SERVICES MARKETING: INTEGRATING PEOPLE,

TECHNOLOGY, STRATEGY
MODULE - 5

DR. ZILLUR RAHMAN

PROFESSOR
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

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 Understanding Service Products, Consumers, and Markets
Module 1, 2, & 3: New Perspectives on Marketing in the Service Economy
Module 4, 5, & 6: Consumer Behavior in the Service Context
Module 7 & 8: Positioning Services in Competitive Markets

Applying the 4 Ps of Marketing to

Services
Managing the Customer Interface
Module 9, 10, & 11: Developing
Module 20 & 21: Designing and
Service Products Developing Customer
Managing Service Processes
Module 12 & 13: Distributing Relationships
Module 22, 23, & 24: Balancing
Services through Physical and Module 30, 31, & 32: Managing
Demand and Productive Capacity
Electronic Channels Relationships and Building Loyalty
Module 25 & 26: Crafting Service
Module 14, 15, & 16: Setting Module 33, 34, & 35: Complaint
Environment
Prices and Implementing Revenue Handling and Service Recovery
Module 27, 28, & 29: Managing
Management
People for Service Advantage
Module 17, 18, & 19: Promoting
Services and Educating Customers

Striving for Service Excellence

Module 36, 37, & 38: Improving Service Quality and Productivity
Module 39 & 40: Striving for Service Leadership & Creating the Seamless Service Firms
CONSUMER BEHAVIOR IN THE SERVICE CONTEXT
MODULE - 5

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 MODULE OVERVIEW

1. Understanding how customers form service expectations and the

components of these expectations.
2. Knowing the moment-of-truth metaphor.
3. Contrasting how customers experience and evaluate high- versus
low-contact services.
4. Being familiar with the servuction model and
understand the interactions that together create
the service experience.

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THE THREE-STAGE MODEL OF SERVICE CONSUMPTION

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 INTRODUCTION

• While understanding the process of evaluating the alternative

services, firms need to comprehend the usage of multi-attribute
models, service attributes, and perceived risk (all three covered in
last module).
• Also important to consumer choice (and subsequently satisfaction)
are customer expectations.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• Expectations are formed during the search and decision-making
process, through a customer’s search and evaluation of information
and alternatives.
• If you do not have any previous experience with the service, you may
base your pre-purchase expectations on online searches and reviews,
word-of-mouth comments, news stories or a firm’s own marketing
efforts.
• Expectations can even be situation-specific. (e.g.,
expectations of service delivery timing during peak
period versus non-peak periods).
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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• Expectations change and can be managed, as discussed in the
section on multi-attribute models.
• Firms try to shape expectations through their communications and
the introduction of new services and technologies.
• Increased access to information through the media and the Internet
can also change expectations.
– For instance, today’s healthcare consumer is
well-informed and often seeks a participative role
in decisions relating to medical treatment.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)

Factors Influencing Customer

Expectations of Service

Adapted from Valarie A. Zeithaml, Leonard A. Berry, and A. Parasuraman (1993), “The Nature and Determinants
of Customer Expectations of Service,” Journal of the Academy of Marketing Science, Vol. 21, No. 1, pp. 1–12.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• What are the components of customer expectations?
• Expectations embrace several elements, including:
– desired, adequate and predicted service, and
– a zone of tolerance that falls between the desired and adequate service levels.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• What are the components of customer expectations?
– Desired service: The type of service customers hope to receive is
termed desired service.
– It’s a “wished for” level — a combination of what customers believe
can and should be delivered in the context of their personal needs.
– Desired service could also be influenced by explicit
and implicit promises made by service providers,
word-of-mouth, and past experiences.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• What are the components of customer expectations?
– As, most customers are realistic. Recognizing that a firm can’t always
deliver the “wished for” level of service, they also have a threshold
level of expectations, termed adequate service, and a predicted service
level.
– Adequate service: The minimum level of service customers will accept
without being dissatisfied.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• What are the components of customer expectations?
– Predicted service: This is the level of service that customers actually
anticipate to receive.
– Predicted service can also be affected by service provider promises,
word-of-mouth, and past experiences.
– The predicted service level directly affects how customers define
“adequate service” on that occasion.
– If good service is predicted, the adequate level will
be higher than when poorer service is predicted.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• What are the components of customer expectations?
– Customer predictions of service are often situation-specific.
– From past experience, for example, customers visiting a museum on a
summer’s day may expect to see larger crowds if the weather is poor
than if the sun is shining. So, a 10-minute wait to buy tickets on a cool,
rainy day in summer might not fall below their level of adequate
service.
– Another factor that may set this expectation is the
level of service anticipated from alternative service
providers.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• What are the components of customer expectations?
– Zone of tolerance:
– It can be difficult for firms to achieve consistent service delivery at all
touch points across many service delivery channels, branches, and often
thousands of employees.
– Even the performance by the same service employee is likely to vary over
the course of a day and from one day to another.
– The extent to which customers are willing to accept
this variation is called the zone of tolerance.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• What are the components of customer expectations?
– Performing too low causes frustration and dissatisfaction, whereas
exceeding the zone of tolerance can surprise and delight customers.
– Another way of looking at the zone of tolerance is to think of it as the
range of service within which customers don’t pay explicit attention to
service performance. When service falls outside this range, customers
will react, either positively or negatively.

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 EVALUATION OF ALTERNATIVE SERVICES
(SERVICE EXPECTATIONS)
• The size of the zone of tolerance can be larger or smaller for
individual customers, depending on factors such as competition,
price, or importance of specific service attributes — each of which
can influence the expectation of adequate service levels.
• In contrast, desired service levels tend to move up very slowly in
response to accumulated customer experiences.

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 PURCHASE DECISION

• After consumers have evaluated possible alternatives by, for

example,
– comparing the performance of the important attributes of competing
service offerings;
– assessed the perceived risk associated with each offering; and
– developed their desired, adequate, and predicted
service level expectations,
they are ready to select the option they like best.

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 PURCHASE DECISION

• Many purchase decisions for frequently purchased services are

quite simple and can be made quickly without too much thought —
– the perceived risks are low,
– the alternatives are clear, and,
– because they have been used before, their characteristics are easily
understood.
• If the consumer already has a favorite supplier, he
or she will probably choose it again in the absence
of a compelling reason to do otherwise.

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 PURCHASE DECISION

• In many instances, however, purchase decisions involve tradeoffs.

• Price is often a key factor.
– For example, is it worth paying more for faster service, a larger room with a
better view, or a better seat in a theater performance?
• For more complex decisions, tradeoffs can involve multiple
attributes, as we have seen in the section on
consumer choice based on the multi-attribute
model.

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 PURCHASE DECISION

• Once a decision is made, the consumer is ready to move to the

service encounter stage.
• This next step may take place immediately, as it is in deciding to
enter a fast-food restaurant, or it may first involve an advance
reservation, as what usually happens with taking a flight or
attending a live theater performance.

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 SERVICE ENCOUNTER STAGE

• The service encounter stage is when the customer interacts directly

with the service firm.
• Might be brief or extend over a period of time (e.g., a phone call or
visit to the hospital)

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 SERVICE ENCOUNTER STAGE

• Models and frameworks:

― “Moments of Truth” – importance of managing touch points
― High/low contact model – extent and nature of contact points
― Servuction model – variations of interactions
― Theater metaphor – “staging” service performances

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 SERVICE ENCOUNTER STAGE
(Service Encounters Are “Moments of Truth”)
• [W]e could say that the perceived quality is realized at the
moment of truth, when the service provider and the service
customer confront one another in the arena. At that moment
they are very much on their own… It is the skill, the
motivation, and the tools employed by the firm’s
representative and the expectations and
behavior of the client which together will
create the service delivery process.
Richard Normann

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 SERVICE ENCOUNTER STAGE
(Service Encounters Are “Moments of Truth”)
• Richard Normann borrowed the moment of truth metaphor from
bullfighting to show the importance of contact points with
customers.
• In bullfighting, the life of either the bull or the matador (or possibly
both) is at stake.
• The message in a service context is that at the
moment of truth, the relationship between the
customer and the firm is at stake.

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 SERVICE ENCOUNTER STAGE
(Service Encounters Are “Moments of Truth”)
• Likewise, Jan Carlzon, former chief executive of Scandinavian
Airlines System (SAS), used the moment of truth metaphor as a
reference point for transforming SAS from an operations-driven
business into a customer-driven airline.
• Each service business faces similar challenges in defining and
managing the “moments of truth” its customers
will encounter.

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 SERVICE ENCOUNTER STAGE
(Service Encounters Range From High Contact to Low Contact)
• Services involve different levels of contact with the service
operation.
• Some of these encounters can be very brief and may consist of a
few steps, such as when a customer calls a customer contact center
or uses a service app.
• Others may extend over a longer time frame and
involve multiple interactions of varying degrees of
complexity. For example, a visit to a theme park
might last all day.
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 SERVICE ENCOUNTER STAGE
(Service Encounters Range From High Contact to Low Contact)
• Services may be grouped into three levels of customer contact.
• These represent
– how much customers interact with service personnel,
– physical service elements,
– or both.
• Although we recognize that the level of customer
contact covers a spectrum, it’s useful to examine
the differences between services at the high and
low ends, respectively.
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 SERVICE ENCOUNTER STAGE
(Distinctions between High-Contact and Low-Contact Services)
• High-Contact Services
• Using a high-contact service means there is direct contact between
customers and the firm throughout the entire service delivery.
• When customers visit the facility where service is delivered, they enter a
service “factory” — something that rarely happens in a manufacturing
environment.
• From this perspective, a hospital is a health treatment
factory, and a restaurant is a food service factory.

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 SERVICE ENCOUNTER STAGE
(Distinctions between High-Contact and Low-Contact Services)
• Because each of these industries focuses on “processing” people rather than
inanimate objects, the marketing challenge is to make the experience
appealing for customers in terms of both the physical environment and their
interactions with service personnel.
• During the course of service delivery, customers are usually exposed to many
physical clues about the organization —
– the exterior and interior of its buildings,
– the equipment and furnishings,
– the appearance and behavior of service personnel,
– other customers,
– the pace of service encounters, etc.
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 SERVICE ENCOUNTER STAGE
(Distinctions between High-Contact and Low-Contact Services)
• Low-Contact Services
• At the opposite end of the spectrum, low-contact services involve little,
physical contact if any, between customers and service providers.
• Instead, contact takes place at arm’s length through electronic or physical
distribution channels.
• For example, customers conduct their insurance and
banking transactions by mail, telephone, and Internet;
or buy a variety of information-based services online
rather than from brick-and-mortar stores.

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 SERVICE ENCOUNTER STAGE
(Distinctions between High-Contact and Low-Contact Services)
• In fact, many high-contact and medium-contact services are being
transformed into low-contact services as part of a fast-growing trend
whereby convenience plays an increasing importance in consumer choice.

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 SERVICE ENCOUNTER STAGE
(The Servuction System)
• French researchers Pierre Eiglier and Eric Langeard were the first to
conceptualize the service business as a system that integrates
marketing, operations, and customers.
• They coined the term servuction system (combining the terms
“service” and “production”), which is part of the service
organization’s physical environment visible to and experienced by
customers.
• The servuction model shows all the interactions
that together make up a typical customer
experience in a high-contact service.
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 SERVICE ENCOUNTER STAGE
(The Servuction System)
• Customers interact with the service environment, service
employees, and even other customers who are present during the
service encounter.

Adapted and expanded from an original concept by Eric

Langeard and Pierre Eiglier

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 SERVICE ENCOUNTER STAGE
(The Servuction System)
• Each type of interaction can create value (e.g., a pleasant
environment, friendly and competent employees, or other
customers who are interesting to observe) or destroy value (e.g.,
another customer blocking your view in a movie theater).
• Firms have to “engineer” all interactions to make sure their
customers get the service experience they came for.

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 SERVICE ENCOUNTER STAGE
(The Servuction System)
• The servuction system consists of

• where inputs are processed and

Technical
the elements of the service
Core
product are created.

Service • where the final “assembly”

Delivery takes place and the product is
System delivered to the customer.

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 SERVICE ENCOUNTER STAGE
(The Servuction System)
• Technical core:
– This technical core is typically back-stage and invisible to the customer
(e.g., think of the kitchen in a restaurant).
– Like in the theater, the invisible components can be termed “back-
stage” or “back office,” while the visible components can be termed
“front-stage” or “front office.”
– What goes on back-stage usually is not of interest
to customers. However, if what goes on backstage
affects the quality of front-stage activities, they will
notice.
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 SERVICE ENCOUNTER STAGE
(The Servuction System)
• Service delivery system:
– This subsystem includes the visible part of the service operations
system — buildings, equipment, and personnel — and possibly other
customers.
– Using the theater analogy, the visible front office is like a live theater
where we stage the service experience for our customers.

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 SERVICE ENCOUNTER STAGE
(The Servuction System)
• The proportion of the overall service operation that is visible to
customers varies according to the level of customer contact.
• Because high-contact services directly involve the physical person of
the customer, the visible component of the entire service operation
tends to be substantial, and many interactions — or “moments of
truth” — have to be managed.
• In contrast, low-contact services usually have most
of the service operations system back-stage with
front-stage elements limited to online, telephone,
or mail contacts.
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 SERVICE ENCOUNTER STAGE
(The Servuction System)
• Here, customers normally do not see the “factory” where the work
is performed, making the design and management of such facilities
much easier.
– For example, credit card customers may never have to visit a physical
bank — they only transact online and may once in a while talk to a
service employee on the phone if there is a problem, and there is very
little left of the “theater” performance.

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 CONCLUSION

• We covered the pre-purchase stage by understanding the formation of

service expectations and, finally, by comprehending the purchase
decision.
• Afterwards, we came to service encounter stage. Under this stage we
covered three models/frameworks, “Moments of Truth” metaphor,
High/low contact model and Servuction model .

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 REFERENCES

• Wirtz, J., Lovelock, C., & Chatterjee, J. (2017) Services Marketing:

People Technology Strategy, Pearson Education, Eighth Edition.
• Zeithaml, V. A., Bitner, M. J., Gremler, D. D., and Pandit, A. (2009)
Services Marketing: Integrating customer focus across the firm, Tata
McGraw-Hill Education Pvt. Ltd., Fourth Edition.
• Hoffman, K. D., & Bateson, J. E. G. (2007) Services
Marketing : Concepts, strategies, & cases, Thomson
Publication, Third Edition.

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Thank You

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