10 Consumer Decision Making

Dr. Puja Waalia Mann

1.0 Introduction

Consider buying a holiday package from a travel agent. You visit a travel agent who offers a bunch of different variety of packages and quotes varying price tags. He takes up the responsibility of managing for the transport, for the local pick and drop, the hotel as well as the food and local sightseeing. One consideration for the consumers would be to get the cheapest possible price for all the services put together. But another would be to get an expected level for service within the same price tag i.e. to get the value for money. In between getting the trip offer and making the payment for the trip, the consumers has many factors which affect his decision making. These factors could range from his personal experiences, to the ones shared by his family or friends and even these days the feedback that one gets from the social media. Added to this is the marketing stimuli which means the promotional tools which give inputs to the consumer thought process and the other stimuli which means the uncontrollable information which a consumer receives from various sources. Thus, a consumer needs to make a choice of the Brand of service to be purchased, timing of its purchase and the price at which it should be purchased within so much of information that comes his way. This complex process of making a purchase decision is known as Consumer Decision Making.

1.1 Learning Objectives – After studying this chapter, you should be able to know:

a)      The different buying situations

b)      Discuss why service characteristics like intangibility and quality control problems affect consumer

evaluation processes

c)      Describe the relationship between customer expectations and customer satisfaction

d)     Explain the purchase process for services

1.2 Key Words- Service, consumer buying, consumer satisfaction, High- contact services

1.3 Buying Situations Faced By The Consumer:

For designing customised services , service providers not only need to know what customers want but also need to know the nature of their actual experiences and also the service buying process. This will help a marketer to better understand consumer expectations especially in high contact services. High contact services are those where there is direct interaction between consumer and service provider. Deciding to buy a product is often a complex purchase process which requires lots of time and efforts. Consumer purchase process refers to the stages a consumer goes through in choosing, consuming and evaluating services.

Customers find themselves in different situations, from purchase to purchase and service transaction to service transaction. For example, two trips to the retail bank for two different purposes (e.g., the first to deposit a cheque in his savings account and the second for a home loan) may not have the same purchase decisions.

The three buying situations as elaborated by Howard and Seth are:

TOOL BOX

Three buying situations

Straight Re-buy or Routinized response behaviour Modified Re-buy or Limited problem solving

Extensive problem solving or Critical problem solving or New Task

Straight Re-buy or Routinized response behaviour-

In this buying situation, the customer comes for repurchase the same service product like a bank draft. Customers are less involved in purchase process because services purchased are of frequent and daily use.

Modified Re-buy or Limited problem solving-

In this situation, the customer does not meet one or more of the differentiation criteria. In other words services purchased are almost similar to previous purchase.He or she may be aware of the category or brand but not the new version or form.

Extensive problem solving or Critical problem solving or New Task-This situation arises when customer is in this buying situation when the offer is totally unfamiliar, and he is not clear either about his decision criteria or his evaluation criteria. This is because of his lack of knowledge of the offer. This happens for most service offers like a vacation, package tours, flights, insurance as well as major consultancy contracts.

CHECK YOUR PROGRESS

1.      “Service Marketing, is a broad term that covers concepts used by companies to manage their relationships with customers.” Do you agree? Why/ Why not?

2.      Define Services with the help of an example.

3.      Explain the various buying situations faced by consumer during experiencing services.

1.4 How Customers Evaluate Service Performances:

Service performances which contains few tangible clues can be difficult for consumers to evaluate. As a result, there is a greater risk of making a purchase that proves to be disappointing. If a customer buys a physical good that proves disappointed, the product can usually be reverted or supplanted,although this work may demand extra effort on the customer’s hand. These options are not as readily available with services, although some services can be repeated. For example, a cleaning service can be clean an office if a customer complains about the quality of the job. A bad haircut must be grown out, and the consequences of a faulty surgical operation or a poorly done tattoo may last a lifetime.

A Continuum of Service Attribute: One of the basic differences between goods and services is that services are difficult for customers to evaluate. Service attributes could be divided into search, experience, and credence properties and they provide a useful framework for understanding how consumers evaluate different types of market offerings. All services can be placed on a continuous basis ranging from “easy to evaluate” to “difficult to evaluate” depending on whether they are high in search attributes, experience attributes, or credence attributes. Let’s discuss all of them:

Search Attributes– Physical goods tend to emphasize those attributes that allow customers to evaluate a product before purchasing it. Features like style, colour, texture, taste, and sound allow prospective consumers to try out, taste test, or “test drive” the product prior to purchase. These tangible attributes help customers understand and evaluate what they will get in exchange for their money and reduce the sense of uncertainty or risk associated with the purchase occasion. Goods such as clothing, furniture, cars, electronic equipment, and foods are high in search attributes. But this is not in a case of Services.Incidentally services lack such attributes that’s why service marketer creates physical evidence.

Tool Box

Service Attribute

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Search Attributes Experiential AttributesCredence Attributes

Experiential Attributes– When features can’t be assessed prior to purchase, customers must “experience” the service to know what they are getting. Customers have to experience by consuming service only than they can evaluate the attributes of services for example- Holidays, live entertainment performances, sporting events, and restaurants. Although people can examine brochures, scroll through Web sites describing the holiday destination, view travel films, or read reviews by travel experts, they can’t really evaluate or feel them until they actually experience these activities. Nor can customers rely on information from friends, family, or other personal sources when evaluating these and similar services, because different people may interpret or respond to the same stimuli in different ways.

Credence Attributes–Those service characteristics that customers find impossible to evaluate even after purchase and consumption are known as credence attributes. Customer is forced to trust those benefits that have been delivered, even though it may be hard to document them. For example, in Medical services patients can’t usually evaluate how well their dentists have performed complex dental procedures.

1.5 How Perceived Quality Relates to Satisfaction:

The terms “quality” and “satisfaction” are sometimes used interchangeably. But some researchers believe that perceived service quality is one component of customer satisfaction, which reflects price/quality trade-offs. Satisfaction can be defined as an attitude like judgment following a purchase act or a series of consumer product interactions. Most studies are based on the theory that the approval/disapproval of pre-standards is the essential determinant of satisfaction. This reflects that customers have certain service standards in mind prior to consumption (their expectations), observe service performance and compare it to their standards, and then form satisfaction based upon this comparison.

But the question arises, why is satisfaction important to service managers? There’s evidence of strategic links between the level of customer satisfaction and a firm’s overall performance. Some marketers claim that the phrase “your satisfaction is guaranteed or your money back” has become a standard promise for many businesses.

However, customer satisfaction is not an end rather it’s a mean to achieving key business goals.

First, satisfaction is inseparably linked to customer loyalty and relationship commitment.

Second, highly satisfied customers spread positive word-ofmouth. They are like walking, talking advertisements for an organization whose service has pleased them. And this could minimises the cost of attracting new customers

Third, highly satisfied customers may be more kind. Someone who has enjoyed good service delivery in the past is more likely to believe that a service failure is a deviation from the norm. It may take more than one unsatisfactory incident for strongly loyal customers to change their perceptions and consider switching to an alternative supplier. In this respect, high levels of customer satisfaction act like an insurance policy against the impact of a single failure.

Finally, delighted customers are less vulnerable to competitive offerings than customers who are simply satisfied or are unhappy with their current service provider.

Customers can also contribute to Quality, satisfaction and value in the service delivery. Often a customer may not be actively interested to increase the productivity of the services of the seller but they are very much concerned about satisfaction of their own needs, which in process may be a learning for the service organisation. This situation can be best described by taking the examples of the medical, educational or legal services. A customer may not be bothered about the overall physical evidence of the hospital or dispensary if he is getting relived of his illness. However, in the process of satisfying his own needs of hygiene, he may contribute in the improvement of the overall cleanliness of the hospital.

Predominantly, it is believed that the success of a consumer buying process, thereby resulting in the success of the Service organization, largely depends upon the Service employees. There are several research studies also conducted that reflect that the success of any service delivery depends upon the processes involved in delivering the service, service HR and the related tangibles to be served along with the service to the consumers. However, there is another important actor in measuring the success or otherwise of the service and that is the Consumer. In many services it is observed that the consumers play a vital role in creating the desired level of service outcome, eventually enhancing or sacrificing their satisfaction level or the value for money perceived to be received. It is ultimately the consumer who decides the fate of a Brand. A Brand perceived as successful by the consumer has the power to charge a premium over its competitors in the cut throat competition. This is true not only for the end consumers in health care or education services but also for the business consumers buying legal or the maintenance services. In these buying situations the customers are an active and integral part of the service creation and service delivery so that they are satisfied with the service. For instance, an HR manager of a Telecom organization wants to hire the services of a Training organization to impart required skills to its Marketing staff, he would be deeply involved in the process of- identifying the need for the training programme; Discussing the content and the skills to be imparted; Methods of delivery of training; Identification and necessary arrangements of participants; Deciding the time, duration, venue, stationery, audio-visual aids required for the training session; Observing the progress of the training and the Evaluation of the effectiveness of the programme. The HR manager has to be constantly involved in the entire training programme along with the outsourced trainers. Thus in such case, the success of the training programme is directly related to two parties representing the customer- HR manager and the Training participants. The success of the training module is dependent upon the needs shared by the HR manager and the participation and learning of the participants.

CHECK YOUR PROGRESS

1.Explain why it is required to evaluate the services?

2. Why is satisfaction important to service managers?

3.Explain the various attributes required to evaluate the services.

1.6 Stages in Consumer Decision Making Process

Many a times, marketers may be motivated to believe that the consumer buying is a random process of choosing a product or a Brand. They might feel that some services might appeal to some consumers who decide to make a purchase and may not appeal to others and who may not buy the same. However, the fact is that the consumers do have a distinctive steps of process which they go through before making any purchase decision even when they themselves may not realise having gone through these steps.

The main aim of all service producers and marketers is somehow identical: i.e to develop and provide offerings that satisfy consumer needs and expectations,thereby confirming their own economic survival. In other sense, service marketers should try to close the customer gap between expectations and perceptions. To achieve this, service marketer need to know 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 phase explains the consumer buying decision process.A consumer goes through several stages before purchasing a product or service.

NEED IDENTIFICATION

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INFORMATION GATHERING/SEARCH

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EVALUATION OF ALTERNATIVES

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PURCHASE OF PRODUCT/SERVICE

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POST PURCHASE EVALUATION

Step 1 Need Identification–

The consumer buying of service begins with the recognition that a need or want exists. Need infact is the catalyst which activates the buying decision of individuals. Whenever the individual feels the deficiency of something, he is motivated to take an action to fulfil his need. The concpt of a consumer having multiple needs has already been covered at the elementary learning of Management i.e. Maslow’s Need hierarchy theory. Abraham Maslow divided an individual’s needs in five levels as follows: Physiological needs- need for food, water, shelter, sex ; Security needs- safety of life and safety of job; Social needs- need for love, warmth and friendship; Self-Esteem Needs- self respect and status and lastly the Self actulaisation needs- which creates demand for things which have not been sought at the lower levels.

An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst. However in such cases steps such as information search and evaluation of alternatives are generally missing. These two steps are important when an individual purchases expensive products/services such as laptop, cars, mobile phones and so on.

Step 2 Information Gathering/Search–

After identifying his need for a particular product/service consumer tries to gather information.Seeking information may be an extensive, formalised process if the service or good is important to the consumer or it represents a major investment(e.g., a foreign vacation package). In other cases, the information search may be quick and relatively automatic (e.g., a restaurant for a quick lunch).

An individual can acquire information through any of the following sources:

• Personal Sources – Like his friends, family members, co-workers and other acquaintances.
• Commercial sources – Advertisements, sales people, Packaging of a particular product in many cases prompt individuals to buy the same, Displays (Props, Mannequins etc.)
• Public sources – Newspaper, Radio, Magazine
• Experiential sources – Individual’s own experience, prior handling of a particular product

Step 3 Evaluation Of Alternatives-

After information search the next step is to identify potential suppliers and then analyse the benefits and risks of each option before making a final decision. This element of perceived risk is especially relevant for services that are high in experience or credence attributes and thus difficult to evaluate prior to purchase and consumption. First-time users are especially likely to face greater uncertainty. Risk perceptions reflect customers judgments of the probability of a negative outcome.When customers feel uncomfortable with risks, they can use a variety of methods to reduce them during the pre-purchase stage. In fact, you’ve probably tried some of the following risk-reduction strategies yourself before deciding to purchase a service:

Seeking information from respected personal sources (family, friends, peers)

Relying on a firm with a good reputation Looking for guarantees and warranties

Visiting service facilities or trying aspects of the service before purchasing Asking knowledgeable employees about competing services

Examining tangible cues or other physical evidence Using the Web to compare service offerings

Step 4 Purchase of Services–

After going through all the above stages, customer finally purchases the product. With the overall evaluation as a decision making criteria, the customer takes either of the two decisions: to buy or not to buy. The decision to buy would include the offer, the most preferred brand, method of purchase and payments.

Step 5 Post Purchase Evaluation-

The purchase of the product is followed by post purchase evaluation. Post purchase evaluation refers to a customer’s analysis whether the product was useful to him or not, whether the product fulfilled his need or not? The customer has two types of reactions: pleasure and pain. When the service delivery is below expectation, the customer is disappointed, dissatisfied, and experiences pain. He is literally pained at the poor service delivery.If the service delivery is as expected by thecustomer then the customer is satisfied. But if the service delivery is beyond expectation, the customer is “delighted”. The service marketer should concentrate all his attention on customer delight to retain the customer.

FILL IN THE BLANKS

1.   The consumer buying of service begins with the _______that a need.

2.   Purchase of the product is followed by________ evaluation.

3.   The service delivery is beyond expectation, the customer is “________”.

4.   Satisfaction can be defined as an ________.

ANSWER:- 1. Recognition 2.post purchase 3. Delighted 4.attitude

Conclusion

Successful service firms are well informed about their customers and are selective about the prospects that they target. Gaining a better understanding of how customers evaluate, select, use services should lie at the heart of marketing strategies. It also has implications for choice of service processes, presentation of physical evidence, and use of marketing communications. Several of the distinctive characteristics of services (especially intangibility and quality control problems) result in customer evaluation procedures that differ from those involved in evaluating physical goods. Because the consumer evaluation and purchase processes for many services are complex, service managers need to understand how customers view the service offering and to explore the factors that determine customer expectations and satisfaction. To understand service usage, it’s helpful to employ flowcharting, which provides a visual picture of the service delivery process from the customer’s perspective.

Learn More

1. Ravi Shanker, ‘Services Marketing: The Indian Perspective’, Excel Books.
2. Lovelock, ‘Services Marketing: People, Technology, Strategy’, Pearson Education.
3. Zeithaml and Bitner, ‘Services Marketing: Integrating Customer Focus Across the Firm’,Tata McGraw Hill.
4. Rust, Zahorik, and Keiningham, ‘Service Marketing’, Addison Wesley.
5. C.bhattacharjee, Services Marketing: Concepts, planning and implementation’,Excel Books