CONSUMER BEHAVIOUR IN SERVICES

Search, Experience and Credence property, consumer expectation of services, two levels
of expectation, Zone of tolerance, Factors influencing customer expectation of services.
Customer perception of services-Factors that influence customer perception of service, Service
encounters, Customer satisfaction, Strategies for influencing customer perception.

Search, Experience and Credence property of services

From a marketing perspective, products and services can be separated into three useful
classes: search products, experience products, and credence products.

 Search products or services have attributes customers can readily evaluate before
they purchase. A hotel room price, an airline schedule, television reception, and
the quality of a home entertainment system can all be evaluated before a purchase
is made. Well-informed buyers are aware of the substitutes that exist for these
types of products and thus are likely to be more price sensitive than other buyers,
unless there exists some brand reputation or customer loyalty. This sensitivity, in
turn, induces sellers to copy the most popular features and benefits of these types
of products. Price sensitivity is high with respect to products with many
substitutes, and since most buyers are aware of their alternatives, prices are held
within a competitive band.

 Experience products or services can be evaluated only after purchase, such as

dinner in a new restaurant, a concert or theatre performance, a new movie, or a
hairstyle. The customer cannot pass judgment on value until after he or she has
experienced the service. These types of products tend to be more differentiated
than search products, and buyers tend to be fewer prices sensitive, especially if it
is their first purchase of said product. However, since they will form an
opinion after the experience, if it is not favourable, no amount of differentiation
will bring them back. Product brand and reputation play an important role in
experience products, due to consistency of quality and loyalty. For instance, when
customers travel, so does brand reputation, as with airlines, hotels, rental cars, and
so forth.

 Credence products or services have attributes buyers cannot confidently evaluate,

even after one or more purchases. Thus, buyers tend to rely on the reputation of
the brand name, testimonials from someone they know or respect, service quality,
and price. Credence products and services include health care; legal, accounting,
advertising, consulting, and IT services; baldness cures; pension, financial, and
funeral services; and even pet food (since you have to infer if your pet likes it or
not). Credence services are more likely than other types to be customized, making
them difficult to compare to other offerings. Because there are fewer substitutes to
a customized service and there is more risk in purchasing these types of services,
price sensitivity tends to be relatively low — that is, the majority of customers
purchasing credence services are relatively price insensitive compared to search
or credence goods.
Consumer Expectation of Services
Customer expectations are beliefs about service delivery that function as standards or
reference points against which performance is judged
For successful service marketing the following aspects of expectations need to be
explored and understand.
 What types of expectation standards do customers hold about services?
 What factors most influence the formation of these expectations?
 What role these factors play in changing expectations?
 How can a service company meet or exceed customer expectations?

Two Levels of Expectation

Zone of Tolerance

It seems that customers have two levels of expectation:

 Adequate - what they find acceptable
 Desired -what they hope to receive.

The distance between the adequate and the desired levels is known as the 'zone of tolerance'

 The zone of tolerance is usually defined as the range of customer perceptions of a service
between desired and minimum acceptable standards ( Zeithaml, Berry, and Parasuraman,
1993 ).
 In essence it is the range of service performance that a customer considers satisfactory.
Performance below the zone is seen as dissatisfying and performance above the zone is
seen as delighting.
 The importance of this zone of tolerance is that customers may accept variation within a
range of performance, and any increase or decrease in performance within this area will
only have a marginal effect on perceptions. Only when performance moves outside this
range will it have any real effect on perceived service quality.
 If a customer's zone of tolerance is narrow, then he or she may be highly sensitive to the
service experience, with a greater likelihood of dissatisfying or delighting outcomes.
Conversely, if a customer has a wide zone of tolerance, then he or she may be much less
sensitive to the service experience, thus increasing the likelihood of a satisfactory or
acceptable outcome. The width of the zone of tolerance may vary from customer to
customer and from situation to situation.
Factors Influencing Customer Expectation of Services

a) Personal needs:
Those states or conditions essential to the physical or psychological well-being of the
customer are pivotal factors that shape what we desire in service. It can include physical, social,
psychological and functional needs.

b) Enduring service intensifiers:

They are individual, stable factors that lead the customer to a heightened sensitivity to
service. Enduring intensifier is personal service philosophy-i.e. the customer‗s underlying
generic attitude about the meaning of service and the conduct of service providers

Sources of Adequate service Expectations:

These factors are short term and fluctuate more than the factors that influence desired
service
 Transitory Service intensifiers: They are temporary, usually short term, individual
factors that make a customer more aware of the need for the need for service
 Perceived service Alternative: They are other providers from whom the customer can
obtain service. The customer‗s perception that service alternatives exist raises the level
of adequate service and narrow the zone of tolerance.
 Self-perceived service role: it is the perception of the degree to which customers exert
an influence on the level of service they receive i.e. how well they believe they are
performing their own roles in service delivery
 Situational Factors: Service performance conditions that customers view as beyond the
control of the service provider, in general situational factors temporarily lower the level
of adequate service, widening the ZOT
 Predicted service: the level of service customers believe they are likely to get. It is
typically an estimate of the service a customer will receive in an individual transaction
rather than in the overall relationship with a service provider.
Customer Perception of Services
Customer perception refers to the process by which a customer selects, organizes, and
interprets information/stimuli inputs to create a meaningful picture of the brand or the product. It
is a three stage process that translates raw stimuli into meaningful information.

Factors that Influence Customer Perception of Service

 Price
Price has a complex effect on consumer perception. On the one hand, consumers appreciate a
bargain and are often likely to favour an economically-priced item. On the other, consumers
often perceive very inexpensive items as cheap and discard able, ultimately damaging a
consumer's view of a product even if the product remains the same and the consumer is benefited
from a price reduction. Especially sophisticated or skeptical consumers are even prone to distrust
a product that is considerably cheaper than the alternatives. As a result, price should be part of a
comprehensive marketing plan, where even inexpensive products are depicted as favourable
alternatives with similar levels of quality to the competition, with a price that is somewhat lower
but still comparable with other possibilities.

 Evidence of service
Of course, the actual quality of a product is a vital part of a consumer's perception of a good
or service. Quality can describe any attribute in a set of characteristics that satisfy or disappoint a
consumer, including usability, reliability and durability. Marketing can influence a consumer's
perception of quality, but, in the end, and particularly with non-durable goods, a consumer's
actual experience with a product will determine his perception of quality. Outside the realm of
mass communication, word of mouth regarding quality also travels very quickly.

 Service encounters
Even in the case of goods that exhibit numerous flaws, excellent service quality can often
overshadow a negative experience with the product itself. If a consumer feels that he receives
exceptional attention when encountering a problem with a product, that consumer is somewhat
more likely to trust the brand or product knowing that the manufacturer or retailer provides a
prompt and effective response to problems. Humans are social animals and their consumer
behavior is often determined by the social relationships that surround a product, including
interactions with customer service representatives.

 Image
A product's reputation is built up over time and is usually a combination of actual experience
with the product, word-of-mouth recommendations and marketing campaigns that attempt to
establish a status or shared view of the product or brand. A consumer's perception of a product's
reputation, moreover, is not only determined by the product's brand identity and manufacturer
but by the whole chain of distribution. Even if a consumer trusts a product's manufacturer, for
example, that consumer may change his mind about the product upon seeing it available in a
retailer he associates with cheap, defective products.

Service Encounters
Service encounters are transactional interactions in which one person (e.g., a vendor,
office clerk, and travel agent) provides a service or good (e.g., a product, an appointment, airline
tickets) to another person.
 It is the from the service encounters that build their perceptions service encounters or
―moments of Truth‖. The most vivid impression of service occurs in the service encounters or
moment of truth when the customer interacts with the service firm

Types of service encounters

1) Remote Encounters
2) Phone Encounters
3) Face-To Face Encounters

1) Remote Encounters:
There is no direct human contact e.g. ATM, mail order, internet website etc. here the
tangible evidence of the service and the quality of the technical process and systems become the
primary bases for judging quality. Such encounters provide the firm an opportunity to reinforce
or establish quality perception in the customer

2) Phone Encounters
Almost all firms rely on phone encounters in the forms of customer service, general
inquiry or order taking functions. The judgment of quality is based on variability in the
interaction. Tone of voice, employee knowledge, and effectiveness/efficiency in handling
customer issues become important criteria for judging quality

3) Face-to-Face Encounters
It occurs between customer and salespeople, delivery personnel, maintenance rep,
professional consultant etc determining and understanding service quality issues in face to face
context is the most complex of all. Both verbal and nonverbal behaviors are important
determinants of quality, as are tangible cues such as employees dress and other symbols of
service like equipment, broachers, physical setting etc. in such customer, the customer also plays
a role in creating quality service for herself through her own behavior during interaction

Five dimensions of service quality (SERVQUAL)

  Tangibility - Since services are tangible, customers derive their perception of service
quality by comparing the tangible associated with these services provided. It is the
appearance of the physical facilities, equipment, personnel and communication materials.
In this survey, on the questionnaire designed, the customers respond to the questions
about the physical layout and the facilities that FFR offers to its customers.

 Reliability - It is the ability to perform the promised service dependably and accurately.
Reliability means that the company delivers on its promises-promises about delivery,
service provision, problem resolutions and pricing. Customers want to do business with
companies that keep their promises, particularly their promises about the service
outcomes and core service attributes. All companies need to be aware of customer
expectation of reliability. Firms that do not provide the core service that customers think
they are buying fail their customers in the most direct way.

 Responsiveness - It is the willingness to help customers and provide prompt service. This
dimension emphasizes attentiveness and promptness in dealing with customer's requests,
questions, complaints and problems. Responsiveness is communicated to customers by
length of time they have to wait for assistance, answers to questions or attention to
problems. Responsiveness also captures the notion of flexibility and ability to customize
the service to customer needs.

 Assurance - It means to inspire trust and confidence. Assurance is defined as employees'

knowledge of courtesy and the ability of the firm and its employees to inspire trust and
confidence. This dimension is likely to be particularly important for the services that the
customers perceives as involving high rising and/or about which they feel uncertain about
the ability to evaluate. Trust and confidence may be embodied in the person who links the
customer to the company, for example, the marketing department. Thus, employees are
aware of the importance to create trust and confidence from the customers to gain
competitive advantage and for customers' loyalty.

 Empathy - It means to provide caring individualized attention the firm provide its
customers. In some countries, it is essential to provide individual attention to show to the
customer that the company does best to satisfy his needs. Empathy is an additional plus
that the trust and confidence of the customers and at the same time increase the loyalty.
In this competitive world, the customer's requirements are rising day after day and it is
the companies' duties to their maximum to meet the demands of customers, else
customers who do not receive individual attention will search elsewhere.

Customer Satisfaction
Satisfaction is the customer‗s fulfillment response. It is a judgment that a product or
service feature, or the product or service itself, provides a pleasurable level of consumption
related fulfillment
 Satisfaction can be viewed as contentment, pleasure, delight. or even relief.
 Satisfaction is a dynamic , moving target that may evolve over time, influenced by a
variety of factors
 Strategies for Influencing Customer Perception

We have just seen the factors responsible for influencing the

perception of customers. Now we will see the strategies that need to be
developed, with the help of the above factors by managing them:
1. Enhance Customer Satisfaction thro‘ Service Encounters: The service
Firms should
train & educate their service personnel for positive service encounters, with respect
to:
a. Recovery – by planning for effective recovery,
b. Adoptability – by facilitating adaptability and flexibility,
c. Spontaneity – by encouraging spontaneity,
d. Coping – by helping employees cope with problem customers,
e. The five dimensions of service quality – by managing the
dimensions of quality at the encounter level and relating every
encounter to one of the dimensions.

2. Reflect Evidence of Service: The evidence of service – people,

process, physical evidence – discussed earlier provides a framework for
planning the marketing strategies that address the expanded marketing mix
elements (4Ps to 7Ps). These new elements or a subset of them cover
essentially tangibles the service for the customer and thus represent
important means for creating positive perceptions. Because of their
importance the new elements need to be treated as strategic marketing
variables, as are the product, price, place, promotions, and the traditional
mix elements.

3. Communicate & create a Realistic Image: Not only promises are

made; they must be kept, thereby enhancing the image, reputation of a
service organisation. By this a positive word- of-mouth can be created and
spread.

4. Enhance Customer Perception of Quality & Value thro‘ pricing:

Similarly the pricing
is also very critical & customers must feel that the service is worth the price they pay for