuire 1999).
Consumer decisions about service-product and brand are distinct because the brand is the company
rather than the particular service product (McGuire 1999) Service-providers may operate with a single
brand, thus the selection of service-brand and service-provider may involve one and the same
decision. McGuire appears to separate the decisions about service-product and service-provider,
although not the procedure involved in these decisions. A consumer's perception of value associated
with specific service offerings is influenced by expected (unspecified) benefits and associated
perceived costs. How many offerings are considered depends on how many different providers
consumers are aware of, a matter influenced by prior experience, marketing communications,
provider's reputation and word-of-mouth recommendations. Inconclusively, McGuire argues that
consumers use marketing research to identify evaluation criteria for particular services and for
comparing competitors.
Motivation and evaluation criteria can be expected to vary with the stage in the overall decisionmaking process and decision task. Following need recognition, the preconsumption stage may involve
searching for information regarding alternative means to satisfy the need, establishing some decision
criteria to select between available alternatives and deciding which one to pursue. Consumers may
then choose either home production or external acquisition. Preference for the latter may require a
further search for new information about alternative sources and, again, establishing some decision
criteria to select between the available alternatives and deciding which one to pursue. In the
postconsumption stage, the evaluation of quality and satisfaction requires decision criteria that
culminates with a further decision regarding switching goods, brands, retail outlets, services or
service providers the next time the same need arises. All decisions involving information search
internalise other auxiliary decisions regarding what and how much information is necessary and
sufficient, and from where it will be sourced.
One approach to the difficulty of explaining consumer selection of a service provider is to adopt the
five-elements criteria of tangibles, reliability, empathy, assurance and responsiveness originally
identified by Zeithaml et al (1990). Commonly used as criteria for service delivery evaluation during
the consumption and postconsumption stages, there are several other purposes: to determine whether
to switch service provider; to form consumer expectations about service delivery and as an indicator
to take into account during provider selection.
This broader application of the discussed evaluative criteria is useful because, following for example
the expectancy - disconfirmation model, consumers evaluate services by comparing expectations
with perceptions of actual performance (Hoffman and Bateson 1997). It is reasonable to assume that
the criteria used to create expectations be used for subsequent evaluation, a proposition confirmed by
the findings of a study by Keaveney (1995). If perceptions match or exceed expectations the
consumer is satisfied and there may be no motivation for switching service provider.
Conclusion.
Four main points can be drawn. In terms of process, the integrated model (figure 1) is applicable to
the diverse focus of decision-making, with different steps more or less important depending on that
focus. Excluding situational circumstances, the decision to seek new information depends on
consumer knowledge and experience, as well as on the type, complexity and importance of the buying
task, regardless of the focus of the decision. This also applies to which sources are selected.
Consumers' motivation and evaluation criteria can be expected to vary with the stage in the overall
decision-making process and decision task. Models of consumer decision-making process that
implicitly treat product, service, brand, retail outlet, service outlet, and service provider
interchangeably need further refinement and testing, at least in the context of service provider
selection.
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