Consumer Behavior in a Service Context - Essay Example

?Marketing Services Introduction: The service industry acts as the backbone, for the economic and social development of a nation. Service industry has emerged as the world’s fastest and largest growing sector in the global economy. The service sector includes a wide variety of activities, such as transportation, trading, financial, communication, real estate, and business services. The service buying process consists of the following steps: need identification, information search, evaluation of alternatives, buying decision, and the post-purchase evaluation. Human wants and needs are the driving forces that make people purchase any products or services. Aim and Objectives: To understand the influence of service experience and its effects on service purchase process. To understand the significance of customer experience in the creation of competitive advantage for the organizations. Theoretical Framework: The theoretical framework is very useful as it assists academics in formulating a precise research direction and focus, and for businesses in identification of the stages that require improvement, and hence necessitate more resources allocated to it. A theoretical framework is a compilation of interconnected concepts, similar to a theory but not essentially worked-out well. “Theoretical frameworks are obviously critical in deductive, theory-testing sorts of studies” (Bhojanna 2007). When the consumer services, they pass through three main stages, ie; pre-purchase stage, service encounter stage, and post-encounter stage. Three-Stage Model of Service Consumption: (Tsiotsou & Wirtz 2011). The stage of pre-purchase in the decision-making process for services is more complex, when compared to that of goods. The decision-making process involves a lot of time, because of consumer participation in the service production process. In the pre-purchase stage, consumers are prompted into action, by the creation of a need to begin the search for information, and assess alternatives for a particular service, ahead of deciding whether to buy or not. “But learning about pre-purchase behavior is equally important” (Finn 2008). The answer for the reason behind the customer’s thought to buy a particular product will eradicate all presumptions and will help in succeeding a long term customer relationship. Consumers pass on to the next stage of service experience, subsequent to the decision to make a purchase. In the service encounter stage, the consumer intermingles straightly with the service firm, and it is the way by which consumers produce value, and evaluate their service experience. Consumer satisfaction, and their perception regarding the service quality, have great importance in the last stage of the service consumption process (ie; the post purchase behavior), because of their relationship with business performance. On the other hand, the satisfied consumers, and those who have high perceptions regarding service quality may not go again to the same service provider. Role and Importance of Customer Service Experience and Service Marketing Mix- An Overview: A customer’s service experience pertains the serious of the interactions with the service providers, when customers try to communicate with them.  All types of customers are emotional, and they are likely to rate experiences on the basis of their expectations. “In order to be successful with all the customers, companies require generating and sustaining uniformity of experience across every channel. A complete communication experience will do more favor than just paying attention to the customer. “The companies require learning the ways to communicate with the customers using different channels and also require making sure that the customer’s experience delivers actual value to them in exchange for time, attention, actions, information, and anything else” (The Importance of Positive Customer Service Experiences 2011). One of the great borders for innovation is the customer experience. Better customer experiences are like a kind of viral phenomenon that generates a wave in the market environment, and this helps to create more revenue to the business. Customers willingly pay additional amount of money for an experience that is emotionally rewarding rather than for it’s functionally rewards. Companies can broaden their profit earnings by developing the skills in releasing emotional issues, in order to build products or services around them. The number of choices in goods and services are puzzling. An account of continued favorable customer experiences helps in increasing the chance for a new product to be chosen above its competitors. “Building great consumer experiences is a compound venture, connecting incorporation of technology, strategy, organizing models of business, management of brand, and commitment of CEO” (Rae 2006). The service marketing mix is otherwise known as extended marketing mix, and this forms an essential part of a blueprint design of the service. The service marketing mix consists of 7 Ps, like the 4Ps of the marketing mix of products. Conventionally, the marketing mix was developed for the FMCG sector (fast moving consumer goods), and it consists of 4 Ps: product, price, place and promotion. As the service sectors have became more aware about marketing, the service marketing mix has developed and included 3 more Ps ie; process, physical evidence and people. Different Components of Service Marketing Mix and Its Contribution to the Delivery of Customer Service Experience Service as a Product: “A product means what we produce. An Insurance company sells their services as the product. When an organization or an individual buys a policy from the insurance company, that individual or organization not only buys a policy, but also the help and advice from the agent. (Marketing Mix and Service Marketing for Insurance Companies n.d., p. 2). Service operation managers ought to facilitate high participation of customers in delivering quality service. This must be their main goal, if they need to stay ahead in the competitive market situation. The impact of customer participation in delivery of service, by keeping the perception of the product quality in mind, increases perception regarding the quality of service delivered in the mind of the customers. This will increase the sales of the business by delivering excellent customer service experience. Each service manager has to understand the way through which customers will derive utility from the service. They also have to understand how to manage the values that are added to the service delivered by the organization. This will helps to analyze the customer satisfaction. Prior to the completion of service transaction, the customer have to give a little effort or information. The service quality, as a result, relies on this effort or information of the customer. “Moments of truth”, with which the customer service deals, is a chief participant to improve the experience of the customers. But the organizations can’t just give attention always on interactions with customer service, or delegate the accountability for customer experience to the organization which provides customer service. If the customer becomes satisfied with the service provided, they frequent their visits, which enable the rise of sales. It also helps to gain competitive advantage in the business environment. Price: Pricing is a very important and difficult process. It must reflect the demand and supply of the product. In service marketing, the price of the product can be high or low, and it could mean it loss for the organization. The pricing process should consider the following factors and they are variable and fixed costs, competition in the market, objectives of the company, positioning strategy, and the targeted group. The pricing strategy is taken by considering the willingness to pay by the targeted groups. The objective of pricing is to greatly influence by the essential service characteristics. However the setting of price objectives a number of factors in relation to the marketing policy of the business should be considered, “pricing of services” (The First P: Service Product or Service Package 2012). Place: Place refers to the position where the consumers can purchase the product and how the goods reach out to that market place. In service marketing the place mix is done through different ways such as internet, retailers and wholesalers. Most of the marketing services are provided through direct sales by way of insurance, banking etc. The delivering of services marketing creates place and time utility. Promotion: In service marketing, there are clear difference in using information between product and services. First, by the differentiation is to facilitate that the consumers of services are less probable to be without information about the product or services. Second, by the services of consumers prefer direct sources to indirect sources of information. Finally, the basic features of the services have implications for the strategy of communication. These services are provided through promotional activities. People: People refer to the consumers, management, employees, and everyone who are involved in it. People are essential for service marketing industry. They realize the prospective in services marketing. A service organization must understand the features of its internal marketing, such as attraction, motivation, development, and training of skilled employees. Internal service marketing paves way for outdoor marketing of services. In service marketing a variety of internal marketing activities are used in co ordinate way. Process: Process is an ingredient of service marketing that sees consumer experiencing a firms offering. Its best view of consumer’s participation at different points of occasion. In this process the example of going on a cruise - from the time that the passenger gets there at the dockside, passengers is greeted, the baggage is taken to the room. Passengers have two weeks of services from evening entertainment and restaurants, to shopping and casinos. Finally, the passengers arrive at the destination, and the baggage is delivered to the passengers. “This is a highly focused marketing process, and is an example of the importance of process in enabling delivery of the customer proposition” (Process 2000). Physical (Evidence): Physical (evidence) refers to the understanding of using the product or service. In a service industry the service go out to the consumer. It is very important process, and it helps to understand what the customer buys or not, for example- pamphlets, brochures, webpage etc to serve the customers. How competitive advantage is affected by services marketing industry? Banking Industry: The Competitive advantage creation is very difficult, and it’s no easy to sustain. The Community banks generally can’t achieve the cost advantage, especially in banking competition with larger for high-volume institution. That leaves the differentiation as their prime method for create “competitive advantage” (Competitive Advantage 2007). The technology involved in the business has to take a larger role in service marketing in banking industry. Today most of the banks use the same system for its functions for developing and distributing products and services. The Corus bank has developed a deep expertise in the business of commercial real estate lending, particularly in the niche markets they are hotel, office, condominium, industrial properties and apartment. Leveraging this proficiency, the bank was capable to increase its portfolio of loan by 39% in a one year period. “Corus Bank of Chicago is an excellent example of a bank that has achieved competitive advantage through specialized knowledge” (Competitive Advantage 2007). Decision making in banking services mainly considers the emerging technology, can which make short-term advantage, but differentiation on a continuous basis but relying only on technology is not practically possible. Technology has really eliminated various historical advantages enjoyed by the banks. Decision making is affected by the competitive advantages of an organization. Sustainable competitive advantage created by the leveraging the business organization’s unique mix of attributes – reputation, brand equity, specialized knowledge, geographic footprint and articulate it visibly and constantly to the market “sustainable competitive advantage” (Competitive Advantage 2007). The operation of the banking industry mainly focuses on consumer’s satisfaction; it influences the marketing decisions to create competitive advantages. Food Service Marketing: McDonald’s is the largest and globally the most valuable brands in fast food chain servicing. There are a number of competitors in food chain industries. The main competitors are KFC, Dominos, and Pizza Hut. Marketing services industry is facing more and more difficult challenges. The paradigms of food chain service marketing require an obsessive understanding of customer perceptions and expectations, and connecting them to delivery and product design, as well as the operational planning. Where the McDonald’s have excelled due to its capability to successfully coordinate the consumer’s perspective in its operations and products in a comprehensive manner. The menu in Indian customers is examples of McDonald’s policy of integrate the consumer’s perspective in its products or services. And, the integration in operations is evident from the McDonald’s importance on its suppliers as its consumers as well as its dealing of its customers as co-producers product or services. “McDonalds Strategy” (Ghosh et al. 2012). The aim of service marketing industry is to become a service leader and to create the brand. The McDonald’s food chain industry can use the competitive advantage against the Jumbo King. Keep in mind the demographics area, McDonald’s has using Wi-Fi facility enabled the outlet to provide to community. “It is for this overall “Food, Fun, & Folks” experience that customers pay a premium over the other competitors” (Ghosh et al. 2012). McDonald’s possibly in the new location, the services are fast and convenient and it is no longer adequate to discriminate the firm. McDonald’s uses the emerging competitive strategy to create a rich, fulfilling experience for consumers. The marketing decisions influence the competitive advantage. Walmart Competitive Advantage: Walmart is a leading retail chain industry, Wallmart discount stores are mainly placed in large towns. Its competitive strategy is to put large stores in small one-horse towns that everybody would ignore. WM substitute was to build their own delivery centres so that they may possibly buy in quantity at attractive reasonable prices. Walmart provides the customers Every Day Low Pricing (EDLP), customers’ trust is enhanced through this strategy, and the product price will not change in frequent activity. The Walmart retail chain has introduced the system of remix designed to decrease inventories, speed delivery to the stores, and to remove stock-outs. The competitive advantage of Walmart is that it initiates the direct import, the goods are purchase directly from the overseas supplier to a certain extent through the importers, and captivate of the import logistics. In 2003 Walmart announced the implementation of radio frequency identification and the company is the leader of this technology. The Individual retail store managers are given significant decision-making rights in relation to product positioning, product range within the store, and the pricing. The decisions about over pricing and merchandising are made by the head office or the regional offices. In 2008, Walmart redesigned their stores and changed the logo. The new logo is trying to say that the company is an eco-aware company. Walmart lead the way in applying communication and information technology. Walmart is firstly used the computers from inventory control, and to initiate the EDI with its suppliers, and the company is to introduce bar code scanning of products for sale and controlling of inventory. “WM was pioneering the use of data-mining for retail merchandising” (Wal Mart Competitive Advantage n.d.). Reference List Bhojanna, U 2007. Research Methods for Management. School of Distance Education. Available at < http://www.scribd.com/doc/7079583/Research-Methods-for-Management> [Accessed on 11 April 2012] Competitive Advantage 2007. Lion’s Share: Marketing Group. [Online] Available at [Accessed on 11 April 2012] Finn, G 2008. Why Pre-Purchase Behavior Matters. Destination CRM.com. [Online] Available at [Accessed on 11 April 2012] Ghosh et al. 2012. McDonald’s: Behind the Golden Arches. NMIMS University. [Online] Available at [Accessed on 11 April 2012] Marketing Mix and Service Marketing for Insurance Companies n.d. Cube 2 Success GMBH. [Online] Available at [Accessed on 11 April 2012] Process 2000. Marketing Teacher Ltd. [Online] Available at [Accessed on 11 April 2012] Rae, J 2006. The Importance of Great Customer Experiences. Bloomberg Business week. [Online] Available at [Accessed on 11 April 2012] The Importance of Positive Customer Service Experiences 2011. The Social Customer. [Online] Available at [Accessed on 11 April 2012] The First P: Service Product or Service Package 2012. Scribd Inc. [Online] Available at [Accessed on 11 April 2012] Tsiotsou, RH & Wirtz, J 2011. Consumer Behavior in a Service Context. Edward Elgar Publishing Ltd, UK. Available at [Accessed on 11 April 2012] Wal Mart Competitive Advantage n.d. OpPapers.com. [Online] Available at [Accessed on 11 April 2012] Read More