GURU GHASIDAS VISHWAVIDYALAYA

(A CENTRAL UNIVERSITY ESTABLISHED BY CENTRAL UNIVERSITIES ACT, 2009)

BILASPUR (C.G.) 495009

DEPARTMENT OF MANAGEMENT STUDIES MASTER OF BUSINESS ADMINISTRATION PROGRAMME (M.B.A.) SESSION: 2012-13
M.B.A. 4th Sem. SUBJECT: MARKETING OF SERVICES TOPIC: Consumer behavior in services

Submitted To:
DR. (MRS) BOBBY B.PANDEY ASSISTANT PROFESSOR

Submitted By:
RAJU KUMAR

S.NO.

CONTENT

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1 2 3 4 5 6 7 8 9

Introduction Factors influencing consumer behaviour Customer behaviour specific to usage of services Levels of Customer Contact with Service Organizations The Purchase Process for Services Factors that Influence Customer Expectations of Services: How Product Attributes Affect Ease of Evaluation Service Marketing System A Framework for Developing Effective Service Marketing Strategies

3-3 7-11 11-12 12-13 16-18 18-19 19-20 21-22 22-23

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Four Categories Of Services conclusion Bibliography

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Consumer behavior in services Introduction

Consumer behaviour is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. Research has shown that consumer behaviour is difficult to predict, even for experts in the field. Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalisation, customisation and one-to-one marketing. Social functions can be categorized into social choice and welfare functions. Each method for vote counting is assumed as social function but if Arrows possibility theorem is used for a social function, social welfare function is achieved. Some specifications of the social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity,

homogeneity and weak and strong Pareto optimality. No social choice function meets these requirements in an ordinal scale simultaneously. The most important characteristic of a social function is identification of the interactive effect of alternatives and creating a logical relation with the ranks. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle, the consumer (Kioumarsi et al., 2009) .

Before understanding consumer behaviour let us first go through few more terminologies: Who is a Consumer ? Any individual who purchases goods and services from the market for his/her end-use is called a consumer. In simpler words a consumer is one who consumes goods and services available in the market. Example - Tom might purchase a tricycle for his son or Mike might buy a shirt for himself. In the above examples, both Tom and Mike are consumers. What is consumer Interest ? Every customer shows inclination towards particular products and services. Consumer interest is nothing but willingness of consumers to purchase products and services as per their taste, need and of course pocket. Let us go through the following example: Both Maria and Sandra went to the nearby shopping mall to buy dresses for themselves. The store manager showed them the best dresses available with him. Maria immediately purchased two dresses but Sandra returned home empty handed. The dresses were little too expensive for Sandra and she preferred simple and subtle designs as compared to designer wears available at the store. In the above example Sandra and Maria had similar requirements but there was a huge difference in their taste, mind set and ability to spend.

What is Consumer Behaviour ?

Consumer Behaviour is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use. Why do you think an individual buys a product ? Need Social Status Gifting Purpose Why do you think an individual does not buy a product ? No requirement Income/Budget/Financial constraints Taste When do you think consumers purchase products ? Festive season Birthday Anniversary Marriage or other special occasions There are in fact several factors which influence buying decision of a consumer ranging from psychological, social, economic and so on.

The study of consumer behaviour explains as to: Why and why not a consumer buys a product ? When a consumer buys a product ? How a consumer buys a product ? During Christmas, the buying tendencies of consumers increase as compared to other months. In the same way during Valentines week, individuals are often seen purchasing gifts for their partners. Fluctuations in the financial markets and recession decrease the buying capacity of individuals. In a laymans language consumer behaviour deals with the buying behaviour of individuals. The main catalyst which triggers the buying decision of an individual is need for a particular product/service. Consumers purchase products and services as and when need arises. According to Belch and Belch, whenever need arises; a consumer searches for several information which would help him in his purchase. Following are the sources of information: Personal Sources Commercial Sources Public Sources Personal Experience Perception also plays an important role in influencing the buying decision of consumers.

Buying decisions of consumers also depend on the following factors: Messages, advertisements, promotional materials, a consumer goes through also called selective exposure. Not all promotional materials and advertisements excite a consumer. A consumer does not pay attention to everything he sees. He is interested in only what he wants to see. Such behaviour is called selective attention. Consumer interpretation refers to how an individual perceives a particular message. A consumer would certainly buy something which appeals him the most. He would remember the most relevant and meaningful message also called as selective retention. He would obviously not remember something which has nothing to do with his need.

Factors influencing consumer behaviour

Consumer purchases are influenced strongly by or there are four factors. 01. Cultural Factor 02. Social Factor 03. Personal Factor 04. Psychological Factor. 01. Cultural Factor :Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social Class

Culture:-The set of basic values perceptions, wants, and behaviours learned by a member of
society from family and other important institutions. Culture is the most basic cause of a persons wants and behaviour. Every group or society has a culture, and cultural influences on buying behaviour may vary greatly from country to country.

Sub Culture :- A group of people with shared value systems based on common life
experiences and situations. Each culture contains smaller sub cultures a group of people with shared value system based on common life experiences and situations. Sub culture includes nationalities, religions, racial group and geographic regions. Many sub culture make up important market segments and marketers often design products.

Social Class:- Almost every society has some form of social structure, social classes are
societys relatively permanent and ordered divisions whose members share similar values, interests and behaviour.

02. Social Factors :A consumers behaviour also is influenced by social factors, such as the (i) Groups (ii) Family (iii) Roles and status

Groups :- Two or more people who interact to accomplish individual or mutual goals. A
persons behavious is influenced by many small groups. Groups that have a direct influence and to which a person belongs are called membership groups. Some are primary groups includes family, friends, neighbours and coworkers. Some are secondary groups, which are more formal and have less regular interaction. These includes organizations like religious groups, professional association and trade unions.

Family:Family members can strongly influence buyer behaviour. The family is the most important consumer buying organization society and it has been researched extensively. Marketers are interested in the roles, and influence of the husband, wife and children on the purchase of different products and services.

Roles and Status :A person belongs to many groups, family, clubs, organizations. The persons position in each group can be defined in terms of both role and status. For example. M & X plays the role of father, in his family he plays the role of husband, in his company, he plays the role of manager, etc. A Role consists of the activities people are expected to perform according to the persons around them.

03. Personal Factors :It includes i) Age and life cycle stage (ii) Occupation (iii) Economic situation (iv) Life Style (v) Personality and self concept.

Age and Life cycle Stage:People changes the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle.

Occupation :A persons occupation affects the goods and services bought. Blue collar workers tend to buy more rugged work clothes, whereas white-collar workers buy more business suits. A Co. can even specialize in making products needed by a given occupational group. Thus, computer software companies will design different products for brand managers, accountants, engineers, lawyers, and doctors.

Economic situation :A persons economic situation will affect product choice

Life Style :Life Style is a persons Pattern of living, understanding these forces involves measuring consumers major AIO dimensions.

i.e. activities (Work, hobbies, shopping, support etc) interest (Food, fashion, family
recreation) and opinions (about themselves, Business, Products)

Personality and Self concept :Each persons distinct personality influence his or her buying behaviour. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to ones own environment.

04. Psychological Factors :It includes these Factors. i) Motivation (ii) Perception (iii) Learning (iv) Beliefs and attitudes

Motivation :Motive (drive) a need that is sufficiently pressing to direct the person to seek satisfaction of the need

Perception :The process by which people select, Organize, and interpret information to form a meaningful picture of the world.

Learning:Changes in an individuals behaviour arising from experience.

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Beliefs and attitudes :Belief is a descriptive thought that a person holds about something Attitude, a Persons consistently favourable or unfavourable evaluations, feelings, and tendencies towards an object or idea. Customer possesses specific belief and attitude towards various products. Since such beliefs and attitudes make up brand image and affect consumer buying behavior therefore marketers are interested in them. Marketers can change the beliefs and attitudes of customers by launching special campaigns in this regard.

Customer behaviour specific to usage of services:

Where Does the Customer Fit in a Service Organization?
Consumers rarely involve in manufacture of goods but often participate in service creation and delivery Challenge for service marketers is to understand how customers interact with service operations People processing (e.g., Hotel stay): customer is physically involved throughout entire process Possession processing (e.g., DVD repair): involvement may be limited to drop off of physical item/description of problem and subsequent pick up Mental stimulus processing (e.g., weather forecast): involvement is mental, not physical; here customer simply receives output and acts on it Information processing (e.g., health insurance): involvement is mental - specify information upfront and later receive documentation of coverage

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High-Contact and Low-Contact Services:

High Contact Services Customers visit service facility and remain throughout service delivery Active contact between customers and service personnel Includes most people-processing services

Low Contact Services Little or no physical contact with service personnel Contact usually at arms length through electronic or physical distribution channels New technologies (e.g. Web) help reduce contact levels

Levels of Customer Contact with Service Organizations :

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The consumers mind is like a Black Box:

Three Buying situations of consumer- Howard & Sheth:

Straight Re- Buy/Routinized response behavior- here the customer comes for repurchase of the same service product- say for photocopying, bank draft. The customer is aware of the service product/brand, the purchase is of daily/frequent necessity. Low involvement with the purchase process. Modified Re-buy/ Limited problem solving- Here the customer is aware of the category/brands but not the new version or form. Liril soap, liquid liril body soap. Extensive problem solving/ Critical problem solving/New task- A customer would be in this buying situation when the offer is totally unfamiliar, he is not clear either about his decision criteria or evaluation criteria. Like insurance, travel package, vacations etc. these are high involvement purchasing processes so consumer would require time.

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Roles in Service-Buying Behavior:

Initiator/Influencer Information gatherer Gatekeepers The devils advocate Decider Buyer/purchaser User

Managing Service Encounters-1

Service Encounter: A period of time during which customers interact directly with a service Moments of Truth: Defining points in service delivery where customers interact with employees or equipment Critical Incidents: specific encounters that result in especially satisfying/dissatisfying outcomes for either customers or service employees.
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Managing Service Encounters--2

Service success often rests on performance of junior contact personnel Must train, coach, role model desired behavior Thoughtless or badly behaved customers can cause problems for service personnel (and other customers) Must educate customers, clarify what is expected, manage behavior.

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The Purchase Process for Services

purchase Stage Awareness of need Information search Evaluation of alternative service suppliers

Service Encounter Stage Request service from chosen supplier Service delivery

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Post-purchase Stage Evaluation of service performance Future intentions

Awareness of need. Information and search qualities Evaluation of service alternatives Problems of comparing service offers. Customers as competition for service delivery. Role of mood, emotions and personal influences . Role of branding.

Service encounter Post purchase evaluation by customers.

Perceived Risks in Purchasing and Using Services:

Functional unsatisfactory performance outcomes Financial monetary loss, unexpected extra costs Temporal wasted time, delays lead to problems Physical personal injury, damage to possessions Psychological fears and negative emotions Social how others may think and react Sensory unwanted impacts to any of five senses
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Components of Customer Expectations:

Desired Service Level: The type of service customers hope to receive in terms of desired service. Its a wished-for level of service quality that customer believes can and should be delivered Adequate Service Level: It is a minimum acceptable level of service that the customer will expect without being dissatisfied. Predicted Service Level: service level that customer anticipates/ believes firm will actually deliver Zone of Tolerance: range within which customers are willing to accept variations in service delivery

Factors that Influence Customer Expectations of Services:

Intangible Attributes, Variability, and Quality Control Problems Make Services Hard to Evaluate Search attributes Tangible characteristics that allow customers to evaluate a product before purchase
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Experience attributes Characteristics that can be experienced when actually using the service

Credence attributes Characteristics that are difficult to evaluate confidently even after consumption

Goods tend to be higher in search attributes, services tend to be higher in experience and credence attributes

Credence attributes force customers to trust that desired benefits have been delivered

How Product Attributes Affect Ease of Evaluation:

Customer Satisfaction is Central to the Marketing Concept Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions Customers have expectations prior to consumption, observe service performance, compare it to expectations
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Satisfaction judgments are based on this comparison Positive disconfirmation if better than expected Confirmation if same as expected Negative disconfirmation if worse than expected

Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and situational factors

Research shows links between customer satisfaction and a firms financial performance

Customer Delight: Going Beyond Satisfaction Research shows that delight is a function of 3 components Unexpectedly high levels of performance Arousal (e.g., surprise, excitement) Positive affect (e.g., pleasure, joy, or happiness)

Is it possible for customers to be delighted by very mundane services?

A Service Business is a System Comprising Three Overlapping Subsystems

Service Operations (front stage and backstage) Where inputs are processed and service elements created. Includes facilities, equipment, and personnel

Service Delivery (front stage) Where final assembly of service elements takes place customers Includes customer interactions with operations and other customers
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and service is delivered to

Service Marketing (front stage) Includes service delivery and all other contacts between service firm and customers

Service Marketing System:

(1) High Contact Service--e.g., Hotel

Service Marketing System:

(2) Low Contact Service--e.g., Credit Card

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A Framework for Developing Effective Service Marketing Strategies:

A Framework for Developing Effective Service Marketing Strategies:

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Differences among Services Affect Customer Behavior:

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

Four Categories Of Services (Fig 2.1):

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People Processing
Customers must: Physically enter the service factory Co-operate actively with the service operation Managers should think about process and output from customers perspective To identify benefits created and non-financial costs:

Time, mental, physical effort

Possession Processing
Customers are less physically involved compared to people processing services Involvement is limited Production and consumption are separable

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

Information Processing
Information is the most intangible form of service output But may be transformed into enduring forms of service output Line between information processing and mental stimulus processing may be blurred.

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CONCLUSION
Consumer behaviour is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. Research has shown that consumer behaviour is difficult to predict, even for experts in the field.

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Bibliography

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