Service MKTG Ch 4: Services Consumer Behavior

-Professional restrictions -Small firms may lack the resources or knowledge to advertise effectively

2 reasons why non personal sources may not be available for some services

-Services have few search attributes. -Services are primarily characterized by experience and credence attributes.

2 reasons why perceived risk is higher for services due to limited information of the products attributes

-Reduces the perceived risk associated with a purchase -Limited number of choices are available -Switching costs are high

3 reasons why service consumers are more brand loyal

1.Acquiring (buying) the product 2.Using the product 3. Disposing of the product

3 steps of the consumption process

•Mass advertising is less effective (due to intangibility) •Word-of-mouth references rule •Target opinion leaders •Nonpersonal sources may not be available

4 considerations for the importance of personal communication sources for services marketing

-stimulus -problem recognition -information search -evaluation

4 phases of the pre-purchase stage

-After-sale contact with the customer -Providing a reassuring letter in the packing of the product -Providing warranties and guarantees -Reinforcing the consumer's decision through the firm's advertising

4 strategies to minimize cognitive dissonance:

internal search

A passive approach to gathering information in which the consumer's own memory is the main source of information about a product. •Low involvement or routine decisions/purchases •Familiar with product •Example: where you do your weekly grocery shopping

external search

A proactive approach to gathering information in which the consumer collects new information from sources outside the consumer's own experience. •High involvement, often big purchases •Not familiar with product •Example: new apartments, going to college

linear compensatory model

A systematic model that proposes that the consumer creates a global score for each brand by multiplying the rating of the brand on each attribute by the importance attached to the attribute and adding the scores together.

lexicographic model

A systematic model that proposes that the consumer make a decision by examining each attribute, starting with the most important, to rule out alternatives.

evoked set

Alternatives that the consumer actually remembers at the time of decision making. -the limited set of "brands" that comes to the consumer's mind when thinking about a particular product category

consumption sequence differs between services and goods

CONSUMPTION STAGE CONSIDERATIONS -Goods: Production-Acquisition-Use-Disposal -Services: Production-Acquisition-Use (all entangled)

evaluation occurs during and after consumptions (goods' evaluation occurs ONLY after)

CONSUMPTION STAGE CONSIDERATIONS From a marketer's point of view, this opens up the prospect of being able to directly influence evaluations as they occur differently than they do for goods

disposal is irrelevant for services due to their intangibility

CONSUMPTION STAGE CONSIDERATIONS How intangibility changes the consumption stages of services vs goods

systematic evaluation

Choosing among alternatives by using a set of formalized steps to arrive at a decision. -ex: linear and lexicographic models

non-systematic evaluation

Choosing among alternatives in a random fashion or by a "gut-level feeling" approach.

consequence

DIMENSION OF PERCEIVED RISK the degree of importance and/or danger of the outcome of any consumer decision

uncertainty

DIMENSION OF PERCEIVED RISK the subjective possibility of the occurrence of these outcomes

consideration set

Of the brands in the evoked set, those considered unfit (e.g., too expensive, too far away, etc.) are eliminated right away. The remaining alternatives are termed the:

script perspective

POST-PURCHASE STAGE CONSIDERATIONS Argues that rules, mostly determined by social and cultural variables, exist to facilitate interactions in daily repetitive events, including a variety of service experiences -a function of script congruence

perceived control perspective

POST-PURCHASE STAGE CONSIDERATIONS Consumers evaluate services by the amount of control they have over the perceived situation -•higher the level of control over the situation perceived by consumers = higher their satisfaction with the service will be -Consumers give up cash and control in exchange for benefits -Two types of control: behavioral and cognitive

expectancy disconfirmation theory

POST-PURCHASE STAGE CONSIDERATIONS Proposes that consumers evaluate services by comparing expectations with perceptions -The simplest and most powerful model -Customer satisfaction is achieved through the effective management of customer perceptions and expectations -Customer satisfaction = Perceptions >Expectations

brand loyal

PRE-PURCHASE STAGE CONSIDERATIONS Service customers tend to be more ______ loyal

personal sources

PRE-PURCHASE STAGE CONSIDERATIONS Service customers tend to relay more on ________ sources for information

self-service

PRE-PURCHASE STAGE CONSIDERATIONS Service providers must consider the customer's own self-provision as a viable competitor in the marketplace -Examples: Lawn care, Fence installation, Housekeeping, Decorating, Painting

perceived risk

PRE-PURCHASE STAGE CONSIDERATIONS _________ risk tends to be higher for service purchases

customer habit

TYPE OF SWITCHING COSTS costs associated with changing established behavior patterns.

cognitive costs

TYPE OF SWITCHING COSTS costs in terms of the time it takes simply thinking about making a change in service providers.

learning costs

TYPE OF SWITCHING COSTS costs such as time and money that are associated with learning new systems, such as new versions of software packages

loyal customer discounts

TYPE OF SWITCHING COSTS discounts that are given for maintaining the same service over time, such as accident-free auto insurance rates. Such discounts are sacrificed when switching from one supplier to the next.

emotional costs

TYPE OF SWITCHING COSTS the emotional turmoil that one may experience when severing a long-term relationship with a provider. Emotional costs are especially high when a personal relationship has developed between the client and the provider.

transaction costs

TYPE OF SWITCHING COSTS the monetary costs associated with first-time visits, such as new X-rays when changing dentists.

search costs

TYPE OF SWITCHING COSTS the time costs associated with seeking out new alternatives.

behavioral control

TYPES OF CONTROL what the consumer actually has control over

cognitive control

TYPES OF CONTROL what the consumer thinks they can control

-to design scripts for the service encounter that are acceptable and capable of fulfilling the needs of both the customers and the service providers. -to communicate these scripts to both customers and employees so that both have realistic expectations and perceptions of their roles.

The 2 key managerial implications of script theory are:

information search

The phase in the pre-purchase stage in which the consumer collects information pertaining to possible alternatives -develop awareness, evoked, and consideration sets -conduct internal and external searches

evaluation of alternatives

The phase of the pre-purchase stage in which the consumer places a value or "rank" on each alternative. -includes systematic and nonsystematic evaluations

awareness set

The set of alternatives of which a consumer is aware.

search attributes

attributes that can be determined prior to purchase (pertains more to goods)

experience attributes

attributes that can be evaluated only during and after the production process

cognitive dissonance

doubt in the consumer's mind regarding the correctness of the purchase decision.

script congruence

occurs when the actual scripts performed by customers and staff are consistent with the expected scripts.

credence attributes

product attributes that cannot be evaluated confidently even immediately after receipt of the good or service

physical cues

stimuli that are biological cues such as thirst, hunger

social cues

stimuli that are obtained from the individual's peer group or from significant others

commercial cues

stimuli that result from promotional efforts

stimulus

the first stage of the pre-purchase state, the thought, action, or motivation that incites a person to consider a purchase

unfulfilled desire

the need for a product or service due to a consumer's dissatisfaction with a current product or service (hint: a want) -Ex: getting a college degree: if you are already enrolled and just don't like where you are and want to transfer

shortage

the need for a product or service due to the consumer's not having that particular product or service. (hint: a need) -Ex: getting a college degree: If you're not already enrolled in college/don't have a degree and want one

social risk

the possibility of a loss in personal social status associated with a particular purchase

financial risk

the possibility of a monetary loss if the purchase goes wrong or fails to operate correctly.

psychological risk

the possibility that a purchase will affect an individual's self-esteem.

physical risk

the possibility that if something does go wrong, injury could be inflicted on the purchaser

performance risk

the possibility that the item or service purchased will not perform the task for which it was purchased

problem recognition

the second phase of the pre-purchase stage, in which the consumer determines whether a need exists for the product. -two types: shortage & unfulfilled desire

post purchase evaluation

the stage of the consumer decision-making process during which the consumer determines whether the correct purchase decision was made.