Lecture 4: Managing Expectations, Customer Delight & Perceived Value Flashcards
Define Expectations
Pre-purchase beliefs about service provision, provide a standard of comparison, a benchmark.
What are the types of expectations?
Ideal - the optimal level of performance desired by a customer
Should - what a customer feels he/she ought to receive
Will. - what a customer thinks he/she will actually get
Adequate. - the minimum a customer is willing to accept
What are Expectation Levels?
Definition: Baseline comparison for post- experience perceptions (customer satisfaction evaluation) is will (expected or predictive expectations), that is what consumers “would” expect
Explanation: Customers use a ‘better-than’, ‘worse-than’ heuristic
How are expectations formed?
Past experiences with service
Awareness of competing brands
E-word-of-mouth (eWOM)
- Personal eg. Facebook friend reviews
- Expert eg. Instagram bloggers
Explicit service promises
- Marketing communications
Implicit service promises
- Tangibles
- Price
Customer Sensitivity
Customer needs
What is the Zone of Indifference/Tolerance? Provide an example.
The extent to which customers are willing to accept some degree of variation in service received
Zone of Indifference/Tolerance = (Ideal expectations) minus (minimum tolerable expectations)
Example
- Ideal: Customer wants to be served in 3 minutes
- Adequate/Minimum: based on past experience, will tolerate 10 minutes waiting time
- Zone of Tolerance: If bank takes 3-10 minutes, customer will be satisfied with bank’s speed of service
What causes Variations in Zone of Tolerance?
Transitory service intensifiers
Perceived service alternatives
Self-perceived service role (causal attribution?)
Situational factors (control attribution?)
Will expectations set
Compare the Zones of Indifference for First-time and Service Recovery situations
For First-Time Service, the expectations are high but extent to which customers are willing to accept variation in Outcome is large. Expectations on the process of service delivery is low to mid and customers are willing to accept a large range in variation.
For Service Recovery Situations, expectations are higher compared to First-Time and the extent to which customers are willing to accept variation in Outcome is is very small. Expectations on the process of service delivery is high and customers are willing to accept a only a small range in variation.
How can firms manage customer expectations?
- Managing the service promises they make.
- Dependably performing the promised service.
- Effectively communicating with customers
How can firms work on Managing the service promises they make?
Over-promising undermines client tolerance & trust
Under-promising to lower expectations reduces the value of the offering
Managers should ensure promises reflect reality by painting a honest picture explicitly (through communications) and implicitly (through the price you charge)
To further ensure that the promised service is consistent with the deliverable service, managers should solicit pre-campaign feedback from frontline staff and customers about accuracy of promotional messages
How can firms Dependably performing the promised service?
Perform the service right the first time.
When service problems occur, client’s tolerance zones shrink and their expectations rise.
How can firms Effectively communicate with customers?
Keep clients informed of services issues widens zone of tolerance.
What are some strategies for managing customer expectations?
Making company reps easily accessible to customers
Encouraging customers to contact the firm
Training and facilitating service workers to provide personalised, responsive and caring service
Initiating contact with customers and following up regularly
Rewarding service workers for nurturing customer relationships
Explain the non-linear effects of satisfaction levels on customer loyalty?
** diagram
Define Customer Delight
Customer Delight occurs when expectations are exceeded to a surprising degree.
Usually happens when ‘perfect; product is found, bargain price, or service personnel who went above and beyond.
What are sources of Customer Delight?
Employee affect
- Being caring and friendly
Employee effort
- Attentiveness and helpfulness, going above and beyond
Employee skill
- Knows firm policies in-and-out
Time issue
- promptness
Core Product
-Quality of food or comfort of servicescape
Bend Rules/ free stuff
- Service failure recovery
What are the pitfalls of customer delight?
Can make it more difficult to please the customer in the future
Difficulties in achieving delight for low
involvement products or functionalor utilitarian products
Potential high costs associated with delivering delight
Low Customer Lifetime
Value cuz customers are not worth extra resources to delight them
Developing a delight package that is difficult for competitors to copy
Define Value Proposition
Consists of the whole cluster of benefits the firm promises to deliver
It is a statement about the total experience clients can expect
Define Equity Theory/Perceived Fairness and explain marketing implications
Ratio of buyer’s value derived from exchange relative to service provider’s value
Value = Sum of benefits/Sum of costs
“I feel I was ripped of by that hair salon!”
Define Customer Perceived Value, explain and give examples.
Perceived value is a client’s overall assessment of the utility of a service based upon perceptions of what is received & what is given.
Perceived Value = Sum of Benefits / Sum of costs
Explain Perceived Costs and give examples
Perceived costs or sacrifices can include:
Monetary price. of the service
Time costs. – the time the customer has to spend to acquire the service
Energy costs. – the physical energy spent by the customer to acquire the service
Psychic costs. – the mental energy spent by the customer to acquire the service
Give examples of Costs and Benefits
BENEFITS
Quality of goods, range of brands on offer, level of staff assistance, variety of goods, store ambience, comfort, cleanliness, opportunities for sampling new products, extended opening hours, petrol discounts, fly buy points.
COSTS
Price of goods, difficulty in parking, lack of trolleys, waiting time to be served at deli or to check out
Explain Co-creation of value
Your goal is not to create value for customers but rather to mobilize customers to create value with you.
Explain the Total Service Product Concept
Core product
- Key benefit
- Problem solving solution
Supplementary services
- Help differentiate product offering and helps customer maximise value derived from offering
- Facilitating services
- Supporting services
Explain Facilitating Services
Facilitating services – facilitate the delivery and consumption of the core service. If lacking the core service cannot be consumed.
They include:
Information
Order-taking
Billing/Invoicing
Payment
