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Consumer Behavior in a Services Context

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Chapter Objectives

Name the elements of the stimulus–response model of consumer behavior
Outline the major characteristics affecting consumer behavior
Explain the buyer decision process

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Consumer Buying Behavior

Consumer buying behavior refers to the buying behavior of final consumers – individuals & households who buy goods and services for personal consumption

The central question for marketers is: “How do consumers respond to various marketing efforts the company might use?”

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Marketing stimulus and buyers response

Marketer need certain response from the customers. So they need to know what should be the exact stimulus to provide to get that response.
Example

Response

Buy the brand of marketers X and rejects the brands of competitor Y.

Stimulus

Is it quality which Make customer buy out product ?

Is it price which matter to customer ?

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Understanding needs and wants

What are people looking for when they visit different destinations?
Why would a tourist choose to holiday in Sri Lanka rather than India – what variables are at work apart from cost?
Why would he choose to travel with Emirates, but not with any other airline?
Why would he buy an independent inclusive tour, but not a group tour?

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The 7 Ps of Services Marketing

Product elements
Place and time
Price and other user outlays
Promotion and education
Process
Physical environment
People

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A Model of Consumer Behavior

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Personal Characteristics Affecting Consumer Behavior

Cultural Factors – Halal tourism takes off in Japan.mp4
Social Factors

Consumers’ groups
Family
Social roles
Status

Personal Factors – lifestyle, personality eg:The spectacular trip of a blind tourist in Québec.mp4
Psychological Factors- perception, learning,attitude McDonald's to offer healthy alternatives (1).mp4

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Consumer Decision Making: The Three-Stage Model

Pre-purchase Stage
Service Encounter Stage
Post-purchase Stage

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Group work

Select a product or a service in tourism
What are the customer needs & wants that are served by the product or the service selected?
Name few target markets that are served by the above.
What information does these customers search for in fulfilling the above needs?
What methods do they use to gather information
What are the other alternative services or products in the market that can fulfill the above need of the customers?
What could be the risks that customers would evaluate before they make the decision to purchase?
What strategies does the organization use to minimize these doubts (risks) about the service in customer’s mind?
What are the reviews made by customers after purchasing the service?

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Pre-purchase Stage Overview

Need awareness
Information search
Evaluation of alternatives

Service attributes
Perceived risk
Service expectations

Purchase decision

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Pre-purchase Stage – Need Awareness

A service purchase is triggered by an underlying need (need arousal)
Needs may be due to:

People’s unconscious minds (e.g., aspirations)
Physical conditions (e.g., health conditions)
External sources (e.g., marketing activities)

When a need is recognized, people are likely take action to resolve it

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Pre-purchase Stage – Information Search

When a need is recognized, people will search for solutions.

Several alternatives may come to mind

The different alternatives need to be evaluated before a final choice is made

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Pre-purchase Stage – Evaluation of Alternatives

Service Attributes

Search attributes help customers evaluate a product before purchase

Style, color, texture, taste, sound

Experience attributes cannot be evaluated before purchase—must “experience” product to know it

Vacations, sporting events, medical procedures

Credence attributes are product characteristics that customers find impossible to evaluate confidently even after purchase and consumption

Quality of repair and after service

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Pre-purchase Stage – Evaluation of Alternatives

How did you feel first time you had to make a decision about choosing hotel or an airline that you have not experience before?

List down the ? That comes to your mind

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Perceived Risks

Functional – unsatisfactory performance outcomes
Financial – monetary loss, unexpected extra costs
Temporal – wasted time, delays leading to problems
Physical – personal injury, damage to possessions
Psychological – fears and negative emotions
Social – how others may think and react
Sensory – unwanted impact on any of five senses

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Pre-purchase Stage – Evaluation of Alternatives

Perceived Risks - How Do Consumers Handle Them?

Seeking information from respected personal sources
Using Internet to compare service offerings and search for independent reviews and ratings
Relying on a firm that has a good reputation
Looking for guarantees and warranties
Visiting service facilities or trying aspects of service before purchasing
Asking knowledgeable employees about competing services

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Pre-purchase Stage – Evaluation of Alternatives

Free trial (for services with high experience attributes)
Advertise (helps to visualize)SIA New Business Class Television Commercial.mp4
Display credentials
Use evidence management (e.g., furnishing, equipment etc.)Are You Shangri-La Room Attendant.mp4
Offer guarantees
Encourage visit to service facilities
Give customers online access to information about order status

Perceived Risks – Strategies for Firms to Manage Consume Perceptions of Risk

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Pre-purchase Stage – Purchase Decision

When possible alternatives have been compared and evaluated, the best option is selected
Can be quite simple if perceived risks are low and alternatives are clear
Price is often a key factor in the purchase decision

Eg: Airline choice depends on convenience of schedules, crew, meals, comfort

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Service Encounter Stage - Overview

Pre-purchase Stage

Service Encounter Stage

Post-purchase Stage

Service encounters range from high- to low-contact
Understanding the servuction system
Theater as a metaphor for service delivery: An integrative perspective

Service facilities
Personnel

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The Servuction System(Service Production)

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Servuction System:�Service Production and Delivery

Servuction System – visible front stage and invisible backstage
Service Operations (front stage and backstage)

Technical core 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 to customers
Includes customer interactions with operations and other customers

Other contact points

Includes customer contacts with other customers

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Post-encounter Stage - Overview

Pre-purchase Stage

Service Encounter Stage

Post-purchase Stage

Evaluation of service performance
Future intentions

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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

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Customer Delight:�Going Beyond Satisfaction

Research shows that delight is a function of Unexpectedly high levels of performance
Once customers are delighted, their expectations are raised
If service levels return to previous levels, this may lead to dissatisfaction and it will be more difficult to “delight” customers in future
Progressive Insurance seeks to delight customers through exceptional customer service

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Thank You

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