Customer

Behaviour in
Services
Sessions4-6

Module II Details:
4.

Search, Experience,
ZBGP/ Ch.1, Pp. 24and Credence
25
Properties
Consumer Choice
Consumer Experience
Post-experience
evaluation

5.

Customer Expectations
of Service
- Level of Expectations
- Zone of Tolerance

6.

Customer
Perceptions
Customer
Satisfaction
Service Encounters,
Moments of Truth

1. To describe
how consumers
judge market
offerings based
on search,
experience and
credence
attributes
2. To outline the
consumer
decision process
in services
LO1 & 2
ZBGP/ Ch.4, Pp. 59- To recognize that
71
customers hold
Case: Home
different types of
Solutions (India)
expectations from
Limited Kitchen
services
Section
LO1&2
ZBGP/ Ch.5, Pp. 84- To associate the
109
factors influencing
customer perceptions
and satisfaction
towards services
LO 1 & 2

Search Properties: Most goods are easy for

customers to evaluate before purchase

Experience Properties: Many services can be

evaluated only on actually experiencing them
they cannot be evaluated before purchase

Inability to evaluate services unless one

actually experiences them Perceived risks

Credence
Properties:
Some services
cannot be
evaluated even
during/after the
service
experience
Even higher
Perceived Risks
Other
examples?
Financial
services ;
consultancy;
car repairs, oil

Most products & services are on a

continuum
Higher on
Credence
properties:
More difficult
to evaluate

Higher on
Experience
Properties:
difficult to
evaluate

Higher on
Search
properties:
Easier to
evaluate

Think & Discuss: [in teams]-two points

1. What characteristics can be said to
generally apply to services with credence
properties vis--vis services with
experience properties?

Learning By Drawing Inferences

Services High on
Services with
Credence Properties
Experience properties
Examples of services which
cannot be evaluated /judged
with accuracy and certainty
even after /experiencing them
purchasing them :

Examples of services which

can be evaluated only on
experiencing/purchasing them:
not before:
X, Y, Z

A, B, C

What commonalities do you find among A, B, C &

among X, Y & Z
How do services-A,B & C differ from X, Y, Z
General Characteristics of General characteristics of
Credence services
Experience services

Services with Credence

Properties
Examples : Financial advice,
Car repairs, Business
consultancy, Health care

Services with
Experience properties
Examples Hotels, restaurants,
travel

Comparison & contrasts between the two

General Characteristics of
Credence services

General characteristics of
Experience services

1. Greater intangibility

1. Tangible cues present.

2. Final service outcome may

take longer to be evident

2. Evaluation possible during

/after experience

3. Customer presence may not

always be required during
service delivery

3. Customer presence essential

4. Higher levels of skills &

4. Not so: customer can make
knowledge which not present
reasonably accurate
with customer
evaluation

2. Where would you place Home Solutions

Kitchen Section services on the easy to
evaluate-difficult to evaluate continuum?
Why? What managerial implications? Do
you think Home Solutions Kitchen
Section is addressing this issue? How?

Pre-Purchase

The decision making process

or How does customer make her choice in services

Pre-purchase Stage:
i.
Problem Awareness /Awareness of Need
ii. Information Search
iii. Evaluation of alternatives
iv. Making a purchase decision

Awareness of Need
: the need may be triggered by:
i. Unconscious minds (personal identity and aspirations)
ii. Physical conditions (hunger; health)
iii. External sources (a service firms marketing

activities) : e.g.: most new on demand services :

Think & Discuss: [teams]

Case : How is need triggered in
the mind of Mr. Raj Dogra?

Information Search:
Several alternatives come to mind which
are considered for satisfying the need
ii. Evoked Set may be derived from past
experience or external sources such as
advertising
,
retail
displays,
recommendations, service personnel.
iii. In services, personal sources of information
play a higher role in Information search
i.

Evaluating Alternatives
Services are high on Experience & Credence

properties
Difficult to evaluate before purchase
Greater the difficulty in evaluating , higher is
the perceived risk

Perceived Risk
Types of Risks:
i. Functional: Will this credit card be accepted wherever I go?
ii. Financial: Could my identity be stolen if I purchase online?
iii. Temporal (wasting time, consequences of delay): Will the

service at this restaurant be so slow that I get late in reaching

my hostel room and doing the Reading for Services Marketing?
iv. Physical (personal injury or damage to possessions): Will I get
hurt in this Giant Wheel ?
v. Psychological (personal fears and emotions): How can I be
sure this aircraft will not crash?
vi. Social (how will others think of me?): Will my guests like the
restaurant that I have chosen?
vii. Sensory (Unwanted effects on any of the senses): Will my
room in this hotel be clean and smell good?
Think & Discuss [teams]:
. What Perceived Risks does Mrs. Dogra face?

Customer Expectations
A major part that affects customer choice,

experience and post experience behaviour in

services.
Customer Expectation in services are more

complex and not as stable as in the case of

products
Discuss this in detail in Session 2

Customer Experience : shapes

Customer Perception Customer
Satisfaction
All services are experiences
The service experience itself often becomes an

important part of the evaluation process

the experience is the marketing
Depending on the experience, customer will decide
whether to go back to the same service provider
next time; whether to spread positive WOM
Service providers need to create positive and
memorable experiences
Service Encounter: building block of the customer
s service experience: Moment of Truth

End of Session 1, Module II [Session 4, Course

Outline]

Session 2, Module II: Customer

expectations in Services

Understanding Customer Expectations In

Services:
Beliefs about service delivery that serve as standards

or reference points against which performance is

judged
Customers judge service quality by comparing their

perceptions of the performance of service with these

expectations
Dangers of high expectations & low expectations
Understanding & Managing customer expectations

critical in designing and delivering quality service

Customer expectations in services are more complex

6 different restaurants: 6 different

expectations: A small exercise on
understanding Customer
Expectations Customer Choice
Look at the pictures of Restaurants that shall

be shown to you.
As you look at each restaurant, write down
how your expectations about the service
quality from each restaurant: High, Medium,
Low [Fast, Slow, Expensive, Low priced,
classy]
On the basis of your expectations, note which
occasions of eating out would you choose
each of the restaurants for [celebrating
something big; a quick bite; family outing;
etc.]

ONE

TWO

THREE

FOUR

FIVE

SIX

Possible levels of Customer Expectations

Ideal Expectations/
Desires
Normative Should
Expectations

Experience Based
Norms
Acceptable
Expectations
Minimum Tolerable
Expectations

R
E
S
T
A
U
R
A
N
T

Some place
real special
for my
Anniversary
Its
expensive,
so it ought
to be
Excellent
Most
times its
good,
slow when
Should
busy
serve me in
an
adequately
good
Expect
manner
poor
service,
but
charges

Levels
of Customer Expectations

Desired Service:
The wished for; should be level of service
Adequate Service:
The Minimum level of service customers will
accept without being dissatisfied
Zone of Tolerance:
Difference between the above two
DESIRED SERVICE
Predicted Service:
ZONE OF
Anticipated service level
TOLERANCE

PREDICTED
SERVICE

ADEQUATE
SERVICE

Zone of Tolerance
Different customers have different zones of

tolerance
Zones of Tolerance vary for Service
Desired Service Level
dimensions
Zone of Tolerance

Desired Service Level

Adequate Service Level

Zone of Tolerance
Adequate Service Level

On Time Arrival

Retail offers on flight

Inter-linkages & dynamics of

Customer Expectations in Services
DESIRED SERVICE LEVEL
Factors affect
Adequate Service
levels by
increasing or
decreasing it

ZONE OF
TOLERANCE

ADEQUATE SERVICE LEVEL

Personal
needs
Personal
Service
Philosophy

temporary
service
intensifiers

Derived
Service
Expectation
s

DESIRED SERVICE

ZONE OF
TOLERANCE

ADEQUATE SERVICE
perceived
alternatives
Situational
Factors

Explicit
Service
promises
Implicit
service
promises
WOM
Past
Experienc
es
PREDICTED
SERVICE

Sources of Desired Service Levels

Personal Needs: Hospital Services: Customer A- A man

with his ailing old mother aged 80 would have higher

desired service expectations than a Customer B: A man
with his ailing brother aged 30
Personal Service Philosophy: a customers underlying
overall attitude about the meaning of service and the
proper conduct of service providers. Some customers
have greater service expectations in general than others
Derived
Service
Expectations:
Customers
expectations derived by another person or group of
people. E.g.: arranging a party in a restaurant; wedding
in a hotel

Sources of Adequate Service Expectations:

Temporary service intensifiers:

short term ,
individual factors, that make the customer more
aware of the need for service. Personal
emergency situations in which service is
urgently needed increases level of adequate
service expectation

Perceived service alternatives: other service

providers from whom customer can get the

same service. More the alternate service
providers: higher adequate service expectations
from current service provider and vice versa.

 Situational factors: service performance conditions

customers view as beyond the control of the

service provider. E.g.: poor weather conditions
may reduce customer expectations of on time
arrivals/departures of flights: adequate service
levels are lowered and zone of tolerance is
widened.
Predicted Service: the level of service customers
believe they are likely to receive. If customers
predict good service, their levels of adequate
service becomes higher and vice versa. Predicted
service is transaction specific.

Sources of both Desired and

Predicted Service Expectations
i. Explicit service promises
ii. Implicit service promises : the tangibles at

the service facility; prices

iii. WOM communication
iv. Past experiences

What does this mean for the

service provider?
Understand the levels of customer expectations
Make sure performed service does not fall below Adequate

Service
Personal service philosophy: use market research to profile
and accordingly design services
Situational factors: Provide service guarantees to assure
customers about service recovery in case of situational
factors that may occur.
Predicted service: Manage customer expectations by
communicating any changes/anticipated delays to allow
customer to manage her Predicted Service Level
Explicit service promises: Make realistic & accurate promise
Implicit service promises: Ensure tangibles and price reflects
service level

Case Qs:
What factors are affecting Mrs. Dogras

service expectations and how?

How are Mrs. Dogras service expectations
changing ?
How could the service provider managed
& shaped customer expectations better?

Session 3, Module II: Customer

Perception, Service Encounters,
Customer Satisfaction

Customer Experience : shapes

Customer Perception Customer
Satisfaction
All services are experiences
The service experience itself often becomes an

important part of the evaluation process

the experience is the marketing
Depending on the experience, customer will decide
whether to go back to the same service provider
next time; whether to spread positive WOM
Service providers need to create positive and
memorable experiences
Service Encounter: building block of the customer
s service experience: Moment of Truth

Customer Perceptions
Perceived service is the service level

customers feel (perceive) they have received.

How a customer perceives services is how
they assess whether they have experienced
quality service and whether they are satisfied
Hence perceptions are always considered
relative to expectations

The Service Encounter: building block

of the Customers Service Experience
Definition of Service Encounter: A service encounter is a

period of time during which a customer interacts directly with

the service provider.
Some service encounters may be very short and involve few
steps( a phone call)some extend over a longer time frame ,
involving multiple actions (restaurant; stay in a hotel/hospital;
an education degree)
Essential contact points with customer as at this stage, the
customer forms a perception on whether he finds the service
satisfactory or not: Moment of Truth
In a study, the first 10 mins in a hotel are the most important
part of the service encounter
Types of Service encounters: face to face; remote; technology
enabled (SSTs)
service providers can also find which service encounters are
more important to the customer.

Specific elements of the customer experience that affect

Customer Perception & hence, Customer Satisfaction
1. The Service Features: various parts that make up the overall

service product: e.g.: at a Hotel: room, reservations, employee

interaction, facilities provided, price
2. Customers Emotion and Moods: affects the way the service

provision is interpreted. Departmental stores often play music

to create positive moods and emotions
3. Compatibility

of Service Customers: Other customers

affect customer experience. E.g.: overcrowding, behaviour of
other customers, similarity with other customers. Watching a
movie alone at home vs.. in the multiplex

4. Customer co-production: Services need customers also to

play certain roles which can have a large influence on the

customer experience. Customers can themselves affect the
service experience. Confusion about what the customer needs

Transaction versus Cumulative Perceptions

Transaction

perceptions: perceptions about a

single , transaction specific encounter. E.g.:
perception from a particular encounter with one
employee of a bank of SBI
Cummulative Perception: overall perceptions of
the service provider: e.g.: perception of SBI bank
Transaction
perceptions
or
service
encounter/transaction specific perceptions have an
impact on cumulative perception
At a higher level is the industry related perception:
e.g.: perception towards the banking industry

Service as a Drama: Services can be looked

as part of a drama in which the service

provider, the customers are actors and
audience; the service performance is the
show , with on-stage and back-stage actions.
Actors, Scripts and Roles; physical setting.

The customer experience at the service

encounter stage: The Roles and Script theory:
Customers expect that the service should proceed according

to a particular script [ rules determined by social and

cultural variables/logical sequence of events expected by the
customer]
and
roles
[set
of
learnt
behavioural
patterns/expected actions from the other actors]
Satisfaction is a function of Role Congruence: the level to
which actual behaviours by customers and staff are
consistent with expected roles.
However,
intra-individual
variables
could
affect
differences in evaluation and satisfaction. E.g.: introvert v.s.
an extrovert customer interacting with a chatty staff.
Implication: Design roles which are fulfilling and capable of
satisfying needs; communicate the roles to customer and
staff; manage the script.

Customer Satisfaction
Satisfaction is the customers 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, Oliver
Satisfaction is the customers evaluation of a product
or service in terms of whether that product or service
has met customers needs and expectations
Failure to meet needs and expectations result in
dissatisfaction with product or service.
Satisfaction: contentment; feelings of pleasure, sense
of relief

Post Purchase: satisfaction or dissatisfaction

Post choice Models:
i. Expectancy Disconfirmation Model : Customers evaluate

services by comparing Expected Service with perceptions

Implication : effective management of customer expectations
and perceptions
ii. Perceived Control Perspectives: During the service
experience, higher the level of control over the situation
perceived by the consumers, higher the level of satisfaction
with the service.
Implication:
. Keeping customers informed is important: e.g.: an airline
which informs of amount of delay; forewarn about delays;
explain procedures; giving choice.
iii. The Script Theory

More factors that affect customer

satisfaction:
Attributions for Service Success or Failure:

Attributions-the perceived causes of eventsinfluence perceptions of satisfaction

Perceptions of Equity or Fairness: being

served first if you have come to the restaurant

first
Other customers, family members, co-workers

Why is customer satisfaction important?:

outcomes of customer satisfaction
Correlated with economic health such as

corporate earnings and stock value

Results in Customer loyalty

Case Q
What factors affected Mrs. Dogras

service experience, shaped her

perceptions and overall satisfaction
level?
What implications for the service
provider?

Two Additional Slides follow

Service Encounters
The Building blocks of Customer perceptions
Defined as the period of time a customer is in direct contact

with any element of the service: interactions with the service

equipment, the interaction with the service personnel, the
interaction with the service delivery process, interaction with
various elements of the service such as waiting period, billing,
etc.
Types of Service Encounters: Remote Encounters (ATM,
website, on phone); technology mediated encounters
(interacting with a service personnel via technology); face to
face encounters.
SSTs: Self Service Technologies (ATM, internet banking, phone
banking; self scanning in retail; self-check in and check out)

Are
compared
with
Generat
es

Compariso
n may
result in

CUSTOMER
LOYALTY
CUSTOMER
SATISFACTION

CUSTOMER
EXPECTATIONS

CUSTOMER
PERCEPTIONS

SERVICE
ENCOUNTER

Results
in