Chapter 2 Customer Behaviour in Service Encounters Copyright

Chapter 2 Customer Behaviour in Service Encounters Copyright

Chapter 2 Customer Behaviour in Service Encounters Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 1 A Framework for Developing Effective Service Marketing Strategies Understanding Customer Needs, Decision Making, and Behaviour in Service Encounters Chapter 2 Building the Service Model

Part II: Chapters 3-7 Managing the Customer Interface Part III: Chapters 8-11 Implementing Profitable Service Strategies Part IV: Chapters 12-15 Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 2 A Framework for Developing Effective Service Marketing Strategies Two Key Themes in Part I of the Services Marketing Strategy Framework: Differences among Services Affect Customer Behaviour Three-Stage Model of Service Consumption

Prepurchase Stage: Search, evaluation of alternatives, decision Service Encounter Stage: Role in high-contact vs. low-contact delivery Post-Encounter Stage: Evaluation against expectations, future intentions Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 3 Learning Objectives Chapter 2 Deliver satisfied customers by understanding the

impact of the Nature of The Service Act Determine the service management challenges of the 4 categories of the service act Better manage service encounters by understanding service consumption, expectations and perceived risks Examine the 6 key elements of the all important customer service encounter Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 4 How Differences among Services Affect Customer Behaviour Copyright 2008 Pearson Education Canada

Services Marketing, Canadian Edition Chapter 2- 5 Differences among Services Affect Customer Behaviour Consumers often involved in service production and may have preferences for service delivery Service marketers need to understand how customers interact with service operations Based on differences in nature of service act (tangible/intangible) and who or what is direct recipient of service (people/possessions), there are four categories of services: People processing Possession processing Mental stimulus processing

Information processing Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 6 Four Categories of Services (Fig 2.1) Who or What Is the Direct Recipient of the Service? Nature of the Service Act Tangible Actions Intangible Actions People People processing

Possession processing (services directed at peoples bodies): (services directed at physical possessions): Barbers Health care Mental stimulus processing (services directed at peoples minds):

Copyright 2008 Pearson Education Canada Possessions Education Advertising/PR Services Marketing, Canadian Edition Refueling Disposal/recycling Information processing (services directed at intangible assets):

Accounting Banking Chapter 2- 7 Four Categories Of Services People Processing Customers must: Physically enter the service factory Co-operate actively with the service operation Managers should think about process and output from customers perspective To identify benefits created and non-financial costs: Time, mental, physical effort

Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 8 Possession Processing Possession Processing Customers are less physically involved compared to people processing services Involvement is limited Production and consumption are separable Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 9

Mental Stimulus Processing Mental Stimulus Processing Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers Physical presence of recipients not required Core content of services is information-based Can be inventoried Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 10 Information Processing

Information Processing Information is the most intangible form of service output But may be transformed into enduring forms of service output Line between information processing and mental stimulus processing may be blurred. Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 11 Customer Decision Making: Three-Stage Model of Service Consumption

Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 12 The Purchase Process for Services Prepurchase Stage Service Encounter Stage Post-Encounter Stage Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 13

Prepurchase Stage Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 14 Prepurchase Stage: Overview Prepurchase Stage Customers seek solutions to aroused needs Evaluating a service may be difficult Uncertainty about outcomes increases perceived risk Service Encounter

Stage What risk reduction strategies can service suppliers develop? Understanding customers service expectations Components of customer expectations Post-Encounter Stage Copyright 2008 Pearson Education Canada Making a service purchase decision Services Marketing, Canadian Edition Chapter 2- 15 Service Encounter Stage

Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 16 Service Encounter Stage: Overview Prepurchase Stage Service encounters range from high- to low-contact Understanding the servuction system Service marketing systems: highcontact and low-contact Service Encounter Stage Role and script theories

Theatre as a metaphor for service delivery: An integrative perspective Post-Encounter Stage Copyright 2008 Pearson Education Canada Implications for customer participation in service creation and delivery Services Marketing, Canadian Edition Chapter 2- 17 High Versus Low Contact Services Service marketers must manage the ways customers encounter the service organization Each element they encounter must be consistent or the organizations credibility is weakened

High contact services present marketing challenges More contact points, more moments of truth Requires consistent messaging at each contact point Low contact services have less contact points with higher importance Customer more reliant on the contact point chosen Importance of self service technology (SST) that works Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 18 The Servuction System = Service + Production Service Operations (front stage and backstage) Where inputs are processed and service elements created Includes facilities, equipment, and personnel Service Delivery (front stage)

Where final assembly of service elements takes place and service is delivered and visible to customers Includes customer interactions with operations and other customers Service Marketing (front stage) Visible part of service operations, service delivery and other contact points Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 19 Post-Encounter Stage Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition

Chapter 2- 20 Post-Encounter Stage: Overview Prepurchase Stage Service Encounter Stage Evaluation of service performance Future intentions Post-Encounter Stage

Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 21 Customer Satisfaction Is Central to the Marketing Concept Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions Customers have expectations prior to consumption, observe service performance, compare it to expectations Satisfaction judgments are based on this comparison Positive disconfirmation if better than expected Confirmation if same as expected Negative disconfirmation if worse than expected Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and situational factors Research shows links between customer satisfaction and a

firms financial performance Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 2- 22 Summary Chapter 2 People, Possession, Mental Stimulus and Information processing are the 4 Categories of Services Services can be difficult to evaluate and customers will use search, experience and credence attributes to do so Service marketers need to manage at least 6 key variables during the service encounter stage Long term customer relationships are built on satisfying customer expectations Copyright 2008 Pearson Education Canada Services Marketing, Canadian Edition

Chapter 2- 23

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