SERVICES MARKETINGCHAPTER 3: CUSTOMER DECISION PROCESS

& ETHICS

OUTCOME

Understand services decision making process

Know the importance of ethics in services

marketing

CONSIDER THIS….

4 out of 7 people said that it is harder to decide

on a service than it is on a product

In the U.S, there’s more reported ethical breach

in services than it is for manufacturing sector

OVERVIEW OF DECISION

MAKING PROCESSUnderstand thought process

3-phase: Pre-purchase, Consumption & Post-purchase

ConsumptionPre-

purchase

Post-purchase

OVERVIEW OF DECISION

MAKING PROCESS1. Pre-purchase

Stimulus

Problem awareness

Information search

Evaluation of alternatives

2. Consumption

Choice

3. Post-purchase

Post-purchase evaluation

PRE-PURCHASE:

STIMULUSInciting a person to consider a purchase, cue(s)

Commercial cue: event or motivation to the

customers, promotional effort for firms

Social cue: motivation through peer groups or

significant other

Physical cue: motivation through biological

triggers like thirst & hunger

PRE-PURCHASE: PROBLEM

AWARENESSCustomers determine whether a need exists for the service

Expressed as shortage or unfulfilled desire

Shortage: the need for a service

Ex: the need to obtain a college diploma

Unfulfilled desire: need for service due to customer’s dissatisfaction

Ex: need to change phone/line provider to get better rates

PRE-PURCHASE:

INFORMATION SEARCH

Customers collect information on possible

alternatives

Alternatives usually based on limited list of

services within customer’s mind, evoked set

Internal search: passive approach limited only to

what is in customer’s mind

External search: proactive approach where

customers collect information from sources

outside of customer’s experience

PRE-PURCHASE:

EVALUATION OF

ALTERNATIVESCustomers place a value or “rank” on each

alternative

Non-systematic evaluation: choose alternatives

in a random fashion

Systematic evaluation: choose using a set of

formalized steps

CONSUMPTION: CHOICE

Activities of buying, using & disposing of a

product

POSTPURCHASE:

EVALUATION/COGNITIVE

DISSONANCECustomers experience varying degree of

cognitive dissonance

Cognitive dissonance: doubt in the customer’s

mind regarding the correctness of decision

Lead to satisfaction or dissatisfaction

SPECIAL CONSIDERATION

PERTAINING TO SERVICES

Attributed to intangibility, inseparability,

heterogeneity & perishability

Pre-purchase, consumption & post-purchase

considerations

PRE-PURCHASE

CONSIDERATIONS:

PERCEIVED RISK

Derived from the interrelationship between

consequence & uncertainty

Financial risk, performance risk, physical risk,

social risk & psychological risk

PRE-PURCHASE

CONSIDERATIONS:

PERCEIVED RISKFinancial risk: risk of monetary loss

Performance risk: risk of task non-performance

Physical risk: risk of injury

Social risk: risk of loss in personal status

Psychological risk: affect customer’s self-esteem

HOW TO REDUCE RISK?

1. Standardization

2. Co-producer involvement

3. Information sharing/personal source of

information

4. Brand loyalty

5. Reduction of alternatives

6. Self-service

CONSUMPTION STAGE

CONSIDERATIONS

Human error

“Act of God”

Service delivery delay

POST-PURCHASE

CONSIDERATIONSExpectancy disconfirmation: comparing expectations

with perception

Perceived control: evaluate service by the amount of

customer’s control

Role congruence: property of actual behaviors by

customers & staff being consistent with expected role

Script theory: rules exist to facilitate interactions

WHAT ARE ETHICS?

A branch of philosophy dealing with what is good

& bad and with moral duty & obligation

Principles of moral conduct governing an

individual or group

WHAT IS BUSINESS

ETHICS?Principles of moral conduct that guide behavior in

the business world

OPPORTUNITIES FOR

ETHICAL MISCONDUCT

1. Few search attributes

2. Technical & specialized services

3. Time lapse between performance & evaluation

4. Services sold without guarantees & warranties

5. Boundary-spanning personnel

OPPORTUNITIES FOR

ETHICAL MISCONDUCT

6. Accepted variability in performance

7. Outcome based reward systems

8. Consumer participation in production

METHODS FOR ETHICAL

DECISION-MAKING

Teleology: decision-making based on result

Consequentialism: asses the morality of decision

Egoist: benefit self-interest

Utilitarianist: maximizes total utility, “greater good

for the greatest number of people”

METHODS FOR ETHICAL

DECISION-MAKING

Deontology: ethical decision-making where the

inherent rightness or wrongness of an act guides

behavior

Moral standards are permanent, categorical

imperative

METHODS FOR ETHICAL

DECISION-MAKING

Relativism: the correctness of ethical decisions is

thought to change overtime

Case-to-case basis

FACTORS THAT INFLUENCE

ETHICAL DECISION-MAKING

1. Cognitive moral development

2. Personal values

3. Corporate culture

4. Cultural differences

5. Organizational structure

6. Opportunity

FACTORS THAT INFLUENCE

ETHICAL DECISION-MAKING

7. Reward system

8. Significant others

9. Competitive environment

10. Changes in technology

CONTROLLING ETHICAL

DECISION MAKINGEmployee socialization

Standards of conduct

Corrective control

Leadership training

Service knowledge

Monitoring employee performance

Long-term customer relationship

CONCLUSION

Decision-making process of services mirrors that

of goods marketing

But, there are special considerations that are

exclusively for services

Ethics is an important component in shaping

customers’ perception on services

THANK YOU