LESSON: 4 - CONSUMER NEEDS AND
EXPECTATIONS
OBJECTIVES
After going
through this lesson, you will be able:
➢
To understand why it is important to have
a proper knowledge of the consumer
➢
To identify the kinds of role that is played in purchase process.
➢
To know the factors influencing
consumer behavior.
➢
To explain the consumer decision making process.
INTRODUCTION
The
primary objective of service producers
and
marketers is identical to that
of all
marketers: to develop and provide offerings
that satisfy consumer needs and expectations, thereby ensuring
their own economic survival. In other
words, service marketers need to be
able to close the customer gap between expectations and perceptions. To achieve
this objective, service providers
need to understand how consumers choose and evaluate their service offerings. Unfortunately, most of what is known about consumer evaluation processes pertains specifically to goods. The assumption appears to be that services, if not
identical to goods, are at least similar enough in the consumer’s mind that they are chosen
and evaluated in the same manner.
This chapter challenges that assumption and shows that services’ unique characteristics necessitate different consumer evaluation process
from those used in assessing goods. Recognizing these differences and thoroughly understanding consumer evaluation
processes are critical for the customer focus on which effective services marketing is
based. Consumers have a more difficult
time evaluating and choosing services than goods, partly because
services are intangible and non-standardized and partly because consumption is so closely intertwined with production. These characteristics lead to
differences in consumer evaluation processes
for goods and services in all stages of buying process.
CUSTOMER NEEDS AND
EXPECTATIONS
Customers buy goods and services
to met specific needs, and they evaluate
the outcomes of
their purchases based on what they expect to receive. Needs are deeply rooted in people unconscious minds and concern long-term existence and identity issues. When people feel a need, they are motivated to take action
to fulfill it. Abraham Maslow identified five
categories of human needs- physiological, safety, love, esteem and self-actualization- and proposed that basic needs
such as food and shelter
must be met before
others can be fulfilled.
Greater prosperity means that increasing
numbers of individuals are seeking to satisfy social and self-actualization needs,
which create demand for more sophisticated goods and services. For instance, travel and leisure services
have been a major beneficiary
of increased
disposable
income, leading
many
firms
to
develop
a
variety
of
enticing vacation packages. However,
as customer needs and preferences continue to evolve, the
leisure industry needs to adapt its offerings accordingly.
The shift in consumer behavior
and attitudes provides
opportunities for service companies
that understand and meet changing needs, continuing to adapt their offerings over time as
needs evolve. Customers’ expectations about what constitutes good service vary from one business to another. Expectations are also likely to vary in relation
to differently positioned service providers in the same industry.
When individual customers or corporate
purchasing departments evaluate the quality of a service, they may be judging it against some internal
standard that existed prior to the service experience. Perceived service quality results from customers comparing
the service ‘they perceive
they have received’ against what ‘they expected
to receive’. People’s expectations about services tend to be strongly influenced
by their own prior experience as customers-with
a particular service provider, with competing services in the same industry, or with related services
in different industries. If they have no relevant
prior experience, customers may base their pre-purchase expectations on factors such as word-of-mouth
comments, news stories,
or the firm’s marketing
efforts.
Customer expectations embrace several different elements, including desired
service, adequate service, predicted service,
and a zone of tolerance that falls between the desired and adequate service levels.
Desired and adequate service levels-Desired service is the type of service customers hope
to receive. It is a wished-for level of service-a combination of what customers believe can
be and should be delivered in the context of
their personal needs. However, most
customers are realistic and understand that companies
can’t always deliver the level of service they would prefer; hence, they also have a threshold level
of expectations, termed adequate service, which is defined
as the minimum level of service customers will accept without
being dissatisfied.
Predicted
service-The
level of service customers actually anticipate receiving is known as predicted
service and directly affects how they define adequate service on any given
occasion. If good service is predicted, the adequate level will be higher than
if poorer service is predicted. Customers predictions of service may be
situation specific.
Zone of tolerance-The inherent
nature of services makes consistent service delivery
difficult across employees in the same company
and even by the same service
employee from one day to another. The extent to which customers are willing to accept this variation is called the ‘zone of tolerance’. A performance that falls below the adequate service level will
cause frustration and dissatisfaction, whereas
one that exceeds
the desired service level will both please and surprise customers, creating what is sometimes referred to as customer delight. 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. By contract, when service falls outside the range, customers will react either
positively or negatively.
The zone of tolerance
for individual customers depending on factors such as competition,
price, or importance of specific service attributes.
DECISION MAKING
ROLES
In the buying decision
process, at times, other people also influence the buying
decision and these people have a definite
role to play. In the purchase of any particular
service, six distinct roles are played. These are:
Initiator-The person
who has a
specific need, and proposes to
buy a particular service.
Influencer-The person or the group of people who advise the decision
maker. These could be reference
groups, both primary and secondary. It could
be even secondary reference
group like word of mouth or media, which can influence the decision maker.
Gatekeeper-The person or organization or promotional material which acts as a filter on the range of service which enter the decision choice
set.
Decider-The person who makes the buying decision.
Irrespective of whether they execute
the purchase themselves or not, they may instruct others to execute.
It has been observed, at times, more typically in household or family or individual related
services that one member of the family may dominate in the purchase decision.
Buyer-The person who makes the actual purchase
or makes bookings for a services
like our lives travel, hotel room,
hospital, bed diagnostic lab, etc.
User-The person who actually
uses or consumes the product.
It can be someone other than the
buyer. In a number of services
it has been observed that users are also the influencers.
FACTORS INFLUENCING CONSUMER BEHAVIOUR
There are a number of factors
or variables which
affect buying behaviour.
Situational factors
The situational factors influencing the buying behaviour are- the influence
of time pressure in service
and brand choice, the atmosphere of the service outlet, occasion of purchase, etc. For
example, if you are traveling, then demand for lodging
and boarding will obviously be there.
Socio-cultural factors
Buyers or consumers do not take buying decisions or the decision
not to buy, in a vacuum.
Rather, they are strongly influenced by cultural
and social factors.
Cultural factors
Children acquire
from their environment a set of beliefs values
and customs which constitute culture. These beliefs, values and customs go deeper and deeper
as a
person grows. Therefore,
it is sometimes said that culture is learned as a part of social
experience. The various sub-categories within a culture can be identified
based on religion, age, gender, occupation, social class, geographical location, etc.
Reference groups
There are certain groups to which people look to guide their behaviour.
These reference groups
may guide the choice
of a product but not necessarily the brand.
Peer group and peer pressure has generally been observed to play an important role in the purchase of credit cards,
cell phones, etc. The knowledge
of reference group behaviour
helps in not only offering
substitutes but also
in pricing and positioning them.
Family
The family is another major influence on consumer behaviour. Family consumption behaviour, to a large
extent, depends on the family life cycle. The stages in family life cycle include bachelorhood, newly married, parenthood with growing or grown up
children, post-parenthood and dissolution. Knowledge
of these stages helps
greatly in knowing
the buying process. Often family members play a significant role in the purchase of a particular
service.
Psychological
Factors
Perception-It is the process by
which buyers select, organize
and interpret information into a meaningful
impression in their minds. Perception is also selective
when only a small part
is perceived out of the total of what is perceptible. Buyer’s perception of a particular service greatly influences
buying behaviour.
Attitude-An attitude is a learned
predisposition to respond
in a consistently favourable or unfavourable manner with respect to a market offer (i.e., a brand, a particular shop or retail outlet, an advertisement, etc.). Attitude is a dispositional term indicating
that attitudes manifest
themselves in behaviour only under certain conditions. Knowing a buyer’s
attitude towards a product without knowing the personal goals is not likely to give a clear prediction of his behaviour.
Motivation- Motivation is the driving force within individuals that compels them to action.
This driving force is subconscious and the outcome of certain unfulfilled needs. Needs are
basically of two types- first, the ‘innate
needs’ are those needs with which an individual is born
and they are mainly physiological. They include all the factors required to sustain
physical life e.g., food, water, shelter, clothing,
etc. Secondly, the ‘acquired
needs’ are those which a person acquires
as he/she grows and these needs are mainly psychological, like love, fear, esteem, acceptance, etc.
Personal
factors
Personality- Personality can be described
as the psychological characteristics that determine how an individual will react to his or
her environment.
Life style-Life style as distinct from social class or personality is nothing
but a person’s pattern of living and is generally expressed in his/ her activities,
interests and opinions.
Life style suggests
differences in the way people opt to spend
on different products
or services differently.
Demographic
factors-Buyers demographic factors like age, gender,
education, occupation, etc., also influence his/her purchase behaviour.
In sum, knowledge on all such dimensions of the consumer will help in understanding his needs and wants and also help in integrating all these elements
in service offer which the consumer
wants.
SERVICE DECISION-MAKING PROCESS
Consumer decision-making process have four main categories: (1) information search,
(2) evaluation of alternatives, (3) purchase and consumption, and (4) post-purchase evaluation.
In purchase of services, these categories do not occur in a linear
sequence the way they
most often do in the purchase of goods.
(a)
Information search
Use of personal sources- Consumers obtain
information about products
and services for personal sources (e.g., friends
or experts) and from non-personal sources
(e.g., mass or
selective media). When purchasing
goods consumers make generous use of both personal and non-personal sources because
both effectively convey information about search
qualities. When purchasing services, on the other
hand, consumers seek and rely to a
greater extent on personal sources.
Perceived risk-While some degree
of perceived risk probably
accompanies all purchase transactions, more risk would appear to be involved in the purchase of services than in he
purchase of goods because services
are intangible, non-standardized, and usually sold without guarantees or warranties.
First, the intangible nature of services and their high level of experience qualities imply that
services generally must be selected on the basis of less pre-purchase information than is the case for products.
Second, because services are non-standardized, there will always
be uncertainty about the outcome and consequences each time a service is purchased.
Third, service purchases may involve more perceived risk than product
purchases because, with few exceptions, services are not accompanies by warranties or guarantees. The dissatisfied service purchaser can rarely “return” a service; he or she has already consumed it by the time he or she realizes his
or her dissatisfaction.
(b)
Evaluation of service alternatives
Evoked set-The
evoked set of alternatives-that group of products a consumer considers
acceptable options in a given
product category- is likely to be smaller with services than with goods. One reason
involves differences in retailing
between goods and services. To purchase goods, consumers generally
shop in retail stores that display
competing products in close proximity, clearly demonstrating the possible alternatives. To purchase services,
on the other hand, the consumer visits an establishment (e.g., a bank, a dry cleaner,
or a hair salon) that almost always offers only a single “brand” for sale. A second reason for the
smaller evoked set is that consumers are unlikely to find more than one or two businesses providing the same services in a given geographic
area, whereas they may find numerous retail stores carrying the identical manufacturer’s
product. A third reason for a smaller
evoked set is the difficulty of obtaining adequate pre-purchase information about
services. Emotion and mood-Emotion and mood are feeling states
that influence people’s (and therefore
customers’) perceptions
and
evaluations
of
their
experiences.
Moods
are
distinguished from emotions in that moods refer to transient
feeling states that occur at specific times and in specific situations, whereas emotions are more intense, stable,
and pervasive.
Because services
are experiences, moods and emotions are critical factors
that shape the perceived effectiveness of service encounters. If a service
customer is in a “bad mood” when he enters a service establishment, service provision will likely be interpreted more
negatively than if he were in a buoyant, positive mood. Similarly,
if a service provider is irritable or sullen; his interaction with customers will likely be colored by that mood.
Furthermore, when another customer in a service establishment is cranky or frustrated,
whether from problems with the service
or from existing emotions unrelated to the service,
his or her mood affects the provisions
of service for all customers who sense the negative
mood. In sum, any service characterized by human interaction is strongly dependent on the moods and emotions of the service provider,
the service customer and other customers
receiving the service at the same time.
(c)
Service purchase and consumption
Service provision as drama-Researchers and managers of service businesses have compared service
provision with drama, observing that both aim to create and maintain a desirable impression before an audience, and both recognize that the way to accomplish this is by carefully
managing the actors and the physical setting of their behaviour. In fact, the service marketer must play many drama-related roles (including director, choreographer, and writer)
to be sure the performances of the actors are pleasing to the audience.
The skill of
the service “actors” in performing their routines,
the way they appear, and their
commitment to the “show” are all pivotal
to service delivery. While service
actors are present in most service performances, their importance increases
when the degree of direct personal contact increases (such as in a hospital,
resort, or restaurant), when the services
involve repeat contact, and when the contact personnel
as actors have discretion in determining the nature of the service
and how it is delivered (as in education, medical services, and legal
services).
Services roles and scripts-If we think of service performances as drama, we can view
each players as having a role to perform. Roles
have been defined
as combinations of social cues that guide ad direct behaviour in a given
setting. The success
of any service
performance depends
in part on how well the “role set” or players- both service employees and customers- act out their roles. Service employees need to perform their roles according
to expectations of the customer; if they do not, the customer may be frustrated and disappointed.
One of the factors that most influences the effectiveness of role performance is a script- a “coherent sequence of events expected by the individual, involving
them either as a
participant or as an observer”. Service scripts consist of
a set of ordered actions,
actors, and objects that, through repeated
involvement, define what the customer expects. Con- formance to scripts is satisfying to the customer, while deviations from the script lead to confusion
and dissatisfaction.
(d)
Post purchase evaluation
Attribution of dissatisfaction- When consumers are disappointed with purchases-because
the products did not fulfill the intended needs, did not perform satisfactorily, or were no worth their price- they may attribute their dissatisfaction to a number of different sources,
among them the producers, the retailers, or themselves. Because consumers participate to a greater extent in the definition and production of services, they may feel more responsible for their dissatisfaction when they purchase
services than when they purchase
goods. As an example, consider a female consumer purchasing a haircut; receiving the cut the desires depends in part upon her clear specifications
of her needs to the stylist. If disappointed, she may blame either the stylist (for lack of skill) or herself
(for choosing the wrong stylist
or for not communicating her
own needs clearly).
Innovation diffusion- The rate of diffusion
of an innovation depends on consumers’ perceptions of the innovation
with regard to five characteristics: relative advantage,
compatibility, communicability,
divisibility, and complexity.
An offering that has a relative
advantage over existing
or competing products; that is compatible with existing norms,
values, and behaviours; that is communicable; and that is divisible (i.e., that can be tried or
tested on a limited basis) diffuses
more quickly than others. An offering that is complex, that is, difficult to understand or use,
diffuses more slowly than others.
Brand loyalty- The degree to which consumers are committed to particular brands of goods or services depends on a number of factors: the cost of changing brands (switching cost), the availability of substitutes, the perceived risk associated with the purchase,
and the degree to which they have obtained
satisfaction in the past. Because
it may be more costly to change brands of services,
because they may have more difficulty being aware of the availability of substitutes, and because higher risks may accompany services, consumers are
more likely to remain customers of particular companies
with services than with goods. Greater search costs and monetary
costs may be involved
in changing brands of services than in changing brands of goods. Because of the difficulty of obtaining information about services, consumers may be unaware of alternatives or substitutes for their brands, or may
be uncertain about the ability
of alternatives to increase satisfaction over present brands.
PURCHASE PROCESS
FOR SERVICES
When customers decide to buy a service to meet an unfilled need, they go through what is often
a complex purchase
process. This process
has three separate
stages-the pre-purchase stage, the service encounter
stage, and post-purchase stage.
Pre-purchase
stage
The decision
to buy and use a service is made in the pre-purchase stage. Individual needs and
expectations are very important
here because they influence what alternatives customers will consider. If the purchase is routine and relatively low risk, customers may
move quickly to selecting and using a specific service provider. But when more is at stake
or a
service is about to be used for the first time, they may conduct an intensive information search. The next step is to identify potential suppliers and then weigh the benefits and risks of each option before making a final
decision.
Service
encounter stage
After deciding
to purchase a specific
service, customers experience one or more contacts
with their chosen service
provider. Contacts may take the form of personal exchanges
between customers and service employees or impersonal interactions with machines or computers. In high-contact services,
such as restaurants, health care, hotels, and public
transportation, customers may experience a variety of elements during service delivery,
each of which has the potential
to provide clues to service
quality.
Service environments include all of the tangible characteristics to which customers are exposed. The appearance of building exteriors and interiors; the nature of furnishings and equipment; the presence or absence of dirt, odor, or noise; and the appearance and behavior of other customers can all serve to shape expectations and perceptions of service
quality.
Post-purchase stage
During the post-purchase stage, customers continue a process they began in the service encounter stage- evaluating service quality
and their satisfaction or dissatisfaction with the service experience. The outcome of this process will affect their future intentions, such as whether to remain loyal to the provider that delivered
service and whether to pass on
positive or negative recommendations to family members
and other associates.
Customers evaluate service quality by comparing
what they expected with what they perceive they received. If their expectations
are met or exceeded,
they believe they have
received high-quality service. If the price-quality relationship is acceptable and other situational and personal factors are positive, then these customers are likely to be satisfied. As
a result, they are more likely to make repeat purchases and become loyal customers. However, if the service experience does not meet customers’ expectations, they may complain
about poor service quality, suffer in
silence, or switch providers in the
future.
SUMMARY
Gaining a better
understanding of how customers evaluate, select, use, and occasionally abuse services should lie at the heart
of strategies for service design and delivery. In this chapter, we discovered that several of the unique characteristics of services mean that customer evaluation processes often
differ from those involved in evaluating physical goods and thus present unique challenges for services management.
KEYWORDS
Culture: A set of beliefs,
norms, values and customs.
Perception:
It is the process by which buyers select,
organize and interpret
information into a meaningful
impression in their minds.
Attitude:
It is a learned predisposition to respond in a consistently favourable or unfavourable manner
with respect to an object.
Motivation: It the driving force within
individuals that impels them to act in a particular
direction.
Personality: It can be described as the psychological characteristics that determine how an individual
will react to his or her environment.
Life
style: It is a person’s
distinct pattern of living and is generally expressed in his/ her activities,
interests and opinions.
SELF ASSESSMENT QUESTIONS
1.
Discuss the three
stages in the purchase process for services.
2.
Elaborate the various
steps involved in consumer decision making process
for services.
3.
Identify the kinds of role that are played in services
purchase process. Also write
important factors influencing
consumer behavior.
