Download Customer Perception of Service

SM
Chapter 1
INTRODUCTION
TO
SERVICES






Explain what services are and identify service
trends
Explain the need for special services marketing
concepts and practices
Outline the basic differences between goods
and services and the resulting challenges for
service businesses
Introduce the service marketing triangle
Introduce the expanded services marketing mix
Introduce the gaps model of service quality
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
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Services are deeds,processes and performance
Intangible, but may have a tangible component
Generally produced and consumed at the same
time
Need to distinguish between SERVICE and
CUSTOMER SERVICE

Defining and improving quality

Communicating and testing new services



Communicating and maintaining a
consistent image
Motivating and sustaining employee
commitment
Coordinating marketing, operations and
human resource efforts

Setting prices

Standardization versus personalization
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Health Care

hospital, medical practice, dentistry, eye care

accounting, legal, architectural

banking, investment advising, insurance


restaurant, hotel/motel, bed & breakfast,
ski resort, rafting

airlines, travel agencies, theme park

hair styling, pest control, plumbing, lawn maintenance,
counseling services, health club
Professional Services
Financial Services
Hospitality
Travel
Others:
Salt
 Soft Drinks
 Detergents
 Automobiles
 Cosmetics Fast-food
 Outlets

Tangible
Dominant

Fast-food
Outlets
Intangible
Dominant


Advertising
Agencies
Airlines
Investment
Management
Consulting



Teaching
Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability



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Services cannot be inventoried
Services cannot be patented
Services cannot be readily displayed
or communicated
Pricing is difficult

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
Service delivery and customer satisfaction
depend on employee actions
Service quality depends on many
uncontrollable factors
There is no sure knowledge that the service
delivered matches what was planned and
promoted




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Customers participate in and affect the
transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult


It is difficult to synchronize supply and
demand with services
Services cannot be returned or resold
Goods
Services
Resulting Implications
Tangible
Intangible
Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized
Heterogeneous Service delivery and customer satisfaction depend on
employee actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production
separate from
consumption
Simultaneous
production and
consumption
Nonperishable Perishable
Customers participate in and affect the transaction.
Customers affect each other.
Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
It is difficult to synchronize supply and demand with
services.
Services cannot be returned or resold.
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,”
Journal of Marketing 49 (Spring 1985): 33-46.
Company
(Management)
Internal
Marketing
External
Marketing
“enabling the
promise”
Employees
“setting the
promise”
Interactive Marketing
Customers
“delivering the promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
Overall Strategic
Assessment
•
•
Specific Service
Implementation
How is the
service
organization
doing on all
three sides of the
triangle?
•
What is being
promoted and by
whom?
•
How will it be
delivered and by
whom?
Where are the
weaknesses?
•
Are the supporting
systems in place to
deliver the promised
Figure 1-6
The Services Triangle
and Technology
Company
Technology
Providers
Source: Adapted from A. Parasuraman
Customers

Traditional Marketing Mix

Expanded Mix for Services: 7 Ps

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Building Customer Relationships Through
People, Processes, and Physical Evidence
Ways to Use the 7 Ps

All elements within the control of the firm
that communicate the firm’s capabilities and
image to customers or that influence customer
satisfaction with the firm’s product and
services:
 Product
 Price
 Place
 Promotion
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Product
Price
Place
Promotion
People
Process
Physical Evidence
PRODUCT
PLACE
PROMOTION PRICE
Physical good Channel type
features
Promotion
blend
Flexibility
Quality level
Exposure
Salespeople
Price level
Accessories
Intermediaries Advertising
Terms
Packaging
Differentiation
Warranties
Outlet location Sales
promotion
Transportation Publicity
Product lines
Storage
Branding
Allowances
PEOPLE
PHYSICAL
EVIDENCE
PROCESS
Employees
Facility design
Flow of activities
Customers
Equipment
Number of steps
Communicating
culture and values
Signage
Level of customer
involvement
Employee research
Employee dress
Other tangibles
Overall Strategic
Assessment



How effective is a
firm’s services
marketing mix?
Is the mix wellaligned with overall
vision and strategy?
What are the strengths
and weaknesses in
terms of the 7 Ps?
Specific Service
Implementation



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Who is the customer?
What is the service?
How effectively does
the services marketing
mix for a service
communicate its
benefits and quality?
What
changes/improvements
are needed?


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Focus on a service organization. In the
context you are focusing on, who occupies
each of the three points of the triangle?
How is each type of marketing being carried
out currently?
Are the three sides of the triangle well
aligned?
Are there specific challenges or barriers in
any of the three areas?
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SM
Part 1
FOCUS ON THE CUSTOMER
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Gaps Model of Service Quality
Expected
CUSTOMER
Service
Customer
Gap
Service Delivery
COMPANY
GAP 1
Perceived
Service
GAP 3
Customer-Driven Service
Designs and Standards
GAP 2
Part 1 Opener
Company Perceptions of
Consumer Expectations
GAP 4
External
Communications
to Customers
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SM
Part 1 Opener
Gaps Model of Service
Quality
• Customer Gap:
• difference between expectations and
perceptions
• Provider Gap 1:
• not knowing what customers expect
• Provider Gap 2:
• not having the right service designs and
standards
• Provider Gap 3:
• not delivering to service standards
• Provider Gap 4:
• not matching performance to promises
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SM
The Customer Gap
Expected
Service
GAP
Perceived
Service
Part 1 Opener
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SM
Chapter 2
CONSUMER BEHAVIOR
IN SERVICES
SM
Objectives for Chapter 2:
Consumer Behavior in
Services
• Overview the generic differences in consumer behavior
between services and goods
• Introduce the aspects of consumer behavior that a
marketer must understand in five categories of consumer
behavior:
• Information search
• Evaluation of service alternatives
• Service purchase and consumption
• Postpurchase evaluation
• Role of culture
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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
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SM
Figure 2-1
Continuum of Evaluation for
Different Types of Products
Most
Goods
Easy to evaluate
Most
Services
Difficult to evaluate
High in search
qualities
High in experience High in credence
qualities
qualities
Figure 2-2
SM
Categories in Consumer
Decision-Making and Evaluation of
Services
Information
Search
 Use of personal sources
 Perceived risk
Purchase and
Consumption
 Service provision as drama
 Service roles and scripts
 Compatibility of customers
Evaluation of
Alternatives
 Evoked set
 Emotion and mood
Post-Purchase
Evaluation
 Attribution of dissatisfaction
 Innovation diffusion
 Brand loyalty
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Figure 2-3
SM
Categories in Consumer DecisionMaking and Evaluation of Services
Information
Search
Evaluation of
Alternatives
 Evoked set
 Emotion and mood
 Use of personal sources
 Perceived risk
Culture
 Values and attitudes
 Manners and customs
 Material culture
 Aesthetics
 Educational and social
institutions
Purchase and
Consumption
 Service provision as
drama
 Service roles and scripts
 Compatibility of customers
Post-Purchase
Evaluation
 Attribution of dissatisfaction
 Innovation diffusion
 Brand loyalty
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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
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SM
Perceived Risk
• More risk would appear to be involved with
purchase of services (no guarantees)
• Many services so specialised 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, standardisation of offerings
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SM
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
40
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
41
SM
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.
SM
Global Feature:
Differences in the Service
Experience in the U.S. and Japan

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

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
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Authenticity
Caring
Control Courtesy
Formality
Friendliness
Personalization
Promptness
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SM
Chapter 3
CUSTOMER
EXPECTATIONS OF
SERVICES
Contact: +923006641921
Usman Waheed
SM
Objectives for Chapter 3:
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
• Acknowledge that expectations are similar for many
different types of customers
• Delineate the most important current issues surrounding
customer expectations
Contact: +923006641921
Usman Waheed
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SM
DEFINITIONS
• 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?
Contact: +923006641921
Usman Waheed
46
SM
Figure 3-1
Dual Customer
Expectation Levels
(Two levels of expectations)
Desired Service
Zone of
Tolerance
Adequate Service
Contact: +923006641921
Usman Waheed
47
SM
Figure 3-2
The Zone of Tolerance
Desired Service
Zone of
Tolerance
Adequate Service
Contact: +923006641921
Usman Waheed
48
Figure 3-3
SM
Zones of Tolerance VARY for
Different Service Dimensions
Desired Service
Level
of
Expectation
Zone of
Tolerance
Desired
Desired Service
Service
Adequate Service
Zone
of
Tolerance
Adequate
Adequate
Service
Service
Most Important Factors
Least Important Factors
Source: Berry, Parasuraman, and Zeithaml (1993)
Contact: +923006641921
Usman Waheed
49
Figure 3-5
Factors that Influence
Desired Service
SM
Enduring Service
Intensifiers
Desired
Service
Personal Needs
Zone
of
Tolerance
Adequate
Service
Contact: +923006641921
Usman Waheed
50
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
Contact: +923006641921
Usman Waheed
51
Figure 3-6
SM
Factors that Influence
Adequate Service
Transitory Service
Intensifiers
Perceived Service
Alternatives
Self-Perceived
Service Role
Desired
Service
Zone
of
Tolerance
Adequate
Service
Situational
Factors
Contact: +923006641921
Usman Waheed
52
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
Contact: +923006641921
Usman Waheed
Figure 3-7
SM
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Factors that Influence
Desired and Predicted Service
Explicit Service
Promises
Implicit Service
Promises
Word-of-Mouth
Desired
Service
Zone
of
Tolerance
Adequate
Service
Contact: +923006641921
Past Experience
Predicted
Service
Usman Waheed
54
SM
Chapter 4
CUSTOMER
PERCEPTIONS OF
SERVICE
SM
Objectives for Chapter 4:
Customer Perceptions of
Service
• Provide you with definitions and
understanding of customer satisfaction and
service quality
• Show that service encounters or the
“moments of truth” are the building blocks of
customer perceptions
• Highlight strategies for managing customer
perceptions of service
55
SM
Objectives for Chapter 4:
Customer Perceptions of
Service
• Perception is what a customer thinks about a
service
• Expectation is what a customer desires from
a service
• Meeting customer expectations is not enough
to retain customers
• Good perception means service has surpassed
expectations
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SM
Objectives for Chapter 4:
Customer Expectation of
Service
• Good quality
• Good price
• Meets goals
• Satisfies customer
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Objectives for Chapter 4:
Positive Expectation of
Service
• Customer buys a specific model of sony TV
from a retail store
• Price offered is very competitive
• TV is offered with manufacture warranty
• Customer is very happy with the TV
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SM
Objectives for Chapter 4:
Customer Perception of
Service
• How easy
• How reliable
• How efficient
• How fast
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Objectives for Chapter 4:
Positive Expectation of
Service
• Customer visits a showroom with a vast
display of all sony models
• Knowledgeable salesman explains every sony
model in great detail
• Customer makes a decision after seeing the
reception quality of each model
• Customer is offered a price that matches the
price offered by any other retailer
• TV delivered the same day
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Why is perception
important?
• In today’s globalising economy competition
is getting more and more fierce
• customer behaviour has become more hybrid
and unpredictable
• Todays customer is much better informed and
has greater expectations
• it becomes ever more difficult to differentiate
a product or service by traditional categories
like price, quality, functionality etc
SM
•
•
•
•
Objectives for Chapter 4:
Customer Perceptions of
Service
Why is Café Coffee day so successful?
Why is tata the most admired company?
What makes Orkut so popular?
Why is IIM more famous compared to
XLRI?
• Why is Indian railways the most preferred
mode of travel?
• Why do people prefer to go to family doctors
instead of hospitals?
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Figure 4-1
Customer Perceptions of
Service Quality and
Customer Satisfaction
SM
Reliability
Responsiveness
Service
Quality
Situational
Factors
Assurance
Empathy
Tangibles
Product
Quality
Price
Customer
Satisfaction
Personal
Factors
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Customer Perceptions
 Perceptions can be
 built
 Enhanced
 Changed
 Managed
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Customer Perceptions
 Dell has successfully built an positive
perception
 Starbucks enhanced customer perception
by enriching the coffee experience
 Netflix changed the dvd rental perception
through technology
 Amazon has managed service perception
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SM
Building Perceptions
 Typically early in the lifecycle when
customers are not aware of service
 there are few competitors
 determine customer need which shapes
customer perception of service
 continuously build perception to match
changing needs
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Enhancing Perceptions
 Typically in a mature market where
potential for differentiation is high eg., hotels
 there are many competitors
 determine customer segment and enhance
perceptions according to their needs
 Perceptions need to be enhanced in
commoditized markets
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Changing Perceptions
 Markets where the needs havent been
fully understood
 there are few competitors
 determine needs and change existing
perceptions according to their needs
 Perceptions can also change due to
disruptive technologies
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Manage Perceptions
 Maintain positive perception
 Regularly enhance or change perception
depending on target segment
 Keep operations and marketing
synchronized
 Amazon does this successfully
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Positioning
Building
Perception
Execution/Ope
rations
Validate
Perception
Word of
Mouth
Enhance
Perception
Customer
Feedback
Change
Perception
Service
Marketing
Manage
Perception
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SM
Information Search
 Initial perception is built based on
Marketing collateral
Recommendation from happy customers
Friends and relatives
Positioning
Advertising
Websites (very important for services with credence qualities)
Employees
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Service Encounter
 Initial perception is validated during service encounter
Does the service execution meet the initial perception
Was the customer satisfied, happy or delighted?
Will the customer choose the service over competitors ?
If customer perception was not met why?
Was the marketing message consistent?
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SM
Enhance perception
through Viral Marketing
Will customers be loyal to you?
Would they recommend your service to others?
What is unique about your service ?
Can you charge a premium over competitors?
Can you deliver consistently?
Can you handle a larger customer base?
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SM
Customer Issues
Was there a disconnect between initial perception and customer
experience?
How many customers felt service was didn’t match initial perception
Could the service have been performed better to meet perception?
Are their resources to execute the service in a better way?
Will this work for all target customers? If not can the service deliver to
customers who have different perceptions?
Change marketing message and improve operations
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SM
•
•
•
•
Factors Influencing
Customer Perception
Product/service quality
Product/service attributes or features
Consumer Emotions
Attributions for product/service success or
failure
• Equity or fairness evaluations
SM
Outcomes of
Positive Customer
Perception
• Increased customer retention
• Positive word-of-mouth communications
• Increased revenues
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Figure 4-3
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Relationship between Customer
Satisfaction and Loyalty in
Competitive Industries
SM
Loyalty (retention)
100%
+ve perception
80%
60%
40%
20%
0%
-ve
perceptio
n
Very
dissatisfied
Dissatisfied
Neither
satisfied nor
dissatisfied
Satisfied
Very
satisfied
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.
78
SM
Service Perception
• 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.
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SM
Reliability
The Five Dimensions of
Customer Perception
Ability to perform the promised
service dependably and accurately.
Knowledge and courtesy of
Assurance
employees and their ability to
convey trust and confidence.
Physical facilities, equipment, and
Tangibles
appearance of personnel.
Caring, individualized attention the
Empathy
firm provides its customers.
Responsiveness Willingness to help customers and
provide prompt service.
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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:
SM
Attributes
ASSURANCE


RELIABILITY
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Providing service as promised
Dependability in handling customers’
service problems
Performing services right the first time
Providing services at the promised time
Maintaining error-free records

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



Keeping customers informed as to
when services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customers’
requests
Employees who instill confidence in
customers
Making customers feel safe in their
transactions
Employees who are consistently courteous
Employees who have the knowledge to
answer customer questions
EMPATHY



RESPONSIVENESS
81


Giving customers individual attention
Employees who deal with customers in a
caring fashion
Having the customer’s best interest at heart
Employees who understand the needs of
their customers
Convenient business hours
TANGIBLES




Modern equipment
Visually appealing facilities
Employees who have a neat,
professional appearance
Visually appealing materials
associated with the service
82
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
– increase loyalty
83
SM
Encounter Design
• Encounters need to be designed around service
positioning
• Encounters serve the purpose of automation,
customization and personalization
• They should convey a positive perception of
customer relationship management
• Every service typically is a combination of
remote, phone and physical encounters
84
SM
•
•
•
•
•
•
•
•
•
•
•
•
•
Service Encounter design
What are the service steps
Search qualities, experience qualities or credence qualities?
Any processes , policies that the service adheres to
How many segments does the service address
What is the frequency of customer interactions
Does the service operate across geographies
What kind of infrastructure exists
How different are customer and segment requirements
What kind of service is this (commodity or premium)
How price sensitive is the market
What is the pricing structure (fixed/variable)
How fast is the market for the service changing
Is inventory being stocked
85
SM
Service Design
Reliability
Empathy
Position
Perception
Tangible
Assurance
Responsive
Service
Script /
Design
Service
Execution
86
SM
Ginger Hotels
Tata Brand
Training
Economic
Hotels
Simple
Modern
Informal
Neat and modern
decor
Reviews
Professional Staff
Service
Design
Service
Execution
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Service Design
Service Reviews
Customized
Offbeat
Kodai
Vacations
Enjoyable
Insightful
Adventure
Site photos
Website blogs
Guides
Service
Design
Service
Execution
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SM
Service Design
Accuracy of
reports/Diagnosis
Personal Attention
MultiSpeciality
Hospital
Exclusive
&
Expensive
Ambience &
Equipment
Skilled Doctors
Professional Staff
Service
Design
Service
Execution