6/25/2017

Service Marketing Management

Prof. Ravi Shekhar Kumar

XLRI- Xavier School of Management, Jamshedpur
ravishekhar@xlri.ac.in
Session-2

Tangibility Spectrum

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Goods vs Service Continuum

Categories within non-ownership framework

Category Characteristics

Rented goods services Provides customers with temporary right to exclusive

use of physical good.

Defined space & place Obtain a defined portion of a larger space & sharing
rentals its use with other customers, under varying degrees of
privacy.

Labor & expertise rentals Hire others to work that they would either choose not
to do, or lack the necessary expertise & ools to do

Access to shared May be located indoors or outdoors or a combination

physical environments

Systems & networks: Rent the right to participate in specified networks like
access and usage telecommunications, utilities, etc.

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Consumer Behaviour: Service

Consumers are rarely involved in manufacture of goods but
often participate in service creation & delivery

Challenge for service marketers is to understand how

customers interact with service operations

Do differences among Services affect Consumer behavior &

if so, then how?

Consumer Behavior: Service

Based on differences in nature of service act
(tangible/intangible) & who or what is direct recipient of
service (people/possessions), four categories of services:
People processing
Possession processing
Mental stimulus processing
Information processing

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Service: Four Categories

Who or What is Direct Recipient of Service?

Nature of Service Act People Possessions
Tangible Actions People processing Possession processing

(services directed at (services directed at

peoples bodies): physical possessions):

Hair cut Package Transport

Health care Laundry Service

Intangible Actions Mental stimulus Information processing
processing
(services directed at
(services directed at intangible assets):
peoples minds):

Education
Accounting

Advertising/PR
Banking
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Service: People Processing

People Processing
Customers must:
Physically enter service factory
Co-operate actively with
service operation
Managers should think about
process & output from
customers perspective
To identify benefits created &
non-financial costs (time,
mental, physical effort)

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Service: Possession Processing

Possession Processing

Customers are less physically

involved compared to people
processing services

Involvement is limited

Production & consumption

are separable

Service: Mental Stimulus Processing

Mental Stimulus Processing

Ethical standards required when

customers who depend on such
services can potentially be
manipulated by suppliers

Physical presence of recipients

not required

Core content of services is

information-based
Can be inventoried

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Service: Information Processing

Information Processing

Information is the most

intangible form of service
output

But may be transformed into

enduring forms of service
output

Line between information

processing & mental stimulus
processing may be blurred.

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Purchase Process

Service Post-
Prepurchase Stage
Encounter Stage Encounter Stage

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Purchase Process for Services

Prepurchase Stage

Service Encounter Stage

Post-Encounter Stage

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Prepurchase Stage: Overview

9 Customers seek solutions to

aroused needs
Prepurchase Stage
9 Evaluating a service may be
difficult
9 Uncertainty about outcomes
increases perceived risk
9 What risk reduction strategies
Service Encounter can service suppliers develop?
Stage
9 Understanding customers
service expectations
9 Components of customer
expectations
9 Making a service purchase
Post-Encounter Stage decision

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Tangibility Spectrum

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Goods vs Service Continuum

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Perceived Risks in Purchasing Services

Functionalunsatisfactory performance outcomes.
Financialmonetary loss, unexpected extra costs .
Temporalwasted time, delays leading to problems.
Physicalpersonal injury, damage to possessions.
Psychologicalfears & negative emotions.
Socialhow others may think & react
Sensoryunwanted impact on any of five senses.

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How Consumer can handle Perceived Risk?

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

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Marketing Action to
Manage Risk Perceptions
Offer performance warranties, guarantees to protect against
fears of monetary loss
For products where customers worry about performance,
sensory risks:
Offer previews, free trials (provides experience)
Advertising (helps to visualize)
For products where customers perceive physical or
psychological risks:
Institute visible safety procedures. Ex. Airline O2 bags.
Deliver automated messages about anticipated problems
Websites offering FAQs & more detailed background
Train staff members to be respectful & empathetic

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Customer Expectation
Customer expectations are beliefs about service delivery
that function as standards or reference points against which
performance is judged.
Customers evaluate service quality by comparing what they expect
against what they perceive they have received (service experience)
When usually Expectation gets formed?
Search & decision making;
Shaped by information search & evaluation of attributes
Is it constant or evolving?
Evolving & Dynamic
Expectations vary from one business to another, and among
differently positioned service providers in the same industry.
Expectations change over time depending on innovation, price,
advertisement etc.

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What could be different types of Expectation?

Desired Service

Zone of
Tolerance

Adequate Service

Expectation Levels
Zone of Tolerance
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Components of Customer Expectations

Desired Service Level:
Wished-for level of service quality that customer believes can & should be
delivered

Adequate Service Level:

Minimum acceptable level of service

Predicted Service Level:

Service level that customer believes firm will actually deliver

Zone of Tolerance:
Range within which customers are willing to accept variations in service
delivery

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Customer Expectation

Can Zones of Tolerance be different?

Zone of Tolerance for Different Service Dimensions

Desired Service
Level of Expectation

Zone of
Tolerance
Desired Service

Adequate Service
Zone
of
Tolerance

Adequate Service

Most Important Factors Least Important Factors

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Factors: Desired Expectation

Derived expectation
Personal Service philosophies

Factors: Adequate Expectation

Emergencies
Service Problem

Bad Weather
Catastrophe
Random Overdemand

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Advertising
Personal selling
Factors: Desired & Predicted Expectation
Contracts
Other Communication

Tangibles
Price

Personal
Expert Review

Personal Needs

Explicit Service
Lasting Service
Promises
Intensifiers

Implicit Service
Temporary Service Promises
Intensifiers

Desired Service Word-of-Mouth

Perceived Service
Alternatives
Zone
Past Experience
of
Tolerance
Self-Perceived
Service Role Predicted
Adequate Service Service

Situational
Factors

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Customer Expectations

Is increasing Customer Expectation good or bad?

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Service Encounter Stage: Overview

Prepurchase Stage
Service encounters range
from high- to low-contact

Role in high-contact vs. low-

Service Encounter contact delivery
Stage
Moment of Truth

Customer Experience

Post-Encounter Stage

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High-Contact vs Low-Contact Services

High-Contact Services
Customers visit service facility & remain throughout service delivery
Active contact between customers & service personnel
Includes most people-processing services
Low-Contact Services
Little or no physical contact with service personnel
Contact usually at arms length through electronic or physical distribution
channels
New technologies (e.g. Web) help reduce contact levels
Medium-Contact Services
Lie in between These Two

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Service Encounter:
High-Contact vs Low-Contact

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High-Contact Service: Marketing System

Most parts of operations, service delivery, & marketing systems are
exposed to customers
Service Delivery System Other Contact Points

Advertising
Service Operations System Other
Customers Sales Calls
Interior & Exterior
Market Research Surveys
Facilities
Billing/Statements
Technical The
Equipment Misc. Mail, Phone Calls,
Core Customer E-mails, Faxes, etc.
Website
Service People Random Exposure to
Facilities/Vehicles

Backstage Front Stage Other Chance Encounters with

Service Personnel
(invisible) (visible) Customers
Word of Mouth
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Low-Contact Service: Marketing System

Some parts of systems are invisible to customers
Service Operations
System
Service Delivery System Other Contact Points

Mail Advertising
Market Research
Surveys
Technical Self The
Core Service Billing/Statements
Equipment Customer
Random Exposure
Phone, to Facilities/Vehicles
Fax, Web-
site, etc. Word of Mouth

Front Stage
Backstage (visible)
(invisible)
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What are moments of truth?

Contact points between customers & service providers.

Portals from which customers get to interact with

providers & influence their overall experience.

Represent skill, motivation, & tools employed by firms

representative and expectations & behavior of client, which
together will create service delivery process.

Post-Encounter Stage: Overview

Prepurchase Stage

Evaluation of service
Service Encounter performance
Stage
Future intentions

Post-Encounter Stage

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Customer Satisfaction
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
Satisfaction reflects perceived service quality, price/quality tradeoffs,
personal & situational factors

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Delight: Going Beyond Satisfaction

Research shows that delight is a function of three components:
Unexpectedly high levels of performance
Arousal (e.g., surprise, excitement)
Positive affect (e.g., pleasure, joy, or happiness)
Getting feedback during service delivery help to boost customer
loyalty

Is it possible for customers to be delighted by mundane services?

Is delivering delight to Customers good or bad?

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Further Reading
Chapter-2
Article titled The nature and Determinant of Customer
Expectation of Service

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