Chapter 2 - 2015

• Explain the relevance of perceived risk and information search at the pre-purchase stage of the buying process.. • Describe why mood states, role and script theory and control theory a

Chapter 2

Customer behaviour, culture

& service encounters

II Case: Dr Beckett’s dental office

II SERVQUAL’s scales (Parasuraman, Zeithaml & Berry, 1988)

II Objectives

• Explain the three-stage model of service consumption

• Explain the effect of culture upon consumer behaviour in service settings

• Explain the relevance of perceived risk and information search at the pre-purchase stage of the buying process

• Explain why it is necessary to understand and accommodate customers’ intrinsic needs and values

• Describe why mood states, role and script theory and control theory are central to understanding customer behaviour in service settings

II Understanding customer behaviour

• Consumer behaviour is strongly influenced by culture

• Asian/Eastern (collectivist) cultures are distinctly different from Western (individualistic) cultures

II Figure 2.1

A typical model of a customer’s decision process

II Impact of culture

• Culture is the sum of learned beliefs, values &

customs that create behavioural norms for a given society

• Hofstede (1984) identified 4 underlying dimensions

of cultural values:

Collectivism/individualism Uncertainty avoidance

Power distance Masculinity/femininity

II Figure 2.2a

Diffusion of innovation in a Western context

Sch Ü tte & Clarlante (1998)

II Figure 2.2b

Diffusion of innovation in an Asian context

Sch Ü tte & Clarlante (1998)

II The three-stage model of service consumption

• Pre-purchase decision making

• Purchase and consumption - the service encounter

• Post-encounter stage

II Stage 1: Pre-purchase decision making

• Need arousal: kích thích nhu cầu

• Information search: tìm kiếm thông tin

• Evaluating alternatives: đánh giá các phương án

• Perceived risk: rủi ro cảm nhận

• Risk & uncertainty aversion: ngại rủi ro, không chắc chắn

• Strategies for risk reduction: Chiến lược giảm rủi ro

• Information sources used to select business services:

II Need arousal

• People’s unconscious minds

(e.g., personal identity and aspirations)

• Physical conditions

(e.g your hunger need drove you

to Starbucks for breakfast)

• External sources

(e.g a service firm’s marketing activities - e.g., advertising)

II Evaluating alternatives

• Search attributes

• Experience attributes

• Credence attributes

II Table 2.3

Perceived risks in purchasing and using services

II Several factors may enhance risk and

uncertainty (1)

• When the service is highly intangible

(a ‘pure service’)

• When the service is relatively new

• When the service is complex (e.g., medical, legal, higher education and financial services)

II Several factors may enhance risk and

uncertainty (2)

• When the customer is relatively inexperienced, and thus lacks knowledge and confidence to evaluate different suppliers (e.g., pest control)

• When service brands are customised rather than standardised

• When the purchase is important to the customer

II Strategies for risk reduction (1)

• Seek more information, especially from respected personal sources (e.g., friends & respected peers)

• Rely on the reputation of the firm

• Look for guarantees and warranties

• Ask knowledgeable employees about competing services

II Strategies for risk reduction (2)

• Look for opportunities to try the service prior to purchase (e.g., first visit free at the fitness centre)

• Use the World Wide Web to search for information

• Remain loyal to their current service because they know what to expect

• Look for tangible cues or other physical evidence

as a means of assessing the quality of the service and reducing perceived risk

II Information sources

used to select business services

• Whether the client had used the supplier before

• Degree of experience possessed by the client in buying this type of service

II Stage 2: Purchase and consumption—

the service encounter

Service encounters: three levels of customer contact Mood states

Role and script theory Control theory

Employees also need control Understanding customers’ psychological needs & values Critical incidents in service encounters

II Control theory

• Cognitive control

II Table 2.4 Categorising critical incidents leading to

significant customer satisfaction or dissatisfaction with

an employee of an airline, hotel or restaurant

II Stage 3: Post-encounter stage

• Customer satisfaction with

service experiences

• Service expectations

Mini case:

Personal trainers – A growth opportunity

(p 65)

Questions for discussion:

What might be important behavioral considerations for John to take into account in thinking about this opportunity?

If John goes ahead, what might be typical risk

factors of concern to his clients, and what would you recommend by way of dealing with them effectively? What other behavioral considerations are likely to be important in providing this service, and why?