Consumer Behavior in Service Marketing
Understanding Customer Needs, Decision Making,
and Behavior in Service Encounters
Building the Service Model
Managing the Customer Interface
Implementing Profitable Service Strategies
How consumers seek, choose, purchase ,experience
and evaluate services
Two most important influences- consumers life
stage and the generation in which he/she was born
Consumer Decision Making: The Three-Stage
Buying cycle
– Pre-purchase Stage
– Service Encounter Stage
– Post-purchase Stage
• Consumers are rarely involved in the manufacture of goods
but often participate in service creation and delivery
• Challenge for service marketers is to understand how
customers interact with service operations
• Based on differences in nature of service act
(tangible/intangible) and who or what is direct recipient of
service (people/possessions), there are four categories of
services:
◦ People processing
◦ Possession processing
◦ Mental stimulus processing
◦ Information processing
People Processing
Possession processing
Mental stimulus
processing
Information processing
Who or What Is the Direct Recipient of the Service?
Nature of the Service Act People Possessions
Tangible Actions People processing Possession processing
(services directed at (services directed at
people’s bodies): physical possessions):
Barbers Refueling
Health care Repair/ maintenance
Intangible Actions Mental stimulus Information processing
processing
(services directed at
(services directed at
intangible assets):
people’s minds):
Accounting
Education
Banking
Advertising
Customer must physically enter
the service system
Health care
Beauty saloon
Barber
Restaurant/bars
People Processing
Customers must:
◦ Physically enter the service
factory
◦ Co-operate actively with the
service operation
Managers should think about
process and output from
customer’s perspective
◦ To identify benefits created
and non-financial costs:
Time, mental, physical effort
Customer ask to provide
tangible treatment
Repair/ maintenance
Refueling
Laundry
Gardening
Possession Processing
Customers are less physically
involved compared to people
processing services
Involvement is limited
Production and consumption
are separable
Directed at people’s mind or
anything that touches people
mind and influence behavior
Education
News/information
Music concert
religion
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”
Accounting
Banking
Legal services
Securities investment
Information Processing
Information is the most
intangible form of service
output
But may be transformed into
enduring forms of service
output
Pre purchase
Service Encounter
Post Purchase
The decision to buy and use a service is made in the
pre purchase stage.
Awareness of Need
Information Search
Evaluation of Alternatives
Service attributes, Perceived risk, Service expectations
Purchase
Decision
Awareness of Need
Seek solution to aroused needs
• 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., chronic back pain)
– External sources (e.g., marketing activities)
•When a need is recognized, people are likely
take action to resolve it
Information search
When a need is recognized, people will search for solutions.
Information may be collected from Internal sources or
External sources.
Internal sources include information retrieved by the
customer from his memory, related to his previous
experience of buying of services.
External sources include personal and nonpersonal sources.
Personal sources- Family, neighbor, Friends etc.
Nonpersonal sources- Advertising, Dealers, Television,
Newspapers, radio etc.
Clarifying between the 2 options
or
Evaluation of Alternatives
Service Attributes
The ‘Search’, ‘Experience’ and ‘Credence’ are some of
the factors which create difference between service
and goods.
Search attribute- Attributes which can be evaluated
before purchase are called Search attributes & it help
customers evaluate a product (Physical Goods) before
purchase like- style, color, texture, taste, sound are
feature.
Experience attribute- Consumer can determine or
evaluated only after the purchase—must “experience”
the service to know what they are getting. Like-
Holidays, sporting events, medical procedure.
Credence attribute- Attributes that customers find
impossible to evaluate confidently even after
purchase and consumption. Like- hygiene of a
kitchen in a restaurant, Quality of repair and
maintenance work
Goods / Services Characteristics
Goods High on Search Attributes
Services High on Experience & Credence
Attributes
Perceived Risks
A perceived risk is the uncertainty faced by consumers when they
can’t asses the post purchase consequences before purchasing
the product & it is involved in all customer decision.
• Functional Risk – Risk faced by customer that product which
customer purchased may fail to function according to his
expectations or unsatisfactory performance outcomes.
• Financial Risk – Risk faced by consumers when he needs to pay
for the service like- monetary loss, unexpected extra costs
• Physical Risk – It involve the risk to the physical safety of the
customer by using the products/ services. personal injury etc.
• Psychological Risk – It is the risk of causing harm to one’s self
image by making a poor service. Like- fears and negative
emotions
• Social Risk – This is the risk of having to face social
embarrassment as a result of make a poor service choice.
• Time Risk- This is the risk that time spent to search and locate
a service prior to purchase may have been wasted, if service
• 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
Aditya Global Business
School(Marketing Team)
A service encounter is a period of time during which you as
a customer interact directly with the service provider
It begins with submitting an application,
requesting a reservation, or placing an order
High Contact Low Contact
Service Service
Customer’s exposure Little, if any physical
takes on a physical and contact between customer
tangible nature and service provider
Eg. Hotels, Restaurants, Ex. Telephone based
service delivery etc.
Healthcare, public
transportation etc.
Customers evaluate service quality & their satisfaction/ Dissatisfaction
with the service experience. The outcome of this process will affect their
future intentions, such as whether or not to remain loyal to the provider
that deliver service.
Evaluation of service performance
Future intentions
Satisfaction: attitude like judgment following a purchase act
Negative Positive
disconfirmation- confirmation-
Service worse than service better than
expected expected
Customer evaluate service quality by comparing what
they expected with what they received.
If their expectations are met or exceeded, they believe
they have received high quality service and customer is
satisfied.
If the service experience does not meet customers’
expectations, they may complain about poor service
quality, suffer in silence, or switch providers in the
futures.
After purchasing a service, the customer
evaluates it by comparing its performance with
his expectation.
Brand Switcher Post- Purchase Evaluation Brand Loyal
-ve +ve
A satisfied customer becomes brand loyal,
gives positive feedback to others about the
service.
Delight- The product’s performance is exceeds
the buyer’s expectations.
Satisfaction- The product’s performance
matches the buyer’s expectation.
Dissatisfaction- The product’s is performance
does not match the buyer’s expectation.
Cognitive Dissonance (Post- purchase Doubt)-
The buyer is unsure of the product performance
relative to his or her expectations.