Consumer behaviour

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Consumer behaviour consumer decision making
processes

• Week 2

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Last week The services sector in Australia

• Services dominate economic growth in Australia
• Account for more than three quarters of economys
  output
• 4 out of every 5 jobs are in the services sector
• Services also provide essential inputs, eg
  communications and transport, into nearly
  everything Australia produces

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Issues associated with services

• Intangible
• Inseparable
• Heterogeneous
• Customer plays a role in production and delivery
• Perishable
• Ownership
• Evaluation difficulty
• McColl-Kennedy (2003)

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Managerial challenges

• Estimating demand
• Train staff to reach uniform levels of service
  provision
• Train customers
• Balancing supply with demand
• Reducing risk for consumers
• Integration with human resource and operations
  departments.

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Services marketing mix
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Expanded marketing mix

• People all those who play a part in the
  production and delivery of a service
• Process all activities involved in producing
  and delivering the service
• Physical evidence all representations of the
  service

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Classifying services

• The degree of tangibility/intangibility - Are
  there some tangible aspects of the service? To
  what extent?
• Who or what is the direct recipient of service
  processes- Are the services directed to the
  customers themselves or to objects belonging to
  them?
• The place of service delivery- Do the customers
  go to the service or the service to the customer?

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Classifying services

• Customisation versus standardisation -Should all
  customers receive the same service or should it
  be more flexible?
• Relationship with customers Is the relationship
  formal or informal?
• Discrete versus continuous services Does the
  relationship occur on a single occasion or
  continuous over a period of time?
• High contact versus low contact- How much of the
  service is tangible or intangible?

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Service encounters

• Three levels of customer contact
• High contact
• Medium contact
• Low contact

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This week Learning objectives

• Explain the impact of service characteristics on
  decision making
• Outline the decision making process
• Discuss relevant service encounter factors
• Understand the role of culture in consumer
  decision making

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Evaluation criteria

• Search qualities
• Characteristics of the product/service that are
  physically evident rather than abstract
• Experience qualities
• Service attributes that can only be evaluated by
  consumers after the service production process
• Credence qualities
• Service attributes that can not be evaluated by
  consumer with any certainty even after they have
  experienced the service

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Three stages service model McColl-Kennedy (2003)
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Components of service decisions McColl-Kennedy
(2003)
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Phase 1 Pre-purchase phase

• Problem recognition there is a difference
  between actual and desired states
• Search for information the collection of data
  on the service of interest (either internal or
  external)

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Stage 1 Pre-purchase phase

• Evaluation of alternatives
• Choice of intended purchase

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Determinants of phase 1 McColl-Kennedy (2003)
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Perceived risk
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Categories of risk McColl-Kennedy (2003)
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Categories of risk (cont.) McColl-Kennedy (2003)
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Reducing risk

• Consumers will
• Seek more information
• Seek guarantees or warranties
• Rely on price as a surrogate indicator
• Evaluate the reputation and image of a company
• Use an initial trial to evaluate the service
• Consider tangible cues as guide to service quality

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Stage 2 Service encounter

• The consumers assessment of the level of service
  quality is determined during this phase of the
  purchase process

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Factors affecting satisfaction McColl-Kennedy
(2003)
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Stage 3 Post-purchase phase

• Customers determine their level of satisfaction
  or dissatisfaction by comparing their
  expectations with their perceptions
• Can be subconscious

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Culture

• Is the sum of learned beliefs, values and customs
• Is a critical component of consumer behaviour
• While globalisation is smoothing some
  differences, differences remain significant
• Consumer behaviour is often the product of a
  particular culture

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Three levels of culture

• Behavioural practices
• Visible
• Values, beliefs, preferences and norms
• Declared
• Basic assumptions
• Taken for granted
• Source Schutte Ciarlante 1998

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The dimensions ofcultural values

• Power distance
• Uncertainty avoidance
• Individualism versus collectivism
• Masculinity versus femininity
• Source Hofstede 1984

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Power distance

• Does society value equality or inequality in
  interpersonal interactions?
• Low power distance (power is equally distributed)
  West
• High power distance (hierarchy is strong) Asia

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Uncertainty avoidance

• What is the attitude towards risk in society?
• Low uncertainty avoidance (calculated risk is
  necessary) USA
• High uncertainty avoidance (risk is threatening
  to be avoided) Japan

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Individualism/Collectivism

• Do people rely on others or themselves?
• Individualist (self reliance is valued) West
• Collectivist (dependence is valued, and society
  expects individual to subordinate own needs) Asia

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Masculinity/femininity

• To what extent and at whose expense should the
  weaker members of society be cared for?
• Feminine (caring and nurturing roles are
  favoured) Scandinavia
• Masculine (personal achievement and assertiveness
  are favoured) Great Britain

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Summary

• An understanding of consumer behaviour is
  essential
• Consumers approach decision making in a slightly
  different way when it comes to purchasing
  services
• That difference relates to the nature of
  services, and a range of other factors

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Summary

• Consumers perception of risk is generally higher
  with services, and consumers will adopt a range
  of strategies to manage risk
• We can think of the consumer decision process in
  terms of 3 stages
• Pre-purchase
• Service encounter and
• Post purchase

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Summary

• Consumers perception of service quality is
  determined during the service encounter stage
• Culture is an important determinant of consumer
  behaviour