9 Consumer Buying Behaviour for Services
Dr. Puja Waalia Mann
1.0 Introduction
Services can be defined as, “an activity or series of activities rather than things which has some element of intangibility associated with it, which involves some interaction between the customer and the service provider, and does not result in a transfer of ownership. Customer has a substantial role in the production process as the services are provided in response to the problems of customers as solution. The only reason for the existence of the service firms is the presence of customers and it forms the basis for all marketing strategies. Without an understanding of the customer, it would be impossible for the marketer to deliver the offer. That is why a marketer must have clear understanding of consumer buying behaviour and needs to answer many questions like what consumers buy? ,Why consumer buys, At what price they are ready to buy services? and so on.
1.1 Key words– Services, consumer behaviour, consumer satisfaction.
1.2 Learning Objectives-After studying this chapter, you should be able to know,
Consumer mind is compare with “Black Box”
What does customer buy
Understanding customer needs and expectations Consumer decision making roles
Factors influencing consumer behaviour
1.3 Why should we analyse the customer?
The buying behaviour of the consumer is studied, because the consumer’s mind is like a ‘black box’.
External Stimulus
“Black Box Effect”
The marketer can try to motivate the consumer but is not sure which way the buyer of the service would react: to buy or not to buy the offer. All that the marketer can study are all the external stimuli acting on the consumer, and his responses. The external stimuli are of two types:
Those controlled by the company through its marketing mixes like the offer, price of sale, advertising, special promotions like freebies, add-ons or celebrity endorsements.
Those which are social sources, like word –of-mouth and emanating from reference groups which have strong recommendations effect.
With this study- marketing, market and consumer research- the service marketer can claim to understand the consumer reasonably well. He can then tailor his marketing programme accordingly.
1.4 What does the customer buy? (Object)
Majorly customer buys goods, services, people, events, organizations, ideas, information and experiences. All these generally fall under goods and services. But the offers that they buy can be categorised into:
High Involvement offers
Low involvement offers/Impulse offers
High involvement service products have the following characteristics:
1. Complexity of features: Those services which has complex features will induce anxiety. Thus, an SLR (single lens reflex) camera preferred by professional photographers will induce higher involvement from the consumers than box cameras with only point-and-shoot features.
2. High price: High price of service products will make consumers slow and cautious in their decision making. This is the reason why they will debate on the pros and cons of consumption or service transaction costs of vacation, more than they would for a hair-cut.
3. High perceived risks: A consumer seesrisk in consumption in two ways: bodily harm and financial loss. For example- When consumer goes for cosmetic surgery, they well perceives higher risk in the offer than for a routine facial. Similarly, when the customer go for an investment in a realestate,they might feel the risk of losing financial loss.
4. Large differences in features: If the consumers feels that there are large differences in service features, then they would be highly involved. And if the situation is as in the home appliance industry, where consumers really don’t perceive much difference between products, then their involvement becomes low.
5. Large number of users: If there are a large number of users for a service offer, like a holiday package tour for family, then there is going to be more participation and involvement from all family members.
6. Enduring Product: If the service offer has a long life span or has a longer lasting effect- like selection of a school for a child – then it will make the decision-maker highly involved.
7. Self Reflects: Consumers are very muchconscious of their self-image and either want to maintain or change it. They do so by purchasing products and services hoping that by doing so it will strengthen their personality and self-image or help them acquire a new one.
Low involvement service products have the following features:
1. Low Price
2. Less difference in features
3. Simple features in the service product
4. Does not reflect a consumer’s personality
5. The products are of mostly daily needs
6. Low brand loyalty
Check your progress:
1. Why consumer mind is referred to ‘Black Box’ ?. Explain with Example.
2. What is the difference between High Involvement offer and Low Involvement offer?
3. Explain the features of High involvement service offer by taking example from hospitality service sector.
1.5 Understanding Customer needs and expectations
Customers purchaseservices to meet specific needs, and they evaluate the outcomes of their purchases based on what they expect to receive.
Needs are often deeply rooted in people’s unconscious minds and may concern long-term existence and identity issues. When people feel a need, they are driven to take action to fulfil it. In many instances, purchase of a good or service may be seen as offering the best solution to meet a particular need. Subsequently, consumers may compare what they received against what they expected, especially if it cost them money, time, or effort that could have been keen to obtain an alternative solution.
Types of Needs
Abraham Maslow identified five categories of human needs—physiological, safety, love, esteem, and self-actualization—and proposed that basic needs like food and shelter must be met before others can be fulfilled. Although poverty, malnutrition, and lack of housing remain pressing issues around the world, including North America, physiological needs have long ceased to be the sole issue for most residents of advanced industrialized countries like the United States and Canada. Greater prosperity means that increasing numbers of individuals are seeking to satisfy social and self-actualization needs. These needs 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 tempting vacation packages. However, as customer needs and preferences continue to evolve, the leisure industry needs to adapt its offerings accordingly.
In North America, as in other highly developed regions of the world, there is evidence that many consumers are reaching the point where they have most of the physical goods they want and are now turning to services to fill new or still unmet needs. Increased spending on more elaborate vacations, sports, entertainment, restaurant meals, and other service experiences is assuming greater priority, even at the expense of spending slightly less on physical goods.
According to Daniel Bethamy of American Express, consumers want “memorable experiences, not gadgets.” This shift in consumer behaviour and attitudes provides opportunities for those service companies that understand and meet changing needs, continuing to adapt their offerings over time as needs evolve. For example, some smart service providers have capitalized on the increased interest in extreme sports by offering services like guided mountain climbs and paragliding. And new financial services (like online investment brokers) have been introduced to cash in on consumers’ willingness to risk their financial futures by trading in the stock market. The notion of service experiences also extends to business and industrial situations; consider the example of modern trade shows where exhibitors, including manufacturers, set out to engage the customer’s interest through presentations and even entertainment.
v Expectations and How They Are Formed
Customers expectations about good service vary from one business to another. For example, although accounting and veterinary surgery are both professional services, the experience of meeting an accountant to talk about your tax returns service experience tends to be very different from visiting a vet to get treatment for sick pet. Expectations are likely to vary in relation to differently positioned service providers in the same industry. While travellers expect basic service for a short domestic flight on a discount carrier, they would undoubtedly be very dissatisfied with that same level of service on a full-service airline flight. Consequently, it’s very important for marketers to understand customer expectations of their own firm’s service offerings—especially as they relate to specific product elements. When individual customers or corporate purchasing department employees 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 means 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 like word-of-mouth comments, news stories, or the firm’s marketing efforts.
v The Components of Customer Expectations
Customer expectations hold 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
The type of service that customers hope to receive is termed as desired service. It is a “wished for” level,a combination of what customers believe can and should be delivered in the context of their personal needs. However, most customers are realistic and understand that companies can’t always provide the level of service they would prefer; hence, they also have a threshold level of expectations, termed adequate service. In other words, adequate service are defined as the minimum level of service customers will accept without being dissatisfied. Among the factors that set this expectation are situational factors affecting service performance and the level of service that might be anticipated from alternative suppliers. The levels of both desired and adequate service expectations may reflect explicit and implicit promises by the provider, word-of-mouth comments, and the customer’s past experience (if any) with this organization.
Predicted Service Level
Predicted services are those services that customers actually anticipate receiving is known as predicted service. If good service is predicted, the adequate level will be higher than if poorer service is predicted. Customer expectations of service may be situation specific. For example, from past experience, customers visiting a museum on a summer 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 adequate service level.
ZoneofTolerance
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 the “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 obvious attention to service performance. When service falls outside this range, customers will react either positively or negatively.
The zone of tolerance can increase or decrease for individual customers depending on factors like competition, price, or importance of specific service attributes. These factors most often affect adequate service levels (which may move up or down in response to situational factors), while desired service levels tend to move up very slowly in response to accumulated customer experiences. Consider a small-business owner who needs some advice from her accountant. Her ideal level of professional service may be a thoughtful response by the next business day. But if she makes the request at the time of year when all accountants are busy preparing corporate and individual tax returns, she will probably know from experience not to expect a fast response. Although her ideal service level probably won’t change, her zone of tolerance for response time may be much broader because she has a lower adequate service threshold.
Check your progress:
1. Do you think it is required for a service marketer to understand consumer needs and expectations?
2. What do you mean by consumer expectations and how they are formed?
3. On what bases customer decides Zone of tolerance for his service purchase?
1.6 Consumer 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, consumer plays distinct roles. These are:
- Initiator– He is who has a specific need, and proposes to buy a particular service
2. Influencer-Influencer are 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 effect the decision maker.
3. Gatekeeper-The person or organization or promotional material which acts as a filter on the range of service which enter the decision choice set.
4. Decider-The person who makes the buying decision, regardless 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.
5. 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.
6. 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
1.7 Factors influencing consumer behaviour
There are a number of factors or variables which affect buying behaviour. 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.
1. 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
2. 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.
3. 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.
4. 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.
5. Psychological Factors-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.
6. 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.
7. 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.
- Personality– Personality can be described as the psychological characteristics that determine how an individual will react to his or her environment.
9. 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.
10. 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.
1.8 Conclusion
Gaining a better understanding of how customers evaluate, select, use, and decide about services should lie at the heart of strategies for service design and delivery. In this chapter, we discovered that consumer plays different role in buying services and better understanding of which helps a marketer to develop healthier strategies. The human mind is referred to black box which states that there are company controlled and social factors which helps the consumer to decide whether to buy or not to buy services.And the understanding of which gives competitive advantage to a marketer,
Learn More:
- Ravi Shanker, ‘Services Marketing: The Indian Perspective’, Excel Books.
- Lovelock, ‘Services Marketing: People, Technology, Strategy’, Pearson Education.
- Zeithaml and Bitner, ‘Services Marketing: Integrating Customer Focus Across the Firm’, Tata McGraw Hill.
- Rust, Zahorik, and Keiningham, ‘Service Marketing’, Addison Wesley