CONSUMER CHOICE BEHAVIOUR IN
SERVICES:
The Drivers Of Consumer Choice:
The drivers of consumer choice in servicescan be broadly
categorized as brand name and functional quality.
Brand Name:
Service Offerings Versus Products The absence of a tangible
physical good on which a brand name can be affixed often necessitates assigning
greater prominence to the corporate brand name on the various physical products
and facilities used to deliver the service.
Functional Quality:
The perceived service quality concept suggests that the
service quality perception is formedby the disconfirmation between expected and
experienced service. The consumer expects a service based on marketing
communication, word of mouth and image.
The actual service experience is based on the actual service
process and the outcome of the service. These two dimensions are known as
functional quality (how the service process functions) and technical or the
outcome quality (what the service process leads to) dimensions.
Service complexity:
The factors that consumers use to evaluate service offerings
-that is those, which can be used indifferentiating a service may be contingent
on thecomplexity of the service offering in question.
For certain more complex or sophisticated financialservices
offerings in particular, their high intangibility makes it potentially
difficult to envisage the use of specific services features as the basis for
differentiation.
CUSTOMERS’ ROLE IN SERVICE DELIVERY:
·
Customers play a very
vital role in successful deliveryof service as customers are often present in
the placewhere service is produced (Delivered).
·
Customers alone can
influence whether the deliveredservice is as per customer defined
specifications.
·
Other customers who are
present in the Servicescape can also influence the Service positively
ornegatively.
·
The level of
participation of customers variesfrom Service to Service.
·
In “High level of
participation.” Eg. B to B projectslike providing software solutions &
consultancies.
·
In “Moderate level of
participation” customersinputs are necessary to facilitate effectivedelivery of
service
PRICING OF SERVICES:
Differences between customer evaluation ofpricing
between services and goods:
a) Customers have limited or inaccurate
referenceprice for services.
b) Monetary price is NOT the only price relevantto
service customers.
c) Price is a key indicator of quality in services;
i.e. higher the price better is the service.
NON MONETARY COSTS:
Time costs, search costs, convenience costsand
psychological costs are the non monetarycosts in a service and play an
equallyimportant role like that of monetary cost.
PRICE
AS AN INDICATOR OF SERVICE QUALITY:
·
In the absence of other
forms of communication fromthe company, price becomes the sole decisive factor
inselection of a service. Customers look for cues likeinformation through
advertising, brand image etc.
·
In certain services
which are perceived as high risk likeconsultancy services and medical treatment
the customersassociate pricing with quality assurance.
·
Too low a pricing can
act as a repellant. It could send negative signals. Too high a price can set
very high expectations
PRICING
APPROACHES:
·
COST BASED:Cost based Pricing: Used in services like advertising, contracting etc.
Price = Direct Cost
+
Overhead Cost
+
Profit Margin
·
COMPETITION BASED PRICING:
This approach is based on using the
competitors’price as the point of reference
Eg: Fitness clubs, Driving classes, Computer
classe setc.
a. When services are standard across providers.
b. In oligopolies where there are few large
service providers : Airlines
c. Going-rate Pricing
d. Sealed bid pricing: govt. tenders.
·
DEMAND BASED PRICING:
ü
Based on establishing prices consistent with customer perception of value
i.e. pricing depends on what customers are likely to pay for the services
provided
ü Example Show time in multiplexes, happy hours in
restaurants, midnight buffets. Etc.