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Module 1: Understanding Consumers and Market

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Consumer Behavior in the Service Context

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MODULE OVERVIEW

Obtaining insights from viewing the service encounter as a form of theatre.
Knowing how role, script, and perceived control theories contribute to a better understanding of service encounters.
Describing how customers evaluate services and what determines their satisfaction.
Understanding service quality, its dimensions and measurement, and how quality relates to customer loyalty.

INTRODUCTION

In the previous module we understood the significance of “moments-of-truth” metaphor in context of services.
Likewise, “theater” can be used as a metaphor for service delivery, and firms can view their service as “staging” a performance with props and actors, and manage them accordingly. The props are the service facilities and equipment. The actors are the service employees and customers.

THEATRE AS METAPHOR FOR SERVICE DELIVERY

As service delivery consists of a series of events that customers experience as a performance, the theatre is a good metaphor for services and the creation of service experiences through the servuction system.
This metaphor is a particularly useful approach for high-contact service providers, such as physicians and hotels, and for businesses that serve many people simultaneously, such as hospitals, professional sports facilities, and entertainment. |
Let’s discuss the stages (i.e., service facilities) and the members of the cast (i.e., the frontline personnel):

Service facilities: Imagine service facilities as containing the stage on which the drama unfolds.
Sometimes, the setting changes from one act to another (e.g., when airline passengers move from the entrance to the terminal to the check-in stations and then on to the boarding gate and finally step inside the aircraft).
Some stages have minimal “props”. (e.g., taxi)
In contrast, other stages have more elaborate “props” (e.g., resort hotels with elaborate architecture, luxurious interior design, and lush Landscaping).
Personnel:The front-stage personnel are like the members of a cast playing roles as actors in a drama supported by a back-stage production team.
In some instances, service personnel are expected to wear special costumes when on stage (such as the fanciful uniforms often worn by hotel doormen).


The theatre metaphor also includes the roles of the players on stage and the scripts they have to Follow.

ROLE AND SCRIPT THEORIES

The actors in a theater need to know what roles they play and familiarize themselves with the script.
Similarly, in service encounters, knowledge of role and script theories can help organizations better understand, design, and manage both employee and customer behaviors during service
Role Theory: If we view service delivery from a_ theatrical perspective, then both employees and customers act out their parts in the performance according to predetermined roles.
Stephen Grove and Ray Fisk define a role as “a set of behavior patterns learned through experience and communication, to be performed by an individual in a certain social interaction in order to attain maximum effectiveness in goal accomplishment”.
Roles have also been defined as combinations of social cues or expectations of society that guide behavior in a specific setting or context.
The satisfaction and productivity of both parties depend on role congruence, or the extent to which each person acts out his or her prescribed role during a service encounter.
Employees must perform their roles in accordance to customer expectations or risk dissatisfying customers.
As a customer, you too must “play by the rules” or risk causing problems for the firm, its employees, and even other customers.
Script Theory: Much like a movie script, a service script specifies the sequences of behavior employees and customers are expected to learn and follow during service delivery.
Employees receive formal training.
Customers learn scripts through experience, through communication with others, and through designed communications and education.
The more experience a customer has with a service company, the more familiar that particular script becomes.
Unwillingness to learn a new script may be a reason not to switch to a competing organization.
Any deviations from this known script may frustrate both customers and employees, and can lead to dissatisfaction.
|f a company decides to change a service script (e.g., by using technology to transform a high-contact service into a low-contact
one), service personnel and customers need to be educated about the new approach and the benefits it provides.
Many service dramas are tightly scripted (like the flight attendants’ scripts for economy class), which reduces variability and ensures uniform quality.
However, not all services involve tightly scripted performances.
Scripts tend to be more flexible for providers of highly customized services — designers, educators, consultants — and may vary by Situation and by customer.
Role and Script Theory complement each other.
Excellent service marketers understand both perspectives and proactively define, communicate and train their employees and customers in their roles & service scripts to achieve a performance that yields high customer satisfaction and service productivity.
Another underlying dimension of every service encounter is perceived control.
It holds that customers have a need for control during the service encounter, and that control is a major driving force of their behavior and satisfaction.
The higher the level of perceived control during a service situation, the higher their level of satisfaction will be.
The perception of control can be managed via different types, including behavioral, decisional, and cognitive control.

PERCEIVED CONTROL THEORY

Behavioral control: It means that the customer can change the situation and ask for customization beyond what the firm typically
offers (e.g., by asking frontline employees to accommodate a special arrangement for a romantic candle light dinner).
Decisional control: It means that the customer can choose between two or more standardized options, but without changing either option (e.g., choose between two tables in a restaurant).
Cognitive control: It refers to the customer understanding why something happens (e.g., a flight delay due to a technical problem with the aircraft), and knowing what will happen next (also called predictive control, e.g., know how long the flight will be delayed).
We are often mollified when someone keeps us informed about the situation. In short, it is important to design perceived control into service encounters.
However, if processes, scripts and roles are tightly defined (as is the case for self-service technologies and highly scripted services such as fast-food and consumer banking), the scope for customization is limited.
This means, firms cannot give much behavioral control as carefully designed processes would simply collapse, and productivity and quality would suffer.

POST-ENCOUNTER STAGE

The last stage of service consumption is the post-encounter stage which involves consumers’ attitudinal and behavioral responses to the service experience.
Important consumer responses are:

customer satisfaction,
service quality perceptions,
Repeat purchase, and
customer loyalty.



POST-ENCOUNTER STAGE: (CUSTOMER SATISFACTION)
The Expectancy-Disconfirmation Model of Satisfaction:

Satisfaction is a judgment following a series of consumer product interactions.
In the model, confirmation or disconfirmation of pre-consumption expectations is the essential determinant of satisfaction.

Where do service expectations in our satisfaction model come from?

During the decision-making process, customers assess the attributes and risks related to a service offering.
In the process, they develop expectations about how the service they choose will perform (i.e., our predicted, desired, and adequate service levels discussed in the consumer decision-making section.
The zone of tolerance can be narrow and firm if they are related to attributes important in the choice process.
For example, if a customer paid a premium of $350 for a direct flight rather than one that has a four-hour stopover, the customer will not take it lightly if there is a six-hour flight delay.
A customer will also have high expectations if he paid a premium for high-quality service, and will be deeply disappointed when the service fails to deliver.
During and after consumption, consumers experience the service performance and compare it to their expectations.
Satisfaction judgments are then formed based on this comparison.
If performance perceptions are worse than expected, it is called negative disconfirmation.
If performance is better than expected, it is called positive disconfirmation, and
If it is as expected, then it is simply called confirmation of expectations.
Customers will be reasonably satisfied as long as perceived performance falls within the zone of tolerance, that is, above the
adequate service level.
As performance perceptions approach or exceed desired levels, customers will be very pleased.
Satisfied customers are more likely to:

make repeat purchases,
remain loyal, and hon
spread positive word-of-mouth.


However, if the service experience does not meet their expectations, customers may:

suffer in silence,
complain about poor service quality, or
switch providers in the future.


Satisfaction with service attributes thus results from the experience of attribute-specific performance and strongly influences consumers’ overall satisfaction.
Multi-attribute models help to better understand the formation process of customer satisfaction.
Specifically, they help managers identify specific attributes with strong impacts on overall satisfaction, which is especially important if customers are satisfied with some attributes but dissatisfied with others.
Understanding this helps managers to cement the strengths of the firm’s services and to focus improvement efforts on where it matters most.

Are Expectations Always the Right Comparison Standard?

Comparing performance to expectations works well in reasonably competitive markets where customers have sufficient knowledge to choose a service that meets their needs and wants. Then, when expectations are met, customers are satisfied.
However, in uncompetitive markets or in situations in which customers do not have free choice, there are risks to defining customer satisfaction relative to their prior expectations.
For example, if customer expectations are low and actual service delivery meets the dismal level that was expected, customers will hardly feel they are receiving good service quality.
In such situations, it is better to use needs or wants as the standard for comparison and to define satisfaction as meeting or exceeding customer wants and needs rather than expectations.
Furthermore, the disconfirmation-of-expectations model works very well for search and experience attributes (e.g., “Il know whether you kept your promise and delivered by 1 p.m.”), but less so for credence attributes.
Firms, therefore, have to understand how customers evaluate their service to proactively manage those aspects of their operations that have a strong effect on customer satisfaction, even if these attributes may be unrelated to the core attributes (such as, the quality of a surgery).

How Is Customer Delight Different From Satisfaction?

So, achieving a customer’s delight requires focusing on what is currently unexpected.
Once a customer is delighted, it has a strong impact on a customer’s loyalty.
Moreover, once customers have been delighted, their expectations are raised. They may be dissatisfied if service levels return to the previous levels, and it probably will take more effort to “delight” them again in future.
Both customer satisfaction and service quality are defined as contrasting customers’ expectations with their performance perceptions.
Satisfaction is an evaluation of single consumption experience, a fleeting judgment, and a direct and immediate response to that experience.
Service quality refers to relatively stable attitudes & beliefs about a firm, which can differ significantly from satisfaction.

Dimensions of Service Quality

Tangible: Appearance of Physical Elements
Reliability: dependable and accurate performance
Responsiveness: promptness and helpfulness
Assurance: credibility, security, competence, and courtesy
Empathy: easy access, good communication and customer understanding

POST-ENCOUNTER STAGE: (SERVICE QUALITY)

Excellent service quality is a high standard of performance that consistently meets or exceeds customer expectations.
Nevertheless, it is critical to improve service quality and keep it at high levels, as it is a key driver of important customer behaviors, including

word-of-mouth recommendations,
repurchasing, and
loyalty



CUSTOMER LOYALTY

Loyalty is a customer’s willingness to continue patronizing a firm over the long-term, preferably on an _ exclusive basis, and recommending the firm’s products to friends and associates.
Customer loyalty extends beyond behavior and includes preference, liking, and future intentions.
The opposite of loyalty is defection, which is used to describe customers who drop off a company’s radar screen and transfer their loyalty to another supplier.

CONCLUSION

The various models we explored for each of the stages are complementary and together provide a rich and deep understanding of consumer behavior in a services context.
In all types of services, managing customer behavior in the three Stages of service consumption effectively is central to creating satisfied customers who will be willing to enter into long term relationships with the service provider.