SM 2

Service Marketing &
Customer Management
Consumer Decision Making: The Three-Stage
Model
• Pre-purchase Stage
• Service Encounter Stage
• Post-purchase Stage
Pre-purchase Stage - Overview
Pre-purchase Stage - Overview
• Need awareness
• Information search
• Evaluation of alternatives
 Service attributes
 Perceived risk
 Service expectations
• Purchase decision
Pre-purchase Stage – Need Awareness
• A service purchase is triggered by an underlying need
(need arousal)
• Needs may be due to:

• People’s unconscious minds (e.g., aspirations)
• Physical conditions (e.g., chronic back pain)
• External sources (e.g., marketing activities)
• When a need is recognized, people are likely take

action to resolve it
Pre-purchase Stage – Information Search
• When a need is recognized, people will search for

solutions.
• Several alternatives may come to mind and these form

the ‘evoked set’
 Evoked set – set of possible services or brands that a customer

may consider in the decision process.
• When there is an evoked set, the different alternatives

need to be evaluated before a final choice is made
Pre-purchase Stage – Evaluation of
Alternatives
Service Attributes
• Search attributes help customers evaluate a product
before purchase
• Style, color, texture, taste, sound
• Experience attributes cannot be evaluated before
purchase—must “experience” product to know it
• Vacations, sporting events, medical procedures
• Credence attributes are product characteristics that
customers find impossible to evaluate confidently even
after purchase and consumption
• Quality of repair and maintenance work
How did you feel first time you had to
make a decision about choosing an
unfamiliar service?
List down the ? That comes to your

mind
Perceived Risks
● Functional – unsatisfactory performance outcomes
Will this training give me the skills I need?
● Financial – monetary loss, unexpected extra costs

Will the repairing of the car cost more than the estimate
● Temporal – wasted time, delays leading to problems

Will I have to wait in line for long?
● Physical – personal injury, damage to possessions

Will I fall sick if I travel abroad on vacation
● Psychological – fears and negative emotions

How sure is that this aircraft will not crash?
● Social – how others may think and react

● Sensory – unwanted impact on any of five senses
Perceived Risks - How Do Consumers Handle Them?
• Seeking information from respected personal sources
• Using Internet to compare service offerings and search for

independent reviews and ratings
• Relying on a firm that has a good reputation
• Looking for guarantees and warranties
• Visiting service facilities or trying aspects of service before

purchasing
• Asking knowledgeable employees about competing services

Perceived Risks – Strategies for Firms to Manage Consume
Perceptions of Risk
• Free trial (for services with high experience attributes)
• Advertise (helps to visualize)
• Display credentials
• Use evidence management (e.g., furnishing, equipment etc.)
• Offer guarantees
• Encourage visit to service facilities
• Give customers online access to information about order status

Service Expectations
• Customers evaluate service quality by comparing what

they expect against what they perceive
 Situational and personal factors also considered
• Expectations of good service vary from one business to

another, and differently positioned service providers in
same industry
• Expectations change over time

Service Expectations – Factors Influencing Consumer
Expectations of Service
Service Expectations – Components of Custom Expectations
• Desired Service Level:

Wished-for level of service quality that customer believes can and should be
delivered
• Adequate Service Level:

Minimum acceptable level of service
• Predicted Service Level:

Service level that customer believes firm will actually deliver
• Zone of Tolerance:
Range within which customers are willing to accept variations in service delivery
• When possible alternatives have been compared and
evaluated, the best option is selected
• Can be quite simple if perceived risks are low and

alternatives are clear
• Very often, trade-offs are involved. The more complex

the decision, the more trade-offs need to be made
• Price is often a key factor in the purchase decision

Eg: Airline choice depends on convenience of schedules, crew, meals, comfort
Service Encounter Stage - Overview
Pre-purchase Stage
● Service encounters range from high-

to low-contact
● Understanding the servuction

Service Encounter Stage system
● Theater as a metaphor for service

delivery: An integrative perspective
 Service facilities
Post-purchase Stage  Personnel
 Role and script theories

Service Encounters Range from
High-contact to Low-contact
Distinctions between 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 arm’s length through electronic or physical distribution
channels
New technologies (e.g. Web) help reduce contact levels
 Medium-contact Services : Lie in between these two

The Servuction System(Service Production)
Servuction System:
Service Production and Delivery
cuServuction System – visible front stage and invisible backstage
Service Operations (front stage and backstage)
 Technical core 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 and service is delivered to
customers
 Includes customer interactions with operations and other customers
Other contact points
 Includes customer contacts with other stomers
Post-encounter Stage - Overview
Pre-purchase Stage
 Evaluation of service
performance
Service Encounter Stage
 Future intentions
Post-purchase Stage
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
• Satisfaction judgments are based on this comparison

 Positive disconfirmation if better than expected
 Confirmation if same as expected
 Negative disconfirmation if worse than expected
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)
• Once customers are delighted, their expectations are raised

• If service levels return to previous levels, this may lead to
dissatisfaction and it will be more difficult to “delight”
customers in future
• Progressive Insurance seeks to delight customers through
exceptional customer service

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Service Marketing &

• Service Encounter Stage

• Needs may be due to:

• When a need is recognized, people are likely take

• When a need is recognized, people will search for

• Several alternatives may come to mind and these form

 Evoked set – set of possible services or brands that a customer

• When there is an evoked set, the different alternatives

List down the ? That comes to your

● Financial – monetary loss, unexpected extra costs

● Temporal – wasted time, delays leading to problems

● Physical – personal injury, damage to possessions

● Psychological – fears and negative emotions

● Social – how others may think and react

• Seeking information from respected personal sources

• Using Internet to compare service offerings and search for

• Relying on a firm that has a good reputation

• Looking for guarantees and warranties

• Visiting service facilities or trying aspects of service before

• Asking knowledgeable employees about competing services

• Advertise (helps to visualize)

• Use evidence management (e.g., furnishing, equipment etc.)

• Encourage visit to service facilities

• Give customers online access to information about order status

• Customers evaluate service quality by comparing what

 Situational and personal factors also considered

• Expectations of good service vary from one business to

• Expectations change over time

• Desired Service Level:

• Adequate Service Level:

• Predicted Service Level:

• Can be quite simple if perceived risks are low and

• Very often, trade-offs are involved. The more complex

• Price is often a key factor in the purchase decision

● Service encounters range from high-

● Understanding the servuction

● Theater as a metaphor for service

Post-purchase Stage  Personnel

 Role and script theories

 Medium-contact Services : Lie in between these two

Service Operations (front stage and backstage)

• Satisfaction defined as attitude-like judgment following a

• Customers have expectations prior to consumption, observe

• Satisfaction judgments are based on this comparison

• Once customers are delighted, their expectations are raised

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